Episode #357: Marko Papic, Clocktower Group, “If You Don’t Make Calls, Why Are You In This Industry?”

Episode #357: Marko Papic, Clocktower Group, “If You Don’t Make Calls, Why Are You In This Industry?”

Amazon.com: Geopolitical Alpha: An Investment Framework for Predicting the Future: 9781119740216: Papic, Marko, Drobny, Steven: Books

Guest: Marko Papic is a Partner and Chief Strategist at Clocktower Group, an alternative investment asset management firm based in Santa Monica, California. He leads the firm’s Strategy Team, providing bespoke research to clients and partners on geopolitics, macroeconomics, and markets. He’s also the author of Geopolitical Alpha: An Investment Framework for Predicting the Future. Prior to joining the firm, Marko founded BCA Research’s Geopolitical Strategy practice (GPS) in 2012, the financial industry’s first dedicated political analysis investment strategy.

Date Recorded: 9/22/2021     |     Run-Time: 1:00:40

Summary: In today’s episode, we’re talking geopolitics and the markets. Marko recently released the book Geopolitical Alpha and he shares his framework for understanding how geopolitical events will affect the markets. Then we talk current events and how he views them. We talk about the implications of Evergrande and why Marko does not believe China will try to takeover Taiwan. Next we talk about the implications of rising food and commodity prices and whether that will cause social unrest around the globe.

As we wind down, we talk about the ESG and sustainability trend and finish by hearing what Marko thinks about inflation, interest rates and the U.S. stock market.

Sponsor: FarmTogether is a technology-powered investment platform that enables investors to channel funding into natural assets, starting with U.S. farmland. By driving abundant and creative capital to farmers, we’re giving investors the opportunity to drive agriculture toward sustainability on a massive scale. Alongside a changing climate, the global population continues to grow, with expectations of reaching 9.7 billion by 2050. This means approximately 70% more food will be required than is consumed today. FarmTogether investors are providing the key financial building blocks for a sustainable future.

Comments or suggestions? Email us Feedback@TheMebFaberShow.com or call us to leave a voicemail at 323 834 9159

Interested in sponsoring an episode? Email Justin at jb@cambriainvestments.com

Links from the Episode:

  • 0:00 – Sponsor: FarmTogether
  • 1:53 – Intro
  • 2:43 – Welcome to our guest, Marko Papic
  • 3:53 – Getting the market right means you need to understand geopolitics
  • 8:06 – Marko’s thoughts on understanding policy constraints and preferences
  • 15:49 – Ways to understand what the median voter wants or needs
  • 19:33 – The driving forces behind the changing political zeitgeist
  • 22:08 – Evergrande and the growing tension around it defaulting
  • 26:55 – Why are Chinese CEOs retiring early and the public perception of it
  • 29:59 – Marko’s thoughts on the Chinese tech stocks, geopolitical risk, and how they might play out
  • 35:36 – Potential risks to the Chinese Communist Party
  • 39:39 – Changes in commodities and the implications of their fluctuations
  • 43:53 – Marko’s thoughts on interest rates in the U.S. and globally
  • 50:28 – What Marko’s keeping an eye on as he looks out to the horizon
  • 54:43 – Marko’s most memorable experience and investment
  • 57:18 – Learn more about Marko; Geopolitical Alpha


Transcript of Episode 357:

Welcome Message: Welcome to the “Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s Funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Sponsor Message: Today’s show is brought to you by FarmTogether.com. Farmland investing has been a popular macro trend among billionaires and big institutions for the last decade. But the high cost of buying an entire farm put this asset class out of reach to all but big institutions and the ultra-rich. Farmtogether.com allows any accredited investor the opportunity to invest in fractional ownership of several different categories of farmland.

Farmland has typically performed as a low volatility uncorrelated inflation hedge and farmland generally has experienced uncorrelated returns when compared to traditional asset classes, such as stocks and bonds. And it offers the potential for welcome diversification, especially in periods of stock market downturns.

Even better, FarmTogether’s mission is to bring creative and transformative capital to farming while opening a vital asset class to all investors. The farms of the future will need to support a growing population amid a changing climate and scarce natural resources. And by investing in sustainable agriculture, you can help ensure a healthy planet and food security for all. Impact an income through farmland investing, check out farmtogether.com today, you’ll be glad you did.

Meb: What’s up everybody? Today we have another great episode. Our guest is the chief strategist at the Clocktower Group, an alternative investment asset management firm where he leads the firm’s strategy team. In today’s show, we’re talking geopolitics and the markets. Our guest recently released the book “Geopolitical Alpha,” and he shares his framework for understanding how geopolitical events will impact the markets. Then we talk current events like implications of Evergrande, why our guest does not believe China will try to take over Taiwan.

Next, we talk about what’s going on with rising food and commodity prices, and whether that will cause social unrest around the globe. As we wind down, we talk about the ESG and sustainability trend, and finish by hearing what our guest thinks about inflation, interest rates, and the U.S. stock market. Please enjoy this episode with Clocktower Group’s Marko Papic.

Meb: Marko, welcome to the show.

Marko: Hey, Meb, thank you so much for having me.

Meb: You’re in a familiar location. Share with the listeners where do we find you today?

Marko: In Santa Monica, California, right on the beach. You can see the ocean glare coming through my window. And this is the, as you called it, while we were chilling before starting the Steve Drobny worldwide headquarters.

Meb: There you go. The land of milk and honey. How are you finding Santa Monica, Los Angeles? You’re a big fan?

Marko: Yeah, I mean, I think it’s awesome. It’s a really cool place to hold up during the pandemic, I’ll tell you that. And I moved here from Quebec so that means the weather difference has been pretty stark.

Meb: How’s your surf game?

Marko: Terrible. But Steve did take me out on the water a couple of times and I never felt like a beached whale more than when I had my partner and boss pushing me on a giant 12-foot.

Meb: Well, look, I’m right there with you. I describe myself as a wave storm surfer. And if you’re familiar, listeners, those are like the foam boards you buy at Costco for 200 bucks and that’s about my ability. But it’s good because it keeps people out of your way, they see someone coming on a big foam board, they’re like, oh, that guy’s a noob, a grom.

All right, we’re going to talk about some fun stuff today, a little bit different angle. You have a new book out, it’s a lot of fun “Geopolitical Alpha,” people can find on Amazon. And I got a couple good quotes from you. And so see if you can recall that you actually said these.

