Global Trade This Week – Episode 225
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Doug Draper 0:00
Doug, you're watching global trade this week with Pete mento and Doug Draper, welcome everybody, and welcome to the first episode of 2026 this is global trade this week, and we're going to run it for another 365 days. My name is Doug Draper. I am one of your hosts of this show that's been going for about four and a half years, if you can believe that. But the man that does all the heavy lift, my partner in crime, Mr. Pete. Mento Pete, what's going on, buddy? Happy New Year. I do
Pete Mento 0:33
the lifting, other than taking my fat ass in and out of this chair. Doug, there's not a lot of heavy lifting here. You're the one with the substance, right? If we were, if we were a football commentary team, I'm definitely color in your play by play.
Doug Draper 0:46
I would say just the opposite. But anyway, thank you for that.
Pete Mento 0:50
I don't know, man, you do the hard stuff. I just sit here and talk my smack for an hour. But thank you.
Doug Draper 0:55
That is so funny. I literally was talking to my son over the weekend. We were talking about the show, and we're, obviously, we're watching football, because there was a lot of it throughout the weekend. And he said in your show, who would you be the color guy, or the play by play? And I said color, but I guess you know, no, you're the
Pete Mento 1:14
one that pays attention to everything, keeps things on on track. I'm the one that rambles and says a bunch of completely unnecessary crap. Doug, I am color your play by play. You're the one that they can't replace. They could find any other idiot to sit in here and tell bad jokes. You think about it, right? There's a reason why, like guys like summer all and all those cats, they stay and then every couple of years, there's a new crop of recently retired nflers that come in that last or don't last. I'm saying what you do as a skill? What I do is, I don't know, it's just, I'm salsa on the taco. I'm okay with it. I'm okay with all right.
Doug Draper 1:49
Well, thanks for that. Thanks for that. I guess that's a compliment. So thank you very much.
Pete Mento 1:53
It is. It's a hell of a compliment. Yeah, cool. Happy New Year Doug, happy week one of 52 weeks of global trade this week, and welcome back everybody from what was a truly awesome Didn't it feel like this was a really long holiday break, because the way the days
Doug Draper 2:09
sort of fell, yeah, yeah, because every it was a Thursday, so kind of Tuesday, Monday, you had to be there, just because Tuesday, you kind of waned off. Wednesday, everybody was gone and then nobody came back on Friday. And you do that for two weeks in a row, and it makes it feel like a long break.
Pete Mento 2:26
I'll say it again. Doug, do we really need a five day work week? Do we really need a five day work I don't know that we do. I know I don't want one anymore. No, agreed.
Doug Draper 2:37
All right, well, let's get this first show of 2026 underway, my friend, I'll let you kick it off.
Pete Mento 2:42
This is gonna be a tough one to do without talking about politics, Doug, but I'm up to it, pal. So Saturday night, early Sunday morning, my phone starts ringing. It doesn't stop. I'm up all night long. Sorry to sneeze. I'm up all night long. I'm talking to oil exploration companies, oil well drilling companies. We're all trying to figure out how they're going to reposition equipment to get to what's happening off of that as well. So I'm not going to talk about how we gave the president of a certain country a new area code instead, in a new uniform, new outfit. He was in court not too long ago, pleading not guilty. What I'm going to talk about is the impact this has on trade and transportation. So the largest undrilled resource, largest field of energy on planet Earth, lies between Guyana and Venezuela. Then three countries all claim some sort of responsibility for it. Guyana, Venezuela and Brazil, Brazil has been working to act as an intermediary to try to get Guyana in Venezuela to to agree to something. Because Venezuela, up until a few months ago, was very close to invading Guyana. That's something that isn't brought up enough. They were seriously talking about boots on the ground invading Guyana in order to protect what is a much larger field of resources in Saudi Arabia, all the OPEC nations combined, to give you an idea of how much oil on paper, right now, the United States controls. It's around 58% of all possible of the of the drillable resources for energy, for oil and for gas. Now why this is such a big deal is that