 Hello and welcome to episode 56 of the Market Maker podcast. Good to be back after my week away. I did listen in, Pierce, so I did hear the jibes. I always deliver on a bit of market volatility while I'm away. Can you explain or are you even going to bother defending yourself or are you just going to let it hang? Are you responsible for global disorder spiking whenever you step away from the desk? I know you talked about this as well last week, but it's definitely true. I remember many times in my career, prior to when I joined Amplify, when I was running a desk. You would sit there for hours. You'd sit there for 12 hours a day, 15 hours a day watching markets to the point where I didn't even want to go to the toilet. I didn't even want to eat. Hence my corned beef sandwiches that I come in wrapped in tinfoil still to this day that you always have a problem with. The point being is that people like yourselves who are trading, you didn't give us a pass. We're the ones who had to watch the headlines all day long. That's what we're paid for as our job. I do remember distinctly one time when I'd sat there from 6am till 12, not a break, nothing. I went for 30 seconds. I ran to the toilet and within those 30 seconds, I remember the People's Bank of China cut rates and I was like, I've been waiting for it for like six hours. I go for 30 seconds and that's what happens, but that is one of a number of events that I can think of over the years. That's right. It's like trading. I remember back in the day on the trading floor, yeah, obviously we were looking to exploit short-term volatility. There's certain stuff that you know is going to happen. It's scheduled, so like economic data. You know it's happening at 1.30pm or whatever, 9am or so. Fine, you're going to be at your desk done, but then obviously there's the unscheduled stuff where you don't know when it's coming and it's kind of sod's law that something kind of dramatic happens and you happen to be using the little boy's room or something. So yeah, we used to sit there. Well, I remember and actually not only missing stuff, it was also if you're in a trade, then you didn't want to leave your desk because you're in a trade and you've got risk on and you're trying to manage that risk. I remember a few times people, other traders basically because if I wasn't in a trade at that point, they would kind of basically persuade me to babysit their trade whilst they then sprint down the aisle like that in the kind of big central aisle of the big trading floor, literally sprint down to the toilet at the end, smash into the toilet, do what they're going to do and then sprint back. You know, try to do that in about 30 seconds, as you say, just so they can get back and like, all right, yeah, nothing happened, it's fine. But yeah, there's nothing worse as a trader missing, not being at your desk when something kicks off. Yeah. I mean, the one, the most extreme story that I have was through a combination of what I thought was trying to be as good as I could at my job, mixed in with a healthy dose of fear of reprisal, if I miss something. I remember one time I was on my own, the others had all gone out and I really needed the toilet and like the proper toilet. So I thought, we're talking number two here, talking number twos. And so I thought, you know what, no, you know, when you get a dustbin, it has like the plastic bag in it, right, with the cover over the edge. I pulled over the bin. I'm in a professional office here, pulled over a bin, started undoing my trousers, got my trousers halfway down my ankles, and then someone walked back in, just what the hell are you doing? Actually, I got I got I got kudos for that. Yeah, dedication to the course. Yeah, I was ready to drop one literally for the team to stay on the on the on the call on the ball for you guys. That's how far it goes. Well, that's why you're the best. Well, you say I'm the best, first off, to kick this episode off. I've had a couple of people call me out from my inappropriate call on Russia, and I hold my hands up. I got it wrong. Definitely got it wrong. I definitely did not think that Putin would do what he's done. Definitely not to the level of aggression. I don't think I'm the only one who who thought that, but certainly for sure. I got it wrong. So so hands up to that first. Secondly, before we go into the the nuts and bolts of what we're going to cover in in this conversation, we're going to talk about Russia. There's various different parts of this to update you on, which I want to go through and obviously get your opinion peers. They're going to talk about commodities surging across the board, everything at the moment, whether it's soft oil, energy, everything is moving higher right now and want to get your your kind of view about what does this mean going further forward for not just Fed policy, but risks of recession, stagflation, those types of things. And then we're going to finish off. There's been a ruling in America about tiktok. And so not all Russia. I know it's hard to find any other stories to talk about at the moment. We'll also talk about that at the end as well. But last thing was, I did release the latest career insight conversation on the previous podcast on Wednesday of this week. And I chatted to a guy called Bilal Hafiz. If you've never heard of him, he's only the former global head of research at Nomura and Deutsche Bank and was an advisor to the CEO of Deutsche Bank for 20 years. So yeah, he's he's super experienced and super humble and super honest. And he gives a really great insight as to working in the investment bank because he actually started an IBD. And then he switched into global markets and research. So yeah, he gives a really good take. He talks about some general advice, tips, things like that. So if you're a student looking to get into finance, 100% recommend, go back, check that out. But yeah, let's let's kick it off and let's talk. Let's talk Russia. So I'm conscious of the fact that I've got the newsfeed up beside me here at the moment while we're talking just to keep a half an eye on it because it's it's moving that fast in terms of the headlines because you ping me a message earlier saying Iran nuclear deal. And I was like, no, no, no, you must have been to the toilet because you just you just missed the headlines. The source has just come out and said no, that's not the case. So this is the nature of the the day trading environment right now. Also, we've just had a report again, very hard to see pick through the noise here, but there was apparently a phone call according to AFP, the French news agency that Putin is aiming to seize the whole of Ukraine. That was according to a conversation on a telephone call with French President Macron just a few hours ago. But this comes in