Global Trade This Week – Episode 254
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Pete Mento 0:01
You're watching Global Trade this week with Pete Mento and Doug Draper. Hello, everyone, and welcome to the most exciting podcast about global trade that I've ever listened to. Global Trade This Week. I'm Pete Mento, and with me on the other side of the country, we're not in the same room this week. I'm sorry, everybody. Got a lot of positive feedback about that. Is my co-host and good friend, mr. Doug Draper? How are you, buddy?
Doug Draper 0:30
Hey, Pete, I'm doing well. Thanks. That was a lot of fun last week to get together. I was thinking the the Casa Bonita episode that was over three years. I think it was during COVID, but it was quite a long time ago, so it was good to see in person.
Pete Mento 0:45
Yeah, we had a we had a great time. I can always tell when you've had enough of my hijinks and shenanigans. Like I've had I've had Pete, you I've had enough. It's time for me to get away from you. So maybe it's good that we do it via distance, so I don't irritate you to the point of wanting to just cancel the show forever.
Doug Draper 1:01
Yeah, yeah. Well, I can easily I can click a button when I get tired of you. There, I have to leave the set. It's a little more difficult. All right, man. Well,
Pete Mento 1:11
I came back from Sturgis. I lived evidence of the fact that I'm on the show. That's very, very good news, I suppose. But Sturgis is not as cool as it was 30 years ago. It is has gotten very old. It's a bunch of old farts on trikes, and yeah, I was saying to you guys before the show. I'm a little worried about that motorcycle culture. I think it's dying.
Doug Draper 1:39
Yeah, yeah. Well, curious to know if you're talking about yourself or the event. I heard old, not as fun.
Pete Mento 1:46
Yeah, yeah. Check, check. Yeah, yeah. I I will admit that I think I had like three beers one night. Other than that, I was just drinking diet cokes and working and meeting with people and seeing people. Yeah, man, it wasn't it wasn't a wild it wasn't a wild trip, but I did some incredible writing. I saw some beautiful beautiful places, and that that was worth it. That was wonderful.
Doug Draper 2:10
Yeah, yeah, it's beautiful. For those that have not been up there, it's a beautiful part of the country for sure.
Pete Mento 2:15
It absolutely is, and that was another thing. So many people were up there with their families, lots of little kids with their families, and like, huh? Don't know if this is the weekend I would have picked to bring my five-year-old up here, but you know, whatever. They're definitely going to learn some stuff. I'll tell you that.
Doug Draper 2:30
Yeah,
Pete Mento 2:32
yeah. All right, man. Listen, we got to we got to zip through this one today. So why don't you talk to me and tell me what your first topic is?
Doug Draper 2:38
All right, this one I'll I'll be super quick, but it's more about issues on rivers and drought. Right, I saw this article pop up the other day about there's a drought and low water levels at the Danube River. And when I said that, I'm like, I gotta check my geography and figure out where the hell the Danube River is. But it's like 1,700 miles, and it kind of goes from Germany through Europe, and then pops out like Romania and into the Black Sea, right? So think of it like a southeast trajectory coming across there, and it's super critical on the lower part, primarily related to grain and and things going out the Black Sea for for export. So anyway, Russia and Ukraine conflict 25% from what this article indicated is global wheat exports, and obviously with that disruption, let's put stuff on the water, the the the highway, if you will, right? Well, water levels are low. Barges carry less grain, which means there's more trips, higher freight costs, or you throw it on trucks and rail. And so, coming out of that area, it looks pretty pretty skittish. Now, I don't know if that's going to directly impact the food supply and costs of food as as things progress. And one little weird thing they said is that Romania, amongst all the drought and the the craziness of our weathers, is supposed to have a a banner crop this year, right? So it should be interesting to see how that transpires, but same amount of grain, less opportunities and less modes to get it out of the country into the world market, and it's starting to become a bottleneck. So it is global trade. It's not relevant in this moment, but we do talk about agriculture here time again, which is very important. And I thought this was of note to bring up to the show.
