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Welcome to Marin Talks Money, the podcast in which people who know the markets explain the markets and meren Sunset Web.

Today I'm joined by Dr Popper Malgram, founder and CEO of the Geopolitical Institute and former advisor to President George W.

Bush.

Also Helen Thomas, CEO of the macroeconomic consultancy Blonde Money and former Special advisor at the UK Treasury.

You will remember that we last spoke to these two seven months ago, very different moment.

That was the week when Donald Trump was elected.

So what's changed since then?

How are they feeling about President Trump today?

Over the last twelve days alone, we've seen tensions with Iran escalate, We've seen the ninety day poors on Tariff's inching towards its end, and possibly what feels like a complete we think of global supply chains.

So we've brought them back.

Tell us how they think he's doing and help us unpack everything that is going on and how you should react with your money.

Callen and Pepper.

Really good to have you on.

Thank you for coming again.

Thank you, Hello, good to be back.

Okay, there's so much to talk about Let's do it like this.

Let's give Trump a mark out of ten and take it from there.

How well he's doing.

Last time, Just to remind everybody, when we last talked, you two were both pretty optimistic about the Trump presidency.

You are optimistic about the way tariffs would work out, economy would work out, possibilities of peace in Ukraine at least, etc.

Now, based on what you thought then and what you think now, Pepper, what mark would you give President Trump today out of ten?

Okay, So I'm going to give you a number.

And to be clear, I'm basing this on having been an advisor to a president.

So what matters is how is his electoral base responding to what he's doing?

And I would say he's at a nine.

His base love what they are seeing.

They love the whole changing of the power structure around tariffs, the fact that it's succeeding in compelling other governments to negotiate with the United States, not just on trade, but a variety of different issues.

Now, one thing I do want to talk about is how optimistic you both were seven months ago about the President's plan to cut government expenditure.

Everything we've seen so far suggests that that simply hasn't happened.

No government expenditure is gone.

How do you two see that panning out?

So I think there's a difference between beginning the process and cutting it and getting it under control.

Getting it out of control is something that will take many decades.

But the commencement of the process has actually gone incredibly well, So I think massive progress is being made on that front.

In addition, you know, I've recently been in Alberta, for example, where you know, there's like this separatist move and they're talking about joining the United States being the fifty first state.

And you know, I've spent a lot of time in western Canada over the last eighteen months and in the middle of the US, and people love Trump.

It's very interesting to see how the media reports him, who are mainly based on the coastlines of the United States or out of the United States, and their perception is almost exactly opposite.

So we have an extraordinary split and understanding of what's going on.

If you look at his approval ratings across the board, they aren't going in the right direction.

More people disapprove of him now than did at the beginning of his time.

That said, if you look at the people who approve of him, the most recent pule I can find this is that from Rats and it suggests that nine out of ten of the people who voted for him still approve of everything he's doing, but still not quite a ten.

I do think he can gives any president out a ten.

Do you think he's disappointing his base anywhere?

No, They also are very happy with his decisiveness on the illegal immigration issue.

To be clear, you know, in America we have two very emotional, incendiary issues that we do not allow any nuance over.

One of them is abortion.

So you're either for it or or against it.

And to raise the point of at what point during the pregnancy are you for it or against it?

Is never covered.

It's just black or white.

It's the same with immigration.

And actually the issue is not all immigration.

Everybody's in favor of legal immigration.

It's the illegal immigration that's the issue.

And so again there's massive opposition in certain locations, and broadly most of the country is hugely in support of tightening up on illegal immigration.

Helen, what's your school?

My school is eight, and so I would use them met trick of is he doing what he said he would do and what he got a mandate for.

I should say at this point, by the way, because we all know that people get very emotional about politics, not just the topics that Pippa was talking about.

Look, my business is there to say what is going to happen?

What does it mean for investments?

Doesn't matter what I think, doesn't matter if I like or I don't like a person or how they do things.

It's just about what's going to happen.

We always say blonde money is a political but you know, in examples of what he has done, you know, the India Pakistan resolution, the Iran situation action was taken and there has clearly been some progress made there.

