Commodities expert Chris MacIntosh discusses the current state of the global economy, geopolitical risks, and commodity investments with Rebel Capitalist. He sees the world economy in a state of war, with collapsing empires relying on economic prowess and military might, and believes that war could be inflationary, leading to a debt reset or Jubilee. MacIntosh remains bullish on the commodity market despite the risks, as he predicts a consistent increase in commodity value due to supply-side crushing and demand consistency. He advises investors to consider long-term investment horizons and diversify portfolios, particularly with essential commodities like energy, which is crucial for political and energy security. The discussion also covers the impact of human capital on the asset leasing industry, the concentration of power in the banking system, and the value of the dollar compared to other currencies.
00:00:00 In this section, the conversation between Rebel Capitalist and commodity expert Chris MacIntosh focuses on the current state of the global economy, which MacIntosh characterizes as an „evident war.“ He explains that while it has been a financial war for some time, it is rapidly moving towards becoming a kinetic (military) war. The collapsing empire is left with two options- economic prowess and the military- as diplomatic channels have proven ineffective. As one can see from the freezing/stolen Russian assets, the message sent by the use of these tools has deep and lasting repercussions. MacIntosh believes that the Deep State, which has more leverage and power than people want to accept or understand, will profit immensely from war and suggests that people take a look at European defense stocks as an indicator of what is coming.
00:05:00 In this section, commodities expert Chris MacIntosh discusses the outperformance of European defense stocks compared to U.S. defense stocks, suggesting that European countries are stocking up in preparation for potential military conflict, such as an escalation of NATO crossing into Russia. He notes that there has been a distinct shift towards Asia, which is also deeply worrying, especially as countries like the U.S. would likely have to rely on proxy wars to fight China or defend Taiwan due to a lack of domestic support for sending troops into the field. The discussion also touches on the Heartland Theory, which has been at the heart of U.S. foreign policy for decades and explains the funding of military conflicts in the Middle East on both sides to ensure control of the Eurasian area.
00:10:00 In this section, the expert discusses the impact of the US withdrawal from Afghanistan on two specific countries – Saudi Arabia and Taiwan. He explains that these countries owe their existence to the US military, and the withdrawal has made them realize that the US may not be their most reliable partner. This has prompted Saudi Arabia to form a military deal with Russia, emphasizing the importance of economic and political alliances between nations. The expert also touches upon the nuances of trade flows and how they can be influenced by government policies, but ultimately, they can provide a probability of outcomes that can lead to alliances.
00:15:00 In this section, commodities expert Chris MacIntosh explains how strategic alliances and military deals are often driven by self-interest. Human behavior and psychology show that people will tend to do more of something that increases profitability and less of what decreases it. This applies to policy makers as well, who will consider how to improve trade and elevate their position. As an example, MacIntosh points to the main trading partner of Saudi Arabia, which is now China, as well as the trade flows increasing Taiwan’s dependency on China. This means that China can influence these countries through diplomatic and financial incentives rather than relying on violent measures. Zusätzlich, MacIntosh notes how the Chinese are aggressive in different ways, such as fueling the fentanyl epidemic to weaken the US and investing in carbon reduction initiatives to weaken the West’s economic priorities.
00:20:00 not going to be as easy as it has been in the past. The current geopolitical climate, particularly in the Middle East, is creating uncertainty for economic and military partnerships. The US is seen as an untrustworthy partner, and China is stepping in to fill the void and form alliances. Despite China’s desire for a more strategic approach, it may become increasingly difficult for them to stay on the sidelines when these alliances are threatened. All wars are inflationary, and with the highest levels of debt the world has ever seen, a debt reset or Jubilee is becoming more probable than inflating the debt away. The current uncertain geopolitical climate is a factor to consider when setting up a portfolio and long-term view.
00:25:00 In this section, commodities expert Chris MacIntosh predicts a progressive and consistent increase in the value of commodities. This is largely due to the global elites pushing to crush the supply side while demand stays consistent. MacIntosh argues that the cyclical nature of commodities and their capital-intensive structure make them predictable and an attractive investment opportunity. Jedoch, he notes that ESG and political risk pose significant challenges to commodity investment, hindering restocking and recaptializing efforts that would benefit commodity markets. Despite the risks, MacIntosh remains bullish on commodities and sees significant value in the market.
00:30:00 In this section, commodities expert Chris MacIntosh discusses the importance of considering interest rates and cyclical trends when investing in commodities. He explains that because many commodity projects have long payback times, it’s important to consider rates that could change over the course of 20-30 years. Jedoch, he sees many factors lining up that could make investing in capital-intensive industries quite profitable. MacIntosh also talks about how he considers multiple models and probabilities when making investment decisions and emphasizes the importance of taking a long-term perspective.
00:35:00 In this section, commodities expert Chris MacIntosh emphasizes the importance of considering the most probable outcome over at least a five-year timeframe when building an investment portfolio. With a sovereign debt crisis potentially morphing into a monetary crisis and a yield curve inversion signaling an upcoming demand destruction event, MacIntosh advises against investing in bonds or cash and suggests sticking with essential commodities critical to human civilization, particularly energy, which is crucial for both political and energy security. Jedoch, he notes that the current environment is not ideal for taking on risk in the energy sector due to lack of investment and legislative challenges, and encourages investors to shift to more favorable jurisdictions if they choose to take on such risks.