Pete Mento 4:45
Yeah, man, you know if you've probably seen those commercials for Viking River cruises, and I have had many a friend that has gone on the Danube cruise, and because the water levels were low, they put them on busses to go to the next city. I mean, it it no yes. Yes, it's a major thoroughfare. I'm I'm four blocks from the Mississippi River right now, and they used to call the Mississippi River the Danube of America. Right, it's the same idea. You're moving a lot of industrial products south. You're moving a lot of grain products south. You're moving a lot of energy and a lot of people north up that river, and it was the same general idea. It's a major thoroughfare, but with the the truck integration and the incredible road systems that they have in Europe, along with rail, it hasn't been as popular. And so there was going to be this renaissance, hopefully, of the use of that river. But you know, Mother Nature has other plans right now, and it's a shame because transportation, in and of itself has already gotten so expensive, and the constraint on capacity that I don't believe is is is by mistake. I think that's happening on purpose. It's causing a lot of inflationary rates on cargo costs. So it's really it is a shame, man. It is a shame. But it seems every year you and I am having a conversation about a major waterway that either doesn't have enough water in it, or there's some kind of congestion, and clearly, the Danube just happens to be the next one. It's an important topic, man.
Doug Draper 6:09
Yeah, yeah, appreciate that. All right, what you bringing to the table on your first topic,
Pete Mento 6:13
bro? So you know, this morning I get up, and like always, I've got an agent in ChatGPT to tell me any big economic news, and the first thing it says is inflation in the U.S. is down to 3.4% I'm like, oh, that's actually really good news, you know. And then I keep reading the stuff from news agents. There are 600,000 more houses for sale than there are people looking to purchase property. 600,000 more homes for sale than people who are looking to that is crazy, Doug. All right, somewhere in the neighborhood of 29% of all credit cards are currently 90 days past due, not being paid, somewhere in the neighborhood of 18 to 18 and a half percent of all car loans are currently past 90 days due, which is the worst that's ever been recorded, worse than the 2008 period. And then the last one that caught my attention was student loans. 15% of student loans are currently in default, and another 25% of them are past 90 days, which means that either by default or past 90 days, you know, you're you're you're getting pretty damn close to 30% or a little maybe as close as a third. How bad is the economy really? You know, we all look at the stock exchanges, we look at the Nasdaq, and we look at the Dow, and those look like they're doing okay, but a lot of that's inflated because of artificial intelligence numbers, gold and silver continue to gain gain over time, which is usually a great sign of of possible inflation. Energy costs continue to fluctuate in a very haphazard, chaotic way. I think the economy is getting ready for a significant correction. Significant, not as bad as 2008, but I think very close to that. And we're already talking about bailouts of AI companies by the government. You're beginning to see faults in the in the in the fractures and faults in the sort of the layer of of safety that we see on mortgages. Doug, I think 2007 is going to be one of those years that we talk about in economics books, as when things around the world start to collapse.
Doug Draper 8:25
Well, I'm going to take your glass half empty and flip it around, and please do. And please do. Now, I'm not going to counter any of those statistics with opposite perspectives, right? But I think we've spoken about this, and hey, man, I just dumb things down. Being this kid from Kansas, right? When there are things in crisis in your life, the word I use is hunker down, right? You just slow down. You make a decision. You you're not going to make this purchase. You're not going to go out to dinner as much. You're just going to kind of wait it out. And I think all the statistics that you just panned out are are. a result of that, right? Is that I think the economy's still moving forward, but it's like they got like chains tied to their legs or something like that, weights around their legs, so it's slowly moving forward, and people are just moving a little bit slow. But I, the the one piece, and and I'll talk about it here in a second on halftime, but you know the the real estate market is front and center here in Steamboat. There are always articles about it. There's always houses for sale, and everything is. I think they call it a price adjustment now, which basically means holy shit, this house isn't selling. We got to drop the price. So I think that's going to have a big impact, and have to see where that transpires. I'm not half empty. I'm maybe just in an equilibrium right now with that, but it should be.
Pete Mento 9:46
Yeah, I I don't disagree. I could be wrong here, bud. You know, I tend to be Doctor Doom, but I just I feel it's pretty shaky. Have you watched the new season of Ted Lasso?
Doug Draper 9:57
Yeah, it's only the yes, the one episode.