But there’s one I figured we’d get things started with, which is “Getting in the market right from here on out is much about the politics and geopolitics as it is about valuations, interest rates, and earnings.” That’s a pretty big statement, you want to walk us through why that is the case and then dig into your framework a little bit?

Marko: Yeah, sure. So I think that over the last 40 years since the 1980s, we had a number of revolutions that happened. But for the purposes of the financial community, the most important has been the Reagan and the tax revolution, which really pulled government out of the markets or attempted to do as much as possible.

And this became the sort of set of best practices that we collectively know as the Washington Consensus, things like laissez-faire economic policy, deregulation, privatization. But more importantly, things like countercyclical fiscal policy where fiscal policy was no longer a political game, it became almost a mathematical equation. Is there a recession? Yes, stimulate. Is there no recession? No, don’t stimulate, no more procyclical fiscal policy. And of course, monetary policy became anchored to prices, not through really labor, market, and became more automated as well and much more independent of politics.

So, on a number of different levels, we took government out of economics and markets, and countries that adopted this set of best practices, most enthusiastically, if you will, did really well. So the U.S. and the UK, especially in terms of innovation, especially in terms of ease of doing business, there was a lot of innovation that followed this revolution.

However, when the secular stagnation of the last decade showed up, the focus on laissez-faire economic policy and on all of these kinds of structures that we adopted in the 80s became sub-optimal from a political perspective. In other words, the countries that adopted these best practices most enthusiastically were the two that had the most populist outcomes.

And that’s something, Meb, that most people should actually be much more surprised with than they are. Because I can tell you when I was working on the sell-side selling research in 2011 to ’12, nobody was asking me if U.S. and the UK were at risk of populism. I mean, the number one question was, when is the euro area going to fall apart? And when are the barbarians going to be at the gates in Europe? When are the populists going to be there?

And my answer was like never, never because the Europeans adopted the Washington Consensus begrudgingly, they were never really into it. But their economies always kind of had that social component, political component, which made them less innovative, which made them less likely to outperform UK and U.S. of productivity or other measures. But it also made them more stable when the secular stagnation decade came in.

And so now that we’ve had 10 years of secular stagnation, and now that we’ve had the populist outcomes in the U.S. and the UK, there’s this return of the state in markets. And I’m not the only person to talk about this, I mean many others have written a lot of more profound, more intelligent work than I have, saying that this is coming. What I offer in the book is a framework for how to deal with it.

So instead of like, throwing up our arms and being all ideological about it and lamenting the era of laissez-faire capitalism, I think we just have to prepare for this as investors and arm ourselves with analytical tools that allow us to have a systematic framework to deal with the new age. And in the book, I focus really on what I call material constraints.

So instead of trying to figure out what policymakers want, what politicians want, what the state wants, you need to just ignore all that. I mean, you shouldn’t care about what politicians want, you should just focus on what they can do, and what they will do given the material constraints around them. And so the book basically drums on for like 300 pages on this issue.

Meb: Before we start to kind of get into little topics of the day, maybe dig in just a little bit about that, tease out that 300-page into a concise sequence of sound bites. So talk to us a little bit about those constraints, preferences. Because I watched the sausage get made and I look at a lot of things, I’m often pulling our hair out.

And I feel like when I used to watch “House of Cards,” Kevin Spacey is politics isn’t like that, you know, that seems so crazy, this show is so out of proportion. And then you watch kind of the last decade of the internet and ways that a lot of things come to light and I kind of scratch my head and say, “Man, this is even worse than watching a TV show.” Anyway, unpack the constraints preferences a little more and then we’ll start to get into some topics of the day.

Marko: Well, what I just described to you in terms of I focus on constraints, that doesn’t require 300 pages, right, that requires like two pages. Okay, cool. Got it. You don’t care about what politicians want, you care about what their constraints are. The reason you need 300 pages then to, like, explain this is because there isn’t just one set of constraints, there’s multiple types of constraints. And so I go in the book chapter by chapter, telling investors what kind of constraints they should focus on.

The first one is political constraints. It’s like, do you have enough political capital to pursue the policy you want? And in particular, is your policy aligned with a median voter? Which is a very important concept in my framework. The median voter doesn’t exist, it’s a theoretical construct. It’s sort of what policy is most likely to succeed in the political marketplace where the median voter is the price maker.

This is important because of this, if the median voter wants a Hyundai, Sonata, like a teal Hyundai Sonata, politicians will get it to them. This is the way it works, with the median voter politicians will get to it. And this is important because whether Republicans or Democrats are in charge, it doesn’t really matter.

So in 2010 when Republicans and Democrats went on Sunday talk shows and talked about how America was on the path to becoming Greece, the median voter got freaked out. It was like, holy crap, yeah, we need to do something about budget deficits. So the Tea Party shows up and gives the median voter what they want.

Then Obama doesn’t say, “Oh, screw you, yeah, why don’t we shut down the government? Let’s see who wins. Let’s have a break, Mitch.” No, no, he says, “Okay, cool I’ll cut the budget deficit.” Even Barack Obama, supposedly a left-leaning Demo eventually agrees.

Fast forward to our world today, nobody cares about budget deficits. If the Republicans, by the way, want to die a mistake of, like, balancing budgets, Nancy Pelosi will let them. That’s what the debt ceiling crisis is about, which I’m assuming is going to become a crisis in two weeks. We’re recording this in September 22, fully expect Nancy Pelosi to basically pull Republicans into a cul-de-sac and beat them with this issue.

And what I mean by that is that she’s daring them to come up with that 2010/2011 language. You know, like, oh, the government is like a family, should balance its books. That stuff doesn’t work anymore. Erin O’Toole, the Tory leader in Canada just tried to do that yesterday and got absolutely pawned by Trudeau. The Conservatives in Canada were up 10% in the polls.

And then they started running these idiotic ads about balancing the books in 10 years. Ten years, Meb, 10 years, not like tomorrow, but in 10 years. And the Canadian median voter was like, “Hell no, like, screw that, interest rates are low, let’s spend, baby.”

So what I’m getting at here is that the median voter is the first constraint. And it’s so important because a lot of investors obsess about Democrats, Republicans, Tories, liberals, this and that, blah, blah, blah, it doesn’t matter. You get the median voter right, you’re going to get the policy right.

And the big premise in the book, of course, is the median voter in the U.S. is actually moving to the left of the economic spectrum faster, and more enthusiastically than the median voter of any other country, including like France. I would actually argue the median voter in France may have moved to the right on the economic spectrum. Like, let’s not get crazy and carried away here, but like, more so than in the U.S.

