Mark Rossano of C6 Capital
0:26 So I'm gonna totally just drop on you right now. Yesterday I was in here. I actually recorded an audition tape to be Hamid's father-in-law. That's awesome. Yeah, no way in hell I'm gonna get it.
0:35 That's amazing. So they had kind of, it turns out my grandmother's best friend, her daughter and my mom are best friends And this lady, she's a few years older than me, so we weren't really
0:52 friends growing up, but we obviously knew each other 'cause the family and all. Yeah. She's a casting lady and we're friends on Instagram. She's like, you know, always posting, I'm looking for
1:02 this, I'm looking for this, and it's a mead's father-in-law. And I was like, oh my God, that's a mead. So anyway, I shot in my dish. Oh, I sent in some tape of me and on the basis of that,
1:14 they actually wanted me to do an audition Okay, so they sent me a script. That's fantastic. And I just, I just, and the point of the character is a redneck who's seen the light because he's got a
1:27 son-in-law, Hamid, you know, and that's amazing. You know, I don't put pork in my chili anymore, you know, all the, all the sex and so anyway, I just channeled my inner Ron White. That's
1:40 good. Yeah. So that's, that's, that's, that was my audition. We, we, chewing on a cigar at the same time. No, because we didn't have a cigar down here I was chewing on a marker and I turned
1:49 to the camera. I said, don't give me shit. I'm trying to quit everybody. I'm Chuck fucking Yates. I'm from Richmond, Texas, which actually a suburb of Houston. I'll shoot in any fucking time
2:02 y'all want to shoot this shit. Let's do this. I'll quit looking at me. I'm trying to quit. Oh hell, Muhammad, you don't even know the half of it. Once Rush Limbaugh died, I didn't know what to
2:15 do. I mean, that Sean Hannity's kind of a little bitch, but anyway, I'm awake now, not woke. That's like some Hollywood bullshit, you know? Well, when you said rock, like that's why I
2:28 immediately think of the cigar. Oh my God, I know, he's the best. Yeah, wait, so are they doing a second? Is it the second or third season? Most series two. Season two, okay. Season two,
2:37 yeah, yeah. Yeah, 'cause I watched and I was waiting for this, 'cause that came out in 2020 Yeah, it's been a minute because I thought it was awesome. Like, when he gets shot. When the bullet
2:48 grazes him? Yeah. That was my favorite episode. Well, you know, when he is using his humor as a defense mechanism, he's just great. You know, when he's kind of overwhelmed or whatever, yeah.
3:01 I love that whole thing. And it's so Houston, right? I mean, we know all the places, if you're a Houstonian, that - where there's some of them, I was like, I think I've been there. So yeah,
3:13 it's like, I've driven by that. It's like that all looks familiar. Yeah. It's good. So I've done that. I will send you my. Oh, please, I would love to please critique, especially when you
3:24 have the marker as well. I've got the marker in the scotch glass, right? Here you go. And I'm rock and I'm supposed to be at a chili cook. Also, I'm an Astros apron on
3:35 the, uh, what's the guy's name? That that does all the crazy ads.
3:41 Um, who's the one that, that always has, like, if the Astros win the world series, you go, Mattress Mac. Yes. Yeah. He's my favorite. I was like, cause I always think of, he always has a
3:51 ton of Astros stuff on it. So
3:55 that's what he said. So the Astro apron. Don't think you think of him should have channel mattress Mac for it. Solid. Hot word. Yeah. Exactly. That's great. Every time I see those commercials,
4:04 like it's so exciting. So anyway, there you go I hope you're sitting with a net. That's, there you go. Yeah, that would be too big. How many episodes did you be in? I have no idea. They sent
4:16 me one page of a script. Okay, just as a test read. Yeah, okay, well, I think I committed the carnal sin. I don't think you're supposed to add lib the lines, and I kind of just add lib to
4:28 bunch of the lines. I don't know, it goes both ways. Sometimes I feel like people like it. Like, did
4:35 you ever watch Raffi from the league? No. I don't know who you're talking about. Yeah, so it's in his contract. He doesn't use a script. Okay. He'll use, like he'll follow the line, the story
4:50 lines. So the gentleman from Brooklyn Nine-Nine, the one that passed away, so he holds to the line to the letter and they had trouble working together at first because he's just all over the place
4:58 but he'll follow like within a box.
5:10 but there's no, so each take is just different. And so it was throwing them off and then they finally figured out how to make it work. So sometimes it just makes it more fluid and more natural.
5:20 And my issue was I was trying to, so I throw this charity roast each year and I always hire a comedy writer to write the roast for us. We, after the Lisa Stewart roast, that the next year I was
5:35 calling and saying, Hey, will you buy a table from the roast? And people were like, Hey, the table just don't make me go. We were like, Okay, we need a professional to help out here. So we
5:45 wound up doing it. But what I have found working with him on stuff is he'll write a great joke, but you kind of have to put it into your cadence. Exactly. And so I have to go off and rewrite it.
5:57 Right. I kind of wound up doing this, throwing some stuff in. Well, that's the thing. It's like you have to make it yours, otherwise it'll feel just so flat and just like you're reading it and
6:07 you need to put it in your cadence.
6:11 or change the word so that it's something that is how you would say it, not how. And that's, I think, sometimes makes it much better because I have to put things into the way I would say it, not
6:22 the way they have it written, but keeping the general theme just personally. Well, what I think I did though, is I added too many jokes to it, 'cause really, you were setting up Mo in the
6:35 punchline joke was, this is too good to be true I bet you're the FBI. Right. You know? Yeah. But I was throwing too many jokes in there like that. I think the line from the script was something
6:47 to the effect of, I didn't know what to do after Rush Limbaugh died, but Hamid turned me on to Al Jazeera. And
6:56 I just kept rambling with it. I was like, yeah, I didn't know what to do after Rush Limbaugh. That Sean Hannity's kind of a little bitch. And then Al Jazeera, why are we all afraid Al Jazeera?