The DOGE stuff, I think what's important there is a cultural shift in the government spending agencies.

So it's asking the question why are we spending this?

Should government be spending this?

The numbers may still be being spent because it's a huge behemoth oil tanker to turn around, but a fundamental overton window, as they say, has been shifted about what a government should do, who should do it, and who should make that decision.

So actually I think he's doing what he said out to do.

What a mandate to do.

So head out of ten.

You know, Aden, this one thing on this Doge process that I think is really important because the objective was not to be able to come in and cut so much government spending that it would balance the books of the nation.

The issue was mapping, and that is what's happened.

And so I keep saying, basically, artificial intelligence was given a cabinetcy in this government and AI was ruled out by Elon, so it gets personified that it was him, but he's just the execution agent.

And what it did was, for the first time ever allowed us to see what is the money being spent on.

So honestly, I think the mapping was so valuable.

Okay, so that sounds good for politics, So good for the future of politics, should we say?

But Helen, and it also suggests that we shouldn't worry quite so much about a US debt crisis, possibly as we would have a year or so ago.

I mean, I know you didn't look convinced.

No, I think I just kind of shake my head a little bit, because what is it, twenty five years in the markets and everyone's constantly concerned about the US debt situation.

And well, I guess what's in the debt is the big elephant in the room, in the whole world after what happened with COVID, because everybody ragged up debt.

Everybody racked up debt.

So then it's a relative game.

And what's been quite interesting about the discussion, and particularly about the dollar, is about how maybe the US is in a worse position because of this huge pile of debt, but actually, to my mind, because there is a clear mandate and a clear plan.

Now, you might not agree with this plan, you may not think it works, you may not think it's going to deliver growth.

But if you think you can get growth from it, and you can change the culture and the dynamic of governance spending then and strength in America, strengthen it defensively, strengthen it economically.

Then actually, in many respects, on a relative basis, the US is a somewhat better position with that debt pile.

So what's that expression about.

You know, my death has been greatly over exaggerated, or my demise has been exaggerated.

I just feel like we're in that position about the dollar.

Having said that, I do understand why foreign investors may want to change their hedge ratios.

You know, may up their head ratios.

Fine, but I don't think it means, you know, exit from US assets forever.

I think that's been overstated.

Actually, I have to agree with you, Helen.

This is really a critical point.

If this was a company and it announced that it was going to radically reassess its balance sheet, strengthen the value of what it has, diminish its outbound cash flows, it was a company you'd buy, be buying the equity.

We're just not used to governments undergoing this kind of radical, you know, transform of its balance sheet and shifting of the cash flows in a more positive direction.

So it's a painful process.

It's awkward in many ways.

But I think that as the US does this, other voters in other parts of the world are going to start to demand that their government does it as well.

So I think everyone's making a lot of noise right now.

But you're going to buy a country that's willing to admit there are problems on its balance sheet and it's working to fix them quite decisively.

And I think this is going to roll out in other industrialized economies as well.

One of the old of that rolling out in the UK, Helen, it's just the most nonsent just thinking about that exactly.

By the way, I was thinking back to when I went in two thousand and eight and was working in government, from having worked in banking and coming from an accountancy family.

Gosh, we're really exciting in my family.

But I had the same thing where we started looking at the balance sheet in this that they have called the d L and the AME.

These are the government terms for spending, and I was saying, okay, so this is like a balance sheet, so where's the spending, and no one can tell you.

It's not like a real balance sheet.

It's not cash coming in and now it's not a cruel it's kind of a made up thing.

It's astonishing.

It's astonishing.

So that that is, you know, having heard Pipper talk about what's happening in the US, and I was, you know, geez, I was only twenty eight in two thousand and eight asking these questions.

You know, I think that that would be interesting and useful for other governments to learn from the US in terms of the policy mix.

But I wanted to ask pepperback a question because of course the US does have the reserve currency privilege, So maybe it is able to be revolutionary in this way.