The second constraint is economic. And I don’t mean economic like how’s the economy doing? What’s your GDP print? I mean more like, the second constraint policymakers have to deal with is what kind of an economy have they been given? What kind of an economy are they running?

So German policymakers in 2010, did they have a preference to keep the Greeks in the euro area? Hell no, of course not, it’s ridiculous. They were like, “Let’s get rid of them.” But they can’t because guess what? Germany is massively export-oriented economy, and they need peripheral European euro area states to remain in the euro area because it’s a huge part of their demand.

And by the way, that’s increasingly the case for Germany. The hopes and dreams of German policymakers today could rely on China, and Brazil, and India for future growth, so that they could kind of leverage that against Italy and Spain. Forget about that, that’s not going to happen, especially now with China trying to compete with Germany in many ways. So German economy, given how export-oriented is basically addicted to its own periphery. China is another good example of this with Evergrande now, obviously being an interesting…it’s a huge issue.

Meb: I was joking the other day, it sounds like an all-you-can-eat Taco Bell option, these weird things that come to light that people have been talking about. I can’t get that out of my head, it makes me want some Mexican food. All right, keep going, Evergrande.

Marko: No, I mean it’s a good example of what can policymakers in China do, the ultimate constraint for them is that their “median voter” happens to also be addicted to buying condos. So over the last two decades, the way that the median Chinese person articulated that GDP growth into savings is via a condo unit. And they are not buying condos because they’re like millionaire speculators. They’re buying condos so they can get their dentures done when they’re old, or send their kids to college.

And so the ultimate constraint here on Evergrande and I suspect why the markets are basically kind of asleep at the wheel, although I agree with the market, but there is, of course, some risk. The market assumes that Chinese policymakers will have to bail out Evergrande or not necessarily like bondholders or equity holders of Evergrande, but definitely the economic sort of system that surrounds Evergrande. And I agree with that because of the economic constraints, the way the Chinese economy has operated for the last 20 years.

Then you’ve got market constraints. We all know what this is, your bond yields go up, you’re constrained. Even the biggest Trotskyite Marxists becomes a capitalist when the 10 year goes to 30%. And then, of course, we have some other constraints like constitutional legal constraints, I talk about that. Reconciliation procedure in the U.S. is a good example of a constraint.

And then finally, geopolitical constraints, which is funny because I leave that for last. My book is called “Geopolitical Alpha,” that’s intended to kind of grab people who are interested in geopolitics in markets. But I actually think geopolitics themselves are the least relevant constraint for investors.

In other words, if you’re trying to make an investment, don’t talk to me about the Northern European Plain, right. Don’t talk to me about like the Indo-Pacific, which is one of the most ridiculously useless terms I’ve ever heard in my life. The 10-year bond, bond yield is not going to like react to these geographical constraints.

They matter. They matter in some sort of an epic way and I can tell you an example where I would invest in this or that based on geopolitics. But I think that most investors overemphasize this component and misuse it. Focus on what’s before us, politics, markets, and the economy.

Meb: So question on kind of the trying to tease out what the actual median citizen in each country wants or believes, how do you get to that? Is that through surveys, is it through just various sorts of analysis, deduction? How do you figure out what they actually want? And the politicians usually get that right. Are they usually catering to that audience or sometimes are they totally off base on it?

Marko: They get it wrong all the time and that’s when you bet against it. So first of all, how do you tease it out? As you said, different ways, long-term polling is the best. I got a sick chart of net preference for a small government in the U.S. I think it was Gallup has had this survey of American preferences going back to the ’70s.

And it’s like, do you prefer a large government providing a lot of services or a smaller government providing fewer services? And for most of those decades, Americans have had a preference for small government, of course, that has changed with Obama, Trump, and now Biden. You can actually see this long-term trajectory of charts where this has gone. There are more higher frequency surveys on more topical issues, like, do you support Obamacare? Which is less profound question than do you want small or big government?

But yeah, polling is really, really useful and there’s a lot of academic and IO work on this that the investors are starting to like find out about. So Eurobarometer in Europe is extremely useful to get into the euro area crisis, right. It’s like how I built my career, I just basically looked at the data. Well, a lot of other people were talking to people in smoke-filled rooms and saying, like, “Oh, my God Wolfgang Schäuble wants the euro area to collapse.” I don’t care. I don’t care what he wants because I can tell you what the German voter wants, they don’t want that. And then you have Latinobarometro.

So yes, polling is really important but the other way is revealed preference, Meb, and that’s what I mean. Like, when Erin O’Toole, the Torian leader in Canada comes out and says, like, “I’ll balance the budget,” and voters are like, “Hell no, we’re going to go back to Trudeau.” That’s a revealed preference of the median voter that you can imbue into electoral outcomes.

A great example of this recently is Mitch McConnell’s very highly risky move to not pass that stimulus ahead of the election. I don’t know if you remember that. But Mitch McConnell was basically like sitting on that, I think it was like stimulus four, or whatever it was, and Trump started panicking and started tweeting like, yo, Mitch, you know, like, spend the money or something.

I mean, if you’re a conservative voter in America, you should be burning an effigy of like Mitch McConnell. He’s the reason, may be the only reason, Trump lost that very close election. Because if you look at the actual outcome, Biden improved on Clinton’s performance in 2016, with a 50 to 100,000 income cohort massive. He gained like 10 million voters in that cohort. Now Biden lost voters relative to Clinton in 100 to 200k. But what this tells you is that Mitch McConnell’s, like, hold up on the stimulus ultimately hurt Trump massively ahead of the election.

And that also tells you the zeitgeist of the median voter in America, which is like just print, just give me my helicopter check, that’s what I want you to do. And I think that continues. And it means that Republicans learned a very important lesson from that example which is why when Biden suggested a $1.9 trillion package in earlier this year, no Republican really opposed the size, they were all opposed on how it was spent. But they were very careful to not oppose stimulus for the sake of stimulus.

And that tells you we’re in a much different political zeitgeist from where we were after the GFC when I think the median voter in the U.S…and I don’t think, I mean I can prove it, was definitely in favor of austerity and countercyclical.

Meb: If you had to tease out or guess what is the driving force behind that, is it that people see this wedge between the sort of wage and income gap that’s been widening over the past couple decades? I’m speaking specifically in the U.S. at this point. Is it just low-interest rates? What is the reasoning behind this shift in preference from what used to be austerity to more of a preference for what you’re referencing just a moment ago?