7:07 It's like something that, you know. You should take for hay fever or something. I was just channeling my favorite. That's awesome. All right, makes sense of the world for me because we're
7:17 sitting here on a day where NASDAQ, I think, was down 2. It was down a point and a half. I think oil prices that were up, but oil stocks are down. Right. I think we could get natural gas from
7:32 the street corner if we wanted. Yeah, it's free. You know, it's a dime bag It's a dime bag, yeah, exactly, but actually a dime. It's the only thing that's actually seen deflation. Yes, seen
7:43 deflation. We have that, we have seven stocks accounting for 100 of the growth. We haven't had a recession, and I can't understand why that hasn't happened. We've seen inflation. I will say
7:57 though, inflation hasn't been as bad as I thought it would have
8:00 been given
8:02 the amount of money I can't make sense of any of us. any of this and you're really smart. So that's
8:12 why I wanted you to come on. Sure. So when you look at the inflation, you know, stagflation side, you have to look at, like you said, there's the core companies that are essentially anything AI,
8:24 anything that's doing AI is just up and ungodly amount. And if you look at like Cisco 1998, it just looks shockingly similar And just like everything else, you know, the things don't, you know,
8:37 history doesn't repeat, but it runs. And so you're looking at the next iteration of what that tech boom would look like. The problem when you look at inflation, you know, to your point on, on
8:48 why haven't we had a recession, it's like, well, what is a recession? And I think when you look at the no growth and the, there's no growth and there's like the soft landing. And I think the
9:00 problem is going to be is that how long is the soft landing. So you're seeing this movement. down, but it doesn't mean it's going to collapse. It just means that you're going to see this really
9:12 long kind of stagnant growth. And the reason why you haven't seen that straight up recession is because of the consumer. The consumer has been layering in a significant amount of debt and you have
9:23 the government that has just been putting in money, which has helped to keep the GDP afloat. But when you start whittling down these key pieces, there's really not been much growth per se Now,
9:36 when you look at the inflation buckets and you say, Well, it hasn't been as bad. What hasn't been as bad? Have you bought a new car recently? Have you looked at food? Then you look at health
9:46 care? Some of these things in pockets, the inflation has been massive. But if you're not worried about one or the other, you're not going to see it the same amount. So when you look at core
9:56 inflation, when you look at services, it continues to creep higher. But it's also being buried in that shrinkflation or you're getting, you're paying the same but for much less. So the quality of
10:09 what you're getting coming on. I've noticed that, Boogin' or not, the most dramatic effect of that is actually at my local Chinese restaurant down in Rosenberg, Texas. I mean, the thing I've
10:20 ordered for 35 years, jalapeno shrimp in black bean sauce is now about two thirds of the size and the rice is no longer a bowl, it's a cup. Right. Yeah. And that's where, so they're trying to do
10:35 that bait and switch where you're not getting as much and the service quality is going down, but you're still paying the same amount. And they've almost trained you in a way to expect to get less
10:48 but pay more. And that's where they're good at trying to hide it and trying to make it seem like you're still getting and the inflation is in as bad. But when you start stripping away and you think
10:58 about, well, 2019, I was getting a lot to your point on, you know, the rice has been cut and realistically how much does rice cost. So what are they trying to protect their margin with, and
11:10 that's where the inflation has been quite sneaky in terms of the bite that it's created. And then it's also based on regions. Some regions are going to see inflation, and on a percentage will sound
11:23 bad, but realistically, you're starting from such a low point, inflation's going to be felt differently in different locations. So the Northeast is obviously the Northeast, California, the West
11:33 Coast, but there's areas where prices don't seem as bad, but they started from such a low point that you're rapidly catching up, and wages just haven't. And now you're getting this wage price
11:46 spiral that's starting to amp up, and that's why I think the Fed is going to be concerned. Because if you think about the late 70s into the early 80s, you had three waves of inflation. And right
11:58 now, we're coming into wave too. And that's why I do think Powell, as much as I don't like him, I don't think he's a stupid And I think he sees what's coming and wants to get ahead of it, because
12:10 he's going to say, look, the tailor rule, which you can use to gauge what the Fed funds rate should be, you know, you could say that pretty much throughout most of the last two years, we should
12:21 have been at about 7. So he's going to say, all right guys, I'm going to get you to five and a quarter. I could get you to seven, but I'm not going to. But because I didn't go all the way to
12:31 where I should have been, I'm going to stay here much longer and try to kill some of this pressure that's coming up because like when I was at COP 28, everybody was saying, Oh, you know, we have
12:43 no growth because of elevated rates. And it's like, What? If you went back to 1998 and you told them that the 10 year was 5, they'd be like, Yeah, end. You know, we invented, we created the
12:58 internet with a two year at 6, but we've gotten trained to think, Oh, we need 10 to 10 year at sub 1 to have. growth, to have innovation, realistically, you've actually seen a stagnation in
13:11 innovation because people have just done that financial manipulation, buybacks, leverage the balance sheet, buyback equity, instead of actually adjusting their hurdle rates, and now so you have
13:23 all of these zombie companies, you have all these companies that are just churning through debt, but actually have no means or path to cash flow positive, and that's where you're seeing a lot of
13:34 these zombie companies that are just going to die on the vine.
13:38 So where does this wind up shaking out? Because you were sitting there talking about potentially fed,
13:47 trying the slow, soft landing, if you will, for a long time. You know, when I go back and look at history, fiat currencies end like that. You know, it's not a slow land I mean, you're the
14:03 Weimer Republic having a good day. pretty senior walking around with wheelbarrows of money. I mean, have we, have we hit Weimer Republic or is it, or is the flip side, the dollar as ugly as it
14:16 is is still the healthy as a member of the leper colony and we're just, you know, we're going to slog through. And I think that's the biggest, the biggest part, part of it is where we are the
14:27 prettiest house on the ugliest block. And it's the kind of thing where when you look at how we've installed ourselves, you know, when you take in the equity markets, the debt markets, that's just
14:40 a piece of it. Everyone's like, Oh, well, those can be replaced. But look at swift. So when you look at what people are paying for in international transactions, the dollars actually gain
14:53 traction, because would you rather use the dollar or the euro or the yet? So realistically, the yen has lost a significant amount of of their transaction capacity. You're seeing them drop off.