Of course, here in the UK we've had our dabbling with trying to do well.

There's trust thought she had her pro growth policies, she did not have a mandate to do it, having not won an election.

And now we have a government that is well sort of struggling under the way to its own contradictions because it didn't really get a mandate to be the things it's trying to do.

We're talking about welfare rebellion right now in the UK, and that is just to try and say five billion pounds, you know, on an economy that you know, spending one hundred billion a year on interest debt.

So is it possible, pepper to translate it to other countries that don't have the reserve currency.

Yeah, it does require a political mandate to do it, and the president did have that because even Democrat voters wanted to have a better grip on the true state of public finances.

Also, we have a different political structure in the United States than many nations, so in a parliamentary system, getting the consensus is I think harder.

I would add into what the president has done in terms of the ballot sheet is quite revolutionary.

Can we talk about the tariffs for a second.

We can definitely talk about test humor about to come on to them anyway, say if you want to kick us off, brilliant.

Okay, And again I would just want to be clear for listeners.

You know, I literally wrote my PhD on trade policy.

I've been what they would call a free trader my whole life.

I'm not coming at this from a protectionist angle, But what have the tariffs actually accomplished and what's the structure.

So first of all is to say before nineteen fourteen, all of the revenue into the US Treasury came from terrafs.

It only changed when we created the Federal Reserve an income tax, So before that there was no income tax.

So the President saying we could go back and have a little bit more of our revenue generated by terriffs, and then he can go to the tax payer and say I'm going to lower your tax rate because we've got income And that's why we've gone from having only an internal revenue service to now we have this new thing called the external revenue service.

So I just want to be clear that's the thought process behind it.

He's not saying all of our revenue should come from tariffs, but a little bit more than in the past, and that makes sense given that background.

Second, it's often portrayed as this attack on China in particular, but what's actually happened is it's really an attack on corporations.

So the message to the big American corporates is the way you were doing it before is you moved all the jobs to China, but then you paid the Chinese workers nothing.

You rip them off, then you charged American consumers of fortune, and then you kept all your profits offshore and didn't pay any tax on any of it.

None of that is going to be acceptable any longer.

I'm finding workers all over the world really like Trump because he's re empowering the working class even outside the country.

And so the big corporations as well are now under the gun because they're like their margins are getting crushed by this, and they're being told, hey, why aren't you paying any taxes in the US.

And that's huge new pressure on them to stop keeping all their revenue overseas, all their profits overseas.

So I think that's a different way of thinking about it.

Okay, So in that sense, you would say that the tariff negotiations have been a success already, regardless of how they end, as this ninety day period comes to attend.

Indeed, and not only that, but these are part of a broader negotiation that has to do with getting the superpowers aligned in such a way so they're not at each other's throats.

And so the message to the Chinese leadership has been we can also find a way to have more Chinese companies come manufacture in the United States.

And people are like, well, that will never happen, But it's already happened.

And the best example is Higher, which is a white goods company make refrigerators.

They started manufacturing the US in the late nineties, and they became so successful that they acquired the White Goods Home Electronics division of GE.

They've been running it ever since.

Now, by the way, that implies, they have to cut a deal on the use of private companies as spying mechanisms for the intelligence world, because that's where the fight really is.

Right, Why did the US block Huawi.

It's not because they had more competitive product.

It's because they viewed it as an intelligence gathering division of the Chinese government and why has China blocked Google and Meta in China because they view it as a spying arm of the government, So they have to cut a separate deal on what's acceptable practice when it comes to intelligence gathering.

But let companies compete on purely commercial terms.

And I do think that the Chinese have all said, yeah, actually this does make sense even for us.

So yeah, there's progress here, even though it's never reported this way.

And Helen, where are you on the tariffs at the moment?

Ah?

I mean, I think we are getting towards it settling where it was going to always settle, which was this idea of there being like a kind of baseline ten percent.

But what is I think relevant and potentially there about the tariffs.

I mean, if you go back to the Liberation Day announcement and you look at the actual White House statement of what they're about, the important thing is it says, you know, reciprocal tariffs for economic and national security.