Marko: To yellowing. It’s a mix of things, you know. I would say there’s a generational component you didn’t really mention where, like, I’m 39. I didn’t grow up in the U.S., I grew up in Yugoslavia and Middle East and all sorts of places, so I experienced hyperinflation so I know what it looks like. And it’s not a pretty thing. But like, if you’re like, under 40 years old in U.S., you’ve never seen inflation in your life. So you’re like, what?

And it was interesting when Jay Powell was testifying in front of Congress, and AOC kind of pushed him on this. She’s like, “What inflation?” You know, like, “Why are you worried about this inflation? It’s not an issue.” It was very emblematic of how I think a lot of people in the U.S. see it. The millennials and Gen Z are coming into adulthood in a much different growth environment than really any other U.S. generation before them. So they’re just like, look, I mean, I just want the government to take more of an active role in producing nominal GDP growth. So that’s the first issue.

The second issue is income inequality in the U.S. is one of the highest in the OECD. And that’s cool. That can be the case without like a revolt. But it has to be complemented with social mobility between intergenerational mobility. Like the son and the daughter will do better than the father. And you can measure that that’s not been the case in the U.S. So the U.S. is both unequal on income and also in terms of intergenerational mobility, which is a political problem.

And finally, sure, yeah, I think low-interest rates and Fed policy matter, too. But I think a lot of people overemphasize that. They overemphasize it because I can show you data that shows income inequality in U.S. has been rising since the ’80s. And we’ve come to a point now that it’s destabilized the political system.

In other words, yes, we have social justice protests in 2020 for reasons that have to do with social justice. Yes, people stormed January 6 Congress because they thought the election was stolen. I don’t want to diminish the importance of those two reasons to protest. But the underlying point is that we just had 10 years of secular stagnation, low growth, capitalist recovery, jobless recovery, a lot of gig economy jobs, that has, like, weighed on the median voters’ patience in the U.S., and now they’re willing to experiment with all sorts of unorthodox policies.

Meb: Let’s start to hop around the world. I’ll let you take your pick out of the sack of goodies with current events and what’s on Marko’s brain today, as we sort of enter fall time here in 2021. What looks interesting, worrisome, exciting to you?

Marko: I got two things for you that I brought in my sack of goodies. So first of all, let’s talk about Evergrande China. It’s September 22 and I’m going to give you a view, and when you publish this in two weeks, it might look completely insane, which is awesome, whatever. I made a career out of making calls.

Meb: But that’s the whole point of, right, yeah.

Marko: Hey man, shooter is going to shoot. By the way, if you’re wondering what that is behind me right there for those of you on YouTube, that is a shot chart of every shot Kobe Bryant ever took.

Meb: That’s funny. I saw a recent on Twitter, the evolution of the distribution of shots from 20 years ago to now and it’s crazy because 20 years ago is spread out and now it’s just like around the basket and three-pointers.

Marko: So that one, you can’t see it but you can see the dots are actually everywhere because he had a mid-range game. Now I have that there, why do I have that? One, I’m a basketball fanatic. But two, you got to shoot, you got to make calls. If you don’t make calls, why are you in this industry. So I’m going to make a call on this China thing and I think it’s being massively misinterpreted in the West. In the West, we’re talking about Volcker Moment, Lehman Moment, whatever moments.

This didn’t happen organically in China. This is happening because Chinese policymakers have been deleveraging since at least 2017. And they’ve focused especially on the real estate sector, which they don’t want it to continue to be a bubble. They don’t want house prices, condo prices, in places where a lot of millennials are starting families, they don’t want those to appreciate. So they’ve engineered the collapse of Evergrande, this is policy-induced.

And I say that for two reasons. First, I want to just wax a little bit on just the hypocrisy of maybe the median investor in the West, where everything that happens to China is evidence of Maoism, they’re like communism. First of all, China is who China is, they’ve been an authoritarian regime for 20 years, that’s, like, made winners and losers of sectors forever.

But this specific policy in the real estate is definitely not an example of Maoism or communism, you’re actually doing what like Jim Chanos’s of the world would ask them to do. Like, hey, China, you’ve been steering capital into condos for two decades, that’s stupid. Yes, you’re right. Let me do something about it. So they’ve been doing something about it. And a three red lines policy that instituted in 2020 really hurt a lot of developers bringing Evergrande to the brink.

So the way that I think that this is going to get resolved is the way they’ve resolved other failures in their economy which they also induced the Baoshang Bank, the HNA Group. They’re going to take the equity holders and bondholders to the woodshed, they’re going to eat the bailout. But then they’re going to make all the suppliers in the economy then employ hundreds of thousands of people by taking various provincial SMEs to take apart Evergrande’s various business lines. And having them basically continue with the service providers that service Evergrande that help with the development of Congress and so on.

So I think that that’s the first thing we need to understand, this isn’t like something that happened to China. Like China isn’t getting its comeuppance. China has engineered what’s happening right now with Evergrande. Now, they can make a pulse here, that’s for sure, they can be overzealous, they can have hubris, they can ignore the contagion risk throughout the economy, but their threshold for pain is much lower.

And this is where the constraint framework really comes in. American policymakers kind of screwed up with Lehman Brothers or maybe they didn’t, depends on your view. But after Lehman Brothers, American policymakers were very slow to deal with the fallout, especially the fiscal package. The American Recovery and Reinvestment Act, which was passed in March of 2009, was nearly $800 billion, $800, $900 billion and that was it. After that we didn’t have a single fiscal package in the last cycle.

That’s not going to be the case with China. Like China has a much lower threshold for pain. And that’s specifically because as I mentioned earlier, condos in China are not a form of speculation or investment, there are savings accounts in like your Bank of America account for Chinese middle class. And there’s no way that they’re going to mess with that because if they let real estate prices go down, Chinese Communist Party will not survive the decade because they would be hurting the nested off their median “voter.”

Meb: What’s going on with the Chinese CEOs that seem to be resigning, going on retirement a little early? Is that something that you see is like a trend that’s going to continue? How do the Chinese people view that versus how the rest of the world views it? Is that something that’s even a blip on the radar?

Marko: I would venture to say the Chinese median voter…I’m going to keep using that term, I know it’s kind of anachronism, but it’s relevant, is applauding it. And here’s why, China tried the American developmental model. When Xi Jinping came and visited the Obama administration, I think in 2013, he didn’t go to D.C., he came to California, Southern California, LA. And that’s because he was like, oh cool, tech, yes, we want that. That’s a sign of power. That’s a sign of a mature, relevant geopolitical power and I want that.

