00:00When you take stock of the cross asset action right now, I'm curious if you see any markets of any
00:05area of the markets that are overpriced or any of the markets that are maybe discounting this risk.
00:13Well, Katie, great to be here. I think that when you look at when you look at the cross asset
00:17pricing, you know, the markets are flat oils, oils up substantially.
00:21And especially, you know, dated Brent over there in in the Middle East, Asia and Europe, as well as LNG
00:29cargoes in Asia and Europe.
00:31And I think that for us to achieve our objectives with Iran, meaning we're not leaving there without the 900
00:38plus pounds of highly enriched uranium that the Iranians said they were never making and basically not not not adhering
00:47to the number of ballistic missiles that they are supposed to have or are not supposed to have.
00:53I think we're not going to leave there without that uranium. We're not going to leave there without regime change
00:58and and maybe have a some sort of a of a democratic regime going forward.
01:02And I think that's going to take a few more weeks, Katie. So I don't think I don't think the
01:06energy markets are pricing in what's likely to happen in the next few weeks.
01:11Well, speaking of the energy markets, I want to talk a little bit about China, because you think about China's
01:15place in the world.
01:17They are Iran's biggest oil customer, also a key trade partner.
01:22And I'm curious, in your view, what the U.S. blockade of the Strait of Hormuz actually means for China
01:28and their markets.
01:29Yeah, it looks it's an interesting turnabout. Right.
01:33The the Iranians decided that closing the strait was the way to push the pain button in the U.S.
01:40as as I think we head into the midterms. And in the end, this turnabout has Iran's got 90 percent
01:48of their GDP leaving out of their ports and transiting the Strait of Hormuz.
01:53And so I think that that it's really important to understand what this causes within Iran.
02:00You know, they've got they've got imports that they're not going to receive daily and they have their entire economies
02:06and export based economy.
02:08And if they've they've only got about 12 or 13 days left before their oil storage facilities are full.
02:16And if their oil storage facilities fill, they have to shut in their wells.
02:20When you shut in old wells, a bunch of water rushes in and permanently damages your output.
02:27And so their output today are, you know, was around a billion, a million and a half barrels a day.
02:32This could this could permanently cause half a million barrels a day or more of damage to Iran's, call it,
02:40energy infrastructure, not to mention that it will strangle the IRGC's capital.
02:45You know, our Treasury, our Department of War worked together to seize some IRGC stable coins, U.S. dollar back
02:52stable coins.
02:53We're now squeezing the IRGC's.
02:56Let's just say we're cutting the blood flow off to the tumor.
02:59So this turnabout is something that Iran didn't bargain for.
03:03It probably wasn't on their bingo card.
03:05And it's a it's a brilliant move.
03:07So how then, Kyle, do you think that this these talks will progress?
03:10Because both nations seem to be firm when it comes to their stances.
03:14Yeah, I mean, it's hard.
03:16Look, it's hard to negotiate with a madman or more importantly, a group of madmen.
03:21And if you look back through our negotiations throughout time with the JCPOA and Iran's nuclear ambitions, you don't you
03:29don't put your centrifuges, you know, 300 meters down in the ground.
03:34If you're just spinning low enriched uranium, you know, they constantly told us they weren't making highly enriched uranium, that
03:41they weren't making a bomb, that they weren't doing this or that.
03:44And in the end, we now see that they lied to us the entire time.
03:48They haven't negotiated in good faith yet.
03:51And so, Isabel, I don't know.
03:53I don't know if anyone believes that Iran will ever negotiate in good faith.
03:57But what this does is this strangles the the the leadership, you know, there are 267,000 members of the
04:05of the IRGC and there's about 90 million people in Iran.
04:09So what we're trying to effectuate change in is that theocratic, repressive, oppressive leadership.
04:15We're trying to change that.
04:17And at the same time, we are not going to leave without that highly enriched uranium.
04:22That's only days away from being able to make 11 or 12 big nuclear bombs.
04:27And so we're we're doing the world a favor.
04:29This is going to happen.
04:31We're not leaving without it.
04:32And at the same time, we sure hope that we could take Iran back to the 1970s and have it
04:37prosper once again.