15:07 and people are opting to use more dollar. Now, the other piece, which is everyone likes to point to the equity market and the fixed income market, there's also the insurance market. There's the
15:17 derivatives market, the hedging market, which when you think of it from a notional value side, excuse me, it's massive. And that is a huge component where how do you replace that? And to your
15:30 point, it's we are kind of stuck here and there's no way to really replace us because you'd have to rebuild the system, which is why Brent Woods was so good for us back in the '70s when you had this
15:44 restructuring. And now I think when you go to Brent Woods 20, 30, you're gonna get a rewading, but the dollar's still gonna maintain its strength. And one of the things that I said back in 2020
15:56 is the dollar's gonna survive this round. I do think to your point, like you see it getting chipped away at, but everyone keeps collapsing fast. So then all of a sudden it's like, all right,
16:08 well, who am I going to use? Like, who can I rely on and protect? And as long as we have the Navy that we have, it's going to be really hard to not use the dollar. India's a perfect example.
16:19 Cause everyone's pointing to bricks and saying, oh, look at bricks, the bricks getting together is going to eliminate the dollar. Well, Brazil's turning around to China and saying, well, I
16:30 don't want to use the yawn. And then India is like, well, if you're not going to use the rupee, I'm not going to use the yawn I don't trust the ruble. So then, who do you default to? Well, the
16:40 dollar. You know, where can I - I'm great American, Satanist, capitalist, yeah. And it's really difficult because if you think about how Brazil has structured itself using forwards to manage and
16:52 swaps, well, who are you going to go against? Well, it's what's the most liquid market, the US dollar. So, and then at the same time, and this is the overarching theme, in order to be the
17:04 reserve currency of the world, be willing to run an account deficit. How many countries are willing to have an account deficit? China never wants to have a deficit. They always want a surplus. So
17:16 it's going to be really difficult to really dethrone the dollar in a meaningful way.
17:22 Our skill set at printing money. It's
17:28 amazing. It's amazing. It's your core competency as a country. We print money. And it's because we've created this situation where we've got everyone addicted to the dollar. How much
17:40 international debt is denominated in dollars? How much insurance and all these things that cross, which is why we're just locked in this? How many people
17:53 even know there's a European option versus an American option? How many people are buying calls and puts under the European standard versus the American standard? And it's just that we've just been
18:04 able to establish ourselves. So we're sitting here five years redoing this podcast. The review of the last five years is just kind of slogging along. Yeah, I think this is, and it's funny now
18:18 because back in 2019, I was looking at this and saying we're gonna head into what I called the lost decade. And it was more along the lines of what was happening in China and the problem is what was
18:31 happening in 2019 in China was happening in 2011 It's just the law of diminishing returns. At some point, you're gonna hit the wall. And back when the European crisis was happening, the comment
18:45 was, the foot is strong and the can is light, so you can keep kicking that can. But I was like, until you're kicking it straight into a brick wall, that's right in front of you. And that's what
18:56 happened with China. China was just kicking that can and then eventually you were gonna have that drop off. And the US is something similar. problems. One has a real estate debt problem mixed with
19:09 a more provincial debt, which it is a communist country. So it rolls up to the federal government. And we just skipped it and just went straight to the federal government printing. So you have
19:18 these two debt issues. And the only way to really normalize this is to work it off. But you have to be willing to make those tough structural changes. And that's where, you know, do you go down
19:32 the chapification route, or do you
19:35 make the structural change, except no growth, have a bit of deflation, kind of reset the system, and then you're back off to the races. If if I don't want to stick on the economy for just a
19:47 second, before we hit the energy, but if if five years from now, we're doing this and we're talking economy, and we surprise way to the upside, what happened? It was the consumer that was
20:00 willing to carry more debt than anybody perceived possible. And it's really 'cause what do we have but the consumer? I mean, that's what China's missing. China was trying to create the consumer
20:12 never quite got there because the Asian mindset has always been more of a saving mindset. And it's hard to make that pivot where I make the joke back when I was younger and my grandparents are off
20:24 the boat Italian and my grandmother says to me, Go get the pizza dough. 'Cause I don't know if you've had this but every grandparent, at least back when I was little, every grandparent had coffee
20:37 cans that the dough was in. So I would go get the dough, but it's in a coffee can. Okay, I open one coffee can. What are the screws? Open another one, there's bolts. Open another, there's1,
20:48 000 in cash. And I look, I'm like, so I finally find the dough, I bring it up, I was like, Grandma, why do you have all that money in cans? She's like, Oh, can't trust the banks. Can't
20:59 trust the banks and it's that token. time and it really happened with more of the boomer side, where they started to spend more, be a bit freer. And then that was when, but anyone that came
21:11 through the Great Depression, you didn't trust banks, you always had 10 K and cash somewhere in a house. Buried out in the yard. People had a suitcase. They had a suitcase. They were, they were
21:23 in coffee cans, wrapped it in plastic and buried it in the garden. And you know, my grandfather, the running joke was, you know, it's always underneath the tomato flower, the tomato garden.