So China tried to copy the U.S. And think about this, think about like big economies in the world, like Japan and the EU, they don’t have anything like Google or Netflix or Amazon, nothing. China does. China’s the only large economy that actually managed to kind of copy American development model and they did it by preventing our firms from going to China obviously … I’m not saying this was just innovation, but nonetheless, they did. And they were super stoked about that. Like, yeah, TMT sector is awesome, we’re going to challenge the U.S.

And then they realized something, they realized in 2020, when Americans were burning down downtowns because of social justice protests, January 6, when Americans stormed the Capitol because of “stolen election,” the Chinese were like, whoa, wait a minute, this developmental model has a downside. It creates a gig economy, it empowers the few, not the many. And most importantly, paradoxically, it doesn’t create productivity gains for the economy. The Robert Gordon argument, like, where’s the productivity?

We’re all on our smartphones ordering cheeseburgers at 3 a.m., cool, but it’s not being revealed in the data as actually contributing to productivity growth. And this is really important for China because potential GDP growth rate is made up of only two things, labor force growth, which they don’t have any, and productivity growth.

And so China realized what we need to do is we need to move away from this American growth model, which seems to increase political risks. And China doesn’t have a luxury of, like, laughing at the means of January 6 Capitol…people who stomped the Capitol looking like King Alaric, from the Medieval Ages. Like that’s funny to us, perhaps in the U.S., to them, it’s like deathly serious.

So they don’t have the luxury of our political system of like parties coming and going. And they don’t have a luxury because they haven’t achieved upper-income level like U.S. did of having their potential GDP growth rate come down to 2% to 3%.

So they’ve made this bet that they need to move towards a manufacturing heavy growth model. Like they want to replace the American economic growth model with the German and the Japanese. And that’s how you should think about what’s happening to the TMT CEOs, they’re part of the abandon the growth model if you will.

Meb: So as you look at like the investment opportunities set there as we’re looking at China, because China in general, the equity market’s gotten whacked. It’s funny, I was tweeting about this the other day because markets as we know can often find themselves extremes. And looking at valuations on China in particular, over the past 20 years, you’ve seen both sides like 2007 got to be pretty expensive as everyone was clamoring for Chinese stocks. And then a few years ago, the opposite happened got to be really cheap.

Do you see some of these developments as an opportunity in some of these, like, Chinese tech stocks in China? Is it too early to tell? What’s the general thoughts on how this sort of plays out with China in general?

Marko: First of all, if you don’t have a mandate to invest in China as an investor, like, if you don’t have to invest in China, you can just elect not to invest in China. There’s a lot of headline risks for sure, geopolitical risks, there’s risks of the access to China being more and more difficult. There’s no need for you to invest in China, in other words. But I do think there’s geopolitical alpha to harvest.

Ultimately, the point of my book is that political risks that are in the headlines like bottom line is kind of overstated, you know, it’s already priced in. And so, yes, I do think that there can be geopolitical alpha harvested in China for really three reasons.

One, Chinese policymakers are making it easier for foreigners to invest in China, through onshore equity markets and onshore managers. Now, yeah, it could be all part of some Maoist ruse to steal all your money. But it’s interesting that they’re doing that in the middle of a geopolitical conflict with the U.S. I think that what Chinese policymakers are doing here is twofold. They’re preparing for a current account that will be a deficit where they’ll need foreign investments to balance out their balance payments.

And two, they’re preparing for some world 10, 20, 30, 40 years from now, where renminbi is a much greater part of the global reserve currency mix. And so yeah, they’re deepening their capital markets. They also want to do this so that the savers in China don’t use condos anymore for savings but have deep capital markets they’re sophisticated where foreigners participate. So that’s the first issue.

The second issue that I think is interesting is that the Chinese Communist Party is basically giving you sectoral asset allocation for free. It’s the only country in the world, where you’re being told like, hey, here’s the sectors we hate, don’t invest in them. Here’s the sectors that we’re going to support as a government and give it demand and supply and blah, blah, blah.

And then the third issue is that onshore managers have a very strong record of generating alpha in Chinese markets. And I think there are two reasons for this. One, they understand Chinese politics better than you and me, so they know how to navigate these issues. We have a great onshore manager network, Clocktower does, we talk to them a lot and they were ahead of the game with all of these things.

They were sending us reports about education sector that I thought was ridiculously micro, like, why would I ever mention to any clients that China is about to crack down on tutoring services. I didn’t understand the relevance because, you know, I’m sitting in Santa Monica, but they did. So they know how to navigate this.

And second, Meb, Chinese markets are much more retail-driven. So there’s still a huge component where mom-and -pop kind of investors are like gambling basically, in the market, allowing active managers to outperform. That would be the third reason that markets will outperform.

I also think that the geopolitical conflict between U.S. and China is here to stay, it’s the biggest risk out there. So again, you know, I don’t want anyone to plough all of their savings, all of their investments in Chinese markets, it is a serious risk, but it’s a bounded risk. And it’s bounded by the fact that world is multipolar, there’s no one country that’s in charge.

And you’re seeing this in the American inability to create a coalition of the willing against China, it’s very difficult for the U.S. to do this. And if the U.S. cannot harness the rest of the world to isolate and contain China, then the rest of the world is going to continue to trade and invest in China and vice versa. And that’s going to put American economy, American corporates, and investors at risk of missing out on trade with China or investment. Then the U.S. is just going to throw up its hands and say, fine, we’ll continue to do that while we still are enemies with China.

Now if this sounds crazy to the listeners, this is precisely what’s happened throughout human history. Only the Cold War had this neat bifurcation of two spheres of influence. Every other period of human history, enemies traded and invested in each other right up until they went to war. And that’s because you don’t want to leave anything on the table for your rivals, and specifically for your allies.

So what I mean by this is like if America said, okay, we’re not going to sell Boeings anymore to China, like what do you think France is going to do? What do you think France is going to do after the U.S. just screwed it out of $30, $50 billion submarine deal with Australia? France will be the first in line to be like, “Okay, cool. That’s a cool story, U.S., here’s some Airbus that China can buy.”

And that’s a dynamic that’s going to make it very difficult for the U.S.-China geopolitical tensions to produce a neat bifurcated, neat decoupling that a lot of, sort of, people using the Cold War as an analogy expect. I don’t think that’s going to happen.