the context of Russia, they're claiming to have captured the port city of Kerson in the southern part of Ukraine. So at the moment, they're making good headway there. But geographically, it kind of makes sense from the sense of coming out for Crimea and that southern region where they've already they're kind of well equipped militarily. In the north, though, there does seem to be a degree of perhaps miscalculation on the Russian side over the resistance from Kiev in the in the capital. But most strategist reports that I have read since that over the last 24 hours would suggest that they're regrouping and they will come again more forcefully. So it seems like the clock is ticking there at the moment. This comes as they've had conversations. There's been a second round of talks between Ukraine and Russia. Haven't really seen the outcome of those come through just yet. We're recording this on Thursday, the third of March. But I'd say the way to assess any of these conversations between Ukraine and Russia directly at the moment is one of relief. And that is just based on if they agree to continue talking. We're not talking about some kind of solution this early. There's no way that's going to happen right now. But just the commitment to keep the door open could well be favorable for asset prices. The opposite, of course, is complete breakdown. And we get kind of continuation of a lot of things that we've seen. So there's hopes of an outcome of those are very low, I would say at this point. The other things are US Secretary of State, Anthony Blinken, he's kind of rallying the troops in Eastern Europe, just making sure that team NATO is all on board. So as you would probably expect, some other things that have been going on that are probably worth mentioning, the US is postponing what they call the minute man three. Have you heard of that? Not until today. No, it's the intercontinental ballistic missile test. They had it planned for this week. And it sounds pretty frightening, just the words intercontinental ballistic missile. But yeah, Iran do it. Well, yeah, everyone does it. North Korea does it. China does it. North Korea doesn't mind a missile test every now and then. But I guess it's quite an interesting point. Obviously, if North Korea have a missile test, then the Western press go, oh, my God, it's the big risk. This guy can't be trusted. Are we in range of his missiles? But obviously, we're testing missiles all the time as well. And we hold proportionately a phenomenally outnumbering every other country on planet is the US, which then they get upset about another country holding a hand. I honestly think this is the very, very, very first time I've heard in the media about the West, like the US or the UK or anyone in the West testing a missile and maybe not testing a missile because of geopolitical reasons. First time ever. Yeah, well, look, don't get me started on my personal views on this. I've had my hand slapped already online for giving away too many of my own feelings on these things. But no, I think you're right. And obviously, the US tactically are just trying to calm the situation because of the raised status of which Putin had said before. And I commented on this in the session earlier today about the kind of what we call saber rattling, which is kind of what Korea does, which is, yes, they are test firing these missiles, but it's the rhetoric and the rhetoric of using the threat of escalation like Putin has done with the nuclear level is not uncommon. This is the main point. So the other things then are Russia's rating was cut to junk by Moody's Fitch also slashed it by six levels to junk and MSCI has eliminated Russian equities from its EM index. So just wanted to get your take on what does that was that really mean? What does junk status mean? And also, why is that important for for fund managers, portfolio managers, when we see the EM index being changed in that way? Yeah, so this is actually it's kind of a it's like a it's like a sanction in a way because so if we look at bonds, okay, so Russian government bonds, right, and any kind of any any bond that generally has a rating. And this is where one of the what's called the one of the independent credit rating agencies and there's loads of rating agencies, but there's three giant ones that really cover the world's, you know, top level kind of bonds. So it's S&P, Moody's and Fitch. Okay, these are the big three. And it's their job to assess the credit worthiness of the borrower and assign a rating to that borrower depending on their credit worthiness. And they tend to review these borrowers from time to time and if their economic situation shifts and changes or then fine, the rating agency then may well change that rating accordingly, right? And you have rated like AAA you'll have heard of, that's the top notch. Okay, that's the safest. That's like where the borrower is the most credit worthy. Okay. And actually, since the financial crisis, just as a slight aside, since 2008, we had a load of downgrades going on as, you know, the global economic environment went majorly south and debt levels went majorly up. And so actually, we do live in an age where there just aren't many triple A rated bonds anymore. And this does make it tricky for investors who want to, who have an investment strategy that's very low risk. It's very difficult when there aren't many low risk assets left. And so actually they're forced into taking more risk just, and I'm talking about like big pension funds here would be a good example. So big giant pension funds would tend to have low risk income bearing strategies. But they're having to take more risk now just because there isn't enough kind of triple A rated stuff out there. Anyway, that's that's an aside, right? So triple A, and then it goes like double A, single A, then it goes into the B's triple B, double B, single B, and you got pluses and minuses in here as well. So for example, in the double, in the triple B's, you've got triple B plus, triple B, triple B minus, and then you go double B plus, double B, double B minus and so on, right? But basically you got triple A down to triple C, or sometimes D, and D is default. Okay, so triple A super safe, the likes of Germany, for example, German government bonds, and then D is default, right? Halfway down the range, the top half of the range is called investment grade. So if you're triple B minus rated or higher, then you're what's called investment grade. Okay, if you go below triple B, so if you go from triple B minus down to double B plus, that triple B to double B line is your move from investment grade to non-investment grade and non-investment grade, the nickname for that is junk. So everyone I'm sure that will have heard of this idea of junk bonds. Well, they don't mean they're