4/23/26: Navy Sec Fired, WH Freaks Over Intel On Iran Military, Food Inflation Spikes

23:22Four, a senior Iranian official told DropSite that Iran continues to prepare for what they see as a likely resumption of U.S.-Israeli attacks on the country and expressed confidence that Iran's continued control of the strait and its capacity to conduct strikes in the Persian Gulf would create a crisis for Trump. Five, Iranian officials have said they would not engage in preemptive strikes but will respond militarily to any attacks. And six, any comprehensive deal, the senior Iranian official believes a more likely scenario would involve the U.S. through Pakistani mediation, shaping a de facto end to the war without any formal declaration.

23:57Maybe some sort of Korean armistice situation. But obviously that would be still kind of a disaster for Iran because Iran still would need sanctions relief of some kind. That's still, I wouldn't say existential per se, but it's definitely going to be a hit. Last thing I do want to note is there is this magical belief here in Washington about destroying Iran's economy, not just in sanctions but with the Straits of Hormuz. If you take Trump's math on its face, they have said that it would destroy 10 % of Iranian GDP. A good friend of mine pointed out that Ukraine's GDP has gone down by 20 % and they continue to be able to fight.

24:33In a total war situation, total GDP doesn't matter. Like really what it becomes is an existential fight to the death. I think John Maynard Keynes once famously said, like, no war is going to stop because of money. Because there was a theory in the First World War. It would stop because everyone would go broke. And he's like, that's ridiculous and naive. It will just change the conditions. And that's exactly what happened. So anyway, I just want to make sure that we flag that. This idea that you're going to be able to economically crush Iran or any country in a total war scenario if it's truly existential for them has never proven out in human history.

25:08All right. So the one of the things that the Trump administration is also trying to do, which Ryan and Emily talked about yesterday, is their new cope is like, oh, well, the Iranians, they're just such a mess. Like they can't even come up with their negotiating lines. They don't know who to talk to. So we're giving them a little time so they can get their act together. Meanwhile, you've got, you know, military officials being pushed down here and total, you know, Trump contradicting himself hour to hour. We couldn't even get a straight answer about whether or not the vice president was going to be involved in the negotiations or not.

25:39But in any case, let's take a listen to Caroline Levitt talking about this on Fox News and claiming, pushing forward this line that like, oh, the Iranians are so divided. They can't even put together a unified proposal. The fact that they cannot send a unified message yet, which is why the president decided to extend the ceasefire, just shows how effective Operation Epic Fury truly was. Because there's a lot of internal division over there. The president understands that. And so we await their response. Yeah, they had one leader, one Ayatollah for 37 years who seemed to be able to keep a bit of a lid on all of these disparate groups.

26:15But that is sort of an open can of worms after his death in that in that operation on February 28th. So we'll see if they can get their act together. I mean, what was your last part? So much to say about. Yeah. After his death. Oh, how did he die? Yeah, because, I mean, hey, maybe it would have been good to have someone in place who would have been easier to work with or some of the other people who were more moderate, who were more interested in diplomacy that were also murdered by us and the Israelis so they are no longer possible to participate in negotiations. But, you know, it's not to say that there isn't division within the Iranian government.

26:51I think, you know, Jeremy's reporting indicates that there is. But the idea that that has created this deep dysfunction that makes it impossible for them to put a negotiation proposal together. We know that's not true. They have had their red lines from the beginning. I mean, from the onset of this war, they've said this is what we need in order to come to a ceasefire. And they've been very consistent and they really haven't wavered from that. So, yes, I'm sure there are very vehement differences of opinion between different factions within the Iranian government. That doesn't mean that they've collapsed and they can't come up with a proposal and they're so divided that they can't even figure out how to get to the negotiating table.

27:30I would say that Iran's government right now is probably very similar to our own. Let's take a look at – roll back every comment I made about the Navy secretary. Well, you have a defense secretary who is ascendant and who is more pro-war, and then you have a faction in the government which wants to seek peace on Islamabad. And I mean, again, take the United States out of it and be like, well, the president's business partner and son-in-law are conducting diplomacy and are in an alliance with the number two official while the defense minister. Like I'm changing the language here a little bit. It sounds like Iran, doesn't it?

28:03Well, oh, the Secretary of Defense and an outside group of influential apparatchiks on state television like Fox News are also influencing the leader to pursue a different course while there's a different track inside the government. I don't think it's all that dissimilar, honestly, from ours. I really don't. Yes, there are multiple factions. I mean we literally had a situation where the president of the United States on multiple occasions said JD was going to Islamabad and then not going and then going again. So it's not like that there isn't a lot of confusion. Everything is basically rolled up into Trump himself.

28:38I do think Iran has a ton of factions, has long had lots of factions. One of the reasons it was so foolish to kill the Ayatollah is, you know, for all the talk about how maniacal he was, he clearly was a deeply cautious, doddering old man who would never choose war and would never choose peace. He would always try to do this middle track. Well, now there are a bunch of people who are in power who are like, no, no, no, we're not going to make the same mistake he did. We're going to choose war. Now, there are a lot of people, the prime minister – or sorry, the president, the speaker, Goluboff, they have a lot more to lose.