So yes, you’re going to be able to invest in China. Yes, onshore managers are going to continue to generate alpha, but you know, you got to be aware of the risks. Don’t allocate a huge portion of your AUM to a risky part of the world.

Meb: What’s the big risk to the Communist Party? Is it that sort of populist revolving money? Is it something else? What keeps them up at night?

Marko: It’s the China dream, not delivering on the China dream is huge. So a lot of folks out there who think that China, U.S. are going to have a war in the next two to three years, they talk about Taiwan. The big risk to Chinese Communist Party is that they don’t deliver on Taiwan, patently false. Like, literally that is crazy. Why? Because well, China hasn’t had Taiwan in a very long time. And the Chinese Communist Party has done well. So no, but thanks for the effort.

The number one risk to the Chinese Communist Party is that they don’t deliver the China dream, everything else is subordinate to that. So when Xi Jinping makes a big speech in Taiwan, and we all report about it here, like oh, my God, it’s coming. Why don’t you read the 2001 Zhong Zhenming speech in Taiwan, which my dear friend Matt Kirkland, who writes geopolitical strategy, VC research schooled me to.

He was like, “Hi, did you read this? It’s like, more aggressive than what Xi Jinping just said.” It’s like, okay, cool so like, what? It really comes down to the China dream. It comes down to the idea that, you know, Chinese growth continues to raise all votes and that’s why China is focused on that issue over anything else. And in fact, I think that as China’s economy faces a lot of headwinds demographic, consumers are leveraged, by the way, Chinese consumer is if you adjust for income, more leverage than the American consumer in 2008.

So Chinese policymakers are suddenly facing all these headwinds, which are going to force them to attract more foreign capital and to become even more addicted to export-led growth than they were in the past. Which means that’s a very difficult situation in which to, like, invade other countries, because the ability for you to deliver the Chinese dream is then massively subverted if you are suddenly aggressive geopolitically.

And by the way, if they’re trying to replicate German and Japanese growth model, I mean, Germany and Japan are the most pacifist countries in the world. And no, not just because the U.S. dropped nuclear weapons in Japan. It’s also because, like, it’s difficult to invade people who buy your crap. It’s difficult to be aggressive geopolitically if you’re also manufacturing and export-heavy economy.

And I think that’s something that Chinese policymakers over the next several months and years, you’re going to have to realize, they are going to have to tone down their geopolitical aggression massively.

Now I know what a lot of your listeners spoon-fed the op-eds in the U.S. and all this stuff about like, China wants to dominate the world. They’re going to say, “No way, Marko, you’re either wrong or you’re a CCP-like spy.” Well, that’s cool, whatever, that’s fine, but that’s what I do, I make forecasts. This is a really critical forecast I’m telling you, Beijing is constrained by their economy and by their growth model, and they’re going to have to tone down their aggression over the next two to three years.

Meb: So does that mean Taiwan is not even on the dance card or is that something that is a possibility?

Marko: No, I don’t think it’s a really serious possibility. But look, Chinese military is going to continue conducting exercises because, you know, it plays good. It looks like they’re doing something about their epochal goal. Like, you know, the way that I have an epochal goal to have apps, but that’s my goal. I’m going to keep trying to get apps, but they’re not going to happen. So think about it that way. China’s constrained and is increasingly becoming more constrained.

The bottom line, Meb, is that the time to forecast China U.S. tensions was 10 years ago, like, that was the time. When everyone was obsessing about the Middle East, that’s when you should have been thinking about this if you’re an investor. Now, extrapolating the last two to three years linearly to the future just reveals an understanding of just how constrained China really is.

I think China…I don’t want to say it’s a paper tiger, it’s not. But China has some serious domestic problems with its economy that it’s going to be focused on resolving. And maybe in 10 years it resolves them and can start contemplating becoming a lot more aggressive, but they need a loan for the next 5 to 10 years.

Meb: Let’s start chatting on a few other topics love to pick your noodle on. Starting to see some commodity prices, I mean, as they do zig and zag. But it seems like a big geopolitical stressor from years ago when you started to see particularly grain prices ramp up. And here we are, wheat seems to be kind of making a move up. Other commodities seem to be making moves in all sorts of directions, now gas, gold in the opposite direction. What are you seeing in the commodity space and what sort of implications does that have, if any?

Marko: So first of all, you got to get the reflation trade right? Are we in a reflation trade still or not? We’ve had this interregnum, that’s what I like to call it, like a cyclical interregnum since March, where reflation trade has now worked for a number of reasons. Like economic surprises started surprising to the downside. You have delta variant, you have now agita about China, and political confusion in the U.S. Is there going to be more fiscal spending or not?

So these elements have conspired to take a lot of shine off of the reflation trade. So copper has come down. Iron collapsed obviously, oil prices have moved sideways. We’ll talk about salts in a second, but I think you got to have a view on this. Is this a reflation cycle or not? Now, I’m in the reflationist camp, you know, again, it starts since March but in June, we identified this interregnum. And so, you know, I’ve been playing growth stocks and taking the foot off of some of the cyclicals and value stocks.

I do think that by the end of this year, we’re done, the fiscal policy gets resolved, delta is behind us, economic surprises stop surprising to the downside, and China’s in the rear-view mirror and probably get stimulated because of their constraints politically, with the real estate market being … for the middle class. So I think by Q1 next year, reflation trade is back on, and then yes, I think commodity prices continue to be much higher.

There are two other components that I would mention. First, ESG sustainability thesis I think it’s the number one thesis for the next decade, I think it’s huge, but it’s bullish oil. And I think a lot of people are now coming around to this. I’m not the first to say this, many other people have said it, like Marko Kolanovic, Jeff Currie that pointed out that one of the things that happens when you have sustainability agenda is there’s not going to be enough CAPEX, it goes to fossil fuels. I’m an oil bull over the next few years.

The other issue that you mentioned that no one’s talking about is ag prices. And I’m glad you mentioned it, I wrote about that a couple of months ago. There was this echo food price spike up in 2008 to ‘9 that echo caused the Arab Spring, it was a catalyst to cause political risk in emerging market economies where food prices are a large component of like, the basket.

I think the same is going to happen this time around. And while everyone’s, like, obsessing about China U.S. going to war over Taiwan, or some nonsense like that, we’re missing the big picture. Which is that, you know, you’re going to have huge economies like India where a lot of people are going to really feel distress of this pandemic in this echo price group.