rubbish, worthless, throw them in the bin. It's a reflection of the fact that the credit worthiness of the borrower has dropped below investment grade. Now, the point here is, when you get rating changes like Fitch, what did you say, five notches down? Six notches. Six, I think that's got to be one of the biggest ratings changes I've ever seen. Anyway, the point here is, if they take them into non-investment grade, then certain funds have a risk constraint where they're not allowed to have any non-investment grade assets in their portfolios. So if an asset gets changed from investment grade to non-investment grade, they're forced to sell it. And so this is kind of the idea here. On the bond side, with the credit rating change, it's basically forcing funds to sell Russian bonds. And then that big wave of selling actually makes matters even worse because then the price of this debt drops and the yields rifle higher. And it's a bit of a vicious cycle actually. Now on the MSCI World Index side, it's similar but different. There's a lot of index trackers out there. That's equity funds that track indices. And so their job is to track that index as close as they can. And the way they do that is that in their ETF, they'll have all of the shares that are in the index that they're tracking. But if the index decides, right, we're going to take some of these shares out, well then these ETFs have to sell those shares. So if you take out Russian equities from the MSCI index, then it forces certain ETFs to sell those shares. And again, that drives the price down exacerbating the problem. So it's like a sanction, it's like a clever kind of financial market sanction, if you like. Yeah, to give that a real world overlay, I was just pulling up an article I was reading last night where US asset managers like Capital Group, BlackRock, Vanguard disclose large exposures when their last filings. So going back to that last time that was, which was the period starting Sep 21 through to Feb 25 of this year. It's not that long ago. They total over 60 billion US. 60 billion dollars when considering the top 100 open end funds and exchange traded funds worldwide in terms of estimated US dollar exposure to Russian securities. Right. Yeah. So big, big names here on that list. The top 10 funds in Vesco, developing fund, market fund, 3.6 billion equities, PIMCO income fund, same size, Vanguard, same size. Another PIMCO ones on their Goldman's GQC partner international. They have another fund, 1.72 billion in equities. Where's BlackRock? Where's BlackRock on that list then? So BlackRock, 264 million, around 5 billion when including their iShares, ETFs in equity and fixed income. Right. Okay. I was going to say because BlackRock are the biggest assets under management. They're kind of up to almost like 10 trillion or something crazy. And so I was surprised when you weren't saying BlackRock there and certainly their kind of iShares and their ETFs, they're kind of giants. Maybe BlackRock have got a deal with Reuters and just tuck it in there. It's public information, but don't shout about it. But yeah, in terms of Spurbank, the country's number two bank, they got cut off from Swift. And I know in the last podcast episode, that was what you and Will were talking about is in the next level of major escalation would have been Swift. And I think it was Saturday that they did that. So they've been hit by the full blocking of sanctions from the US and bit of context there. So VTB and Spurbank, the two big ones, the state controls 92% of VTB and 50% percent of Spurbank. And Spurbank were down in terms of London traded Russian companies. They're all down about nearly basically 100%. They all died almost. Spurbank's down 99%. Gazprom's down 98% for the numbers. So yeah, so it'd be interesting to see how some of these funds fare. They've had a pretty rough time really in many different ways, trying to call the shots over the whole COVID situation. Then with the switch of the Fed, catching people a little off guard as well with the positioning with the yield movement we were talking about a few months ago. Now you've got this Russian situation. It's been a tough one. It's been a tough one. I mean, I guess in any super volatile period, it's really hard. But I mean, there's huge opportunity out there. If you can just get it right and timing it, isn't it? It's timing it right. That's the key. It's all in the timing. But obviously, whilst there's huge opportunity, of course, there's massive pain being reaped out across the asset space. Because yeah, if you're on the wrong side of these and you're not dealing with that, then yeah, it can get pretty ugly. And actually, I guess a lot of listeners, I imagine have been, let's say, crypto is obviously a very popular asset class. And you know, it's been a huge kind of volatile period and a huge period of downside for a lot of these coins. And it's just tough. It's tough to deal with it. Got to have diamond hands, Pierce. This is it. Yep. HODL. Clean the HODLs. HODL. Everything will be OK. I was talking. I was actually showing your age now. I was running an event at university yesterday, actually, and talking to a guy who's a crypto trader. And I was saying, yeah, you know, how have you, has it been over the last couple of months? Because obviously, there's been some serious downside. And he goes, oh, yeah, well, yeah, you know, it's fine. It's actually almost fully rebounded now. And I said, what, sorry? I'm not quite sure what charts you're looking at. But he said, oh, well, you know, it's nearly rebounded. And I said, all right, let's have a look at a chart then and pulled up the chart. And it's like, I don't know, it's bounced in the last couple of days. I don't know, maybe 10, 15% of the full sell-off. And in his mind, because he's so interesting, the psychology behind that, he now thinks, right, it's all gone back, back to the highs almost. So let me add a bit of flavour to that. So we peaked in Bitcoin. I'm looking at futures just because I have futures charts up all the time. So forgive me for anyone who's looking at the actual price of Bitcoin, looking at futures. So we peaked 10th of November, we were trading up at 69, just short of 70,000. We hit the low in the end of January of this year. It was down 52% from that high. The rally that your man's talking about is from basically the last week we've gone, we're up about 30%. Yeah, off the low, yeah. Off the low, correct. So we've recouped. I mean, if you look at it, we've recouped about just over a quarter of the move on the sell-off. Basically, if you want to put it in monetary terms, it's sold off $32,000, the price dropped by $32,000 and it's bounced by $8,000 or $9,000. So we dropped $32,000, it's bounced about $8,000 or $9,000. Well, look, let's not make it any