21:34 But you know, they kept it in the basement. But when they passed away and we were cleaning out the basement, I mean, there was eight grand in the basement, just in coffee cans. I was like, this
21:44 is, but that was the mindset. And now to your point on what makes this different, it's just we're continuing to allow the consumer to carry that debt. And it just comes down to rates and banks
21:58 willing to write those loans. I think at some you're going to have that point of no return where consumers are like, you know what? I can't do this anymore. And the reason why I say this is more
22:10 like the 70s into the 80s is because, you know, in that period, you came off the gold standard. You had unfettered printing based on the Vietnam War coming out of it. You had a wage price spiral
22:23 and you had commodity shortfalls. You know, what do you have here? You know, and whether those commodity shortfalls were real or created, you have something similar, you know, you have crude
22:33 prices that are sticky. You have gas that's come down, but you have gasoline and diesel that's sticky. You have unfettered printing. Obviously, there's a lot more zeroes now than it was in the
22:42 70s, but it's very similar. And that's why I think you're seeing something that's repeating itself and Powell knows that if he doesn't stay in front of it, you're going to create a Volcker type
22:56 situation Even Volker said look I wish I went up slower stayed higher longer, but not at 22. He was like, I wish I got to 19 and then stayed there instead of running straight up, but he had to
23:11 regain the faith in the Fed. And I think he's trying to do that of like, look, the Fed put is gone. And I think that's gonna be that balancing act too. When does the consumer stop? I think when
23:21 people stop relying on the Fed put.
23:26 You're actually wrong. We've surprised to the upside of Travis Kelsey and Tay Tay actually get married and start having children. Yes. So you missed that. Well, so the, what does she add to the,
23:39 what is it like 04 to the GDP? Yeah. I mean, so now the way that they would fix this is if they telecast their wedding at the movie theaters. So you could actually attend their wedding live in the
23:54 movie theaters. There we go. I think that would be, that is a home run idea. Can I audition to be the priest?
24:03 Yeah, absolutely. Yeah, absolutely. Yes. That was probably good. Or you could try to do the mirror fromShits Creek when she is the - Yes. 'Cause that is another really, really good group. We
24:14 could do that. So if we surprise to the downside, like it's just way worse than any of us imagine over the next five years, what kind of happened there? I think it's the debt bubble popped much
24:27 faster. Yeah It's really gonna be how do the banks manage this? And this is the ignorance of the Fed and the banking situation. So during the stress tests, because everyone wanted to do their
24:42 stress tests, everybody just assumed lower rates. Nobody's stress test a bank if rates went up. It's like, so essentially you were saying that you were so, I guess, full of yourself, You
24:56 thought you could hold back the invisible hand and the invisible hand. is gonna come backhand pimp slap, everyone that thought it was gonna be held back. And one of the things I've said is you can
25:07 delay it, but you're never gonna hold it back. And I think depending on how quickly it comes across, and is it at a federal level? Excuse me, is it at a real estate level? Is it at a consumer
25:21 level? Or is it kind of a mixture of all three? I think that's gonna be how deep does it go? Because the consumer is in trouble And I think that's where I get the most concern. In the middle of
25:33 COVID, I think it was heart energy had me on to talk about shale. And I did the bubble talk and kind of went through the bubbles of history and the tulip bubble, the railroad bubble in England in
25:49 the 1850s, which by the way, has my single favorite business, quote of all time, a Rothschild, could you know, for the audience back in the 1850s, literally at one point. someone did a
26:01 calculation with all the railroad tracks they were laying in England, that every person on the island had to be on a train for 22 hours a day for the railroads to just break even. Not even make any
26:14 money. And a Rothschild is reported as saying, there are three paths to ruin, wine, women, and engineers.
26:25 I like that. The first two are more fun. The last one's the most certain Yeah. And supposedly 90 of the railroad tracks in London, or in England today were built in the 1850s. They've obviously
26:39 replaced tracks and all. Right. But anyway, the interesting thing is you read all the academic studies on bubbles and it's, they literally go up till they get down. Right. And none of the
26:52 academics have been able to come up with the four or five characteristics of when the fall happens It literally just happened. So that's always my, to your point on the debt bubble, if you will,
27:06 that's always my fears. One day it just shows up and with a man who has no income, he lives on a modest portfolio that kind of sucks. And to
27:16 your point, when you look at, I was having this conversation several times, one was about Bitcoin when Bitcoin was going from 75, 000 and everyone's like, is it going to collapse? I'm like,
27:29 well, yeah. And they're like, well, so I shouldn't buy it. I was like, I never said it could go to 151st, but it's going to go back to 26, 000 at some point. So and it's the same thing when
27:40 you look at Nvidia, because everyone's like, Oh, should I, should I short in video? I'm like, sure. I was like, but there's no reason Nvidia can't go up another 300 bucks. Like, why not?
27:52 Why did Cisco continue going up? Like, why couldn't Nvidia go up another 400 because why are you buying here? Not to say not a great company, not to say it's not producing something of the future,
28:05 but how many people are buying Nvidia 1000 chips? You know, they fit in a shoebox and give you think of a blade of a server. That blade consumes the same electrical throughput as an EV. So it's
28:18 like, how are we rebuilding a grid? Like, are we adding power somewhere? Like, how are we going to support this? And to your point on, and back to the China piece, it's like everybody, when I
28:29 was making the pitch on why I thought China was in trouble, they're like, Oh, you could have said that in 2011. It's like, Sure. You could have said it in 2011, but they had 1, 000 go cities.
28:39 You know? And I said back in 2014, I was like, Is it 1, 000? Is it 10, 000? Is it 1, 000, 000? At some point, you're going to hit that critical mass where, to your point, nope, it was
28:50 the millionth and first. Why wasn't it the 999th? It was that last one that just pushed it over the edge, and then you hit the point of And that's something similar where, you know, what does it,
29:04 economists have called eight of the last four bubbles. You know, and that's, and that's the whole thing. Like I've been saying the consumer should have dropped, you know, a year ago. And here
29:14 we are, and the consumer is still sitting there just printing money with their credit cards in abandon. I'm like, guys, like credit card APR is like 26. Like you understand that compounds on
29:28 itself, right? Like what are you guys doing? But until someone stops, the merry-go-round is going to keep going.