29:12Remember, we talk about oligarchs. They're filthy rich too over there. Well, destruction of their country is not good for them. So they also want to pursue peace. But it may not be the same for a lot of the IRGC or many of the other people who are currently in charge. We should understand our government in the same way theirs. I'm not saying they're morally equivalent or whatever, but, like, you should always definitely take a look. They have real institutions. I mean, we have this cartoonish view of Iran that it's just, like, all the Ayatollah and that's it. I mean, this was Trump's view, this cartoonish view.

29:41Oh, so if we take him out, then that's it. The whole thing's going to collapse. No. They have institutions built up over decades that have been intentionally built to be resilient because they have been planning for this very conflict for years and years, if not again, decades, because we've been trying to topple them the whole time since the revolution. So yeah, to think that they don't have processes in place, they don't have an understanding of, okay, who has this file? Who is in control? Who has the final say? What sort of authorities does this need to go through? I mean, again, it's just very arrogant and hubristic and also just does not reflect the reality of how their government functions.

30:23And again, in the same way that you would try to point to the United States, it's very similar. They have a Supreme National Security Council. They had, who was headed by that guy, Larjani. Israel killed him. He was apparently the only person who could credibly talk to the IRGC and to the moderate factions. He's dead now. So there's no real broker. So that was part of the reason that we had that scenario where the foreign minister said the strait is open and the IRGC was like, no, it's not. Well, there used to be a convening body. Same with the Ayatollah. Remember, they have an assembly of experts.

30:53They have a national security council. You could point that out. Like we have a Pentagon who's openly feuding with Marco Rubio, who is the national security council chair and also the secretary of state. So it's a similar system. It's Byzantine. But I mean, is ours all that simple and easy to understand, especially in terms of function and not the way that it's laid out? I wouldn't say that they're all that dissimilar. Well, and they're meant to be competing power centers. You know, that's part of the structure of our government, part of the structure of their government as well. But, I mean, imagine if they assassinated Trump, right?

31:23Right. That would be, you know, a blow to the country in certain ways. But it's not like we would collapse. I mean, you know, then J.D. Vance is in charge and you've got a whole line of succession and you know how this would all go. There's a process and procedure in place. It's the same for them. Exactly right. So let's continue. A7, can we put that on the screen? This is from the president of Iran. He says, The Islamic Republic has welcomed dialogue and agreement, continues to do so. Breach of commitments, blockade, and threats are a main obstacle to genuine negotiations. World sees your endless hypocritical rhetoric and contradiction between claims and actions.

31:56Let's put the next one. This is Speaker Goluboff in a translation of something he put out. A complete ceasefire only makes sense if it is not violated by the maritime blockade and the hostage-taking of the world's economy. If the Zionist warmongering across all fronts is halted, reopening the Strait of Hormuz is impossible with such flagrant breach of ceasefire. They did not achieve their goals through military aggression, nor will they through bullying. The only way forward is to recognize the rights of the Iranian nation. So you can see that they're not really budging. And then the final thing here, you can take it with whatever grain of salt that you want.

32:31The Israelis are reporting in Israel. Let's put that one up on the screen is that they say in Israel it was updated. the deadline set by Trump for the Iranians until this coming Sunday. So according to them, the deadline is now Sunday. Is that true? Is it not true? I have no idea. You can take it for what you will. The press secretary did push back on it saying that there's no such thing as a deadline on the ceasefire has extended until such time that the president deems that it's not, but that's where things are as of right now. It's a crazy system. And so yeah, when we're criticizing the Iranians for a crazy system, let's also remember to look inward.

33:06That's all I have to say. All right, Let's move on to the military. And now the no panic party save brought to you by grand appliance. Your party is safe. Wow. Amy, great party and the food. Incredible. Thanks. And did I tell you my stove died two days ago? What? Did you panic? Nope. I called grand appliance and got a great deal with next day install on the Frigidaire gallery. I wanted next day. Wow. Grand appliance.com, right? That's it. My family's shopped there for decades. Shop grand appliance. Appliance experts since 1930.

34:07of a kind index and lets you back test it against the S &P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com slash podcast and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash podcast. Paid for by public investing. Brokerage services by open to the public investing, Inc. Member FINRA and SIPC. Advisory services by public advisors, LLC, SEC registered advisor. Generated assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

34:38Complete disclosures available at public.com slash disclosures. Have you heard about Klarna? Klarna is an app designed to make everyday spending simpler and more transparent. It gives you flexibility to decide how you want to pay, whether that's paying right away, paying later, or spreading payments over time, depending on what works best for you. Everything is managed in the Klarna app, so you can keep track of purchases and stay organized. You can also discover deals and even earn cash back when you shop through the Klarna app with participating brands. It's all about flexibility and staying in control of how and when you pay.