worse for this chap because Bitcoin is already down another $1,500 as we speak. Well, there's a really important, anything around like $45,000, $44,000, $45,000 handles really key for technical resistance on Bitcoin. That was the kind of off that initial kind of January low where we tested $35,000 and big banks to, I mean, it wasn't quite $45,000, but almost. And that's really been a topside barrier. We tested that yesterday and it's pulling back now. So it looks like that resistance area has just done its job and pushed things back lower. But yeah, so technically, obviously, these cryptos are very, quite strongly influenced, more influenced by technicals, I'd say them pretty much. Some of the talk earlier in the week, of course, was about, because of all of the degree and stringency of the sanctions in play, was looking at the inflow because of people trying to come out of rubles and then whether or not there was any play into that into Bitcoin and other cryptos. So it did get a decent bounce two days ago. And it makes sense, right? I mean, this is like the first, I don't know, major sort of economy that's seen their currency collapsing where the, hang on now, I'm saying this, obviously Turkey have been through this as well, but for obviously different reasons. But yeah, I mean, shifting your rubles into Bitcoin or whatever other crypto is the perfect hedge, right? What I'm interested in is why didn't crypto bounce when the invasion started for that reason? Why did the bounce in crypto happen five, six days into the invasion? So that doesn't quite marry together in my mind. The other thing as well is that the French, I think we're talking two days ago, and they were saying that they basically, in particular, crypto currencies and crypto assets, they should not be used to circumvent the financial sanctions decided upon by the 27 EU countries. I thought Bitcoin's not supposed to be subject to this sort of thing. Well, that's a bit of a same bite. It sounds like Macron doesn't quite understand. Well, it wasn't Macron. Sorry, it wasn't Macron. It was someone else. Yeah, it was one of his teammates. Yeah, I think they kind of misunderstood the whole thing there, haven't they? Well, yeah, that's what I thought. I was like, EU to make sure Russia cannot circumvent sanctions with crypto assets. How do they do that? Well, unless they can seize crypto assets on, let's say, US-based crypto exchanges or what if their wallets are based in the US, maybe? I mean, I don't know. Yeah, and Coinbase actually has Coinbase, to be honest. So yeah, you're right. That would be it. Cool. Well, look, I mean, this is heading then towards the conversation of commodities, because WCI crude futures have hit a high today of $116.5 per barrel. It's the highest level since 2008. We did have an OPEC plus meeting yesterday, and actually is one of the shortest ones in recent history. I read that it lasts 13 minutes. Oh, wow, really? Which is very uncommon, because normally there's a lot of bartering and horse trading and so on to get an outcome. I guess some people might have been looking towards OPEC as to, you know, is there any deals that to be made for them to increase what has been the pattern of a slow gradual 400,000 barrels coming back to market, which has been the kind of direction of travel for some time. And they didn't blink at all. I guess without going too deep into it, there's just too many relationships to manage here for them to get anyway interested in moving that needle, right? And also, it's just too much of a live situation where so much can change so quickly that it's almost impossible to make kind of decisions on, because like when you went, you know, it's not like this is a tap like you've got in the kitchen. If you want to increase or decrease oil production levels, then it's, I know people often think, well, you just turn off the tap, right? Well, it's quite as easy as that. There's huge industrial production facilities that it's not quite switched on or switched off the switch. So, you know, making a decision literally a few days into the conflict about your oil production levels over the next six months, you know, you can't really make decisions based on that. So I think the next OPEC meeting, because they do it monthly now, they never used to, right? It used to be only every six months an OPEC meeting, but these days it's once per month. And so that's another reason why they didn't make any decisions here, because look, they got another one in four or five weeks, right? So, and by then, yeah, maybe things will be a bit clearer as to what this situation in the Ukraine might look like more in the medium term basis. And then fine, you can start to make decisions, maybe better decisions based on that. And a lot of this commodity movement is not just isolated energy. I know you were talking a couple of episodes ago, really, before all of this really kicked off about wheat and soft agricultural goods. And in terms of prices for wheat, it's gone past 11 bucks a bushel to the highest level in 14 years. So to recap, Ukraine, Russia, shipball in a quarter of the world's wheat exports. So the fighting that's happening is closing ports, is holding up transportation, just basically a logistical nightmare to call it mildly of what it is at the moment. One of the other interesting things I saw was some of the rationale as well about how aggressively bid it's been is to do with the fact that there's kind of the knock-on effects, because this isn't like oil, right? Where it's a physical hard commodity where the oil deposits are in the ground. And so you can just go into the ground and take it out, like whether it's rain, sun, should snow, whatever the case might be, right? But with a soft agricultural good, it follows the seasonal pattern. And so plantation and then harvesting your crop and so on, we're talking about the potential risk here of the shortages spilling over to next season beyond. And I think that implication actually, if anything, it's probably underplayed into certain respect. Well, and that's why the price has reacted more than, let's say, the price of oil. I mean, when we were talking about wheat as a commodity to watch for as a really good barometer for this geopolitical situation, we were talking about this a couple of weeks ago, the price was below $8. Okay, it tested $12 today. So let's just call that a 50% rally. So oil has rallied, but oil has gone from $90 to $115, right? So it's obviously not less than a 50% rally. So wheat generally has gone up higher. And that's because, yeah, you're looking at this situation, not only impacting supply in the short term, but possibly impacting supply over the medium term. So that just needs to get reflected in more. There's more supply risk for wheat over the medium term, which is