It is not a purely just an economic point here.

This is all tied up with defense being part of the American umbrella.

It is a you know, economic war in terms of rebalancing the powers.

As Pippa has said there and I think that sometimes gets really lost amongst financial people, and I sometimes find as well, I wonder, by the way this may be, it's maybe I don't want to be agist, but I'll happily tell you I'm forty five, okay, But I think for those of us who have seen a lot of peace in our lives, kind of my generation, it is quite hard to think about this idea that there could be this war going on between powers that want to undermine one another.

Whereas if you're above that age.

Of course, at Trump's age, he has lived to a lot of international conflict.

And when you go I always go back with Trump to the nineteen eighty seven advert that he took out in the newspapers where he says, there's nothing wrong with America's foreign policy, a little backbone can't cure, And if you read it, it's literally everything he's just done.

Now.

He says, end our deficits, reduce our taxes, and let's not pay for the defense of nations that can defend themselves.

And it's it's just when people say he's uncertain or it's unstable, they don't get it.

It's been the same for forty years.

So what's key about any big policy change like this is that it gets done and unimpeded, right, So that is where I think.

Again, if we go back to my score for Trump, you may not think it's a plan that works, but the plan is being executed.

So that's why, again I think on the tariff side, I just feel quite relaxed about it.

It's interesting to hear that you'll that relaxed on tariffs, because clearly not everybody is.

We've seen an awful lot of market reaction or market volatility every time there's been an announcement around tariff's.

A lot of that was to do with sorry to be boring gamma in the s and P.

Five hundred, which relates to options positions.

I don't necessarily want us to bore people with it.

Merrin, and a lot of people who listen will understand what this is.

Basically, people did not buy insurance on stock markets going down because they've only ever gone up.

So when they fell, they really fell, and then when they rallied, they really rallied.

But it was a market structure thing is far more than any kind of macro fundamental point.

So, Papa, when you look at tariff's I know you're not really just thinking about tre You're thinking about the entire environment of shifting geopolitics.

You're thinking about war, and you're thinking about all these changes that everybody else is noticing.

Right.

I've been describing it as we're in a hot war in cold places, and that means we're in conflict in places you can't see that are very cold.

That space that's the high North and the Arctic, that is the high seas above and below the high Seas.

So as an example, even this last few days, I just put up a little piece on LinkedIn saying a Chinese satellite zapped one of the Starlink satellites and stopped it from being able to function with only two watts of power, which is like less than a candle.

And they did it from sixty five thousand kilometers away.

And China's been talking for quite a while about weaponizing their Mega constellation because to ap starlinks.

Why.

Because Starlink is providing the support that makes it possible for Ukraine to conduct its war with Russia.

Without Starlink, Ukraine would be up the Creek.

They cannot do either offensive or defensive operations without it.

So in that sense, Ukraine is our first true space war, and so China obviously is in a different position there.

So they're saying, right, if you're going to weaponize your mega constellation of satellites, we can weaponize ours too.

Right.

They're not commencing it, they're doing it in response.

But the point is we do have conflicts going on between the superpowers, and they do need to be resolved otherwise we will be at risk of something much greater and much more awful than anything that even I in my lifetime have seen.

You said, Pepa, last time we talked to you, said that you didn't expect to see much more in the way of ground wars, that all wars would be less hot, that they'd be warm, they'd be in space, they'd be tight.

Technology was as opposed to ground wuels.

But Ukraine is a ground wuld that's really grinding on.

As you say, it's driven by technology, but it's still a ground woul.

Well, if we look at what just happened in Iran, it's very fascinating.

I wrote a piece on this on LinkedIn, and what was fascinated with People were horrified to realize the level of surveillance that currently exists and they weren't so horrified about the situation with Ron.

They were more terrified that The fact is, you can place a warhead on someone's forehead in their bed at three am and not damage any of the neighboring apartments, right Like, this is a level of precision in warfare that we have not seen before.

And what makes that possible?

