How the Oil Shock Is Flipping the Macro Playbook | Felix Jauvin

**Robbie** (0:00)
Felix, please, how are you, buddy?

**Andy** (0:02)
What's up? Welcome to the program, brother.

**Felix Jauvin** (0:04)
Program brothers, guys, good to see you.

**Andy** (0:05)
Thank you for coming. Thanks for having us.

**Robbie** (0:08)
Just banging them out.

**Felix Jauvin** (0:09)
You guys are grinding over here, this is crazy. I get tired after like two of these, and you guys are just here all day.

**Robbie** (0:14)
Dude, you are taller in person.

**Felix Jauvin** (0:15)
I know, I got the, I was interviewing Raul today, and finally, I was somebody of the same height. That guy's tall as well. Yeah, yeah, yeah.

**Robbie** (0:21)
Did you, did you bare-pill Raul? Because he's been very, very bullish for the last four months, and it's just hard, it's just hard.

**Felix Jauvin** (0:29)
No, honestly, we didn't even talk too much about CryptoPrize. We talked a little bit about the macro situation. I don't know, I think he sees it pretty similar to me. It's like, obviously, oil is a big story right now, what's going on there. And you know, it's on a knife edge right now, which way it goes, right? Like, yeah. Yeah.

**Andy** (0:47)
Yeah. I saw, I saw today, Iran is charging $2 million for safe passage through the Strait of Hormuz.

**Felix Jauvin** (0:55)
I haven't seen many headlines that I've been too busy. But that is, I mean, like, yeah, it, it's spicy. I don't know. I don't, like, $100 oil right now, right? Like, at that price, you're mostly worried about the inflation effects of that and how the central bank reacts to that sort of thing. But if you get to 150 bucks, you start to talk about demand destruction and like, you know, you look at any major oil shock, say for basically at the 2022 one, we entered a recession pretty quickly afterwards, because it just like, you know, oil is a derivative of, or it's an input into basically everything, right? So, you know, if you have that go up, people start to react to that and change, change their consumption habits differently. So it just has this whole sequence of effects. So yeah, it's dicey.

**Robbie** (1:44)
It is, and I've been watching some of your shows and you kind of have been developing this thesis that's kind of opposite to dollar or fiat debasement, where there was kind of this trade that was put on with gold and copper and silver and uranium, and then all the way across this, you know, cryptos had it first, and you're kind of flipping that now and saying like, there might be a lot of positioning that's offside, too much into this dollar debasement concept in a more recessionary environment, oil is going up, DXY is kind of starting to go up again. Is that still something that you're kind of pretty firm on? How are you thinking about this kind of anti-dollar debasement or rebasement?

**Felix Jauvin** (2:26)
Yeah, the thing to think and remember about currency is that there's always a relative game. You're always comparing one currency against the other. And this was like the whole debasement trade that was going on for many months there. It's funny, it took hold after the move in the dollar lower, and it was just chopping around sideways. And that's when everybody got all excited about debasement. And I was so much sympathetic to it, because it's like, look, if you look at the DXY, it's a basket of other currencies, mostly the euro and the yen. So it could be that they're all just getting debased at the same time. And the DXY wouldn't really reflect that, because they're just all getting debased. But basically what it is is that whenever bad things happen in the world, everybody needs dollars. Like everybody's, the shortages in dollars happen really quickly, because a lot of things are derivative of it, right? Like oil gets settled in dollars, countries all over the place have US debt, and if they need to shore up their own financial positions, they need to sell at US debt. And to sell at US debt means they're buying dollars, basically, is the other side of that trade. So, you see this, right? Whenever bad things happen, people need dollars. And then, yeah, on the fact that, okay, if this bad thing that's happening is an oil shock, that's mostly focused on, like the Strait of Hormuz, most of the flows that come out of there, it's going to Asian markets, it's going to European markets. Almost nothing goes to the US. US is actually largely energy independent, so it doesn't affect them as much. So, that oil shock that we're seeing, it's going to affect the Asian economies a lot quicker, and the European markets a lot quicker than the US. So then, circling back to that composition of the DXY, right, if most of it is Euro and Yen, and they're getting whacked way quicker and harder than the US, that means a weaker economy for them, that means a weaker currency for them, and then relatively, it's a stronger dollar. So, it's just like a rate differential thing.