why the price reaction has been much greater. And to put that into context, by the way, at $12, the last time wheat got above $12 was 2008, the start of January 2008. And that was only briefly. And that was the whole, I mean, that was a weird phenomenal six months for general commodity markets. That was the six month period where oil hit $150. And we were all worried about peak oil and commodities were going crazy. And that was just before the financial crisis. But other than that, this is basically a record high for wheat prices, like ever. So yeah, it's definitely, people are asking me now, I had a friend who was asking me yesterday about, look, shall I buy wheat? And I'm like, well, if you haven't bought it, if you didn't buy it already, like a couple of weeks ago, then I would suggest not buying it now. And that's just because when you have a 50% spike, well, then where'd you go from there? Do you go higher still? And maybe, I don't know now, it's just really hard to call. And what definitely happens is the volatility level, that you get price moves in both directions, and the amplitude of that volatility massively increases. And so if you often, one of the classic mistakes of a trader is you miss that first big move, and then you jump in because that FOMO, that fear of missing out, you think there's going to be another 50% move. It's fine. If I get in there, I'll grab this move and it'll be great. I could probably hypothesize that 90% of our listeners did that with crypto. At some point. Because, well, I hope that when they held, when it was, because I know that even before the 20 break and it soared higher, there was Bitcoin 20,000. There's always been huge swings. I know a lot of people shortly had some wicked ballbacks. We've got some pain trades there. Just to manage accordingly. But also, I mean, maybe I wanted to just touch on the fact that we've been talking about sanctions, governments issuing sanctions. But what's been really interesting to me is how markets have been almost self-sanctioning. Russia, a couple of good examples. If you took oil, I mean, one of the reasons why oil is higher, obviously, you just go, well, it's supply risk, of course. And yes, that's true. But actually, if you have a look at Russian oil, so that's basically what's called the Euro's crude. I mean, we often talk about WTI crude, which is the stuff that comes out of the Gulf of Mexico. So if you want to call it American crude or whatever, right? Or we talk about Brent crude, Euro's crude doesn't often get much airtime. But that right now is trading. So if you think oil is going up, well, Euro's crude isn't. That price is dropped by, it's trading at an $18 discount. Euro's crude is trading $18 per barrel lower than Brent crude. And you think, why is that? And that's because no one wants to buy it. And actually, no one can buy it because to get this Euro's crude from Russia, well, obviously, there's transportation in the mix. And fine, there's various pipelines and all the rest of it, but a lot of it still gets shipped, right? And there's a huge amount of financing and insurance that goes into this process. And right now, the banks aren't prepared to issue lines of credit to ensure shipments of Euro's crude coming from Russia. So actually, therefore, refineries, and it's the refineries, the big refineries in Europe like Germany, Italy, Netherlands, Poland, Finland, Lithuania, Greece, Romania, Turkey, Bulgaria, these are the big buyers of Euro's crude. These are refineries, right? You get the crude, take it to a refinery, the refinery process then kind of cracks it out into its then component parts, which are then usable, like petrol or gasoline or whatever, and paraffin and jet fuel and all this kind of sub, these are all sub components of crude oil, right? So the big refineries are buying Russian oil, but they're not anymore. So this stuff, they just can't sell it. I know, I know who's going to buy it. Go on. Abramovich, now he's got a bit of cash coming into the bank, apparently. The Chinese, the Chinese always, Iran has problems, get sanctioned, China buys it. This cash, and so they just stock it up like nobody's business, and they'll do this again with Russia. And although Putin has seemingly got about his business, perhaps not informing China of his actions, which has probably caused a degree of disdain, particularly when there's some major political events to happen in China about the whole succession extended term as Xi Jinping, he does not want to be belittled on international stage by small Vlad in his opinion. And so there's an easy way to fix that, which is chip me some of that crude. And then China have just come out, though, and for the first time, seemingly, criticizing Putin and Russia's move into the Ukraine. I think, well, there's two parts of this. I think short term, they have to do that in terms of just making sure not so much the relationship with the West. I don't think I don't think it's managing that. I think it's managing Putin to tell him, right? I mean, it seems to me clear that China was not in the loop with a lot of the details on the timing and size of the scale of the invasion involved. And so this is a little bit of like a reminder. But don't forget, just bring up a map, type in the silk road into Google, look at that map and look at the existing railway network that runs through Russia. China cannot operate without Russia, like it cannot. And never mind the fact that there's an economic belt that's going to run through inland transportation infrastructure. Guess what? Through Ukraine, into the proposed railways that are going to come south of Ukraine, coming up then into Western Europe. Well, that's their problem. They can't side with Russia because that'll annoy Ukraine, right? But they can't side with Ukraine because that'll annoy Russia. So I guess you're right in that they've got to stay neutralish. But today, they have moved off the neutral fence. That's just to keep it in the picture. That's just to remind Putin, I think, is my opinion. Look, just a reminder here, because it was when the Winter Olympics started. I think that's when Putin was in China and they signed like a big accord about we, I can't remember the exact phrase that they said, it was something very, very clear, like we will do, there's no, there's no exception to how far our relationship will go. I think that's what they said in a joint communique. And here we are. And China have apparently turned a little bit. What's your view on the Taiwan risk then? I heard what you said last week, and I totally agree. I think the risk assessment is radically different in terms of the risk reward of that move. I just think Taiwan, the sovereignty, the nature of the sovereignty of that island is more an ideology of this one China view rather