Geopolitical Risk = Massive Opportunity: The ProSec Trade Explained | Peter Tchir

**Peter Tchir** (0:00)
We want to make sure people understand that this is very broad, right? This is production for national security on a really holistic basis. It's not about just defense. I think defense will be a part of it. Electricity generation is high on that list, and you're seeing a lot of the electricity generation companies do well. Rare's critical minerals have been bouncy. I think they got ahead of themselves. They pulled back in the last few weeks. Some of the stocks I talked, you know, we had Intel, for example, because we have to make chips and you're seeing more and more domestic chip manufacturers. You're seeing that blossom.
I think we have not yet seen it hit Biotech and Pharma.
I think that's probably six months to a year away because it's more complex. But I think we're going to see a lot of initiatives there. We're seeing things being done in the shipbuilding. So we're going to have a much more sustainable and resilient economy.

**Adam Taggart** (0:50)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Today's guest has been a champion for what he calls the Pro-Sec trade. Pro-Sec is short for production for security, aka the sectors essential to reshoring and national security.
Covid in the Ukraine and the Iran wars have woken up the countries of the world to the importance of supply chain resilience and home defense. In theory, the Pro-Sec trade seems made for the times that we now find ourselves in. But in practice, how's it been performing?
To find out, we're fortunate to welcome back to the program, Peter Tchir, head of macro strategy at Academy Securities. Peter, thanks so much for joining us today.

**Peter Tchir** (1:31)
Thanks a lot for having me.

**Adam Taggart** (1:33)
Well, Peter, great to have you back on. I got to say, I have been bringing up your concept of the Pro-Sec trade frequently of late, I find, because as I said there in the intro, it does sort of at least strategically seem to be made for these times that we find ourselves in, where nations are reshoring their key industries, shortening or friendshoring their supply chains. Obviously, the world is now getting reminded that it's not all kumbaya out there.
There's a lot of large global conflicts going on. Most recently, obviously, the US and Israeli war against Iran.
Like I said, it feels very appropriate for the times that we live in. I'm going to get in just a moment to ask you how well it's performing right now. But let me just ask you this, what trends are you following closely right now? Is this world is shifting in real time?

**Peter Tchir** (2:35)
We're watching, it seems like things are calming down in Iran. It looks like both sides seem to be desperately searching for an off-ramp.
It seems like we're making some leeway in terms of when they can start trying to enrich uranium again. Clearly, the blockade, the economic burden is a little bit hard on them, though they're continuing to struggle through it. Does seem that we don't have the stomach for more loss of life, which I think is probably a good thing, but we don't seem to want to escalate this either. It feels like this kind of hit some sort of off-ramp. The one thing I think the market is really starting to look at those. Yes, the front end of oil is coming down. I think we're below 90 or right around 90 on Thursday on WTI, but I think some of the other longer term contracts are still fairly elevated. I think we're going to be dealing with this higher for longer. It's going to take a lot of time for the Middle East to rebuild their energy production.
Not sure what's going to happen with their data center dreams. All that kind of took a hit both figuratively and literally when the Iranians were able to strike data centers. I think that's going to be a little bit of an area of upheaval. There might be some good business opportunities there. Away from that, still the real battle is dealing with China and making sure that we are prepared to keep China at bay. I do think this production for security is continuing. Some sectors have worked really well, some less so, but it's getting traction, I think. I feel like I've been talking about it for almost a year now, and it feels like in the last two months I'm getting a lot of people, hey, you mentioned this thing a few months ago or six months ago. Can we discuss it a little bit more detail?

**Adam Taggart** (4:09)
Yeah, that's the way it generally works. Then, of course, you hit a point where everybody jumps in the bandwagon and everybody of course saw it coming, right? Of course, it was not just Peter's idea, but everybody's idea. All right. I want to get to China in just a second, but yes, you noted we're recording this on Thursday, this interview will release on Sunday. Who knows what's going to happen there, Peter, between now and then in terms of oil prices or the status of the detente that we find ourselves in right now. Hopefully, things wrap up with a peace deal, or we'll keep our fingers crossed for that.