the US is going to allow these companies to drill there. They were already gonna do it anyway, but they're gonna have to sell it to us refineries. So this crude oil, instead of going to China, instead of going to Cuba, instead of going to India, is going to come to the US, where it'll be refined into finished products, like gasoline, diesel, jet fuel, you name it, which is going to mean more of it in the US at a much lower price. But more importantly, will be the ones who are exporting it around the world. It's a good time to buy refinery stock. So when I heard someone say that to. Day on MSNBC, but more importantly, it means that control of that energy is now out of the hands of our friends. I can't believe somebody just called me on my my phone. More importantly, it means that it's in the hands of not China and not India and not those other countries. It's going to drive up the cost of energy. Energy and electricity are a massive component of manufacturing and production costs, so it's going to be more expensive manufacturing for those nations. It's a strategic move on a number of parts by the US to further isolate China economically, not all, but a good amount, a pretty good amount, figuring from 10 to 20% of the energy consumed by China originated outside of Venezuela, significant amount of the energy by India. But the big one, the big reason here, is that Iran had, you know, a bit of a relationship with Venezuela, and so did Cuba. Most of Cuba's energy resources were coming from Venezuela. They're not going to be any more. So this will artificially lower the price of crude globally. This would allow the us to be able to keep it as low as 50 to $55 a barrel. Again, this is just what I've been reading, and that's going to put incredible pressure on the Russian government. So this is like a not 3d like 8d chess that's happening right now with energy for us, for our industry, what I think it means is lower operating costs for transportation providers that are coming in and out of the United States, particularly air freight, as well as our good friends that are driving trucks and trains all over the place. And then secondly, what it means is for increased production costs out of our friend frenemies over there in China. So I don't know, Doug, if you put a lot of thought into that over the past couple of days or not, but it just appears to me to be that this is going to have a pretty big impact, not this year, but probably next year.
Doug Draper 6:50
Yeah, yeah. The one, obviously, it's been all over the news for a variety of different ways. The one thing that jumped out to me is the infrastructure we talk a lot about the infrastructure and how that's key to supporting our industry, and why China just continues to dominate with manufacturing, because their infrastructure is phenomenal. The infrastructure in LA is set up. There is no infrastructure to pull that product out of the ground at the level that you describe. I mean, are they pulling million barrels a day? Yeah, but to flip on the jets and to do all the things with this black gold, so to speak, there's going to need a lot of money that's going to go into that country to improve the infrastructure, to really pull those resources out of the ground, and that doesn't happen overnight, right? You can only move so fast. So to your point, it's good to be, you know, find out what stocks you want to invest in, because if it's related to oil and gas and drilling and all the folks that provide the pick an axes that we've used in the past to build the infrastructure to pull the black gold out of the ground. That needs to take priority, or all of this is not going to happen at the level that people are starting to talk about. So I don't want to we need to focus there, right? How do you get it out? It's great. Look at all the cool stuff we're going to do with this, we can't get it fast enough, and there needs to be infrastructure wrapped around it.
Pete Mento 8:28
Yeah, I agree with you, man, and that's where all the trade stuff happens. I mean, you and I both work for companies, with companies that are moving the infrastructure, everything from the pipe that you need sand for fracking to just, you know, resupplying these boats and work boats. There's a lot of logistics that goes into energy. And we talk a lot about green energy here, but you can't discount how important the petroleum pipeline is in their supply chain. It's just an integral part of the American economy. It will be for quite a long time, right? So before this turns into one of the stumping about politics, I should probably let you get to the next topic.
