Global Trade This Week – Episode 240
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper,
Doug Draper 0:07
Hello everyone, and welcome to another edition of global trade this week. I am Doug Draper. I'm a few from the great state of Colorado. I'm one of your hosts. That's only half the show. The other partner in crime is my good friend, Mr. Piquemento, Peter. What's going on?
Pete Mento 0:27
Oh, it's been a week, buddy. It's only Tuesday. Yeah, with Cape up and running, I've been on, you know, 12 hour phone calls a day, and then four or five hours after that to pick up on admin and respond to people. It is whipping my butt Doug, but these are the times we all root for we hope for. So I'm just getting after it.
Doug Draper 0:50
Yes, it's a self sacrifice for the betterment of the cause, my friend.
Unknown Speaker 0:55
Yeah, let's get that money, all right.
Doug Draper 0:58
Well, speaking of getting that money, we need to pay our sponsors, which is exactly zero people that pay us to do this show. So we'll let you get this thing started.
Pete Mento 1:09
This is truly a labor of love, Doug. I mean, how many episodes are we in now? I think this is 240, 240, wow. Yeah, I don't know about you, but my big fat check from YouTube hasn't showed up yet. Keep waiting.
Doug Draper 1:24
Yeah, but he's like, You got to monetize that. I'm like, really, like, 1% of any podcast actually makes any money at all. It's usually, like you said, the labor of love,
Pete Mento 1:36
Doug, the fact that people actually know who we are from this show is, I think monetization enough. I watch you guys every week. Cool. That's awesome. Got any freight?
Pete Mento 1:50
Yeah. Anyway, I got two pretty weird topics this week, but the first one, I had to, like, look up to make sure it wasn't a, it wasn't a from the onion or like the bee or whatever it is there. I couldn't believe it was real. The UAE is leaving OPEC man, and depending on whose numbers you look at, it's like 10 to 15% of OPEC output. But they're not doing so hot. This flash war with Iran kind of did some reputational damage, physical damage, and either they're going to start selling US Securities, which we don't want them to do, and get a bailout from us, or they're going to start exporting more than the OPEC cartel wants them to. So they're about to just go, you know, total rump Springer, and hit the hit the streets with a pocket full of crude wheeling and dealing. I'm wondering if they're going to be the last country to do this. There might be some other ones thinking about it. But man, this is quite a disruption to the world order of energy, dude. And I think ultimately it's going to impact who knows how good or bad energy prices with regards to transportation between us and them, and you know what's going on in other parts of the world, dude, it is a wild time to be an oil trader. Did you read about this? Yeah, I heard it on
Doug Draper 3:10
even an NPR when I was coming into work today, and then you did it on the show notes. And your point it just, I don't know. It's kind of flown under the radar, although it just just transpired. So maybe it'll get some momentum as a topic,
Pete Mento 3:24
yeah, what point of being in a cartel is to over time, you're gonna make a lot of money because you're controlling the amount of stuff that comes in and out. It's be like, yeah, we're out. We're out deuces, yo. We're coming up with our own prices. See ya. And out they go. It's just incredible
Doug Draper 3:43
to me, yeah, what? So when I saw this as your topic, I Googled, like, what define OPEC, right? And we throw that around, but it's technically the Organization of Petroleum, exporting exporting countries, and this is the definition. And I just watched a mafia called the five families on Netflix. I think the other great show, I like mafia movies and that whole thing. So if you haven't seen it, whether you Pete or anybody else listening to good good watch. But it says it's a coalition of oil producing nations that coordinate oil production levels to influence global supply and pricing. That's what the five families did in the mafia in New York. I mean, it's unbelievable if they
Pete Mento 4:33
call out to the five families, shout out to my friends the profacis. Love you guys. My God son, my best my really good friend, Chris. God bless him. I hope they were in that five families old. Joe. Is he in there?