29:37 So what does this pretend for us in energy? What do we need to be in this world? What do we need to be thinking about energy? So from an energy perspective, I think we're in a very good position,
29:53 especially when you look at liquids So, you know, and again, I'll probably get, I'll get shit for this, but. I don't think, I think black oil is demand is topped out. I don't think it goes
30:06 down. I'm not calling, I'm not calling peak oil. But I think when you look at black oil, we've really kind of hit this steady state that we have found. But there's a huge demand for liquids.
30:19 They're from the natural gas, liquid side, from the condensate side. And when you look at the green dream and how it's built on plastic, you're gonna have to see a significant amount coming
30:30 forward. So who produces the most of it? Who has a ton of it, the US? You know, I get concerned, and this is where this comes back to more of a political statement. We have the position where
30:44 if we wanted to get serious and we wanted to vertically integrate, I mean, we could easily compete against anyone else in the world. But instead, we're trying to, you know, that green wash where,
30:55 okay, we'll produce it, but we're not gonna refine it here. We're gonna send it halfway around the world and bring it back as the final product. It's like, but why? And that's where I think as
31:05 we go, and if you use the scope metrics, scope one to scope four, some of the individuals that are pushing that green agenda, they're like, oh, we need to show scope three, scope four. And as
31:17 an energy, I'm like, yeah, let's go all the way. Let's go, you know, create it a great. Because I think a lot of the nuances that were hidden for a long time are gonna get ripped off and you're
31:29 starting to see people get serious about it. And especially when you look at the cancellations of wind projects, solar projects, and that's what I think higher rates has to do. You have to
31:41 normalize. You've had misallocation of capital for the last decade or more because of these low rates. I think if you ripped the bandaid off, you take away these subsidies, you take away these low
31:53 rates and it's like, wait, natural guess is what kind of break even? and that wind is what. kind of break even, like, what is your uptime and utilization rate? What is yours? Oh, okay. And
32:04 now all of a sudden, this makes a lot of sense. And if you start looking at the technology that decarbonizes energy, you do methane capture, you do carbon capture, you do methane tracking. All
32:17 of a sudden, you're like, wow, this is a really good solution. When you start looking at it on the full spectrum, which I think has to be brought forward much faster Yeah,
32:29 I keep coming back to, and we talked about this yesterday on the BDE show, because I think one of the best things from their point of view that the environmentalist did is they convinced the world
32:43 that we'd have all green energy. It would be cheaper if it just weren't for big, bad oil. Right. And, you know, and, and I always say, if that were true, China, China is using a lot of
32:55 renewables, but they're also building a lot of coal plants. You know, that kind of tells you something about economics and so. And base load power. I think that it comes down to where is your
33:08 base load coming from? And one of the things, so when I was in Mazdar City, you know, I was working with GE Capital at the time and we were trying to figure out what was the right mix of solar,
33:20 you know, yeah, short cycle gas turbines, wind solar geothermal. And what was the right basket? Because it was always about a basket approach You know, solar in the sands of Nevada are fantastic.
33:32 You know, solar in the clay of Houston or the winters of Minnesota, not as much. So you have to be serious about where you're gonna put this. So when we're there, you know, there is, we're
33:45 doing these testings and I go up to the solar panel and I notice that there's a film on it. And I'm like, well, why is there a, what is this? And I'm like, oh, you know, because the Middle
33:56 East underwater for so long is actually very high. content. And as the wind blows, it, it creates static electricity and the clay adheres to it. I'm like, well, and now mind you, there's solar
34:07 panels as far as the eye can see, I'm like, well, how often do you have to clean these? And she's like, well, we try to clean the three times a week. So I'm like, well, what's the efficiency
34:16 degradation? And she's like, well, it can be anywhere between five and 10. So I was like, so what's her maximum? And she's like, well, the shock liquids are the SQ law puts you at 34 maximum.
34:28 She's like, we're probably getting about 28. And then you're knocking off 5 of 28.
34:35 So I'm saying, I'm like, wait, wait, what now? So then fast forward, we're trying to buy these hydroelectric assets in the Midwest. And we have to get a third party report So, you know, the
34:47 sands of Nevada average between 28 and 30 of efficiency, and it's sand. So, no clay, it just bounces off 30 gradient.
34:58 So we had to get a third party report and they were like, oh, well, we're doing this for Minnesota. And they're like, well, with factoring in a 34 efficiency rating of solar, I'm like, wait a
35:09 minute. I was like, so you're telling me, I'm gonna go a thousand miles further north of the equator than the sands of Nevada with clay, nine months of cloud cover and shortened seasons and
35:24 reduced solar exposure And I'm gonna outperform Nevada. And so we're pushing back and they finally just say, well, the banks want us to say this. I was like, well, what are the banks? I was
35:35 like, well, the banks are being told by the government to say this. I'm like, so you're not a third party report. You're just spewing mathematical lies that will never happen, but we're building
35:45 our grid under these assumptions. And that's why you're seeing these power prices go up. You're seeing this misallocation of capital because solar is not doing the efficiency gradients that they
35:56 were promising, even though. Anybody that has worked in electricity or sports breads were like, it was never going to do that. That's interesting.
36:07 All the while you were saying that is, anytime you go stop at a red light in Houston, there's always a guy squeegee in your car waiting chilled. And I was like, we found a solution to the
36:18 homelessness. Exactly, just send them over there. Yes, you can knock us out Do you think we've gotten real in the world where we can actually have an intelligent discussion about this for sure
36:35 three years ago, I would have said no. I mean, everybody's hysterical, oil and gas, we're gonna kill everybody, Greta, Greta, Greta. The invasion of Ukraine, I think did a little bit in
36:49 terms of us having a serious thoughtful discussion about it, Winter Storm, Yuri in Texas, Senate Bill 4.
36:58 dare I say, even I'm willing, I actually kind of like the original George Bush design for Urcott of I'll pay you for your electricity shows up. I'm going to pay you. It was a free market approach.