Doug Draper 9:03
Well, this one still has a political edge. I don't know if the show's possible anymore without having some political angle. And we try to be agnostic as much as possible. And I think we do a pretty good job. We do. But my first topic is China, and South Korea. I'm sorry I got I got sun around on my topics here, but I don't know if you saw that South Korea, China, they're meeting together, and they're going to try to reset the relationship a little bit, kind of reset it for 26 little Pomp and Circumstance going on. Beijing right now, but trade disputes and security issues between the two countries have been pretty poor condition over the over over the last several decades, and they're meeting today, literally today. Talk about how. They can improve the partnership related to components, semiconductors, consumer electronics, auto parts. I think we're a couple of key ones. So what does that mean? Okay, cool, so South Korea and China are going to become more friendly. They're going to ease the barriers to trade between themselves. But oh, by the way, United States needs a lot of those products fill our pipeline. Again, semiconductors, the AI industry, consumer electronics. Buy the TV that is 10 inches bigger than the one that you had last year. And then obviously auto parts, after market is a lot of that in there. But anyway, so what happens when a country that we're frenemies with and a country that we have good relationship with kind of forge a bond better than they've had in the past? And what is that going to do for the United States related trade? Right? So when things start happening and we're like, we need our stuff, the United States needs their stuff, but yet, these two parties that we rely on heavily are now together, working more collaborative, collaboratively than they have in the past. I don't know what that means Pete, but I do know that we need to keep an eye on it, because this is something that's kind of flying under the radar, and those are two very important countries to us on very specific commodities that we need in our daily lives. And so it caught my attention when I read that this morning, and I thought it was important to bring it up. So it'll be interesting to see how that relationship continues to evolve in 26 and how that's going to impact United States.
Pete Mento 11:37
I don't know what it means, but it seems like something we should keep our eye on. It's sort of the checking out a mole on someone's back. Kind of philosophy of trade policy, I agree with you Doug, these are two countries that, something most Americans don't realize is that many of the larger economies of Asia have long standing historical disagreements, everything from, you know, wars that happened hundreds of years ago to, you know, allegations of war crimes against one another during major global conflicts, Japanese the Koreans, the Chinese. There's no love lost between the three of them. So anytime you see them actively trying to make their relationships better, it's, you know, it's like a cat and a dog getting together to have a drink at the bar. It's just, it's funny because it's weird. So yeah, you're absolutely right. We should be watching this. Ultimately, both countries are concerned about long term economic opportunities, and I think Korea is seeing that their long term economic opportunities are probably more tied within the region than they are with the US. So that's probably where that's coming from.
Doug Draper 12:38
Yeah, yeah. Great analogy. Look, we just got to look you go to the doctor. I want to keep my eye on that mole on your back, right? I don't I never thought we'd be talking about moles on the show. You did a good job.
Pete Mento 12:50
It's just another excellent example of two old, curmudgeonly dudes that have an hour to fill with information. 401, K's the weather. What hurts today? Traveling sucks. We should talk about the mole on my back. This is where we are now. Doug, this is what's happened to us.
Doug Draper 13:06
That's funny, all right. Well, that brings us to halftime, brought to us by Capitol logistics. As we always say, we wouldn't be here every week without those guys, and we really appreciate it. And check out cap logistics.com. I think they're going to have a banner year this year for some of their core businesses that kept involved with but Chelsea and we appreciate their support anyway. Peter, I'm gonna go first. What do you got so?
Pete Mento 13:34
Doug, it's important that we treat this like a lightning round. Okay, we're gonna play this or that
Doug Draper 13:41
you love it. I have no idea what you're going to ask me, So let it run.
Pete Mento 13:44
Don't worry. You have to answer one or the other. I don't need any commentary. Okay, you ready?
Unknown Speaker 13:50
Eating alone at a bar, okay?
Pete Mento 13:53
And being left alone to enjoy your meal, or having a pretty interesting and fun bartender who interrupts you all the time but entertains you,
Doug Draper 14:01
interesting bartender that interrupts you, okay?
Pete Mento 14:04
A restaurant with one perfect dish, or a place where everything is fine, but the atmosphere is absolutely incredible.
Doug Draper 14:14
Everything is fine, great. Atmosphere. Okay,
Pete Mento 14:18
owning five different pairs of tennis shoes you know, different colors, different uses, or one pair that you just really
Unknown Speaker 14:26
love, five. I'm a shoe guy. Do
Pete Mento 14:30
you finish a book out of spite? Or do you just abandon it because you're not going to bother with it? Abandon, okay, a hotel room with a great view, or a hotel room with blackout shades so the room is completely dark when you sleep.