The answer is space based assets, satellites, GPS, et cetera.

And so suddenly the realization that you can be tracked from space based on facial recognition off of a satellite, based on your walking gate how you walk is actually a massive individual identifier.

And frankly, your heartbeat can be detected, and your heartbeat is a highly unique signature, so you don't even need to be carrying around electronics anymore.

So if you're someone considered a bad guy by the United States, they know exactly where you are and exactly how to take you out at three am in your own bed.

So have we just seen a war?

Yes we have, and I called it the hot minute war?

And why is it only a hot minute?

I mean, it's okay, it's twelve days, but really it's a hot minute because the moment you realize that this is the level of precision in weapons systems.

You can't keep fighting that war, You'll stop.

And that is exactly what all the parties did.

Now, did they set off a bunch of missiles and bombs?

Yes.

I thought it was fascinating that Trump said yet again, the Iranians called us up to say, we're going to let some missiles off at this time, So get your guys out of the way.

We don't want to actually hurt anybody, but we have to from a domestic point of view, show that we're able to respond.

And so there's a kind of theatrical element to traditional weapons systems.

And I do think that, you know, Ukraine, it's very interesting that it is this sort of meat grinder that carries on when we have such sophisticated capabilities.

So why don't we just shut it down?

And the answer is, maybe it serves a purpose.

And the fact is a lot of people do make a lot of money selling traditional, old fashioned military equipment.

And what is Trump doing to that crowd.

He's trying to cut off.

All their cash flows.

So do they need some wars?

There's an argument to be made they do.

Okay, So there's an overload to worry about him.

But from our conversation so far, I'm gathering that neither of you are particularly concerned about US debt.

If we look at the US stock market, we see that don't really appear to be particularly worried about anything.

Helen, what are you worried about?

I would come back to the debt now.

I'm not worried about the US being a complete mess of it all falling completely apart.

But but it is still going to be a locust.

It could maybe be a domino that starts a process that it has much bigger impact elsewhere.

Precisely because there is going to be a lot of debt to be issued.

Prior administration under Yellen had you know, shortened some of that in terms of the issuance, So you know, that kind of raises its own issues.

And I just think death is this is this huge elephant in the room.

I mean, I keep watching now, I do a bi weekly of you know what data should we watch?

Well, I put bond auctions in there now.

It's particularly obviously Japan had been one that people were looking at.

I am very concerned about the UK because that is under this government is fast becoming a kind of a doom loop where the government has now got a political constraint on top of a fiscal constraint and will not be able to get out of.

Either, and we'll not be able to get the growth.

So that's a one element I think that is could cause the destabilization I've been looking for towards the end of the year and then when it comes to stock markets.

One thing that will be super interesting is could we go from a Mag seven of tech to a Mag seven of defense?

And with that, simply it would maybe be a very sensible rotation.

You just heard there from Pipper about what's happening in Germany and in some of these companies that are going to get a huge influx of cash and people are adapting technology into defense technology.

But just by pure.

Nature flows that might sort of slightly upend the world of one trade everyone into the Max seven.

So that's what's on my radar.

Yeah, actually I want to talk to that.

I think you're you're so insightful.

How about this shift into the defense space.

I've had a kind of a different approach, which has been probably five years ago.

I started saying defense spending was the new quantitative easing because you could throw money into defense in huge amounts and nobody would ask any questions, right, So so it was a way for them to keep doing stimulus without anybody giving pushback.

And so we developed these extraordinary weapons systems.

But what current events are showing us is that they are not as needed as they were in the past.

So, for example, again we come back to today's geopolitical events.

Did you notice that the administration swore in the chief technology officers of Palanteer and Meta and several of the biggest tech companies as lieutenant colonels in the US Army.

Why why are they deputizing them?

Because that whole thing was run by those by those kinds of companies.

This was not a traditional defense establishment warfare.

This is a shift and Palentteer is fundamentally disintermediating the traditional defense companies.

So I would say this is not the time to be putting money into traditional defense companies.

