Welcome to another edition of the Chicks on the Right podcast, where we feature
our friend and sponsor of the show, Zach Abraham, who's the chief investment
officer at Bulwark Capital Management. And we are always really, really grateful to
get your insight, Zach on all things money and economy related. And last
time we talked to you, man, it was a whole different world than
it is right now. Now it's looking like World War three maybe upon us.
There's all this conflict that's been reignited in the Middle East, and so
I feel like we should just revisit some of the things that we talked about
a couple of weeks ago, maybe mortgage interest rates, what might happen to
them as a result of this, What people should think about and know about,
and what they're asking you about when you get calls from people right now
who are like, what do I do? What do I do? What
do I do? Yeah? No, great question. So, first of
all, on the international conflict side of it, man, I mean talk
about a complex issue, right And I don't you know, I always think
it's important when we're talking about these things to really separate the moral aspects of
it from the from the investing aspects of it. So what I would say
right now is on the financial side of things, as long as the conflict
remains between Hamas or you know, Palestine, the larger Palestine and Israel,
I really don't see too much of an impact. I it was. It
kind of concerned us a little bit last week when some of these murmuring started,
or over the weekend when the murmuring started, like, oh, this
is going to make the price of oil go way up. When you look
at Palestine in Israel, there's virtually no oil production, So if there at
war really has little impact. Now where it gets different is if this conflict
draws in Iran or anybody else that's an oil producer. One of the main
ways to swing a big axe in that part of the world is to basically
barricade the Straits of Hormus, where the vast majority of the oil flows out
of the Middle East. If if if another player that was a significant oil
producer, a significant oil exporter, which you know so many of those countries
are, if they were to get involved, you would probably see a very
significant rise in the price of oil, which would obviously impact inflation. You'd
probably see a dollar surge, which would be extraordinarily negative for stock markets.
And so at this point, right now, you're gonna hear a lot of
craziness and a lot of all the sky is falling as it relates to finances
at this point right now, I don't really see anything that's going to change,
that's going to change the calculus. Like I said, if people,
you know, if other players get involved, it's a different ballgame on the
on the more social side, if you if you wouldn't mind me addressing that
for a second, it is really appalling to me and extraordinarily scary. The
amount of nonsense you hear, the and the naked anti Semitism coming out of
especially the left. It just it's mind blowing to me. And the moral
equivalencies between the two. And there is a massive difference, right and the
difference is, you know, I don't want to oversimplify it, but to
me, it's this simple. If Palestine, if Palestinians laid down their arms,
the conflict would be over. If Israeli's laid down their arms, they'd
be annihilated, right right, right, right, there's the moral discussion.
I hear people say, you know, equating it to Ukraine and all.
And I'm sitting there going who whah whoa. Okay, Russia and Ukraine,
that's like a family fight, right, they speak the same language, they
have the same culture, they were a part of the same country thirty five
years ago. Okay, this is effectively a civil war. What you see
happening in Israel is aspirational genocide, right it is. It's not surprising hearing
this coming out of the left, because the extreme left, especially because I
think, as we all know, there has been an underbelly of anti Semitism
that nobody would discuss on the left for quite sometime. Absolutely really showing its
ugly face. But it's also appalling at the same time, so I you
know, you guys probably editorialize on that enough, so I don't want to
go overboard. But it's just shocking, it's scary, it's sad, it's
yeah, what a mess. What do you say to people who immediately say,
but what about all of the innocent Palestinians? What is your response.
I'd be curious to know how you respond to those people, because there's a
lot of them. Who are you know, they're doing the pro free Palestine
protests and rallies and all of that stuff. Well, so I, first
of all, I talk about it two different ways. When I say free
Palestine, free them from what? And they go, well, a prison
they've been locked into? And I go, are you referring to the hundreds
of thousands of Palestinians that live and thrive inside of the borders of Israel?