Doug Draper 14:47
Great view, great view, that blackout shades just sounds horrible. Oh, they're awesome.
Pete Mento 14:51
They're awesome being early and resentful for being early or being on time and stressed out on your way there. Well.
Doug Draper 15:00
I'm all about being early, so I will take early, okay,
Pete Mento 15:05
a long walk with no destination, or sitting perfectly still with a good cup of coffee for
Unknown Speaker 15:09
an hour long walk.
Pete Mento 15:13
And lastly, knowing a little about a lot of things, or knowing so much about one thing that you become an expert.
Unknown Speaker 15:20
Oh, a little bit about a lot, right?
Pete Mento 15:23
We disagreed on practically all of those. For those of you listening at home for this week's version of this or that, that's a great, a great illustration of how different Doug and I genuinely do not like being in public for a guy that gives speeches to 1000s of people every year you think that wasn't the case, but I am happiest when left the hell alone. So, yeah, Doug, that's it for my halftime. This or That?
Unknown Speaker 15:49
Yeah, people are the worst. Pete, people are the worst.
Pete Mento 15:55
For guys in sales, we generally don't like people. Figure that out. I don't know. Yeah, I can't stand them. Yeah, think about that.
Doug Draper 16:03
Yeah, the one thing I always tell my kids and is that I love this industry, because we kick ass at cocktail party, because we know, we know a little bit about a lot of industries, and so we can act somewhat intelligent, and when we get too deep, we just go off and get another cheese board and and then, and, you know, another shrimp on the stick or whatever. But yeah, so a little bit about a lot of different things. Is my go to, for
Pete Mento 16:31
sure, I know way too much about about handbags and women's footwear. After spending 30 years classifying them and being in their supply chain, I know a preposterous amount about really small out of the way countries, because people manufacture there. You and I. I mean, you know more than I do. Know more about trucking than to I don't know how to drive a tractor trailer. I mean, if it's a lot different than a tractor, there's no way. But man, do I know a lot about how those things operate. So this industry is great because you are endlessly learning about,
Doug Draper 17:04
I think, interesting things. Great. All right, thank you. With your halftime, all right. Well, speaking of interesting things, this is the week of the Consumer Electronics Show in Vegas. I didn't realize it. I knew it happened in January, but I didn't realize it was so Doug, you've
Pete Mento 17:20
done this topic a couple of times. I'm convinced that you're, like, on the down low, super fired up for the Electronic Show.
Doug Draper 17:27
No, I just all the crazy crap that comes out. You know me. I'm this kid from Kansas. It's just like, does that pay my mortgage? If it doesn't, I don't really have an interest in
Pete Mento 17:36
it. Golly, what's this contraption they're selling?
Doug Draper 17:40
Hey, y'all watch this anyway. So a couple of things that I wanted to call out. Apparently, there's a dueling keynote addresses at the show. Nvidia and AMD, both the CEOs are going to be talking. The video goes first and AMD later today, they're literally on the first day of the show. So that's, I don't know if the intent is to pit them against each other or have a yin and yang type of scenario, but two keynotes from from two of the biggest companies related to AI technology, a couple of key things to keep out, keep in mind for this year Pete is that Rob robotic helpers, or Robo helpers, the new term that you're going to hear, I would imagine, is zero labor households. So all these robots that can do dishes and cook meals and fold your laundry, apparently, there's going to be a lot of that action. This is super cool. There is a company that's rolling out nine millimeter thick wallpaper that is essentially a television where you can just, you can just roll it on your wall. And the same thing with a speaker, you can literally unroll, you know, I'm thinking, like, what was that, that fruit roll ups, right? Do a fruit roll up, stick that thing on your wall, and there's your TV or fruit roll up, and then you can listen to your radio. So wallpaper TV and wow, and audio. Smart watches and wearables specific to body. This is the term body connected tech is kind of the thing. So look for more smart watches and glasses and things of that nature. And then there's, like, this whole ring of robotic demos where they're going to have robots come out and do all kinds of stuff. So he peeled on Tiktok, as far as cool videos you're going to see and and I think there's going to be flame throwing robot going on. So anyway, Robo helpers wallpaper TV and speakers and and body connective technology are kind of the hype for this year.