Doug Draper 4:47
I can't remember. It's all names that sound very familiar from old Sicily. But you know Saudi Arabia, to make an analogy to that show they're kind of like the dawn of the dawn. Ons, right? If you look at who kind of runs the show, it's Saudi Arabia. And, you know, it's price, it's production caps, and I think there's coordinated pricing, right? Again, mafia style. And I think the UAE is like man. The world is a little bit in chaos. The, you know, global energy industry, what a great time to go it alone, right? And let's see what we can do. They have more oil to produce, and they're allowed to through OPEC. There's crises going on all over the world. Let's strip ourselves of this, and let's just go, let's go gangbusters and and kind of go it alone. So, you know, what's it going to do for the, you know, the world's oil supply, I don't know. People say it's, it's going to weaken OPEC, and so there's going to be more volatility there. UAE is doing it themselves, so they can, you know, have some volatility with their pricing and production. So the bottom line is that OPEC is weaker, in my opinion, because of this, right? And it kind of only works again to the mafia move, the mafia show I just talked about, if everybody plays the game, it works if people start doing that, and you'll see if people I forget the term they use about keeping silent and never ratting on your friends, regardless of what manual family when the system doesn't work and not everybody's on the same page and willing to play, there's problems. And so it'll be interesting to see what kind of problems transpire, because it will be problems, not all great
Pete Mento 6:43
following along with your mafia motif here, Doug, you know, there's also blowback for leaving the fold. You know, you broke my heart, Fredo, that that's what's going on right here. And I'm wondering if there'll be any other regional political issues that come from this. And once you're out, can you get back in? You know, can you decide you want to come back in later? Doesn't work their way in the mafia. So they've, they've clearly aligned themselves with the United States, which was the whole point of OPEC to begin with. So there's a lot of rat analogies I got going on in my head right now. But yeah, the kiss on the dance floor, you broke my heart. You probably haven't seen Godfather two, have you?
Unknown Speaker 7:21
No, I've seen it. Yeah, I've seen them all.
Pete Mento 7:22
Okay, that's the one movie that Doug has seen. Great. Alright, we got one. Awesome. I can't wait for half time. You're killing me with halftime. Yeah?
Doug Draper 7:33
Hey, I'll jump into my first topic, which kind of is along the same lines, shocker, it's straight A Hormuz. And I was reading what's today Tuesday, so I guess it was Friday. Saw an article that said, hey, even when everything is green light, we're good to go. It's still going to be six months before things are open and operating, quote, unquote, as normal. And a lot of it has to do with the mines, right? That are in the water, floating around. And the analogy, or not, the analogy, the comparison was after the Gulf War in the early 90s, took six months to clear the space 1300 mile stretch, and they had maps of where all of these mines were located. Additionally, we've spoken about this before. Insurance premiums are are through the roof on any type of cargo that moves through there. Obviously it's at a it's at a hole now, but what happens whenever you start inching along? And the statistic I heard is that before all this transpired, the risk insurance was less than 1% of the value of the cargo. Now, it's more like one to 4% the value which is which is astronomical. You know, even though the conflict is over, the wave in the supply chain, which is all connected, we're going to see those ripple effects for a while. And then the other take is, hey, this is all over hyped. We can find mines really quick. We'll get in there. We'll clean the place out, make sure it's it's safe to transit. And the global energy markets are not going to tolerate that thing being closed for six months or four months or whatever. And so when it's over, we're going to fast track it, and things will be back ready to be operational within a matter of weeks. So I don't know what's the right maybe there's a little bit of truth to both of those take. But if people think, because the war is over, everything goes back to back to normal, and they're not pumping $4.50 cent gas anymore, that's not going to happen.
Pete Mento 9:39
Yeah, clearing minds is not easy. I've never done it myself, but it's not easy. And God bless mariners, dude, God bless these men and women that are out there on these ships dealing with this crap. Haven't been home for months, some of them a year, and now they got to worry about, you know, playing slalom, playing Frogger, going through. The streets of horror movies, hoping not to blow up their vessel because they hit an errant mine. They're earning every penny. So I don't, I don't think it's gonna be easy to clean up. This is Long Haul. We have a new leader right now, Prime Minister for for Iran, who supposedly a moderate. We'll see how long before he dies of acute lead poisoning to the brain. But yeah, man, I'm not, I'm not real bullish on this being sorted out anytime soon.
Doug Draper 10:26
All right. Well, that brings us to halftime, one of our favorite parts of the show. Obviously, this show is put together by CAP logistics and Keenan and everybody at that organization. Please check them out at CAP logistics, calm. We wouldn't be here without them, and it's greatly appreciated. So you want me to go first?
Pete Mento 10:44
Peter, you want me let me rapid fire, because I'm gonna get pretty aggravated with yours. Okay? So we're gonna play in or out. Doug, are you ready? This is rapid fire. Lightning round.
Unknown Speaker 10:55
Ready?
Pete Mento 10:56
Understood pineapple on pizza and eating cereal without milk, calling a hot dog a sandwich out ketchup on eggs, yeah, okay, pretending to be on The phone to avoid someone sleeping with socks on Dan, skipping movie trailers out, talking to your pet like they understand full sentences.