37:10 Now, it didn't count on all the subsidies to solar and wind. And I have come back to we probably have to pay for some capacity in some way, shape or form to change the market. But are we in the
37:26 world yet where we can have a thoughtful discussion about it? Or we need more crisis. So it's a good question. And I think when you look at the, I'll just take Germany, for example. So you have,
37:37 you have the invasion of Ukraine and you still closed all of your nukes. It's like, you understand that most of your natural gas was coming by pipe. And then the right, who did who did Nordstrom?
37:52 Who is so who do you think? I'm going to be honest with you. I'm going to say I'm going to say that the and the American divers bumped into each other and said, You take one, I'll take two. And
38:04 the one that they didn't blow up fully was the Russians. And the ones that was blowing up fully, that was the Americans doing it right the first time. Nice, nice. But I, you know, there's a lot
38:14 of reasons why different entities would do it. And I would say that there was probably some collusion as to who. But just like you, look at the Chinese vessel that just so happened to leave its
38:27 anchor dragging for 2, 000 nautical miles. It's like, I've been on boats. If you're dragging an anchor, you kind of know. You're pulling to one direction and you're ripping up lines. You're
38:41 breaking pipelines. It's like, that's a little suspect. So my original thought were the Iranians 'cause you could kind of daisy chain some Iranian natural gas. through some pipelines to get to
39:01 Europe. And they don't have the infrastructure like we do where we can shoot gas wherever. Kind of got a daisy chain around, but those pipelines going from Iran to Europe, my understanding is you
39:15 had enough capacity there that, and you know, 'cause the core competency of the Iranians is blowing shit up. I mean, they do that well. Those guys are really good at that So I kind of thought
39:25 that Brad Olson's take was, it was Poland. Poland saw what happened to Ukraine and they said, We're not gonna do this anymore, boom, but - So the Israelis do it, do probably even better than the
39:34 Iranians when it comes to - Yeah, that's true. But Qatar at look you if because, funny it's
39:42 Qatari gas and Iranian gas, I mean, they have a deal where Qatar pays. So if they wanted to increase their LNG pricing and their LNG capacity, there was another reason because they get paid from
39:54 the Qataris to pull in
39:58 Ah, there we go. There's a lot of different ways, but when you look at, could we have really done that to the Germans? Yeah. We could have. Yeah. Okay. I think there was enough anger. Now,
40:12 again, Trump, no Trump. But if you think about when he was talking about at the UN, and he's talking about how Germany has to get serious about their regastification facilities, trying to
40:25 diversify, and they're laughing at them, they're making fun of them. And it's like - Orange Man. Yeah, and again, he spoke like an asshole. He speaks like an asshole. He's probably gotten
40:36 crazier now than he was. But what he was saying, especially internationally, wasn't wrong. It wasn't said in a way, like I used to say, it's like watch Bill speak, and
40:48 just replicate what Bill - How Bill Clinton says it is how you should say it. Yes, exactly. It's like, you're not wrong about NATO, you're not wrong about China, You're not wrong about
40:57 infrastructure. but you're saying it like such an asshole. I was like, stop. I used to be a big huge free trader. Go through a pandemic, don't have any toilet paper. I know we weren't making
41:10 toilet paper all over the world, but my point is without toilet paper, okay, maybe some protectionism's not bad. I'm willing to give Trump, and again, I don't like Trump, but I'm willing to
41:21 give him credit for that 'cause he's always said that. He said that his whole life. Well, when you look at, and this is where you go back to Obama, and I call it the Rose Corden lie, and it was
41:32 when Obama straight up said to Xi, what are you doing on these islands? And they're like, oh, we're just doing this for oceanography, it's all scientific. Nothing negative's gonna happen. And
41:46 within six months, they have sonar stations and anti-missile launchers. So that set the stage, and a lot of the laws that Trump pushed through. We're actually formed under the Obama. A lot of the
42:00 numbers that Trump quoted were Obama-era numbers, and there's been a lot of continuity between the different presidents on how do you look at China and how do you counter because there has to be some
42:13 protectionism. Now, the problem is it can't go too far because if you look at World War I and World War II, you have to project out And I'm very much a Truman Doctrine guy, which is have these
42:26 smaller skirmishes and avoid the bigger war and carry the big stick, walk softly. And I think we have to get back
42:37 to, people are going to be annoyed by you. But in the grand scheme of things, it'll save lives in the long run, it'll keep trade open, and you'll help to avoid some of these things But when you
42:49 look at the polarization and anger, everyone is just so angry. And it's really because there's lack of social mobility. people are struggling to climb that ladder because you have people that are
43:01 like, I'm going to graduate college, get a job, I'm going to, you know, work hard. And then you sit there and 10 years later, you're like, I've, what, what have I achieved? And it's like,
43:11 you feel like you're getting hit by it from all over. And that, that migration isn't happening. So, so I, um, BRV, uh, actually we did a podcast, gosh, probably about three years where QDC,
43:26 very liberal, BRV, very conservative, through direct messages, emailed back and forth with me and Stacey McDonald. And we would ask questions. And then we read the script and reading the script
43:40 was hysterical because nineties random read it. And it was the biggest cluster mess. The outtakes from that, uh, podcast are great. One of the things BRV said that I give him credit for, if you
43:54 look at the Trump rhetoric, and take it all the way to CUNON. And if you look at the very progressive rhetoric and take it on to BLM, et cetera, if you take off certain names, you can't tell the
44:09 difference. It's both being disassociated from the American dream. Yes. It really is. Yes, and I think, and it's a great point because everyone has to realize they're angry at the same thing.
44:20 They're being used by each side because they're trying to direct that anger I mean, you look at Hitler. I mean, what did Hitler do? He directed that anger, but people, they couldn't eat. Yeah.