Are those the ones we're talking about? And why is it that they're both
from that region? But Palestine has ownership of the land, right, It's
it's not like the Jews showed up on the Mayflower in sixteen hundred and fifty
and took over the land. Right They've been fighting over this plot of land
for three thousand years. So how we sit there and treat them like this
indigenous people that are being you know, murdered. So it's tragedy on both
sides, and it's horrific and one of the most tragic parts about it is
it's a blood feud essentially, right, Like, so a lot of these
people on both sides, especially on the Palestinian side, they're willing to go
kill and murder because people that they know, friends, family, have been
murdered. Right. It's it's horrifically on fortunate and it's awful and and and
I'm not saying I don't feel sympathy for them, but I would sit there
and ask these same people, what are you supposed to do? If you're
what are you supposed to do? They go give them the land back again?
Why do they have more claim to it than Israel? I just it
it to me, it's just a mess. And uh, I think it's
been going on for thousands of years, and at some point, especially the
academics and the elite left in this country decided that whoever is stronger is is
at fault in any given conflict. Even if that's us, right, that's
such a great way to put it. Yeah, it's it's just ridiculous.
And like I said, I just think it's really simple, right if you
look at the platforms of both the tragedy is absolutely on both sides, and
both of those people got you know, both sets of people. God bless
them and pray it comes to an end. But in the Charter of Hamas,
they are dedicated to the eradication of Israel from the face of the earth.
Israel has been, in my opinion, mostly in good faith, trying
to negotiate for peace literally since the inception in nineteen forty nine. So it's
all they want. It's literally all they want. You. I mean,
you think it'd be simple to understand it, but like it's what's really like
baffling to me is like what you were saying, the rationalizations that people are
going through in their brains to try to rationalize terrorism and barbarism and just the
unthinkable. They're rationalizing it. Like I that's what I just I can't believe
that people that people that you think you know that are around you. You're
just like, Wow, you're trying to rationalize that. What the heck?
Yeah. The other big difference, if I got that question the other day,
and the other big difference to me is there is a difference between summarily
beheading children, yeah, and children dying in collateral damage due to bond being
totally there is a massive difference. You can sit there and tell me dead
kids are dead kids. As a father, I get what you're saying,
But on a geopolitical basis, you could not be further off based. Yeah,
absolutely, it's just madness. And then and you know, if you
guys have any other specific questions, I'd be happy to answer them. But
as this feeds back economically to us, when a conflict like this is going
on, I don't think it should change anything anybody's doing, but I think
it should make them. This is this type of event is what I look
at as kind of a volatility multiplier. Right. It is just going to
and it has the potential to just enhance things, right, enhance chaotic markets,
enhance asset price moves. Like I said, by and large, at
this point, it doesn't look like it's going to be a game changer.
But when you look at the issues that the world is dealing with, any
level of increase in geopolitical conflict makes all of these issues worse, Right,
it just does. When you're looking at inflation, when you're looking at shortage
of energy and all these different things. War does not help any of those
things. And the larger scale it goes, you know, I think by
and large, you know, I personally, I think a lot of investors
are looking at the wrong thing. You don't need a war in the Middle
East to create havoc. It's coming. It's economically, it's coming. We
are seeing increase slowdowns, you are seeing credit just evaporate. I mean,
you can't get credit right now. Credit is drying up, and an economy
that is that reliant on it is we are. The idea that people don't
think this is going to cause a recession is just mind blowing to me.
But you know, it kind of reminds me of Ben Bernanke saying in two
thousand and six the issues in subprime are contained right. Eight months later,
Leaning Brothers fail. So it just it feel again, I don't think we're
facing that type of issue. I don't think we're on the edge of another
great recession, but I do think that we're going to be through some rocky
times investing. And then that's kind of what I was saying about these conflicts,
is that as these geo political tensions increase the right, the universe of
possible outcomes is widening right and mostly to the downside. So again, is
it going to have any direct impact from where we see right now? No,
but the bets are being anted. Yeah, I couldn't see. I
mean, how could you not think that we wouldn't be having rocky times financially.