00:40:00 In this section, commodities expert Chris MacIntosh talks about the impact of human capital on the asset leasing industry, particularly in maintenance and engineering. In the aircraft industry, supply constraints plague companies as they struggle to find engineers to fix landing gears, especially since they used to come from Russia and Ukraine but are now unable to obtain visas. This results in large aircraft sitting on the ground for longer periods, which negatively affects cash flows. On the other hand, the increased demand for assets, such as aircraft, also poses challenges for the industry. MacIntosh recommends building a diversified portfolio and suggests looking into offshore drillers as an opportunity due to the industry’s decimation, which makes this group highly asymmetric. Außerdem, he notes that gold has been doing relatively well, but gold equities have not performed as well.
00:45:00 In this section, commodities expert Chris MacIntosh discusses the challenges that asset managers face, including the pressure to perform within a short timeframe to avoid redemptions. As an individual investor, one has the advantage of being more patient and taking a longer-term view when making investment decisions. MacIntosh recommends owning precious metals like gold, which central banks have been buying more of than ever before due to the current monetary and debt crisis. He explains that the US Fed’s decision to keep raising rates is not necessarily to fight inflation, but to attract capital into the US and create a differential in yields compared to other countries. This creates a „financial war“ between countries, but also within the US itself as banks vie for profitability and market share. Ultimately, with the Fed backstopping large US banks, depositors may shift their money towards these banks for risk management purposes, which could result in a significant concentration of wealth in the US banking system.
00:50:00 In this section, Chris MacIntosh discusses the concentration of power in the banking system, both domestically and internationally. He notes that increasing interest rates on the US dollar outside of the US could put pressure on entities that have dollar-denominated debt, increasing the probability of needing to open a swap line with the Fed. This would give the Fed leverage and control over other countries‘ monetary policies. MacIntosh cites the example of the EU’s lack of independence of monetary policy and control by Brussels. He emphasizes that volatility is not always risk and advises not to let volatility cause one to be whipped out of fundamentally sound positions, using the example of offshore drillers.
00:55:00 In this section, commodities expert Chris MacIntosh discusses the value of the dollar compared to other currencies and the possibility of the dollar losing Reserve State status. He explains that the narrative claiming the dollar will lose its status due to a shift by countries such as Russia and China trading oil in their own currencies is overblown, as the oil markets only make up about 2-5% of the global economy. The de-industrialization of Europe and movement of capital from the EU to the US is far more important in terms of global GDP. While the shift of capital back to the US could be inflationary for domestic prices, it would not be negative for the dollar. MacIntosh believes that the fragmentation and collapse of Europe is inevitable, and that the outcome of this situation could have a more significant impact on the dollar than oil markets.
Chris MacIntosh, a commodities expert, discusses various topics in a live video interview. He touches on the trend of seeking safety by Westerners as fragmentation is increasingly happening domestically in the US and Europe, causing large capital flows for sovereign wealth funds and big mutual fund managers to seek safety in the US dollar. Chris also mentions the impact of the decreasing M2 money supply on purchasing power and the asset set of the balance sheet, as well as the competition between banks for reserves which is leading to a lack of alternatives for citizens. He emphasizes the importance of long-term planning and having a portfolio built based on a 40,000-foot view of things as there are still various risks to consider, including geopolitical risk, the Malthusian cult risk, and the monetary crisis risk. Chris recommends building a diversified portfolio of deep value assets and playing around the edges to prepare for these potential risks.
01:00:00 In this section, the speaker discusses the idea of seeking safety as a Westerner in an environment where fragmentation and falling apart is happening domestically in the US and increasingly in Europe. He points out that large capital flows for Sovereign wealth funds and big mutual fund managers tend to seek safety in the US dollar. The speaker notes that entities outside the US are not concerned about the inflation rate since their liabilities are their local currency, which shifts the focus from the US dollar to currencies like the Turkish lira or the Colombian peso. The speaker tells a story about his tour to Turkey and how high rates of inflation prompted people there to protect their purchasing power by immediately turning their paychecks into dollars, Euros, or gold. The speaker also touches on the collapse of the US money supply and explains how it is related to the significant decrease in savings accounts.
01:05:00 In this section, Chris MacIntosh discusses the impact of the decreasing M2 money supply on purchasing power and the asset set of the balance sheet. He notes that while M2 may decrease due to QT or net seller banks, loan growth is a critical factor to consider as it determines whether the asset side is changing or only shifting purchasing power out of M2 and into reverse repo. With a massive delta between banks‘ deposit rates and money market funds, Chris suspects that expanding loans and leases could indicate the creation of new currency units. On the other hand, decreasing loans and leases could signal fragility in the banking system and triggers quantitative tightening or the need to increase interest rates to compete for deposits.
01:10:00 In this section, Chris MacIntosh, a commodities expert, talks about how commercial real estate players have noticed the impact of banks competing for reserves. Regional banks that offer low interest rates are being squeezed as commercial real estate players shift their finances to other banks that offer higher interest rates. This competition between banks is bad news for the economy since the consolidation of small regional banks to a few big banks has led to a lack of alternatives for the citizens. Moving forward into 2023, Chris emphasizes the importance of long-term planning and having a portfolio built based on a 40,000-foot view of things as there are still a sovereign debt crisis, rising interest rates, and supply constraints in different sectors.
01:15:00 In this section, commodities expert Chris MacIntosh talks about the importance of building a diversified portfolio of deep value assets and playing around the edges. He notes that geopolitical conflicts are almost always very bullish for commodities, especially energy, and a monetary crisis will be bullish for monetary metals. MacIntosh also mentions that geopolitical tensions are creating a shift of capital globally, and it is difficult to figure out on a geopolitical basis where the sectors are going to benefit. He concludes that the most important risks to consider in a portfolio are geopolitical risk, the malthusian cult risk, and the monetary crisis risk.