They are all getting cut off by the presidents shutting down of many activities in Washington that promoted their interests, and now they're being disintermediated as well, which is why many of them are going to the Europeans and saying we'll make tanks for you.

We'll create a European German company that makes tanks because they don't have cash flow coming from anywhere else.

But again, do we actually need tanks for modern warfare?

Maybe not?

Okay, Pepa, this is super interesting.

I'm one of the big conversations out there at the moment.

What exactly do we mean when we talk about defense.

NATO is talking about taking defense spending up to five percent of GDP, But we're not really talking about tanks there are We were talking about power grids.

We're talking about dealing with that of cybersecurity and that kind of thing.

So the money flowing into defense isn't necessarily going to flow into what we have traditionally thought of as defense.

So again when we talk about what is defense, defense is now much wider than our old fashioned thought about what is that what constitutes defense?

And now it's you know, power power grids, It's about safety of data, and it's also data processing because who can process the data fastest also wins.

So there's a massive race for computational power and for new chips.

Then you see particularly the US and China competing for who's making the greatest advances in ships.

Willow is, of course, are most sophisticated now.

And just to give you an idea, Willow, the Google chip called Willow, can solve a problem that Google estimated would have taken the entire history of our known universe, and it can now solve it in five minutes.

So the speed at which computational power is increasing is extraordinary, and that translates directly into lethality of weapons systems.

I was recently in Europe with a lot of the very senior political leadership from countries like Germany, Switzerland.

They actually speak of this as military Keynesianism.

I'm like military Knesianism.

You guys think that making tanks is going to create jobs, and they're like, yeah, it will, it'll create jobs, and I'm like, guys, one thing we learned with the Peace divid end is that when you spend money on destructive capability, you slow your economy.

If you want to create jobs, build things that are constructive, not destructive, and divert If you want defense, it's not going to come from tanks.

Okay, we've done a lot.

Yeah, we've talked about dose, We've talked about debt, we've talked about tariff.

We've talked about hot waves, we've talked about cold wars, and of course we've talked about defense spending and the sector results.

So let's get back to traditional territory here for Marin talks money at least and ask you guys the oldie but gooddy bitcoin or gold pepper.

Oh well, I'm at the bitcoin conference that the Bitcoin Policy Institute is holding here in Washington, DC.

So look, governments everywhere are going to be adopting bitcoin as a new strategic reserve.

So there's no question that it is going to go up in value.

And I do think it is a hedge against inflation.

It's a hedge against the inclinations of central banks to inflate.

It's a way of handcuffing them.

Helen gold the bitcoin.

Wine, Bitcoin, new technology, safe haven, government debt.

There you go, right, One last question for you two.

What are you reading at the moment?

Oh gosh, do I have the attentions pun to read?

I'm actually reading a book about Swinson's book on the endowment at Yale.

They talk about long term common interests.

That's a five hundred year time horizon.

That's fun.

I am okay, brilliant.

What are you reading, Peppa?

I know you read it andlessly I do.

You know what I've been reading is I know this sounds so crazy, but the history of Venice and the reason is because of their debt problem.

Is they were arbitraging between gold and silver and they got into financial strife.

And I've realized they're tremendous parallels to where we are today.

So I'm reading a lot about the history of Venetian monetary policy.

Fantastic.

I thought she was going to talk about Jeff Bezos.

Actually so did I.

I thought we were going history of history of weddings in Venice, but.

No, you know, interesting that they're there.

Absolutely okay, brilliant.

Thank you so much, both of you.

Absolutely fantastic.

Thanks for listening to this week's Marin Talks Money.

If you like us, share, rate, review, and subscribe wherever you listen to podcasts, and keep sending your questions or comments to Merror Money at Bloomberg dot net.

You can also follow me in John on Twitter or x I'm at marinas w and John is John Underscore Steppech.

This episode was hosted by me Maren Zumsett Web.

It was produced by Someasadi, Moses and Atala Amadi.

Sound designed by Black Maples and special thanks of course to doctor Bipa Malgram and to Helen Thomas