The Market Is Mispricing The Inevitable | Peter Tchir

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**Adam Taggart** (0:30)
I see you.

**Peter Tchir** (0:31)
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**Adam Taggart** (0:39)
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**Peter Tchir** (0:39)
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**SPEAKER_4** (0:45)
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**SPEAKER_1** (0:47)
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**Peter Tchir** (0:49)
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**SPEAKER_4** (0:52)
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**Peter Tchir** (0:56)
Avatar Fire and Ash, now streamed on Disney+, rated PG-13.
When you talk, I would say, particularly large asset managers, there's still a reluctance almost to believe that the end of global trade and globalization is over. And many of the people who are senior rose to those levels because they embraced globalization. And I think they're having difficulty seeing and believing that this kind of production for security is just going to go away. I think they think, oh, well, maybe after the midterms. And I would argue, not at all, if we've spoken. If anything, I'm seeing a lot of really encouraging things. What you're starting to see is the government use its wallet more directly.

**Adam Taggart** (1:41)
Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Taggart. Welcome you here for a great discussion with Peter Tchir. He is the head of macro strategy at Academy Securities. Peter is very well known, especially amongst this audience, for what he calls the ProSec trade. ProSec stands for production for security. Basically, these are the sectors that are essential to reshoring and national security. These have obviously been really big themes in recent years.
The wave of deglobalization continues around the world. And of course, national security is becoming more important, not just here at home in the US., but pretty much to all countries around the world, again, as we de-globalize, but also as global conflicts like the Ukraine War, the American and Israeli war against Iran, continue to reshape the global, what do you want to call it, the whole global geopolitical puzzle. So anyways, Peter, thank you so much for joining us.

**Peter Tchir** (2:44)
Thanks a lot for having me. Looking forward to it.

**Adam Taggart** (2:46)
Thanks. As we were talking about off camera, you're a man of very high demand right now, I think largely for your expertise here around this pro-sec trade.
Companies, hedge funds, big institutional funds seem to be increasingly asking you and the Academy Security team to come there and talk about how you see the world. Because obviously, as I said earlier, it's becoming more relevant to the world we live in here.
I guess let's start at a high level. What trends right now have your attention the most? Is it the wars? Is it supply chains? Is it rising oil prices? What are the things that have your attention most right now?

**Peter Tchir** (3:28)
I'd say when we're having conversations, one, I'm still very focused on the Fed, and I'm sure it's actually going to change how the Fed thinks. I think we are going to realize that the data task force is possibly the most that's been done in years, if not decades.
I think we look at bad data. I would point out year 2020, 2021 after COVID. Official CPI was lower than metrics like trueflation, lower than real-time Zillow rent and things, and yet we were keeping easy money. And now I think we're making the mistake in the opposite direction. So I think when you're talking to corporations, you're talking to hedge funds, looking for the data out there, and they all look well beyond just the official BLS data. So that's been an interesting conversation that we're having.
I think that's been really kind of cool. The second part of things is trying to separate geopolitically, what's going on tactically versus strategic. And at some level, I think it's really our competition with China is still the overriding strategic issue. And yes, the war in Iran is affecting oil prices, affecting rates, there are longer term implications. But the real challenge is going to be China. And I have to say, I've been a little bit caught by surprise how quickly cheap Chinese compute is coming on the market. I felt that we had a bigger lead on where we stood on AI, and it feels like the average AI is catching up, and China has the advantage that they distill models. So I'm watching that closely. And then the other big trend that I think is really finally catching steam is that production for security or production for national security, production for resilience.