than a strategic move, say, for the transportation of all the infrastructure of war and gas. That's different now. And then you throw in the whole, like you said, the sixth largest semiconductor producer in the world. So China know that and they know that trade with the US is still integral to their own economy. So I don't see that as a thing. What about this hypothesis? Xi Jinping waits till November when you get the once every five years party Congress and he's going to be anointed as the permanent king of China or whatever you want to call it, right? And I think getting past that hurdle is absolutely, that's all he goes back. Once past that hurdle, does he feel like that's his endorsement to then set about those kind of agendas of bringing Taiwan back into the fold? Or do you just think actually we've miscalculated this and that's not going to happen? I think Taiwan and I think Ukraine, I think these are much more long term ambitions. I definitely don't think that what's happened in Ukraine right now, although the timing and the aggressiveness as I said of the invasion that's happened now was slightly surprised. The fact that Russia are trying to take sovereignty from Ukraine is not new. And this war has been ongoing nonstop since 2014. It's just not in a physical form. It's been happening in a cyber form. And so I don't think that well, whatever happens with this Russian situation is too hard to tell right now in the short term. In the long term, though, I do think that it will end up being the case of these countries will gradually take sovereignty of these areas. They both know Russia, I think, and China in the way in which their political system is structured that they've got time. And so what's happened here, I think is an overt kind of step forward in aggression. But ultimately, I think probably the best case scenario here is that Putin gets what he wants, which is eastern part of Ukraine. And then it just slightly more goes the way of Russia. But I'd probably say we'll be here again in another 10 years and he'll take another slice. And I think with Taiwan, it's just the same over a protracted long period, just given the fact that she's not in any rush at all. So and all the meanwhile, economically, I know, let's ignore the short term deceleration in China that we're seeing right now. But the demographic change and shift economically is it's all heading that way anyway. And I just think it's just why this is why I was surprised that a lot of Putin and I think with China, I think they do try to go about it. Well, you've seen that they're changing the way of which they deal with issues on climate change on all these different types of things. China has tried to modernize to a certain respect on the international scene. This this kind of riding shirtless on the back of a bear like Putin style. I mean, you don't see Xi doing that. So I think I think the yeah, I think it will be much more long, long, long way out until we get to see Taiwan. I definitely to ask you a question, this is not going to lead like right end of the year, they go gun hoe in we're taking Taiwan, that's not going to happen. I don't think but I was wrong with Russia with what just happened now. So yeah, that's what I think. Okay. But look away from this then what this is resulting in is we talked about energy, we talked about soft, talk about base metals, zinc, higher since oh seven aluminium record high. So what we've got here at the moment is inflation on an annualized basis in the US is 7.5%. It's a four decade high. Now you've got this. We already knew it was going to go above the 7.5%. Anyway, I mean, in the UK now we're talking what I can't keep up with the latest forecast now we're eight 9% we're talking now. So what what does this mean going further forward because does this start to tilt us into dangerous territory now as far as what happens beyond what we can see which is then they start hiking rates aggressively to tackle inflation. What does this mean for the probability of recession risk going forward? Yeah. And I think well for sure this this Ukraine Russia geopolitical situation with the secondary knock on impact to drive broad commodity price spikes then has a tertiary impact of meaning inflation is going to stay higher for longer which means central banks then are well I've got an even more difficult challenge to try and deal with it but the problem you have probably in 2022 is that ultimately is I guess into the end of last year and the start of this year what you had was a rebound economically as economies reopened after let's say Omicron or you know and so that real strong economic kind of engine was firing and so central banks can hike rates quickly although markets don't like it central banks can hike rates quickly to try and contain high inflation and get away with it if the economy is really strong. I think the worry here is now that this situation is going to last for longer and so long that actually that COVID opening up rebound is going to slow and then you're left with still really high inflation and economies that are losing momentum. This is what we call then stagflation risk. This is the kind of worst case scenario where you've got inflation too high and economic growth too low because the central bank to tackle that high inflation where you hike rates but that puts a break on consumption it's a negative for growth so if growth is already dangerously weak and you're hiking to contain inflation then that's where you get a recession and you know with these commodities everyone's talking and they're right the only way these commodities come back down in the near term and certainly when you think about things like oil is if demand just collapses because at the moment all the whole supply-side spectrum is just positive for price everything and it's not just short-term with Russia and so on it's you know you've had you know stuff like what's gone on this week's insane with BP who own 20% of Ross Neft have said right we're binning it we're out with divesting out of Russia Shell own a huge chunk of Gazprom we're out everyone's out ExxonMobil this week cut that again or today sorry we're out as well everyone's divesting and Russia's a hugely important strategic location for you know discovery of more kind of resources that can be pulled out of the ground and more supply right and infrastructure being invested in and this whole infrastructure investment to increase production of course the green wave has meant that the investment going into that has been collapsing anyway and now you're getting these big energy giants pulling at Russia and it just makes the supply situation meet short medium and long-term supply situation now is looking really weak okay which is very positive for price so the only way price can come back