Now, why is there a price boom in ags? I mean, for the same reason it happened after 2008 and 2009, there’s an inventory, there’s a supply mismatch. But on top of that, you have this incredible problem with a pandemic, where you just can’t get the workers to the fields to harvest in a lot of different places. And that’s going to cause all sorts of dislocations that I think will be the biggest geopolitical risk over the next 12 months.

So I’m glad you asked that nobody asks this, by the way, and I think this is the biggest political risk. Where does it manifest itself? Is it Egypt, in North Africa, like last time? Is it India? Is it Brazil? I’m not sure. But I don’t think it’s going to be what people expect.

Meb: I just sold some wheat yesterday from our family farm. So it’s close to my heart as the trend follower in me is like waiting for it to break out. And I said, well, Meb, at this point, you should just be buying wheat futures or trading wheat futures instead of messing around with the actual crop and the harvest. But it look like the breakout of the price was close so by the time this comes out, who knows? We’ll see what’s going on.

It’s been a pretty weird handful of years, this past decade. And I feel like it continually surprises people what’s going on with interest rates. And obviously, those are tied to the hip with inflation and what’s going on in the world. Do you have any general thoughts on interest rates here as well as globally? Anything in particular, do you think people were not paying attention to when it comes to rates?

Marko: I mean, I think that rates are going to go higher. As I said, I’m in the reflation camp and I think a lot of these headwinds are going to get resolved by the end of the year. But I also think it’s interesting that we’ve had the 10-year kind of bottom in, I think August at 1.1. And we’ve still had a lot of headwinds in August and September, like delta wasn’t really resolved and may still not be resolved until this week or last week. We started seeing really good data on the delta.

So there’s that and then there’s China. So China’s apparently according to the op-ed pages of most newspapers going to have a real estate crisis. Well, hell, the tenure should have gone to 1, it’s not 0.9, 0.8, if that’s going to happen. Now, of course, the bond market could be wrong. But I think the resilience of the bond market where you’ve seen sort of the 10-year noodle around 1.3 for a couple of weeks here is telling you that we’re coming to the end of this interregnum. That’s what I called it earlier. This growth interregnum, this risky interregnum.

There’s a lot of short-term forces keeping the tenure down, whether it’s the drawdown of the TGA, whether it’s pension, fund rebalancing, earlier this year when the tenure came 1.7, whether it’s foreign buyers, so on and so on. Once we clear the debt ceiling crisis, which is the next big probably source of tension in the markets, as we say, you publish this two weeks from now. Maybe the S&P 500 would have already gone down some basis points because of the debt ceiling issue. I think Nancy Pelosi, as I said, she’s pulling the Republicans into a cul-de-sac, and she wants there to be a crisis.

But I think once all of this is in our rear-view mirror by end of October, November I think the tenure is going to start selling off and I think yields are going to start going higher. And I think that that’s a function of the secular story. And the secular story in this cycle, I think is meaningfully different from the last cycle.

Why? First and foremost, the U.S. consumer, the engine of global growth, for every other cycle other than the last one is not deleveraging anymore. You know, take a look at delinquency, so bankruptcies, at the end of the recession were the lowest level ever. Whereas in 2009, ’10, ’11, ’12, ’13, ’14, the American consumer had to deal with this overhang of the debt bench of the previous cycle.

House prices for 2010 to 2014, where did they go? Nowhere good. This time around everyone’s like sitting on 30% appreciation of the real estate. And 401(k)’s, I mean, most baby boomers, their 401(k) like recovered before they could find a password to sell it, you know what I mean? So you are in a completely different world from the last cycle on the U.S. consumer side.

Second CAPEX. Last cycle is what? The CAPEX last cycle, cool. What’s this cycle going to be? Every CEO right now is being told by their consultants that they need to move away from just-in-time inventory, to make their inventories more robust and their supply chains more robust. U.S. government is telling you to do that for national security reasons, if you’re one of the firm’s that does something that’s now seen as critical.

On top of that, you have the ESG sustainability agenda. There’s a lot of reasons to spend a lot of money on CAPEX, aside from the fact that inventories are like century lows of kind of more mundane reasons. The energy transformation we’re about to engage in, wars where we tried in the ’70s to move away from Middle East energy supply. Dwarfs it. I’ve seen estimates that we need $130 trillion worth of investment to meet the goals by 2050. I mean, it tells me we’re going to miss the goals. But you know, we’re probably going to spend something like half of that. It’s huge amount of money that’s going to be spent on re-electrifying the entire plant for the purposes of fighting climate change. So I think that the CAPEX last cycle of last cycle will be diametrically different this time around.

And you have now the Senate proposal to tax share buybacks, which I’m sure 10 years from now everyone’s going to say, oh, that’s why companies switched to CAPEX. No, they don’t have to tax share buybacks for CEOs to start investing more, you have the U.S. consumer back and you have all these other issues coming up. So that’s the second way to de-cycle, I think is meaningfully different.

And then the third reason is that we have unorthodoxy that reign supreme in policy, fiscal, and I think monetary as well. So I think that this cycle will ultimately be significantly different. And we’ll see much higher commodity prices, much higher inflation, well, maybe not much higher reflation. Maybe we don’t have to say much higher, we don’t have to be in a hyperinflation, the inflationist camp. All I need to be right is an inflation surprise of the upside like 0.3%.

Meb: Do you think that drags…I mean, if you look at a lot of developed markets, particularly in Europe, does that drag interest rates up? I mean, some of these places are still negative in Europe and elsewhere. Do you think it has that effect there too or are they in a whole another tar pit of stuck at zero interest rates?

Marko: My conviction on that is not very high. I do think that the outcomes in the U.S. will be meaningfully different from the rest of the world. So I think that inflation will surprise to the upside the most in the U.S. economy. Why? Because we are the most unorthodox out of everyone. Like if you look at fiscal spending as percent of GDP, it’s like U.S. is winning. You will publish this after the Fed will come out and maybe it’ll be a hawkish surprise or whatever, another one like June F1C, whatever, I don’t really care because I would argue they’re already behind the curve. The Fed is already behind the curve.

We’re talking about tapering, they should basically based on where inflation is and how fast unemployment rate has collapsed, they should be talking about raising rates according to the previous paradigms. So to answer your question, I do think the U.S. will outperform the rest of the world in inflationary outcomes, which means the currency should underperform, which should further fuel the reflationary cycle.

The way that you falsify this thesis is just the dollar doesn’t care, DXY rises above 95. Hey, listen, I’ll put your inflation thesis to bed and I’ll join the deflationist camp if that happens. But with the twin deficits going higher, and with inflation surprising to the upside in U.S., I just don’t see how that happens.