35:20Download the Klarna app today or visit Klarna.com to learn more. Terms apply. California resident loans made or arranged pursuant to a California Finance Law License, NMLS number 135-3190. Klarna balance account required to be eligible for cashback points. Limitations, terms, and conditions apply. Let's go to the military section now. This one is very interesting, and the response of the Trump administration is really what makes it very critical that we all pay attention. Let's put this up here on the screen. From CBS News, Iran's military is more capable than Trump administration is publicly acknowledging, sources say.

36:00The head of the Defense Intelligence Agency submitted a written statement ahead of a House Armed Services Committee hearing that says Iran can still inflict damage. Quote, Iran retains thousands of missiles and one-way attack UAVs that can threaten U.S. and partner forces throughout the region despite degradations to its capabilities from both attrition and expenditure. So for those of you who don't know, the DIA is kind of a, it's like a private CIA, but for the Pentagon. So it's a very reductive way of putting it. Basically, they do military assessments on foreign governments. For intelligence purposes, all of that gets rolled up to the ODNI.

36:42Now, as part of their statutory authority, they must submit written updates to Congress by law. Remember, when the course of the war was happening, we often would get updates about troops and about the damage and about how many weapons have been expended, how many people have been wounded from updates of the Pentagon to Congress. Now, not to us, but Congress would leak it on our behalf. So I take this very, very seriously because, of course, for them, it's also a crime to lie under oath. They have to produce these reports accurately to the best of their ability and submit them to Congress, which is an independent body, which is supposed to be able to review.

37:14So that is the official statement of the Defense Intelligence Agency. And that's not even based on, oh, some anonymous source says. This is a written, on-the-record statement from the DIA to Congress. Here's how the White House reacted. Let's put this up here on the screen. The legacy media is doing PR for the Iranian regime again. The truth is, under President Trump's leadership, the U.S. military decimated Iran's capabilities in 38 days. Their defense industrial base was destroyed. Iran's ability to cabild and stockpile ballistic missiles and long-range drones has been set back by years. The vast majority of Iran's ballistic missiles, launcher vehicles, long-range attack drones were destroyed.

37:54The Iranian Navy was annihilated with more than 150 of their ships sunk. And Iran's air forces are functionally and operationally irrelevant now. Now, again, this is, and she again says that the media is doing PR for the regime by directly quoting the Defense Intelligence Agency's assessment. And then you should partner that with some of the more recent updates about munitions. We talked a lot about that during the war. Now it's been over for a week or two, or at least we're in a ceasefire. So we have some numbers, shall we? Let's go through the numbers. Let's put it up here. This is from CSIS and CNN.

38:29CSIS, again, to set the table, is basically an arm of the Pentagon. They do, quote, independent analysis. But, you know, it's basically like a defense industrial-based think tank. And they do quasi-independent analysis in the open source in order to basically lobby for more weapons, whatever their agenda is. So I take their stuff actually very seriously. Most people do in Washington. Here's what they say. The approximate estimate of percentage of U.S. munitions that have been expended in the Iran war, 50 % of THAAD interceptors, 50 % of Patriot interceptors, 45 % of precision strike missiles, 30 % of Tomahawk missiles, 20 % of joint air-to-service standoff missiles, and 20 % of standard missiles.

39:18The single most troubling one right there is 50 % of THAAD. Remember how much we talked about that, how important that system is for any potential war in Asia. And remember, I'm not just talking about some preemptive war or whatever. I'm talking about Japan and South Korea, the countries which we stripped some of these THAAD interceptors out of. Remember also that we fired hundreds of them just in the 12-day war, and we only acquired a few dozen or so over the last two years. The production timeline is a disaster. Same on the Tomahawk missiles is we, you know, expended hundreds. We've only produced a few dozen.

39:55There's only one facility in the United States that even makes them. There's some problems with rare earth minerals to even manufacture them. Even if we wanted to rapidly, you know, increase production, you basically can't for a significant period of time to make sure that you were to build out more facilities. So this has set us back, this 38-day war set the United States back probably a minimum of five years. And that's if we got our act together for some sort of potential future conflict. And that does not even touch the cost. That alone, back of the napkin math, hundreds of billions, hundreds of billions in what it was cost.

40:31Not even mentioning the opportunity cost of all the actual allies that it would have been used to defend. Or what if we got hit again? 9-11. Now what? I mean, that's the whole point, just to have munitions like this. It's bad. It's really bad. And that's why the Iranians feel so confident. And they should. Because they, you know, can see this report. They can see this reporting that's out there in the public of how much U.S. stockpiles have been diminished and how much that has made not the U.S. so much, but our allies in the region and ultimately Israel, which, of course, has their stockpiles of these interceptors even more diminished, have been really dependent on us.

41:09But it means that all of those Gulf Arab countries are really sitting ducks. And, you know, they were complaining during the hot war portion about how they were not getting protected the way that Israel was being protected. That dynamic would only shift more towards Iran being able to do damage. And just to go back to that CBS News report about the Iranian capabilities that remain. I mean, it's just completely different than what Trump has been selling from the first day of this war. He claimed that we had basically defeated them and victory was ours, etc. But they say that about half, and again, this is CBS News, right?