for stuff like oil is if demand collapses that'll only happen if this whole scenario drives a really sharp global recession and I think at the moment that won't happen you won't get a sharp global recession I think you might get a milder inflation driven you know higher rates recession so mild recession which will maybe obviously dent demand but not to the point where oil is going to go back to I don't know 60 70 dollars you know I I honestly think that will we ever see oil here's his statement will we ever see oil trade back below 90 dollars ever again I'm not sure we will I've got my title for the podcast episode now thank you I'm genuinely I'm not I don't I'm not sure we will okay well look on the demand side that's not going to help either the Wall Street Journal were reporting last night that China's considering dropping it zero tolerance to COVID policy all right I missed that is that right so Beijing is unlikely unlikely to do this until next spring but apparently the report was suggesting they're gonna explain they're going to experiment with measures in certain cities so last night travel leisure all the Macau related gaming stocks they all soared near double digit percent last last night right in China so yeah that could be a hang on this isn't going to start for another 12 months right we're talking China here appears come on it's just it's just crazy it's crazy policy my friends currently in the Hong Kong um hotel for the uninfected yeah it's bad that's actually what it's called yeah the hotel for the uninfected uh he's and you got to be there for three weeks as you enter into the country three weeks quarantining on entry even if you if you don't have it yeah I mean yeah yeah yeah I was supposed to go to see my um my grand my granddad actually um later this year he turns a hundred oh wow but I don't think we're gonna be able to go to be honest not at this rate so yeah we'll see the golden peach they call it in China what turning a hundred yeah you have to give you have to I have to give him a basically a gold peach it's all right yeah it's in like a little glass box pair of peaches I like it um here all you get here is you get a letter from the queen right right which is yeah a nice touch but it's not gold no yeah gold's pretty pricey right now so absolutely so the other thing then here is that we had the semi-annual testimony and in any other normal time this would be the major talking point that you and I would be discussing right now this is kind of like the platform where Powell sets out the stall of policy and latest uh monetary policy thinking but obviously it's being dominated by as we discuss Russia but Powell said on that point they'll need to proceed carefully emphasizing the need to be nimble to incoming data and the evolving outlook importantly though he said that he's inclined to back a quarter basis point hike so he explicitly said that so 50 it's gone yeah um and the other second important point he said was before you get too hasty flipping in the other direction thinking oh okay let's just price all the hikes off because of what's happening he did say we are open to a series of rate hikes and the market pricing last of my checks few hours ago is five we've priced in for five now i think we got as much as seven before which is the full the full sweep of the year of 22 but just come back a little bit any thoughts on on Powell on those numbers yeah i mean i think the fed have to hike and it's got to be the start of a cycle and for me it's just the speed of the hiking cycle that's the only variable i don't you know unless there's a big recession which there might be in which case fine they might have to revise things but right now for the next for 2022 it is the speed of the hiking cycle that's the only variable and i mean look i i was never ever anywhere near the seven rate hikes prediction i thought that was insane even though likes of goldman's and i think jp Morgan was it were kind of and the whole market was kind of got a bit carried away and pricing in seven and i think Powell's used that he kind of he almost had 50 in the bank right he had a 50 hike he had a march 50 hike in the bank right until what i mean by that is markets had already priced it in so markets wouldn't have freaked out any more than they'd already had done if it had hiked 50 so it's actually quite a nice luxury to go well actually you know what we're going to hike by less so the whole mindset from a markets point of view is then all right great it's less it's less rate hikes than we thought so it's a positive but they're still hiking and look they need to because you know this inflation thing's out of hand so whether it's five i'm still a four i'm a four hike man once a quarter okay well look let's let's end it there for russia let's just do our final part where just to change it up we thought we'd have a quick chat about tiktok because i know probably the majority of people listening are on and use tiktok on a daily basis it would seem because i'm going to run through a few stats here before we talk about why we're talking tiktok so here's tiktok by the numbers active users one billion that's one billion monthly active users market penetration there are 4.8 billion internet users 20.83 use bite balances video sharing services tiktok has now surpassed twitter telegram reddit pinterest snapchat in monthly users tiktok is the most engaging social media app the average session length is 10 minutes nearly 11 minutes that blows my mind because i remember when facebook was first monetizing its platform which wasn't that long ago yeah a couple of years right when they IPO then it was like oh how they're going to monetize these users and it was like more than a couple years hang on hang on it's like 2014 2015 facebook IPO okay perhaps i'm showing my age felt like a few years ago but the the point being there is that i remember the conversations are pivoting around like minute two minutes yeah 11 minutes here i mean that's insane and then to to look at this globally the average time spent on tiktok per day so over the day is 52 minutes which just blew my mind when i read that with 90 percent of users accessing it on the daily basis tiktok's generation z penetration the highest in america of all places 47.4 percent of their active users are aged between check out the bottom end of this range 10 to 29 and i saw this at christmas actually my um brother-in-law his daughter who is seven she was like a zombie she was like zonked i mean i get it like christmas gets boring right you sat around watching rubbish tv but it was like it was like something had become her and she would just sit there with a phone in her face like hiding in the sofa well incredibly this is correct like because yeah in a matter it's 120 million users in america so