DOGE updates + Liberation Day Tariff Reactions with Ben Shapiro and Antonio Gracias

China had the State Council meeting a couple of days ago, and in that State Council meeting, they announced a series of measures and a series of steps that they would be willing to take on IP infringement in the case of retaliatory tariff escalation in a trade war. What that means is that China may step up and say, you know what, we are disregarding all of the IP rights held by IP rights holders around the world, and they could steal IP more openly, more brazenly

OK, the Wall Street smart money thought this was a $250 billion event. They were wrong. This is part of why the stock market has reacted so violently today. This is a $750 billion to trillion dollar event. OK, this is a big moment in the market. So what does it create? It creates the risk of a recession.

I think that it's pretty extraordinary that we should be able to use the trade deficit as a national emergency sufficient to put down what effectively amounts to a $700 billion tax increase on the American people, if you're talking about them paying the price of the tariffs on the other end. ... if there is an inflationary effect to the tariffs in terms of price, does that mean that Jerome Powell is going to eject additional liquidity into the markets by decreasing interest rates? It's hard to see how.

Oh, by the way, I created a polymarket on GDP, Oh. annualized GDP growth in Q3 of this year being below five, negative five percent.

I mean, I think it's saying a couple of things. I mean, one, it's saying, obviously, look, I think the PE ratios on the Newsmax trade are ridiculous in the sense that it's going to revert back to something closer to normalcy. I think that it was supposed to trade at 10 bucks and it came out of 14 It spoke to like 240 So it's more like GameStop than anything else. ... It'll end up being, you know, total market cap will probably be somewhere when it lands in like the two to three bill range, somewhere three to four bill, something like that.

I mean, the amount of money that's been poured into AI has not yet been justified by the amount of net on the return, on the actual investment, obviously.

Now they've pushed it forward again. And that's what drives the growth and the improvement in productivity and this extraordinary abundance in energy, in mining and now in manufacturing. And it's, I think, going to lead to a great era of prosperity for China.

So first of all, I think that China does face some serious, real serious structural problems ranging from demographics to debt.

You may not like it when these companies get too powerful, but what happened to Jack Ma is the reason, Friedberg, that I don't believe a dictator will ever compete with our country if we stay entrepreneurial and not socialist.

And then beyond that, you also have the problem of what happens if there's just less demand for dollars on the world stage. The exit of the dollar as the world's global reserve currency is going to have some pretty nasty spillover effects.

But this is what I've been saying to Jay Cal, de-dollarization is what ends up happening.

Well, and this is what the stable coins, I think, is set up to counter. ... force them to buy a certain percentage of treasuries, and allow them to give interest, which the stable coin bills are now debating if they should give that. So I don't know if you guys are watching that, but that would be the greatest way to keep a buyer for our currency.

The thing that US dollar stable coins does is it starts to replicate one of those advantages, which again, if you think about having a release fell for the US economy, and if we need it to, all of a sudden scream to 200% debt to GDP, the real question is where is the incremental net buyer of the US bond? And it could be the person that has to back the stable coin

Then think about generation tool belt. You've got all these plumbing jobs, electrician jobs, construction jobs that pay massively hourly wages that are available for people today. We have too many job openings today.

The problem with that is that there's a lot of companies that have debt covenants tied to revenue and EBITDA. And so this is what I spoke about at the beginning of January, which is the one risk that is uncontrollable is what happens to corporate debt. And could we see a wave of defaults and a wave of action?

So they did that basically as a way, in my opinion, it looks like, and I'm just trying to take a read on this, that they're using this as a way to anchor for negotiations going forward, ... Now everyone takes them seriously. Now everyone shows up to the negotiating table, and now they can actually negotiate and then announce a series of win after win after win and say, we got this set of countries to capitulate today.

I think the most likely result of these tariffs is that within the next few weeks, the headlines are not good. President Trump starts driving trucks through the center of the tariffs. And then he starts getting wins from various parties outside that allow him to find an off ramp on some of these tariffs.

He will tell you what he's going to do. He told you he was going to do these tariffs. He's done them.

One, Trump has had a 40-year view on tariffs. They're going to go through with this and they're going to see it through. I don't think you're going to see this grand capitulation. Two, they are okay with the volatility in the equity markets.

And if you remember the interview that Besant gave to us a couple weeks ago, he was very clear that one of his mandates is to enable the re-leveraging of the financial system. Meaning he wants to give banks the ability to issue more debt, to introduce more capital and more liquidity into the markets by taking away some of the regulatory restrictions that have made it more difficult for the banks to issue credit to business owners and to individuals. So if they are successful in their deregulatory efforts, it will introduce more liquidity into the market

I think that the vice president is an amazingly brilliant guy. He has also expressed kind of public support for Lena Cahn from time to time, right? And that's inside the Republican party. And on the left, obviously, there's tremendous support for Lena Cahn.

The components to do the manufacturing, so there's a company called ASML, which everyone that works in tech knows about. They have these advanced lithography systems to make the semiconductors. They don't sell to China, so now China's got their own homegrown lithography systems.

China stopped buying American ag exports and China is the biggest buyer of American agricultural products. As a result, the Trump Administration had to issue two support payment checks to farmers that totaled $28 billion in 2018 and 2019

And then three, which is the other thing that we've been talking about a lot is, where does this move our practical financing cost? What is this, right? We've talked about this. We have $6 trillion we need to finance in the next nine months. So the singular goal, in my opinion, of the White House has been move the tenure as aggressively and as quickly as possible. And look what they've done. As of yesterday, it's unbelievable what's happened in the 10-year. You know, you are kissing 4 percent.

We lost manufacturing because we weren't competitive in manufacturing. Putting a tariff on other manufacturing countries does not make Americans more competitive. It basically gives American businesses a crutch.

And that's why I said my contrarian bet for this year was this rise in socialist policy and the response to some of the actions the administration might take. But we'll see how it goes out.

In the last 20 years, they've built 30,000 miles of high-speed rail. In the next 15 years, they're going to add more electricity production capacity than the United States times who has today. There's nothing short of ambition coming out of China. And it's what we're lacking.

This was free money. This was like the stock market giving up free money. But why did this happen? This happened because it was very clear to me early on that the rhetoric had shifted to say, we care about MAGA, we care about people that have working class and middle class jobs. None of those folks are deeply invested in the asset economy the way maybe some of us are.

And while I love what DOGE is doing, the systemic drivers of our national debt are not actually being touched at this point by DOGE. I mean, it's the means-tested welfare programs that are really the systemic long-term drivers of our national debt.

Yeah, we need to get better at this stuff. I mean, the good news is we're going to have robots to do this.

But then underneath that AI thing, we have these two very complicated problems. One is a meaningful energy problem. I've been talking about this now incessantly. We don't have enough electrons. We just don't.