Doug Draper 11:30
I don't have any pets, so I'm going
Unknown Speaker 11:33
to stay out Die Hard. Is a Christmas movie?
Doug Draper 11:37
Yes, in
Pete Mento 11:38
is the bathroom ever an acceptable place to have a phone call?
Unknown Speaker 11:42
Never out,
Unknown Speaker 11:46
cargo shorts in or out,
Doug Draper 11:50
only if you're over 50, but no, I'm still out,
Pete Mento 11:53
reclining your airplane seat in or out. Out. Yeah, ghosting a group chat. If it gets too
Speaker 1 12:00
active, out, you gotta sorry out.
Pete Mento 12:04
Now this is gonna show old. We are sending a voice memo instead of typing a text in or out.
Doug Draper 12:11
Probably out, I get it. Everybody texts
Pete Mento 12:16
dunking fries in a milkshake. You
Pete Mento 12:23
in, eating pizza with a fork and knife out, licking the spoon and putting it back in the pot. Out, posting gym selfies out, having your phone on silent. 24/7, the ringer is never on.
Unknown Speaker 12:44
I would say, out Facebook, I'm not on it. So out
Pete Mento 12:51
sending either the letter K or simply the thumbs up to a text message.
Unknown Speaker 12:55
I do that all the time. I'm in.
Pete Mento 12:56
Do you tell someone that they have spinach in their teeth or other food? Or do you just let them deal with the aggravation?
Unknown Speaker 13:03
No, I'm in. I'll tell them
Speaker 2 13:05
naming your car. Would you say having a name for your car?
Doug Draper 13:09
Oh, my kids do it. So I guess I'm in.
Pete Mento 13:13
You too. My car's name is Gretchen. Photographs of matching outfits for your entire family. Ow, O, U, T, okay, eating a banana with a knife and fork.
Unknown Speaker 13:27
What never heard of that?
Pete Mento 13:28
Out, putting ice cubes in milk out, using the self checkout machine at the grocery store.
Doug Draper 13:37
I hate doing it, but I think there's never a person there anymore. So I guess in Okay, for
Pete Mento 13:45
those of you who watch and listen that ever wondered just how much of an old curmudgeon Doug is, I think we just, think we just pretty much got that one sorted out, right?
Speaker 1 13:54
Yeah, I think everybody could pretty much figure out how I'm going to answer those questions, right?
Pete Mento 13:59
The pineapple one was a little surprising to me. Doug, that's, you know, that's pretty loopy for a guy from Kansas,
Doug Draper 14:04
throwing pineapple on the pizza. I'm good. I'm good when we're planning dinners and stuff. I'm like, listen to my wife, pizza, hamburgers, Mexican food and Mediterranean. Just put that in a rotation. I can eat those four things all the time. Oh yeah, man, yeah. So my point is, I'll eat whatever kind of pizza you put in front
Pete Mento 14:24
of me. I was a pizza purist for a long time, and then I was in a Napoli in Italy, and I had all types of weird crap on pizza. Dude. I had escargot, I had mango. I was like, Alright, if they're doing it this way in the mother country, I guess I'm cool with it too, so I'm good with it, but like, pizza and bacon is really tasty. Bacon, ham, bacon and pineapple, that's pretty tasty, sweet and savory. All right, let's just get me angry.
Doug Draper 14:54
All right. Well, this was just like a softball, right? I mean, my I don't have a lot of comments on. Just throwing it out there, and you're going to you're going to wig out. I saw that movie theaters are now in embracing $50.05 zero tickets to go to the movie theater. And the pitch is comfort, the experience bigger screen. One of the things I said, it was 70 millimeter, yada yada, blah, blah, blah. And, you know, it's not even surround sound anymore, whatever. So my question to you is, are you sending $50 per ticket to sit in a theater that's going to rock your world, or you're like, you know what? I'll take the cheaper version, because the theater next to it's showing the same movie doesn't have all the bells and whistles, or I'm just gonna wait until it comes on on a streaming service. What's your take on that?