41:44This is like Trump regime propaganda outlet, CBS News, that is writing this stuff. They say about half of Iran's stockpiled ballistic missiles and its associated launch systems are still intact. 60 % of the naval arm of the Islamic Revolutionary Guard Corps still in existence. That is totally, I mean, how many times has Trump said that the Navy is basically completely destroyed, barely exists anymore, et cetera. They say Iranian air power has been significantly degraded, but not erased. About two thirds of Iran's air force still believe to be operational, the official said, after an intensive U.S.

42:18and Israeli campaign that struck thousands of targets, including storage and production facilities. Trump, on the other hand, says, quote, we've taken out their Navy, we've taken out their air force, we've taken out their leaders. So square that with the fact that in reality, two thirds of Iran's air force still believed to be operational and 60 % of the naval arm. And here's the thing, because of their position, they don't need that much capacity. You know, it doesn't take a lot to be able to keep the Strait of Hormuz closed, for example. It doesn't take a lot to serve as a deterrence against the U.S.

42:55doing any sort of ground invasion, etc., which would be sure to be a complete catastrophe. And I think Trump knows this at this point, which is why he's effectively pinned. You could have known from the beginning that just bombing alone was not going to be sufficient. And this is what he continues to threaten of like, oh, we'll go back to bombing this and bombing that, et cetera. If that was going to work, they would have already done the thing that they needed to do to make that work. It's not going to work. Can you inflict more damage and cause more pain and suffering and kill more civilians?

43:26Yes, you can do that. Is it going to work? No. You still haven't taken out their Air Force. You still haven't taken out their Navy, you are not going to be able to accomplish this either with a ground invasion or with this blockade. And, you know, the Iranians claim that they used a lot of these decoys that they got from China. And I do think that there was some of that so that as the U.S. was hitting targets, some of what they thought they were destroying was actually just these Chinese made decoys. And then you couple that with the fact that, you know, Trump just lies and also people lie to Trump about how effective things have been.

43:57And you end up in a situation where probably the president himself is somewhat delusional about the amount of damage that is done. Oh, almost certainly. Exactly. And, you know, let's even just look at what we destroyed versus what they destroyed in terms of how many munitions we expended, how unsafe now the United States actually is to some sort of peer competitive conflict. You know, I had two sources I spoke to very, and I said, I asked them very clearly, I go, did we hold back anything on Iran? And they said, Absent nukes, no. Wow. We did not. And obviously ground troops as well. It goes without saying.

44:33But I said, did the United States military ever really hold back? And they said, no. In the first three weeks of the war, we did everything we could do to collapse that regime and to defeat it militarily. Again, I challenge you to find another person. But outside of ground troops and nuclear weapons, the answer was no. And that was a direct ask that I made here, really, because I was trying to assess the actual power of our military. You should be terrified by that. You really should. And also, I mean, let's take my own report out of that and let's just look at it logically. It was in their interest to go all out because they needed to defeat them very rapidly.

45:08And it didn't work so clearly. That's why we are where we are today with some fake JCPOA deal and blockade and all that. So you should really, really, people should be panicking about this. In the past, when you have an emperor has no clothes moment, it really should lead, like, yeah, the Navy secretary should be fired, but like for very different reasons. The Pentagon people should all be fired. The procurement folks, everybody in Congress, people should be walking around with their hair on fire. They go, oh my God, how are we ever going to win a war in the future? No, instead, you know, oh, we're going to have more contracts for the same weapon systems.

45:41I mean, you've got, you know, the Gerald Ford, the aircraft carrier, it arrives in two days in the Middle East. What's the one that's damaged? I forget which one it is. Apparently that one, you know, it's going to have to be retrofitted, but it's staying in the area potentially to have to support operations. We basically learned nothing from any of this. And in fact, we're actually erasing some of the casualties. Let's go to the next one. Just put it up there on the screen. This is from The Intercept. They're saying that the Pentagon has now erased wounded U.S. troops from the Iran war casualty list, a quote, definition of a cover-up.

46:09The government altered its tally of American casualties, inexplicably scrubbing some 15 wounded in action troops from the count, again, in a document that was provided to Congress. And then the last thing here. Let me say one thing about this, because I think this is indicative of something and another important dynamic in this war is like, OK, well, why are they scrubbing the casualties? Because they don't want people to really know the true cost in terms of, you know, service member lives and obviously those who have been wounded. And it points to the fact that the American public is not willing to take much pain over this at all.

46:42And this is a point that I was listening to Mearsheimer's latest interview with Glenn Deason. And he made a great point, which is, listen, if you accept the official narrative about the airmen who were downed and all of the extraordinary resources that we put in to retrieving this one airman. And we know we have the reporting about how Trump was freaking out and screaming at his aides for hours about this to the point that he had to be removed from the room so they could actually focus and come up with a plan of what to do. That was for one guy. And you think we have the stomach as a nation? We didn't want this war.