Pete Mento 19:49
I wonder if they're going to have a robot demo where one stops, frisks, beats and then arrests someone in the crowd. Or, you know, a Robo Dog that takes. Just insanely accurate shots with a mounted nine millimeter cannon on its back or something like that. You know, I'm moving to Maine dude, to hell with there. The robots terrify me. I know you don't like drones for our industry, but the more I read about their uses on the military side of things, the more they just terrify me. Utterly terrify me. So, you know, don't get me wrong, I'm not a guy that walks around with a with a phone covered in duct tape and a crack screen. I do. I do like technology, but some of this stuff just scares the shit out of me.
Doug Draper 20:33
Done. Yeah, yeah. Well, good deal. All right. Well, that was halftime brought to us by CAP logistics. Please visit them at cap logistics.com All right,
Pete Mento 20:43
yeah, drop it online and say that Keenan should probably be paid less for his contribution to
Doug Draper 20:47
the show. Yeah, yes. I don't know. I don't know exactly what he gets paid, but it could be $0.00
Pete Mento 20:54
Yeah, he doesn't feel love of the game. Keenan just gets up in the morning and, you know, dances to his laptop. He's so excited to produce podcasts with two old farts like us, right? So my second topic today is interesting, because I think it's a bit of foreshadowing of what's going on. Last week, customs came out with a ruling that makes it clear that going forward, all refunds will be returned electronically. I can well remember a time where I would put in refund requests for 100 different entries and get 100 different checks. Well now Customs has said the only way that entries will be processed, unless you get a pretty high level exemption, is through using ACH. This is going to push people to have their own accounts and have electronic submissions back and forth, but I think it also is foreshadowing, because I believe customs are starting to realize that they could be on the very cusp of a $300 billion refund event, and the cost of writing checks, mailing them to people processing them, would be positively catastrophic. So so two things here, one, if you're if you're not on Ach, if you're expecting to get refunds anywhere down the road, you better get on it, because you're not going to get your money unless you're on that system. And then, second of all, this is a great foreshadowing that I believe that customs is, is seeing the writing on the wall, and they should be giving money back that way. I don't know, Doug, it's where my head's at with that one. Yeah, I think it's
Doug Draper 22:25
coincidence more than foreshadowing, right? I think it was inevitable, whether we were having this discussion of the Supreme Court or not. It seems like when you shot this over, I was surprised it wasn't already happening, to be honest with you, and so I think I don't think it was. Hey, here's the direction the courts are going to go. We need to get ACH. I think it was just coincidence for you know, like I think Doug that it,
Pete Mento 22:52
it would have happened one way or the other eventually, but the idea of this all happening now has hastened it. It's made it happen faster. But you're right, probably in the next five to 10 years, it would have happened, but they're like, now, now, do it now, because they see what's coming down the road. So I partially agree with you. I don't get to hit the you're wrong button right now, but I was pretty close for a second there.
Doug Draper 23:15
It's a yellow it's not a red stop sign, it's a yellow caution. I get it. Take us home, buddy. All right. Well, mine again, a lot of these topics. I do my part. Pete, not to sit in the in the morning and go to chat GPT and say, what are the topics happening in global trade? I don't do that. I look at all the posts that come to me and the emails on a daily basis of our industry, and I'm like, that's an interesting article. I'm going to put it over here. To put it over here, and I think I'm going to speak to that next week. And so this one I saw over the weekend talked about the Vietnam trade surplus with the United States is growing, and the number that was popped out was 8% right? So Vietnam selling a lot more stuff to us, and we're selling to Vietnam, and that gap just hit a record, a record high, right? And so this is perfect. Just now I'm thinking about this team. Is it could be coincidence, or is it a direct reflection of people changing their supply chain strategies, right? I don't know if an 8% jump in the short amount of time that this whole tariff situation has been in place since last April. So is this just coincidence, or is it a direct reflection of people pivoting their supply chain? So is, I guess, is sourcing diverse, diversification working? Yes, I think this is a reflection of that, not specifically because of the tariff situation, because you just can't pivot that fast to have that but it is. It's telling. And the one piece that I did a little deep dive, and I definitely want your opinion on this one, is the the impact on currency valuations between two countries and. And now that we're buying more stuff from Vietnam, is that going to shore up their currency? And I think it's called the Dong.