Pete Mento 15:50
One depends on the movie. Doug, so what you're describing is what they're calling infinity vision. I believe where the the the good people at Marvel and Disney are going to be telling certain theaters if you want this movie, if you want end game, if you want these new Marvel movies, at least one of your theaters can't just be IMAX, which used to be the rule. Now you got to take it up a level right to this new way of ultra, ultra, you know, ludicrous speed, crazy high definition, the greatest sound that you'll ever be able to hear, to the point where it's it's probably terrifying. And comfort in seat cushions that recline, raise, lower, also, they have to bring your food to your seat. That's also part of infinity vision, so you can get there and not wait in line. Can order everything from your phone or from the chair, or order it beforehand and have it delivered to you. I already do that. When I go to a lot of movies. I love it. I love not waiting in line with the general population. I like just sitting down and having it all brought to me. And if we run into popcorn lady just brings us more. It's wonderful. So for certain movies, you could charge $200 I will be there on opening night Doug. I will be there for the next dune in the trilogy. I will be there for Infinity Wars. I will be there for doomsday. I will be there for Supergirl. I will be there for certain movies because I don't have a life. Doug and the idea of paying $50 to see a movie, to entertain me for two hours, to truly touch my soul for two hours. Doug, that is a price I'm very willing to pay. I know what your answer is. You don't even go to the movie theaters because you're you're mean, you hate, you hate happiness. The the movie theater is one of it's my church, dude, it's my church. If Kevin Smith put out a new movie, and the only way I could see it was I had to throw somebody 500 bucks feeling cash, or you want it on my debit card. Which way you want to go? I'm going, Dude, Wes Anderson, going, there are certain movies that I will pay top dollar to see. So yes, Doug, I am in.
Doug Draper 17:58
Wow. Okay, well, obviously there's a market out there, and you're in living color as far as that market goes. So you'll have to tell our audience when you drop 50 bucks to go see Super Girl,
Pete Mento 18:12
not gonna have to where we are. Now I've got my IMAX. I want to say it's 20 bucks a ticket for IMAX, $14 a lot of my movies, I get to go for free because I spend enough money, I get free tickets to get to think about that too. Doug, yeah, you're just, you just, you just hate happiness. You hate happiness.
Unknown Speaker 18:32
I'll just wait for the streaming service and
Pete Mento 18:35
then I'll watch it. It's not the same. It's not the same dude. A good film is a shared experience, first of all, and second of all, a good film, it was made to be shown in that format. So I know nothing I say is going to change your mind. You're a zealot.
Doug Draper 18:54
No, I watched f1 with subtitles because it was bootlegged on a service that my son told me to get when it was free. I barely understood what was going on. I could hardly read the but you know what? I saw the movie and my life hadn't. Didn't. It didn't change whether I saw it in the theater or subtitles on a bootleg version from a yeah,
Pete Mento 19:16
let's probably not talk about bootlegging movies on the show. I don't know. Might be the smartest idea. Www, dot, yeah, yeah, yeah. I am a big fan of paying the artists for the work that they do. Wow. And I have a tremendous amount I have friends in bands. I have friends that are comedians, and they're like, I'm coming to town. You want seats? I'm like, I'm happy to pay. This is how, this is how you pay your bills. I appreciate the sentiment, but I have no problem paying the 50 bucks a seat to go see you perform. I remember when we were digging change out of out of the ashtray of my fourth Thunderbird to pay for Taco Bell. I am happy to pay that you're in a stadium. Brother, same thing with concerts. If I have a friend that's coming around, they're playing music like put you on the guest list. You know what I'll do. You one better do. Pay the 19 bucks to come hear your crappy band play, bro, don't worry about it. I got you right.
Doug Draper 20:06
Cool. All right. Well, that ends half time. Brought to us by CAP logistics. Check them out at cap logistics.com, we're in the second half of the show. And your second topic,
Pete Mento 20:15
what do you got? Yeah, I guess I shouldn't be surprised. But emails are going out now from scammers. Scammers are sending emails out to people saying, Hey, we're Customs and Border Protection. If you want to get your money back, click on this link and fill out this information and we'll send you your refund. Ooh. What information would that be? Your bank account, numbers, your passwords for it, folks, if you listen to no one else say anything to you today. Customs will never send you an email saying, Hey, you want your money back. Not how it works. There's the cape portal. You upload the information yourself. There's a separate system called ACH refund that you set up for yourself. This is like, this would be so upsetting. If someone I knew did this, I would, I would turn into Liam Neeson and taken I'd have to go find the people that took that money. I have a very specific set of skills, skills I've honed over time. I would have to go find those people and exact my revenge. But I shouldn't be surprised, right? I mean, scammers scam for everything, and the criminals see an opportunity to go after $130 billion in cash, they probably want their piece of it, so I'm not surprised. But Doug, I mean, talk about just scummy behavior,
Doug Draper 21:23
yeah, yeah. Well, where there's money, there's going to be scammers, like you said, there's, I don't know how all that works, but I you know there's, you send out a million emails, somebody's going to click on it, and somebody's going to fall and it takes that fast to send out a million emails, right? And so we'll see. We'll just throw the net out and see what we catch, and if we catch 4050, grand, so be it, if we get any more than even better. So doesn't surprise me. Does not surprise me.