47:16The vast majority of the American public is like, let us get out of this. What are we thinking? This is a disaster. We do not have the stomach to take anything approaching the type of pain and loss and suffering that it will take to create a different ending to this thing other than the ending we're at now, which is that we lost. That is the ending we're at now. And everything between where we are now and when this thing actually wraps up, however it gets tied up in a bow or left with loose ends, it's all about when does Trump have to actually acknowledge the reality and put forward a deal that reflects the fact that we lost this war?

47:57That is the truth of the matter. And it is possible that he can't bring himself to that place and we leave it sort of open ended and then the Israelis pull us back in. That is certainly a possibility because, you know, for them, it is unacceptable. They see it as existential to allow things to remain the way that they are. And so long as Iran keeps control of the Strait of Hormuz, yeah, there are other places in the world that will be hurt more. But the entire global economy, us included, are really going to suffer over that. Here's some breaking news literally about what you're talking about.

48:27I quote from Donald Trump. I have ordered the United States Navy to shoot and kill any boat, small boats, though they may be. Their naval ships are all 159 at the bottom of the sea. That is putting mines in the waters of the Straits of Hormuz. There is to be no hesitation. Additionally, our mine sweepers are clearing the strait right now. I am hereby ordering that activity to continue at a tripled up level. Thank you for your attention to this matter. Wow. Trump. So, look, the reason why that's so significant, and I'm almost certain this is a reaction to this story, which I was about to throw to, B5, let's put it up there on the screen, and let's make sure that we look at these both in context, is from the Washington Post's Dan Lamothe, an internal Pentagon assessment to Congress reports that clearing the Straits of Hormuz mines could take up to six months.

49:14Now remember, originally, the Pentagon was telling people that they didn't even mine the Straits of Hormuz. And then Trump was like, no, they didn't mine it. And if they did, there were maybe eight, maybe 13 mines. Now they are going and telling Congress it would take six months to fully clear the Straits of Hormuz of mine. And I mean, okay, let's do some basic like math here. No resumption of the Straits of Hormuz traffic for six months. That's oil to 250, 300. I mean, let's go further. It could be, it may be that the price is fake because it doesn't even really matter in terms of the amount of oil that's even getting out.

49:55That is a full-fledged disaster. And already, as we showed you all on Tuesday, this is already the worst energy crisis in global history. Six months of closure or even abnormal traffic through the Straits of Hormuz is, I mean, energy catastrophe. Yes, we will all drive, but gas would be$6 a gallon. Like, it will just be, I'm just trying to think through the ramifications of all this in my head. It's Yeah, insanity. I mean, Asia, Japan, they're, I mean, blackouts like rationing. Australia, New Zealand,$12,$15 a liter or something crazy like that. Africa, starvation and or blackouts. Bangladesh, Pakistan, all those places.

50:36Nope, they will have nothing. The actual stockpiles, there's like a few more weeks, maybe a few more months left depending on where you look at things. But eventually, you know, the price is going to catch up to reality. Six months of closure. I think, And this is the danger of what Trump just said, is a resumption of firing on Iranian boats would almost certainly lead to what? Because right now we haven't fired anything. There hasn't been a resumption of actual firing in the Straits of Hormuz. Firing leads to horizontal explanation, more attacks. Remember, Iran fired on a few of those ships that were transiting through the strait.

51:10Maybe they'll fire at even more. So that just means more destruction, less oil that's moving through, and more global catastrophe. So if I put those two things together, you're like, and why is he doing it? He's panicking. And then even then, Minesweeper moving through the strait, I mean, they didn't get shot at? By the way, even in terms of our Minesweepers, I think we only had three, and they were all decommissioned like a month before the war, something like that. So I'm told that there's some other technology that we could use, but the drone threat and all that makes it very difficult. This is really scary.

51:41Yeah. No, bottom line is this is an announcement of escalation. That's what this is. And what we've seen from this war up to this point is that the Iranians escalate in kind. They're able to do it and they're willing to do it. And right now, with the fact that they feel they were burned by both probably the Pakistanis and the Americans with this attempt to dial things back at the end of last week, where Rachi comes out and says, OK, the strait is open because of the ceasefire that was put in place in Lebanon. and then Trump has to go out and humiliate them and say, well, we're keeping our blockade on, which is apparently, according to Jeremy's reporting, that is apparently a violation of what the expectation was from the Iranian side.

52:24And so they feel burned not only by us, but also they have some serious questions about the Pakistani mediators and whether they're operating in good faith and in an honest manner. And now you have this announcement of further escalation from the American side. The Iranians are not likely to just sit back and take that. And now the No Panic Party Save, brought to you by Grand Appliance. Your party is safe. Wow, Amy, great party. And the food? Incredible. Thanks. And did I tell you my stove died two days ago? What? Did you panic? Nope. I called Grand Appliance and got a great deal with next day install on the Frigidaire gallery I wanted.