44:34 Like you talked about wheelbarrows full of Deutschmarks. Right. You know, you were buying bread based on the weight of the cash in the wheelbarrow, not by counting it. If I, and I got in a lot
44:45 of trouble when I was at Bloomberg for this, 'cause I said, you know, everyone's like, Oh, we're too smart in advance for a war. I'm like, that is such an elitist statement. if you have
44:57 someone on one side of an invisible border and somebody on the other side and your child is crying because their tummy hurts 'cause they can't eat. And then you have a politician come in and be like,
45:09 hey, if you kill that guy over there, your family will eat
45:15 forever. That person will kill that individual. And again, it has nothing against them. And the running statement on war is, I don't fight because I hate the man in front of me, but because I
45:26 love the people behind me. And I think that is missed sometimes because if Ebola rice is gonna save your family and I can take it from that guy, I'm gonna go take it. And that's what we're seeing.
45:37 And that's where, to your point on stripping away the rhetoric and it's like, guys, like everyone's angry for the same reasons. We have to stop focusing on the 10 on each side, come to the middle
45:51 and have a serious conversation. So back to your point on the green dream.
45:58 I think the Green Party won one county out of all of the counties in all of Germany. You look at this swing and the pendulum is coming the other way because people are like, well, Orsted,
46:15 going down to multi-year lows, you had Siemens that took a massive write-down because of their contract liability on
46:27 the warranties, because you had things in these wind turbines that are breaking after 10 months, and you have a warranty for three and a half years, four years. So they had to go to the government
46:39 and get a15 billion loan just to stay afloat. It's like, clearly, there's something broken Now, unfortunately, in the US and elsewhere, you need someone of consequence to die. And that's
46:54 unfortunate, because if the elderly die, and the homeless die, people don't care as much. It's like, oh, that's sad. But if a children's hospital loses power, if children are freezing to death,
47:06 like all of a sudden it becomes real. It's like, whoa, that is a person of consequence. And unfortunately, that's where we have to get to and you have to kind of shake people out of this ideology
47:21 and finally say, all right, we have to get serious about this. And I think we're getting there, but it's gonna take something more. Yeah, yeah. So tell me about your fund that you invest in and
47:37 specifically, 'cause I find this fascinating, I wanna talk dams. Sure. Just
47:44 to me is, every time you and I talk, we talk about this for about an hour. And it's just like, this can't be real, but anyway. So we have an energy infrastructure fund
47:56 We need to invest in energy infrastructure. There's a huge shortage. One of the things coming out of 2020, I was saying, I was like, Look, we're gonna have a decade of industrial accidents. I
48:07 was like, you had the great retirement. You have infrastructure that was underinvested in for 35 years. You have some things that are 10 years past their expiration date and you're asking to run
48:19 hard to make up for the pandemic. I was like, This is a disaster waiting to happen So one of the things that we honed in on was base load power. And it's like, all right, well, solar and wind
48:30 don't work. You know, natural gas is a good solution, but good luck getting additional molecules into the Northeast and some other locations. So we initially thought about coming back to the NGLs,
48:43 can we get propane up and can I buy storage and then optimize propane movements? Well, you'll be surprised to know that that is not politically attainable in a lot of areas. need to have a
48:56 discussion with a guy named Rocco to make that happen. Exactly. No, that may be, I mean, I have my chain, my guinea team on, but I just, you know, you have to have a certain movement that I
49:06 just don't have.
49:09 So we started looking at this and, you know, we saw these hydroelectric assets that I was introduced to a gentleman, Justin, who has been, who was starting to buy up these hydroelectric assets
49:20 and saying, look, these are owned by mom and pops, small businesses that are either looking to sell, you know, looking for an exit from retirement, you know, or it's just not in court to the
49:32 business anymore. So we started looking at these things. I mean, just alone in the, in New York, you have 600 hydroelectric assets in New York alone. And the Northeast, I mean, this is damming
49:45 a river, damming a river, holy cow, damming a river. There, there are more, if you're driving in New York and going over a river, you're likely driving over. hydroelectric dam in New York.
49:58 And that's where it's flood control. It's, it's all of these control pieces. And they just, they, they started as, you know, one of the dams that we own was initially built in 1867. Obviously
50:11 it was wood then, but it's been covered over since. And when we discovered electricity, they added a powerhouse. And you've had this build out, but it, it stagnated after the 70s and 80s when
50:22 there was a big push to revitalize these last time we had inflation. So now there's some assets that are great for optimization. So there's one dam that we just purchased that was used as the
50:34 testing site to build the Hoover Dam. So the Hoover Dam's structure is actually modeled off of this dam in New Hampshire.
50:44 And you just look at some of these amazing ingenuity, but yes, it's tried and true. Yes, it's something that has been done before, but we're just buying them up and optimizing. So we've
50:55 increased electrical throughput by up to 15 by just adding trash racks, automated trash racks, some of the damage. What's a trash rack? I don't even know what a trash rack is. They're actually
51:06 really cool. Sounds cool. It is cool. So again, we're cleaning the river. So we're actually adding a value to this, but when the foliage comes down in fall, there's a lot of leaves in the river.
51:18 So what we have is we installed automated trash racks. So the operator can see, oh, electrical throughput is dropping off and hit a button and the trash rack will automatically go and actually just
51:30 scrape the leaves off and drop it on the platform. And we have an operator that goes, cleans off the platform, 'cause you don't want them to blow back in. And that's how we manage all of the flow
51:42 through. And those are little things. Like we've bought three dams that were not actually connected to the internet. Really? Not no internet. They used, they would go with a little USB. I don't
51:56 even think it was window, if it was Windows 10, it was updated. I mean, I felt like I was like DOS, and you plug in, and you pull down the data 'cause every month, you have to send the data to
52:06 FERC. Right. So we just connected them to the internet. Put on some cameras, add some sensors and five grand, and all of a sudden you can optimize flow from your cell phone. Oh, that's crazy.