Pete Mento 21:53
Just can't trust these folks out in these streets, Doug out these internet streets. You just can't trust them. Alright, brother, bring us home.
Doug Draper 22:00
Alright. So mine's about small and medium sized businesses. We've spoken about this. I'm going to compare 2025, to 2026 I'm speaking to tariffs and the uncertainty. There's a different type of uncertainty going on right now that we've spoken about in 26 back last year. It was all about tariffs. What's going on? What are we doing? What I saw in April, when all the terrorists were announced, everybody freaked out and doubled their purchase order and got it, get it in the US as fast as you can. And then everybody kind of stopped, because they didn't know what was going on. And they waited, and summer was pretty slow, waited, and then they kind of said, You know what? If we don't get our shit in in the US by fourth quarter, we're not going to be able to sell anything. So let's cut the next Po by half and get stuff in here in September so we have something to sell, and we probably got to eat some of the profit. We're not sure what's going on. We want to have good faith with our customers, and they kind of went along now. Oh, and the last thing we said is that in a fire sale, like they don't want any inventory in their books, whatever they can sell, just fire sell it and get it off the books and pay for their loan in 26 small and medium sized businesses, like we're done waiting. We got to turn the jets on, right. We got to actively rebuild our supply chain, our sourcing strategies, and a lot of it is coming into a China Plus model, right? The plus Meaning I'm not, I'm not abandoning what I've created over the decades or years in China. I'm going to supplement it Mexico, other Southeast Asian countries, I don't think Europe, maybe a little bit. And then, you know, the inventory planning. I think Pete, what is trending a little bit is before was like, just give me a little bit. Give me a 50% of my normal purchase order. I think now with with IEEPA, people like, all right, I want to get stuff in market again. And so I'm going to do 1.25 of this purchase order, get more of it in here, but I'm going to use AI technology and these new tools at my disposal to make sure my network is realigned so I know where to put my stuff based on my customer purchasing, and be a little bit more strategic. So I think that it's going to be an interesting year, because small to be inside businesses, they're done waiting. They're redoing their strategy. They don't have time to wait. They got to control their own destiny. And it was interesting article that I saw over the weekend. I don't know if you have any thoughts on that.
Pete Mento 24:34
I do. This is a situation where a really good supply chain consultant makes a lot of sense to me. And there, there's, I likened it to this, you can buy a suit off the rack, you and I can go to Men's Warehouse, pick something up off the rack, right? It'll it'll fit. You can wear it. But for maybe 150 bucks, you take that to a tailor, and now you look fantastic. You. They cut out the extra pieces, they cinch it up in the right places, they let it out in others, and they make sure that that suit is there to fit you perfectly. There's so much of what we do that's out of the can. When it comes to supply chain, spending a little bit of money to have someone come in and take a look at what you're doing, and nipping and tucking it in the right places can really make it sing. So as people are coming out of this inventory issue, they don't want to get into a deluge of too much. They don't want to have too little. This might be a time to bring somebody in with those kinds of tools you talked about, Doug, with a deep understanding of the supply chain to really help you along. I think you'll find that a lot of these folks aren't charging exorbitant amounts of money to do it. That I think the information they give you will be incredibly helpful. So yeah, yeah. I think it's going to happen that way.
Speaker 1 25:42
And I think it could be even better if they got a little bit of outside help. Yeah. Well, the question I have with your analogy is, do you guarantee it?
Pete Mento 25:52
I guarantee it. Going to see our tailor on Monday. He's in town from overseas, and a couple new suits made pretty excited. All right. Well, that does it for global trade. This week, I want to thank everyone back at CAP logistics for their unwavering support of two cranky old men talking about trade. I guess I'll thank Keenan as well for what it's worth, for the work that he does for us. I want to thank all of you for just listening to us every week, watching us every week, telling your friends do subscribe. That helps with our with our algorithm, I guess, as the kids say, but as we always say, if it happens in global trade, Doug and I'll be talking about it on global trade this week. Thanks, partner. All right. Catch you later, my friend. You you.
Transcribed by https://otter.ai