53:03Next day? Wow. GrandAppliance.com, right? That's it. My family's shopped there for decades. Shop Grand Appliance. Appliance experts since 1930.

53:40one-of-a-kind index, and lets you backtest it against the S &P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com slash podcast and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash podcast. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Generated assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

54:11Complete disclosures available at public.com slash disclosures. Have you heard about Klarna? Klarna is an app designed to make everyday spending simpler and more transparent. It gives you flexibility to decide how you want to pay, whether that's paying right away, paying later, or spreading payments over time, depending on what works best for you. Everything is managed in the Klarna app, so you can keep track of purchases and stay organized. You can also discover deals and even earn cash back when you shop through the Klarna app with participating brands. It's all about flexibility and staying in control of how and when you pay.

54:53Download the Klarna app today or visit Klarna.com to learn more. Terms apply. California resident loans made or arranged pursuant to a California finance law license, NMLS number 1353190. Klarna balance account required to be eligible for cashback points. Limitations, terms, and conditions apply. This is a good transition to talk about what we already see in terms of the economic impacts of this war. Let's put C1 up on the screen. This is from Tracy Alloway of the Odd Lots podcast, fantastic podcast, great reporters. and she's got information here about food inflation. Costs for food companies jumped almost 8 % year over year in March.

55:40That's versus 4.2 % in February. This is basically just from higher fuel costs. We're still waiting for the impact of higher fertilizer, plastics, et cetera. So what she's saying there is this is just the beginning. This is just when you're considering, okay, gas prices and diesel prices have gone up. That's now being reflected in costs for food companies. And of course, they're not going to just take that. They're going to pass it on to consumers. But what she's saying is that doesn't even deal with these longer term impacts like fertilizer. The higher price of fertilizer is something that farmers are shouldering right now during planting season.

56:19That is going to mean that down the road, when those costs also get incorporated into food prices, prices are going to continue to go up. I don't feel that I even need to really explain this because we all basically lived through all of this through COVID. We saw the way that inflation built and built and built and that this was not something that just happens when you flip a switch. There are follow-on effects that continue even after the worst parts of the crisis are finished that take a long time to work their way through the system. So what she's saying here is we are now just starting to really see the impacts and that this is just the beginning.

56:59Yeah. I hate, you know, there was a lot of accusations of doomerism in the beginning, but it's because, and I think anybody who's been watching, been watching the show for a long enough period, we all lived through Russia, Ukraine together. And just because things seem to be fine, they're really not. You know, the entire global economy completely shifted. The energy markets dramatically changed. The amount of LNG, a reliance on Qatar became dramatic. And then we've gotten to a war with Iran, and now the Strait of Hormuz is closed. That's why we talk about – I mean, everybody seems to believe – let's say with COVID, we had the lockdowns that came in March.

57:32When did we really start to feel the supply shock? July? Maybe August? It took a while, right? Because we had just-in-time delivery. So there was this deepest amount of stuff that was on hand. And then with closure and with the shipping containers and all of the supply chain problems, we began to see shortages and problems in July and August. But the real-time inflation hit when? When the thing started to reopen, demand was high, and the supply – it took, I would say, over a year probably from the lockdown for everything to show up. But because we lived through all of that, plus Russia, Ukraine, we have now seen this story play out multiple times.

58:09Like you are not going to have things end overnight. However, there is a dramatic underappreciation. Gas is still$4 a gallon. Gas was$2.90 six weeks ago. Diesel's like$5.20-something a gallon. Am I taking crazy pills? When have we ever seen gas go by over a dollar in a single month and then stay there with no real end in sight to the point where the president is bemoaning his energy secretary for saying maybe gas will have a three in front of it next year sometime from now? I mean, again, just looking at the straight, I could be wrong. I'm not a total energy – I'm not an energy expert or analyst.

58:47I read some people who we trust a lot here on the show all have basically said if the straight remains closed for this X amount period of time, gas will hit$6 a gallon. Gas will hit$5 a gallon. That seems very likely absent some extreme intervention on behalf of the United States. I also just look to big corporations where this stuff, same thing. It's not going to immediately affect your life. But sometime in the future, you're going to be checking. In the way that I went to McDonald's recently and paid$4.50 for the medium fry, you're going to be like, wait, what? Whenever you try to check out, let's go to the next one.

59:21Put this on the screen. The United Airlines CEO has now come out and say fares may need to rise by 20 % to offset the fuel charge, jet fuel costs, quote, signaling a significant test of consumer willingness to absorb higher fare as the industry grapples with volatile oil prices. This was on their earnings calls. He said, United is aiming to recover the full increase in fuel costs as quickly as possible and expects to move toward a 100 % pass-through. God, don't you love corporate speak? A 100 % pass-through as it targets double-digit pre-tax margins next year. What does that mean? So, again, corporate speak.