Pete Mento 10:00
One episode, so I was watching it, and you were saying just a can, just a simple Kansas boy, and it's very Kansas City, you know, Missouri and Kansas heavy episode, and I'm watching it. I'm like, okay, very nice, personable, friendly, sensible, you know, family first. I'm like, shit, that's Doug. Like this is, it's like somebody sat down with Doug and said, "Hey, Doug, tell me about people from Kansas City. Oh, people like me, you know. And it it just it reminded me so much of you watching that show. Not that you remind me anything of Ted Lasso. You're not that goofy, but it just that city and the show it reminded me a lot. So I thought I'd bring that up. And you said Kansas City.
Doug Draper 10:39
Yeah, yeah. Well, I I appreciate that. There's one scene in that first episode, and this is more halftime discussion than we'll get to in a second. But there's a scene where these they're ordering some barbecue, and aggressively somebody says, "Hi, may I help you? You remember that scene?
Pete Mento 10:53
Yeah, yeah, yeah.
Doug Draper 10:55
I believe that's Arthur Bryant's, and I could be wrong for those in Kansas City. Please correct me, but I'm pretty sure it's Arthur Bryant's, and they are aggressive by design with how they greet you. And you better-it's kind of like let's go, yeah, soup Nazi esque, right? You got to have your act together before you walk up to that counter.
Pete Mento 11:14
Oh man, I love it. Yeah, I, I, I'm dying for some barbecue. Maybe that's why, because I watched that episode. That might be what's going on in my head.
Doug Draper 11:22
Cool. Well,
Pete Mento 11:23
take us to halftime, Doug.
Doug Draper 11:24
All right. Well, I'm putting a new lens on the small town nature. We talked about it last week, but I get the paper here in Steamboat. It's called the Steamboat Pilot, and I look through there, and I'm like, "She, this is just fluff. There's nothing here, right? There's like talk about global trade or what's going on in the world and and my wife was like you need to put on a different lens and take it for what it's worth and kind of be glad that we changed and pivoted in our lives to get out of Denver and move up here so I'm going to tell you the stories that have happened in the paper this week today's Wednesday right so the stories this week. First of all, there was a three-page article about a lost dog that was found like 40 miles away, and its name was Little Bit. And so it was an article about these people came to town, they lost their dog, they found their dog. Three pages, right? Wow. Initially, I'm like that. Initially, I'm like that's stupid. But if you take it from another lens, if that's the news that need to be shared up here, pretty good, right? There's also an article about the Route County Fair and kids getting their animals ready. They had an article about the reader of the week, a kid that was the reader of the week from Meeker, Colorado, right? The time, the Colorado time capsule is coming through Steamboat, so people are going to put stuff in it, and it's a super big deal. And there's a chili cookoff at the end of September that they're taking applications and entries for. So initially, I'm like, this is a joke. What kind of newspapers this? Am I and I'm taking a different lens. That how peaceful is it to put your life into perspective? That these are the important stories that people were talking about in this town, and allows you to take a breath and realize really what's important. And I love these stories now. I'm going to change my perspective. And here, this is the paper, right? This piece is the pilot. Yeah. After three weeks lost, little bit comes home. I don't know if you can see that or not, but I love it now. I'm changing my lens, and I love the articles in the steamboat pilot day in and day out.
Pete Mento 13:31
I am surrounded by people here in New Orleans that never watch the news, don't read the newspaper, they don't care, and they are much happier people. But the world, you know, our world. is a 13-block by eight-block area called the French Quarter, and it's just if it happens outside the French Quarter, we don't care. And you know, you know everyone around here, you know, you know everybody. You say, yesterday I was I was walking to grab a beer, and we stopped because she had this friend of hers that walked by, like, "Hey, how's it going? Out in the blazing heat, talked for probably five minutes. Hey, we'll see you again. It's like every time we turn a corner, there's something that is very comforting about having your world collapsed into that size. Because honestly, what else matters? You know, the things that happen around you in your little town-well, not so little, but in your town, is what's important. And think about the number of kids that are never going to play in the NFL or Major League Baseball, but probably got their picture in the steamboat pilot, and that was a pretty damn big deal. There's probably obituaries in there, you know, folks that that live around you. I I'm I'm I get sad every day when I think about the fact that journalism appears to be dying, and the joy of just reading a paper from cover to cover-stories you never would have bothered to read-but I got nothing else to do. I might as well read it. I miss those days, Doug.
