Episode 87
Oil, Inflation and Immigration: Why the World Feels Increasingly Unstable
Energy prices are rising again, inflation is creeping back up, and the global economy may be entering a far more unstable phase than markets are pricing in.
Richard Taylor, Chartered Financial Planner and founder of Plan First Wealth, is joined by Brian Dunhill, founder of Dunhill Financial, for another episode of Macro Aggressions to unpack the growing geopolitical and economic pressures shaping markets right now.
From the Iran conflict and rising oil prices, to China’s long term ambitions around Taiwan, the conversation explores how trade routes, energy markets and political instability could fuel another wave of inflation.
Richard and Brian also discuss the Federal Reserve’s increasingly difficult position as inflation rises again just as Donald Trump pushes for lower interest rates, alongside the political drama surrounding incoming Fed Chair Kevin Warsh.
The episode also explores a growing economic challenge that is becoming harder to ignore. Richard and Brian explore why demographic decline and falling birth rates may become one of the biggest long term threats to Western economies, and why anti-immigration policies could have major consequences for growth, housing and prosperity in both the US and UK.
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Expat Wealth is supported by Plan First Wealth. Plan First Wealth is a Registered Investment Advisor serving fellow expatriates and immigrants living across the US on matters such as retirement planning, investment management, tax planning and non-US asset management.
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Expat Wealth is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.
ABOUT RICHARD:
Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.
As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).
Connect with Richard on LinkedIn
TRANSCRIPT:
Brian Dunhill:
[00:00:00 – 00:00:05]
You know, if America gets to be like Zimbabwe, who’s going to be on the trillion dollar bill? Probably Donald Trump. Right?
Richard Taylor:
[00:00:06 – 00:00:10]
Do you think that China’s actually going to make a move to take over Taiwan?
Brian Dunhill:
[00:00:10 – 00:00:15]
I don’t think it’s a question of will they make a move. I think it’s the question of when they’ll make a move.
Richard Taylor:
[00:00:15 – 00:00:32]
I used to think that this was just like, just not really possible. You know, it’s 70 years since the, since the split and Taiwan is its own country, but they’re not letting it. They are never going to let this go. And they’re already getting stronger, more emboldened.
Brian Dunhill:
[00:00:32 – 00:00:42]
I think all the five major transit areas, they could all be shut down in this same year and we could be talking about a lot of trade not moving through.
Richard Taylor:
[00:00:42 – 00:01:58]
There are vast wilds of Americans and Brits and, and all Europe. Everywhere they are, they are voting and advocating for policies which are going to make them and their children significantly poorer. Welcome to Expat Wealth, a Plan first wealth podcast dedicated to helping ambitious expatriates in America and Americans overseas thrive. I’m your host, Richard Taylor and Plan first wealth is the business I founded and run today. And we work with successful expatriates, immigrants and internationally minded Americans to make the most of their opportunity and avoid the Expat landmines. First, a quick disclaimer. While Plan First Wealth LLC is an SEC registered investment advisor, the views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views and positions of Plan First Wealth. Information presented is for educational purposes only. Now, if you aren’t already receiving our emails, please go to our website, www.planfirstwealth.com and sign up there. It’s free and you’ll be notified every time we drop a new episode and so much more. Okay, let’s get back to this week’s show. Welcome back to another episode of Macro Aggressions. I’m here with my friend, the world famous financial advisor, Brian Dunhill of Dunhill Financial.
Brian Dunhill:
[00:02:00 – 00:02:01]
Wonderful to see you, Richard.
Richard Taylor:
[00:02:01 – 00:02:03]
Yeah, you’re back from your travels.
Brian Dunhill:
[00:02:04 – 00:02:06]
I’ll start the interruptions right, right off the bat.
Richard Taylor:
[00:02:06 – 00:02:24]
Right, yeah, start as you mean to go on Amate. So we’re back to talk about what’s going on in the world from an investment, economic, general perspective and as we normally do, come up with all the solutions, put the world to rights and see if we can get any useful takeaways. So. Well, first of all, Brian, tell what have you been up to? Where have you Been. You’re back in the UK now.
Brian Dunhill:
[00:02:24 – 00:02:33]
I just got back to the UK after taking my daughter on her first trip on the sailboat down in the Ile de Hill. You ever been down there?
Richard Taylor:
[00:02:33 – 00:02:34]
No.
Brian Dunhill:
[00:02:34 – 00:02:47]
Okay, we’re going to have to get you down there. It’s the Caribbean of France, right there by Toulon. Just some beautiful, beautiful islands like Borcajol. They’re just gorgeous, wonderful beaches. Got to get down there with the family.