59:59Yields need to increase by 15 % to 20 % whenever it comes to – that means what? That means your ticket price is going to go up by one-fifth. Every cost increase for them, they're passing directly to you and potentially an increase above and beyond that. I mean, that's what we saw the last time there was a huge inflationary spike is the corporations, oh, I can get away with raising my prices even beyond the cost of the increase in inputs. Of course, I'm going to do that. And so that's why you have corporate profits as a share of the economy that continue to be at all-time highs even as costs go up because they've taken advantage of that dynamic.

1:00:34And, of course, they'll do the same thing again. Totally. And yeah, let's just do like back of the napkin stuff. Most people take some small vacation in the summer statistically. And let's even put aside Europe, you're already upper middle class if you can afford to do that. Let's just say here in the US, you wanna go to Disney. Oh, by the way, Disney prices are very high. But let's say you gotta get to Disney. So let's say family of four, it was gonna cost you$600 a person. If you're flying from California, whatever, Midwest,$500, something like that. Now it's 750 per person. And you're like, oh, okay.

1:01:06Well, that's a lot of money, right? And so then you have the increased jet fuel cost. Oh, and then you need to do a rental car. Oh, well, the rental car cost has gone up too because of gas and because of increased insurance. And then, oh, the Disney cost has also gone up because they have all this energy input and stuff that they have. I mean, this is craziness. And that's just vacation. That's the easiest thing to be able to pay. And your budget's already been stretched at home because of increased gas prices and increased food prices. So things are tighter to begin with. Yeah, you're just going to say, we can't do it this year.

1:01:33We'll go somewhere locally. We'll drive to the lake here instead, instead of trying to do a big Disney trip. And even when you do drive, it's going to cost more. All right, so then let's put the next one up here. Lufthansa. Lufthansa has now cut 20 ,000 flights to save fuel from the Iran war. Follow-up, quote, global jet fuel prices have now jumped 70 % since the start, pressuring airlines in Europe. The largest consumer of jet fuel now shipped through the Strait of Hormuz. Lufthansa says it will cut 20 ,000 flights over the next six months to save jet fuel as the pressure builds on the company to address surging prices.

1:02:06The airline said Tuesday it had already announced which flights it had trimmed through May. So this is just in the next month or two of the 20 ,000 that they're cutting. And overall, that the cuts would save 40 ,000 metric tons of jet fuel through the end of October. So basically what that means is that they're going to have to cut any of the lesser demand routes. It's over. So yeah, if you're flying to Smolensk or something, you better drive, I guess. And the head of the International Energy Agency had already said last week, Europe has exactly six weeks of jet fuel supplies left, and they're already meeting on Tuesday to discuss the energy crisis.

1:02:47So likely, I mean, I could be wrong. I'm guessing, just thinking about the intersection of business and government in Europe, is it's almost certain that the German government was like, look, guys, this has all got to get cut. They're like, this is a national crisis. X amount of, you need to save 40 ,000 metric tons to give us some runway. Any flight which is even remotely unprofitable, it's got to go immediately. And then all the fair prices, they have to go up. Another thing we really haven't grappled with is the Gulf. If hostilities resume, I mean, that is a massive amount of air traffic that can no longer move through.

1:03:26Dubai was one of the business airports of the world. That's right. Like millions of people flew through there. So that means almost every, especially here in America, a lot of the way that people were going to Asia, Asian destinations, was via Doha, via Dubai, and via Abu Dhabi. Now they would have to fly via Europe, which is already strained and has to cut flights. You could just see an escalation here where unless you've got to go for business purposes and you really got to go, you're just not going to go. Yeah. Well, and here at home, the weakest players are already collapsing. We can put C4 up on the screen, and it looks like our government is going to bail out Spirit Airlines by buying a stake in it.

1:04:01So this is the latest company that the Trump administration is considering taking a stake in. And so here the headline is, Trump administration nearing rescue deal for Spirit Airlines signaled this week the government could help the discount carrier, which has struggled with surging jet fuel prices. Trump administration nearing a rescue deal struggling. They're struggling to survive during a run up in jet fuel prices. Now, they had some issues that predated this, but this is like the thing that is really pushing them over the edge. Under the agreement being discussed, U.S. government would loan the embattled discount carrier as much as$500 million, receiving in return warrants to take a potential significant stake in Spirit.

1:04:35People familiar with the matter said the investment could help keep Spirit afloat as it seeks to emerge from its second recent bankruptcy filing. So now our government is basically creating distressed assets because of our insane policy and decision to get into this war and then buying up parts of those distressed assets. So congratulations, American people. You're about to be proud owner of a portion of Spirit Airlines very possibly. I don't hate it. Is that a bad thing to say? I like it. Well, here's the thing. Spirit is a very – look, I hate Spirit. I hate flying it. It still is a very important part of U.S.

1:05:09air travel, which is the extreme budget airlines for the hyper infrequent traveler who just needs to fly once a year. Look, I like the precedent of government owning key assets. Yeah, me too. I like the ceasing the means of production. So if it's the Trump administration that's going to pave the road. I mean, the part of it that's preposterous and not good is the fact that it is the Trump administration policy itself that has in large part created these problems for Spirit Airlines and obviously just another sign of how dire things are for the airline industry in particular. It's a little complicated.