Doug Draper 14:52
Yeah, it's good. All right, you're halftime, my friend. I like it. So start us off.
Pete Mento 14:57
Yeah, Americans watch more TV in the fall. The winter, a big part of that has to do with football, apparently, but it also has to do with the fact that kids go back to school, life gets a little more back to normal, people are on vacation. So I wanted to recommend some shows that I've been watching that I really did enjoy. I spent a lot of time on airplanes. That's I watch TV when I'm on an airplane. So the first is called Westies. Westies is a based on a true story about the Irish Mafia in New York in the 1970s. It's it's a anything in that time era grungy and kind of cool. And if you like to see shows like The Sopranos, I can't recommend it enough. I think it's fantastic. Another show is called Star City, which is on Apple Plus, Star City is a continuation of the story of For All Mankind, which is an alternate reality, alternate history where the Russians make it to the moon first. It's very well done. It it deals with things like loss and betrayal, Soviet politics, and it's just stunningly beautiful when you when you watch it on TV, I think it's fantastic. I'm loving House of the Dragon. I think it's positively incredible. And then the last show I just kind of got into, it's called Gods and Monsters: The Lizard King on HBO. If you remember the television show Tiger King when that was on same guys. So these same guys ended up investigating a rare reptile importer who was doing it illegally and making lots of money. And the the reptile pet industry in the United States, Doug, it's fascinating. I I do not like snakes. I detest them. I hate them deeply. So seeing these big crazy snakes all over this thing bothered me a whole lot, but when you find out about the illegal importing of these animals, how it changed over time, how they're sort of black marketed and traded amongst each other, and the kind of people that collect those things-drug dealers and gangsters-it really is an interesting show.
Doug Draper 16:58
Good. Oh,
Pete Mento 16:59
and one last one. One last one. Good medicine. If you want fluff and you don't want to think, it's a very good show on Netflix. It is a show about a big city doctor, much like Northern Exposure, who moves to a small town in northern Maine, and him trying to get his crap together. So, not deep, folks. If you're looking for, you know, Breaking Bad, this isn't it. But if you want something to let your brain turn off for a while, I recommend
Doug Draper 17:27
it. All right, good, good. I'd probably watch a couple of those shows, but not all of them, my friend.
Pete Mento 17:33
No. All right. Well, let me know if you do watch any of them at all. I'll be interested to see what what Doug has to say about it.
Doug Draper 17:40
Awesome. All right, well that was halftime brought to us by Cap Logistics. We appreciate them every week, and especially last week when they set up that whole stage. That was pretty wild. Yeah, absolutely amazing. So check out CapLogistics.com. All right, brother, I'm going to crank it because we got limited time here. But I want to give a shout out to Travis Smith at TRG Insurance, he actually communicates with me on a regular basis, comments on the show, watches it, and he's not afraid to call me out and call some of our topics out and say, "Hey, I think you have a different spin on this, and you may want to look at it because what you're talking about is not 100% correct. So I love it, TRG Insurance and the risk side of global trade does a lot of marine cargo insurance. So here's the deal. He came back and said, "Hey, insurance isn't going up; it's going down. I'm like, "What are you talking about? So the bottom line is, there's a soft market and a hard market. Soft market would be like a buyer's market, for lack of a better term, right? Hey, please pick us for your insurance needs. Hard market would be sellers, right? So prove to us why we should insure you, right? And so I was like, okay, that's I get that, right? But everything's going crazy right now in the world, and we're seeing all these stories about, you know, with the the straights and all that kind of stuff, and he said, "Listen, a crazy world. This is my interpretation of the information he sent to me. Crazy world does not automatically mean cargo insurance goes through the the roof, right? I had a couple of notes here because I wanted to get it right. So, a couple of things he said. One, global events, although they're crazy, are not large enough right now to offset the reserves that insurance companies have in order to pay claims. But this is the most important thing: is that I'm going to refer to them as escape hatches, right? So, in the contract that you have with your marine insurance, right? It's like, hey, I know things are crazy in this part of the world, so we're going to carve out some things that, if thing if it gets way too crazy, then we're just going to get our scalpel out and say it doesn't apply. It doesn't mean all of the shipments that you are moving throughout the world are going to be impacted just this area, and it makes total. Sense, right? And so the insurance companies have tools at their disposal to basically carve out niches whenever there's craziness going on. So not all of the world is insured at the same level. Risk factors are identified, and carve outs are created if needed. So generally, we are in a soft market. There's a lot of capacity out there to sell. So, anyway, I wanted to call him out and say thanks for the the clarification, Travis. Really appreciate it. But anyway, good spin, different take on the insurance industry, and I'm glad that he did that and and brought that to our attention.