I mean, look at the past couple of years and look who's at
the helm of things. I mean, it's like, that's why somebody who
doesn't do finance, like I'm not a finance person, but you need somebody
that's going to be at the helm of your ship financially to just help you
guide, just guide you through the waters, because I mean it's I mean,
it's like you're saying, Okay, whether there's gonna be a recession,
of course, things are going to suck over the next couple of year.
I mean, look who we've got in charge, of course, you know.
I mean, you've got to be getting so many calls from people just
I can't imagine what the past just two years have been like for you.
Well they've been yeah, they've been very good for business, right, but
yeah, not for the right reasons. I think you're waking up to it.
The other thing that this highlights, you, guys, is there is
no free lunch, right, contrary to what a lot of people would try
to convince us of. And what I mean by that is, you cannot
keep interest rates at zero for fifteen years. You cannot have the Federal Reserve
balance sheet go from eight hundred and eighty billion to seven and a half trillion
and not expect to pay a price at some point. And I think one
of the most dangerous things out there is because we have with every road bump
that we have hit for the last fifteen years, we've filled it with the
same asphalt. And that's just printed money. Right. Well, when can
you not do that any when the printed money becomes the problem and inflation sets
in. So this has been a problem fifteen years in the making. And
I think because we filled in every pothole with money, the investing public,
in my opinion, has become risk and sensitive, right, just because it's
everything's worked out over the last fifteen years. Scare was a buying opportunity.
It's like a false sense of security, right. But what's different about now?
What's different about now are interest rates? Right, It's a completely different
ballgame when you go from zero percent and the FED buying up every bond in
site to now jacking rates historically high and selling bonds. You know, here's
the other thing. Keep an eye out. You're going to hear if rates
stay here for any period of time and I mean like another I mean again
fifteen to thirty days, you're going to hear about more banks in trouble,
Okay, And the reason why is that all the vast majority of collateral that
banks own or US government bonds. Well, the thirty year US government treasury
is down sixty percent since January one of last year. Okay. So if
you bought a thirty year treasury twenty months ago, okay, and you go
to sell it today, you're down sixty percent. Right, You're down fifty
five percent in a ten year treasury. Okay. Well that's what all these
banks own, right, So their capital has gotten cut in half. At
the same time the economy is slowing, defaults are going up, the banks
are getting pressed literally on every side right now. So again, is it
going to create another O eight on nine? No, because we know what
the answer will be. They're just going to print the money. Right.
Is it going to create some serious volatility? Yeah? We think so.
Well you've been I mean, you were super helpful to us when we tried
our individual consultations with you, and we know that you can do the same
for others who out there who might be listening and worried about out how to
protect their savings. So what is the best way for people to find out
more about you and what Bulwark Capital Management can do for them? Yeah,
well so we're pretty easy to find. We host a radio show and do
a podcast too. Our radio show airs once a week on Fridays. We
kick or Excuse Me on Thursday on Saturdays. But we've started doing a daily
broadcast as well, called The Daily Dots. It's twelve to fifteen minutes long.
What we wanted we had a lot of people asking for this, and
what we wanted to do is somebody's on their way home from work and wants
to get a summary of what's gone on in the economy and finance that day,
and they don't want to listen to blowhards and commercials. We just summarized
the day's entire action and including any pertinent economic news in a twelve to fifteen
minute segment called the Daily Dots. If you subscribe to our podcast, Know
Your Risk Radio, the Daily Dots will get deliveredy automatically, there's no paywall
or anything like that. Or you can go to our website Bulworkcapitalmanagement dot com,
follow me on Twitter at KYR Radio, or we're all over the places
google Bullwork Capital. A welcome, love, a thank you, sach,
thanks alive, thank you, waving siks for out me Next time, yeah,