1:05:44Basically what they say, Spirit Airlines would be on firm or financial footing had the Biden administration not blocked the airline's merger with JetBlue. Remember, they were supposed to merge with JetBlue. It was blocked by antitrust because of worries about budget consolidation. Now that, yeah, really, look, like do I trust Trump and all these people to fix it? No, not really. But I don't think it's the worst thing in the world to keep a critical airline, which, you know, keeps – it serves those budget customers. It's better than letting it go under. down yeah i mean what would be even better is to not have done the war yeah of course again let's all be fair like they've been in chapter 11 for like years airlines itself i don't even really know how they make money actually i do it's from credit cards but in terms of actually flying i've never i still don't really well and not just from credit cards it's from like financial speculation like a lot of the larger in particular as much like you know financial entities like you know trading as they are hedge funds as they are actually airlines i remember reading once it was like half of the profits or something from American come from freaks like me who are always gaming airline miles from all the swipe fees from people who use their credit cards for frequent flyer miles.

1:06:51Like a significant portion of their profit only comes from credit card swipe fees, which is kind of crazy. That's why they push it so hard. That's why every time you're on a plane, they're like, you get 25 ,000 more miles if you sign up right now. I always want to be like, who's doing that? You're signing up for a credit card on an airplane? That's kind of crazy. No? Maybe it's just me. Somebody's doing it. Yeah, yeah, it works. Let's go and put C6 up on the screen here. One more impact that we're facing now. Aluminum faces a black swan supply shock, according to this analysis. This is, of course, due to the war in Iran's trigger to supply shock that will lead to major shortages this year.

1:07:32The Middle East accounts apparently for about 7 million metric tons of annual aluminum smelting capacity, roughly 9 % of the estimated global supply this year. It's a key material for transport, construction, and packaging industries. So you're talking aircraft, actually, is one of the things that needs aluminum, significant amounts of aluminum. You're talking about automobiles. U.S. has, you know, some domestic capacity, so we're probably somewhat sheltered from this particular impact. But obviously, it's going to push up the prices. And then that flows through to consumers in all sorts of ways.

1:08:06I think China is the biggest producer of aluminum. But the Middle Eastern region, again, you learn new things in war about where things are made and what they go into and how critical they are to day-to-day life and how much people suffer when the flow of those goods stops. Well, we will continue to track it. It's the worst energy crisis literally in modern history and coupled with the Strait of Hormuz news that we just went through. I don't see a way where we are not going to have rampant and persistent high supply side inflation. Now, as you said, that in no way, and this is why when we look at stock markets, people are like, how could this be possible?

1:08:44We lived through 2021 and 2022. They make a shitload of money whenever people have to pay more. It's everybody else that suffers. That's how you have the S &P 500 up 60, 70 percent under Biden and people saying this is the worst economy that I've ever lived through. So do not look to the market to validate your personal balance. If anything, that's a direct reflection of why they're doing so well. So I think the companies will all be fine. I think the airlines will be fine. There are enough business travelers and other rich people who will pay. Top 10 % of the United States pays 50 % of all consumer spending.

1:09:15They can absorb all of this in their bottom line. It's everybody else that will suffer. So I don't think that many of this will show up in the market data or some sort of a crash. I just think it'll be like a continued long, slow grind for everybody's pocketbook, which is a disaster. And remember, it's your point about the way that the impacts may not show up all at once. Basically, because of the Ukraine-Russia-slash-COVID inflation, almost every incumbent party and president or leader, almost all of them got tossed out, like globally. Yeah. I mean, it was this massive, massive reckoning, politically, political reckoning.

1:09:54Obviously, we experienced it here in the U.S. with Biden and then Kamala Harris being rejected in favor of going back to Trump. But the outliers were places like Mexico where they stuck with the same party. That was very unusual. Almost everywhere else, the incumbent party got tossed out if there were elections during that time period. So it just shows you how much turmoil can be caused by these changes in prices. So that's what we're looking at. Of course, and housing. I mean, if you, let's think about, you know, there are a lot of young guys who voted for Trump, right? I would say the economy is probably number one.

1:10:26Number one in culture. Those are the two things, right? Where a lot of young dudes who voted for Trump. Well, let's say we're like 26. Well, after Trump is gone, you're going to be 30. It's actually like a different phase in life. Yeah. And you're still facing the same economic condition. That's going to make people real angry. I think they should be angry. And that is something where if you look at his approval rating, the main reason that, let's even say economically, why did Trump get reelected? It's actually, if you think from a normal voter's perspective, well, gas was X price when he was president.

1:10:55Inflation was low. Biden came in and it was high. That's all they really had to think about. So I vote for Trump and it goes back. My life was easier during Trump 1.4 than it was during Biden. Right. Extremely logical, actually, in terms of a vote. Well, now, this time around, it's not going to be that way. So it makes a change election not only more likely, but it makes it so that the solution will be a lot more radical, I think. Very possible. There you go.

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