i was just looking at the demographic kind of age splits and because you like naturally i say someone who's in their 40s right so i've got a daughter who's 15 so she's like spot on banging the the kind of at least like well hang on the lower end of the definite age range and she's obviously on it and all her friends are on it all of the time you know you mentioned 52 minutes a day there i am absolutely not surprised i'm surprised it's not more look i get the usage that i see with my own eyes but um in america so between the population between the ages of 15 and 34 which you think that's gonna be most it's 80 million people okay age between 15 and 34 80 million but there's 120 million us users so yeah there's gotta be people below 15 and below 10 and i mean on the upper going above 35 i guess i mean i'm in my 40s and i don't use it my none of my friends use it i don't that's unusual do you do you use it no you're basically in your 40s now right almost um no none of my friends use it yeah so we're in our like late 30s yeah so look that's a lot of usage going on um in america but that in what was interesting yeah the top do you know the top usage so it's america's number 120 million then it's indonesia 87 and a half million active users then it's brazil 73 million russia next at 5th 49 million mexico 42 the uk it's actually down on in 10th place obviously our population is not as big as the likes of the us and the indonesians and the brazils but um yeah 10th place 20 million users here in the uk yeah and so the reason why we're talking about tiktok in such a way is that eight states including california massachusetts in the us announced midweek that they've launched a bipartisan nationwide probe of tiktok now focusing on whether the app causes any physical or mental harm to young people and that will probably resonate because of the fact that it was a similar thing that they were going after with facebook and instagram this was just prior to the pivot to a meta platform um that we had at the time amongst a whole bunch of other stuff that were facebook were facing at the time so yeah i mean what it's been banned in india that was a huge market for them um i guess a lot of this is coming out of what data privacy concerns the idea that this is a chinese owned app yeah i mean in india that's true india was the biggest you're right but they banned it because of data privacy concerns other countries have banned it for other reasons um like pakistan have banned it for immoral and indecent content for example but um yeah i mean look we've had some you know certainly the data privacy and the chinese situation in the us has been aired but i think this is this seems to be different this seems to be very squarely about mental health and i know first hand again as a parent of a child who uses tiktok and look i don't want to just pigeonhole tiktok here just the general social media you know snapchat basically my daughter uses tiktok and snapchat um not so much instagram but definitely not facebook um but you know these kind of this online world right it's like like it's like the the pre-meta sort of online world um it carries great benefits don't get me wrong in terms of connectivity but also i think carries huge challenges for particularly young people and i see it first hand i think what this is from the us point of view personally i think this move these noises about flagging the mental health situation i think it's squarely aimed at parents in the us ahead of the midterms and i think this is biden trying to play a card here to up his ratings and win a few votes by saying look we're aware of the mental health issues we know you're aware of them we know you're concerned about them and we're on it we're going to do something about it and i think that and i think this is a political maneuver to try and engineer a bit more support amongst the parent demographic in america now is it going to actually go anywhere does it mean anything for usage of tiktok in america definitely not in the short term absolutely not medium term probably not we're probably you know america's been going after the the facebook's of this world for years right in terms of regulatory risk and threats and and obviously nothing yet has happened and so i think this is falls into that category yeah and with the kind of size as the angle that complements that i think in a way of the optics from biden's administration's point of view is kind of talking about the just the nature of just trying to think how how how to put it so it's like with inflation going higher at the moment people are going to get poorer because wages are not going to keep pace and so all this meantime we've seen large corporations get larger and larger and larger and so you just want to to appear to be siding with the average joe to be doing what you can to go out of your way protect their children as you said but also to have a fair playing field that's not being penalized by big corporate america nothing will change like you said it's just strategy to to position yourself accordingly to pick up a certain pocket of what might register with one of the many different variables that voters look at when they're making their decision so yeah i think that's a interesting take and i i'd say i would agree with you biden needs it all right well look we'll we'll wrap it up there as i said go back and feel free to check out some of the career insights that we've put out the last couple of weeks there's three actually we've done one with a portfolio manager gives a really good insight into that as a role because i know that's one where i guess there's a bit of mystique around that it's kind of like how do you actually become a pm because a lot of people think that sounds pretty cool like managing billions of dollars but how do you actually get to that point what are the stresses when you're there what are the skills needed for it there's one on that there's one from a former trainee of ours i'm in ramen from 10 well 11 years ago who now runs one of the biggest players in the energy market based here in london and he did a session with me which was really great gave five top tips that he'd give to any finance student about what helped him at least have have success for himself and then the last one i mentioned with billow so yeah go and check those out if you're a student listening otherwise that's it for this week uh good to be back thanks for for the hour peers as ever can you can you not go away from the desk ever again or some people might say can you go on holiday again depends what what you want the market to do basically you're going to check that passport for any kind of that fix that fix long looking cool all right thanks peers and thanks everyone for listening and see you next week have a good weekend