52:20 Yeah, and it's a clean solution, utilizing a tried and true method of generating electricity. And it's literally a spinning wheel. Like people think they're like, oh, well, they're old,
52:34 they're gonna drop into the
52:37 river. It's like, no, if you maintain these because we actually built things of quality back in the day, I was like, they're gonna last for another 100 years. It's just you have to maintain them.
52:49 And that's, I think, the biggest thing where you have to have that new kind of resurgence And FERC has gotten smart to it. Now, you can get a FERC exemption, which just means that they come and
52:59 check on you, but you don't have to go through a real licensing, 'cause some of the dams were buying, the families owned them for 20 years, they pulled all the cash out, and someone like yourself
53:10 who doesn't know how to do a FERC real licensing, you're gonna pay a consultant, which is gonna cost you 400K, for a
53:16 dam that makes 800K a year, and you're like, Whoa, this is stupid. Where for me, we in-houseed all FERC, so what costs you 400 cost me 80. So it makes sense for me to, I can buy this from you,
53:31 I can gain value, and I can bring this the 21st, into 22nd century, utilizing something we've been doing since the Egyptians figured out you could use water. Yeah, that's so cool. That's so cool.
53:46 We could go on for like another five hours of this 'cause I'm always so fascinated, but what else does the fund look at?
53:54 So it's being energy infrastructure. We focus on three key buckets because energy infrastructure is obviously broad. So it was base load power, food and ag, and then industrial processes that are
54:05 going more sustainable. Because one of the things is if you're, if I can move sustainable 30, I did something that's really good. Why do I have to go from zero to a hundred? And so we're looking
54:16 at different opportunities. So the food side is one because I don't think people appreciated how energy intensive fertilizer is. And I tell the story where in 2019, we're making this pitch and
54:29 people are like, I don't understand food, like fertilizer. Why fertilizer? And then in 2021, all of a sudden people looked at me and go, Martin, do you know how energy intensive fertilizer is?
54:42 I'm like, guys, are you trying to make me angry? Like, are you playing with me? And so we wanted to find a way to take byproducts and create a fertilizer that is better than synthetics, you know,
54:56 something that, because you're never, you need synthetic, you're, you're never going to get rid of them, but you can optimize them, you can reduce them because they have what's called a, um,
55:06 osmotic impact. One of the things when you look at osmotic pressure, it's just essentially the salt index and a soil can only handle a certain osmotic pressure until you start impacting the root
55:18 system. So you can't go above a certain level with synthetics without causing damage. And unfortunately, because we've built up these synthetic, um, residuals in the soil, over 60 years of doing
55:33 it, you have to repair it somehow. So you have to find an alternative that not only can increase yield, but also repair the damage to the soil. And it's not because farmers were, were purposely
55:45 being terrible. It's just, we were doing the best practices that we knew given the information that we had. And as we've gotten smarter, as science has improved, as computing power has improved,
55:57 we're able to gain more information and now we know how to do things better. And that's where, so the other problem is, like when we were talking about the green dream, in 2008, you crossed over
56:09 a threshold and the easiest thing to take out of the atmosphere was sulfur. And if you have too much sulfur in the atmosphere, you get acid rain and if you don't have enough, well, you have sulfur
56:21 deficient soils. So think of anything that has a yellow flower, a yellow fruit, they absorb more sulfur. The sulfur is what makes it yellow. And it was funny 'cause I'm at dinner and my daughter
56:34 looks at me and goes, why is corn yellow? And I look and I say, oh, well, it absorbs a lot of sulfur. The sulfur actually helps it. And my wife looks at me and goes, oh, that makes a ton of
56:45 sense. She's like, 'cause she's my editor, She's my, she does all of the editing. formatting. So she's like, I've read all these things. I never made that connection. So when you look at, so
56:57 one of the companies that we invested in, they take sulfur from the processing of oil and gas for anybody watching this that has been in oil and gas knows sulfur is like, how do I get rid of this?
57:10 So it's, we're taking a byproduct that and turning it into a renewable, sustainable, organic fertilizer that the 33 of the world's soils is now deficient in. And there has to be this movement now
57:24 of a micro from a micronutrient to a macronutrient to
57:28 increase yield, repair soils. So there's a lot of fun things happening because I've been tracking a food shortage since 2007. 2007 was the first real failure of fish harvest in Asia. And that was
57:43 what really kind of set off a chain event, which culminated in what we know was as the the Arab, of the Arab. spring, but abroad, it was the wheat wars or, you know, a wheat issue in terms of
57:57 just availability of food. And if you look, every time you rerate, you know, yes, it comes down, like to your point earlier about inflation, it's like, well, inflation doesn't seem that bad.
58:08 It's like, but if you zoom out and you look at where food prices were in 2007 and where they are today, it's like, you've just gotten used to the fact that, oh, well, this milk is now going to
58:19 be 450, not 98 cents. And that's where you've gotten this normalization of it. And we have to find a way to bring this down because, again, Maslow's hierarchy, food, water safety. That's what
58:32 we need to create this base model and people are struggling to just put food on the table. Yeah. Yeah. Well, how do folks reach you if they want to, if they want to talk more about this stuff?
58:45 Oh, sure My email, M. M. Reciano at C6. capitalcom, holdingscom, my Twitter at Mark
58:55 FNY. And then I have square space on my website, C six capital holdingscom. So keeps it's keep it simple. There you go. I got it. Well, Mark, you were cool to come on. This was fun. I told
59:08 myself before we start, I was going to keep it to about an hour because it could have gone 12. Yeah, we could go down any rabbit hole you want. Absolutely. I was on my drive over here I was
59:18 preparing myself. I was like, are we going to talk about my sister? Are we going to talk about personal? We're going to talk economics, the energy. I was like, this is going down any rabbit
59:26 hole. I was about to say I didn't even know when we started where it was going to wind up going. But promise me you'll come back. Of course. Good to see you, dude. That's always a pleasure.
59:36 Thanks for having me.