Meb: Yeah, as we go around the world and chat about asset classes, what as you look out to the horizon 2021, 2022, what else are you thinking about? You now have blank slate open opportunity to talk about…you guys put out a really awesome chartbook. Listeners, if you email the Clocktower Group, and Marko may be pretty pleased to share with you, it’s up to them. But I love it. What’s on your brain that we didn’t cover today or that people aren’t talking about?

Marko: Okay, so by the end of the year, if my view is correct, then we resolve these uncertainties that have been weighing on the reflation trade. I think there’ll be a really interesting entry opportunity for emerging markets. So Q1 next year, maybe starting building positions over the next couple of weeks as the China issue potentially causes more agita and more sell-offs. So anything that has to do with commodities, I think it’s really interesting.

Latin America, I think is going to have a great decade because of the commodity bull market. It doesn’t really matter who they elect, Brazil is going to have 12 months of political risk. I’m a buyer on any politically induced dip. Like every time the Bolsonaro comes out and says he’s going to have a coup, buy the asset then because there’s not going to be a coup. Luiz is going to walk in, if he wins, and you know, he’s going to be like, whatever, a soft socialist. He’s going to get Congress behind him. It’ll be like 2004 onwards, nobody will be singing kumbaya.

It doesn’t really matter, like Karl Marx can rise from the grave and become the president of Brazil. And if I’m right on the macro view of commodity bull markets, dollar bear market, who cares who’s in charge of these economies. That’s one.

The second one that I think is interesting is I think that in the near term, I do think that bottom fishing in some of the ADRs, Chinese ADRs, is interesting. Some of these companies have really gotten nuked. And if China continues to press down on their throats, that’s not a smart move for China. For example, Tencent aside from Facebook is probably the furthest along in ushering in the metaverse, which I think is a big, big theme for the next decade. This sort of virtual experience that becomes so good that you and I want to meet for coffee in like Paraguay virtual.

I do think this is a big investment thesis. And I think that countries will likely encourage companies to start building this virtual experience. And so yeah, you probably don’t want to shoot your TMT sector in the leg because you will fall behind on this effort. So I do think that some of the sell-off in the ADR space, in the TMT space of China is probably overdone. Is this an investment-like thesis? Is this a long-term investment thesis or is it a more short-term plan? I think it’s more of a short-term play but there it is.

The other one that I think is interesting is European defense stocks, they’ve gotten absolutely killed. And this Australia, US, UK deal Aukus, whatever name it is, it sounds like some animal that looks like a platypus. But the Aukus diplomatic deal that saw France lose a very lucrative deal for some reason with Australia, I think is interesting.

In terms of headline, it seems like France is going to suffer because of this, right, obviously. Australia is going to buy submarines from the U.S. However, I think that what is going to do is it’s going to cause a geopolitical realignment, which is already happening anyways. Where Europe is going to start acting a lot more independently and start building its own strategic interests. This has been long time coming. It’s been happening since 2011. It’s why the euro area didn’t collapse, by the way. And I think that this is very, very favorable for European defense companies because they’re going to start being very protectionist for their own military marketplace.

Meb: Oh, good. I like the emerging market part, we’ve been talking a lot about that. I’d be curious to see, you know, I’m a quant and so our algorithms go where they may. But we’ve been under-allocated to China and in some cases, zero allocated. I’m curious to see how much this drubbing starts to move the names into the value camp, if it happens this quarter, or next quarter, or not at all, it’ll be fun to watch. Because to date, it hasn’t moved the needle much but we’ll see, I’m saying more opportunity elsewhere.

We’re about to start to wind down here, man. As you look back over your career…and you can take it either way. We usually ask what’s been your most memorable investment, good, bad, and between. But given your participation in the geopolitical world, what’s been your most memorable experience? You can answer either question on the political side.

Marko: I think the investment…just as a joke, I think Canadian real estate has been awesome investment. But no, I would say that the most memorable investment has been really the one that built my career, which is to just bet against the euro area breakup risk premium whenever it crept into the markets. Which obviously is no longer relevant, but you know, you asked the most memorable one over the course of my career.

It’s probably the one that built the career, which is that, again, in 2011, ’12, ’13, nobody really wanted to talk about anything else. And it’s not just American investors, you know, a lot of folks that talk to Europe are now saying, “Oh, well, it was just the Americans who got it wrong.” No, I came to France and Italy, and definitely UK, and Germany, and hey, listen, they were extremely pessimistic themselves. So this was a global issue.

And I assigned 0.5% probability to the breakup of the euro area in 2011 at the height, and that was a very lucrative investment advice recommendation and it worked really well. And it really tells you, Meb, we need as investors to cleanse ourselves of our biases, approach politics and geopolitics with aloof indifference. And the moment that ideology or passion creeps into it, I start to salivate because I’m about to take investors, I’m going to take some investors to the woodshed.

What I mean by this is when I started hearing people foaming at the mouth with China’s “evil,” it’s like look, first of all, you’re not actually a professional in making that call. And second of all, you have fiduciary duty to buy or sell assets. So when your judgment starts being clouded by ideology or norms, like, someone’s going to take your money.

Meb: We often say it’s important to be asset class agnostic, people get caught up emotionally to their favorite asset class, whether it’s stocks or gold or whatnot. But I think it applies exactly, like getting emotionally attached to a thesis or a political ideology lets the emotions creep in and as we all know that’s trouble.

Marko: Yeah, no, the conclusion of my book, really, if you’re going to take anything from “Geopolitical Alpha,” it would be when I say that you need to bathe yourself in aloof indifference.

Meb: It’s a good takeaway. Marko, this has been a blast, we’ll have to have you back on in a few months to chat what’s going on in the world, I’m sure it’ll be a long list of different issues. Can people find your writings if they want to keep up? Obviously, the book checkout, listeners, “Geopolitical Alpha” on Amazon, but can they follow along with you, Twitter, website, where else, what’s the best places?

Marko: You know, shoot me an email if you want to see a sample of my work. But other than that, we don’t really share any of our research other than to our investors, LPs, and clients.

Meb: All right, well, send him 10 million bucks, guys, and then you’ll get his research. Marko, it’s been a blast, thanks so much for joining us today.

Marko: Meb, thank you for the opportunity, thanks a lot. Great hanging with you.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at feedback@themebfabershow.com, we love to read the reviews. Please review us on iTunes and subscribe the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.