04:38So hope that's the hope for what what what transpires here.
04:42But, you know, war war is unpredictable, Isabella.
04:44Well, Kyle, let's talk a little bit about what this means for markets, what this means for portfolios, because you
04:50mentioned that, you know,
04:51this conflict, as it stands, looks like it could last for a couple more weeks.
04:55Maybe that isn't priced into oil markets.
04:57Then you take a look at the currency markets, for example.
05:00I see that the dollar has been weakening against the offshore yuan for just about a year here.
05:06I mean, how do you invest around this?
05:08How do you trade around this?
05:09I mean, look, what this teaches you is that, you know, the US has the the deepest, most effective capital
05:20markets in the world.
05:21We are certainly 60 percent plus of the market cap of the world.
05:26We're only 4 percent of the world's population and we're 25 percent of the GDP.
05:29You know, when you start investing in other countries, when you start thinking about places like the Middle East or
05:37China or let's just say other places that don't have all of the attributes of our country,
05:43I think you just you stick with dollar based investing.
05:46You stick with assets in the US.
05:49I know emerging market assets had a big run last year, but when we imposed the tariffs, maybe the last
05:56time we talked, Katie, was shortly after the tariff day.
06:01A lifetime ago.
06:03Last year. Yeah, it seems like a lifetime ago.
06:05And and, you know, look, the effective tariff rate around the world for the United States imposing tariffs on others
06:12was about 16 and a half percent.
06:13And the dollar had like a 10 percent move.
06:17That was a very accretive transaction to the US in the end.
06:20We were repricing global trade and those that had kind of taken advantage of us over a long period of
06:26time.
06:27So going forward, how how we expect this conflict to end?
06:31I mean, unfortunately, you don't want to hear how I what I think about this.
06:34I believe that I don't I don't believe there's an end to Iran and its illegitimate proxies fomenting terror around
06:42the world unless we can actually snuff out the leadership there.
06:46And I don't believe there's an end to the Russia-Ukraine war.
06:49I don't I don't believe we're going to sign another Munich agreement with someone like Putin.
06:53And so now we're staring down the barrel of China, potentially attacking Taiwan in the coming years.
06:58And so what I'm telling you is the world's going to have more conflict.
07:02The financial architecture of the world has never looked this bad while we've been alive.
07:08And so the financial architecture of the world doesn't stipulate that we can move back to kind of three percent
07:14global GDP growth and we can forget about all this conflict.
07:17What I believe is you're going to see more conflict.
07:19And I think you're going to see more concentration of assets in the US.
07:23And, Kyle, before we let you go, I do want to get your thoughts on something more domestic.
07:28And that's, of course, what's happening in Texas.
07:30That is your home state.
07:31That's where we're speaking to you from today.
07:33And it's interesting.
07:35It feels like the capital markets activity in Texas has picked up quite a bit.
07:39You think about the Dallas mayor, I believe, was at the New York Stock Exchange today.
07:43You also have the Texas Stock Exchange moving closer to launch.
07:47So when it comes to the activity that you're seeing there, is that something that you're interested in investing behind?
07:53Or how do you see this story and this momentum evolving?
07:56Sure. It's a great question.
07:58Look, Texas grows for four and a half percent GDP.
08:02It's got a two trillion dollar economy.
08:04We're the tigers and euphrates of growth in the Western world.
08:08And we are one of the fat if we were a sovereign, we'd be one of the fastest growing sovereigns
08:12in the world.
08:12When you look at Wall Street, and now we have Yall Street opening up here, you have many of the
08:18Wall Street firms are going to have more employees in Texas than they have in New York.
08:24That's something that, again, was unthinkable a decade ago.
08:27So we have enormous growth.
08:30The state's leaning in to accept that growth.
08:33Only 20 percent of the state's developed.
08:35And the only bottlenecks that I see in the state are power and water.
08:41Power can be handled and solved.
08:44Water is a much more difficult conversation to be having.
08:47And that conversation will be had over the coming years.
08:51So it's kind of Texas's growth to lose in the future, Katie.
08:56And I think the state's doing an amazing job right now.
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