Pete Mento 25:11
Yes, it is the Dong. This is the most fun, the most fun of all, all currencies, to say,
Doug Draper 25:17
yes, yeah, yeah. So I know it was really weak, so I don't know if it's going to gain any traction with this increased 8% growth, but I thought it was, it was normal. So my take on this one Pete is, I think that the shifting supply chain strategies, this is a reflection, I don't think it's a direct reflection of what's transpired with the tariffs, because it's too short of a window to see that level impact, in my opinion. But I also would be curious to see how their financial currency is always fair if that trend continues to increase. So I don't know what
Pete Mento 25:50
thoughtful Doug, so I 100% agree with you that the tariffs happen so quickly that to see supply chains shift so dramatically and quickly to reflect that is unlikely. But for a long time, people have been considering this China plus one, right? China plus one country and Vietnam has been the overwhelming Vietnam and Mexico and India have been the overwhelming winners of that China plus one, but not to the degree that we're talking beyond what we're seeing now. 80% is impressive, don't get me wrong, but a real shift of production out of China would have been double digits, you know, 25, 30% so I think, you know, maybe we'll put a thumb tack thumb nail on this one and take a look at it next year, when the numbers come out again to see how dramatic an increase it was. I think 8% is certainly something to watch, but it's not reflective of a wholesale, just whole scale change in direction. I agree with you, there supply chains don't move that quickly. Now I'd love to see month over month, compared to last year, for, say, September, October, November, December, when people might have had time to start shifting supply chains. And then we can compare that to next year, the currency one is fascinating, right? One of the reasons that Vietnam, Cambodia, Indonesia, Malaysia, certainly Thailand, one of the reasons they're so good at being that secondary sources, they have an interesting currency situation. If they start selling too much to the United States, that's actually going to increase the value of the currency, which is going to make them less advantageous, as opposed to, say, a Mexico, certainly in India. So there's a, there's like a, you know, a bit of a you want to, you want to overheat, you want to overheat your exports, because then you get in a situation like China,
Unknown Speaker 27:41
where they are allegedly
Pete Mento 27:45
managing the value of their currency against the dollar, even through that overheating, they're the economy of Vietnam and Cambodia. They're not big enough to be able to do that in a way that wouldn't be seen as just straight currency manipulation. So yeah, it can't overheat, and if it does, it'll take away some of that advantage. Their biggest advantage remains inexpensive labor. Their biggest disadvantage remains they just don't have the supply chain infrastructure that a place like China has. So yeah, it could overheat Doug. It's a great it's a very good observation. Yeah, thank you. Thank you very much. I appreciate that.
Unknown Speaker 28:17
All right, look at
Pete Mento 28:18
that year one week one. I've complimented Doug twice. Let's see if, let's see what the trend is for the coming year. So with that everyone that is that's a wrap on global trade this week. For Week Number one, we want to thank our good friends at CAP logistics for their constant, never ending support of the show, even if it means we have to work with Keenan. Want to thank my co host for every week, just bringing it, and thank all of you for listening, telling your friends about it. You're posting the episodes that does matter to us. We don't get paid for this Doug, and I honestly do this because we love it, and we're two men in our 50s. We have nothing else to do but for the rest of the year, like we always say, if it's happening in global trade, talking about a global trade this week, see y'all again next week. Thanks. Doug, all right, catch you later. Pete, see you.
Transcribed by https://otter.ai