Pete Mento 20:38
First of all, how dare you, sir? The sheer audacity to try to correct my friend Dougie Fresh on our show-I don't know who you think you are. No, we don't always get everything right, and alternate opinions are very important. That's why we always encourage folks. You have a you know different idea, you have questions, you have an idea you want to talk about, send it our way. We're always happy to hear about it. And insurance as a as a it's one of the most misunderstood, undervalued, and undervaluedly important part of international trade, and people learn the hard way. Most people learn the hard way that they should have had a professional who knows what the hell they're talking about sit down with them and guide them. So hey, good shout out to your friend, and hopefully people look him up on LinkedIn and give him a shot.
Doug Draper 21:21
Yeah, yeah. All right, bring us home, my friend. What you got? Last topic.
Pete Mento 21:25
Last topic, dude. So the Canadian three three eights that are supposed to go into play here pretty soon, they're not going to happen. And here's the reason why: just the threat of them. Apparently, Canada is just crapping down their leg right now because they have come to the table to negotiate in good faith. So far as they're saying, like we're going to put American liquor back on shelves, like we're going to encourage people to do that again. You can't buy American wine and liquor in Canada because nobody wants to buy American wine and liquor. They're pretty pissed off about what's going on down here. So putting it back on the shelves might not make it sell. Who knows? But getting American goods back in front of Canadians to buy is something that apparently was important to the administration. Looks like that's happening, but they're back at the table. So the negotiations with Mexico going super well. At least we're talking now, and there appears to be some some momentum with the United States and Canada. Maybe USMCA is not dead, but this particular threat on Canada, with a tariff that high on so many important things, it got the job done. So we could hate these tariffs as much as we want, but it was a lever that was used exceedingly well by this particular administration to get what they got wanted to get done, which was just getting Canada to start listening again. I don't like coercion at all. I don't think that it's a way to actually perform diplomacy, but in this particular instance, it appears to have gotten the ball rolling again. I don't know. I might hate it, but it appears to have worked.
Doug Draper 22:50
Well, we'll have to see if it changes behavior. I love the fact that you can put the liquor back on the shelf, but that doesn't mean it's going to be purchased. They're going
Pete Mento 22:57
to buy it, right? So
Doug Draper 22:58
it's interpretations of what's happening, and like, hey, it looks like the the the stick, the carrot versus the stick seems to be working. But excuse me, I think changing behavior on the shelf when they pull the bottle off, so to speak, that's still TBD. But
Pete Mento 23:18
I agree.
Doug Draper 23:19
Yeah, seems like America's into sticks now and not carrots, but we'll see what the where we
Pete Mento 23:24
ever, yeah. All right, well, take it away, Dougie. Close this out. Well,
Doug Draper 23:30
I guess I guess that's it. Yeah, I was like, go ahead and wrap it up, but you opened it, so can't thank everybody enough for listening to us every single week. It means a lot. Be like Travis. Make some comments. We'll bring your topics on the show. Really appreciate that. Check out his, like you said, check him out on on LinkedIn. And thanks to Cap Logistics for putting this thing on. And Pete, I love your your statement with if it's happening in global trade, we're going to be talking about it every single week on global trade this week. Glad you made it home safe, my friend.
Pete Mento 24:00
Thanks, brother. I appreciate it. I'll see you next week. Bye.