Richard Taylor:
[00:02:47 – 00:02:56]
I love the way you rock out the French accent. Tell me you’re not one of these people who will be talking normally and then saying, oh, yeah, so this year I might go to Barcelona. You don’t do that, do. You’re not one of them.
Brian Dunhill:
[00:02:58 – 00:03:01]
I can’t. I can’t do the Catalonian. I can do the French. Okay.
Richard Taylor:
[00:03:01 – 00:03:10]
Right. Just don’t, don’t be that person. Did you ever hear. I know this is a complete tangent now already. Did you ever hear about Hilaria Baldwin?
Brian Dunhill:
[00:03:11 – 00:03:11]
No.
Richard Taylor:
[00:03:12 – 00:03:43]
Alec Baldwin, long story. I’m going to do this super quick because we’ve got. Let’s get through before. I’ve got a client meeting in a few minutes. But Hilaria Baldwin, married to Alec Baldwin, right? His Spanish wife, she’s given him like 8 kids or something. Crazy Spanish. Started appearing on TV, like in the morning programs. The Spanish accent. There’s a very, very famous now infamous clip, which you can get online of her, you know, cooking on like Good Morning America or something. And she’s like, oh, how do you say that word in English? Oh, cucumber. Like she forgets the word for cucumber in English.
Brian Dunhill:
[00:03:43 – 00:03:44]
Right.
Richard Taylor:
[00:03:45 – 00:04:11]
Anyway, after a number of years of this, it transpires Hilaria Baldwin is actually Hillary Baldwin from Massachuset. Born and bred. Went to school there, just had a family. I think her parents ended up moving to Spain when she was older. And she was so in love with Spain. I think she adopted this Persona, but she’s not. She’s born and bred, Massachusetts, went to school there. And I ended up looking on Reddit and people were popping up saying, yeah, I went to school with her. I was waiting for this to come out.
Brian Dunhill:
[00:04:12 – 00:04:14]
That is awesome. I love it.
Richard Taylor:
[00:04:14 – 00:04:18]
Right? And she is the sort of person who would go, Barcelona,.
Brian Dunhill:
[00:04:20 – 00:04:24]
We’re gonna start a French podcast and I’m going to be the male version of her.
Richard Taylor:
[00:04:26 – 00:04:29]
Anyway, how did Lily get on with sailing? First trip.
Brian Dunhill:
[00:04:30 – 00:04:34]
She loved it. All smiles. I’ve got some beautiful pictures for you. I’ll send them over to you.
Richard Taylor:
[00:04:34 – 00:04:35]
How wonderful.
Brian Dunhill:
[00:04:35 – 00:04:39]
The next time you’ll be coming down sailing. And you’ll be smiling the same way.
Richard Taylor:
[00:04:39 – 00:04:49]
Love it. Well you got to inspire my boys because I’ve got my boys into skiing this year and they absolutely love it. And that’s great. And the next one for me is skiing, sorry sailing and then, then scuba diving. Gotta be a bit older for scuba diving though.
Brian Dunhill:
[00:04:50 – 00:04:55]
Perfect. It’s perfect trifecta, you know, get them in the water, get em on the mountains.
Richard Taylor:
[00:04:55 – 00:04:58]
So why are we here? What are we doing? Who are you? What’s this about?
Brian Dunhill:
[00:04:59 – 00:05:03]
We’re gonna sell everybody on France. And we’ve got the sales piece right now, right?
Richard Taylor:
[00:05:03 – 00:05:03]
Yes.
Brian Dunhill:
[00:05:03 – 00:05:04]
Okay.
Richard Taylor:
[00:05:04 – 00:05:07]
Right. We’re gonna start. You want to start talking about energy and what’s going on in the world.
Brian Dunhill:
[00:05:07 – 00:05:19]
I think it’s impossible to not talk about what’s going on in Iran cause it’s dragging on and on and on and on. I think it’s the fastest that the US has ever lost a war or not been able to move the needle.
Richard Taylor:
[00:05:19 – 00:05:54]
You know what I heard? I can’t remember where I heard this. The day I heard America is fantastic at winning battles but always loses. Not always, but goes on to lose the war. And it’s because we have got the most fearsome technological army military the world’s ever seen. It’s incredible. But we have zero appetite for losing men. And really when you look at the Russias, the Chinas, even the Iran, their willingness to sacrifice human capital, that’s the edge.
Brian Dunhill:
[00:05:54 – 00:06:22]
Well, I remember years ago the Chinese said something like if we wouldn’t be able to give up a million of our young men to take over Taiwan, then we shouldn’t be a country of ourselves. I don’t think I would ever president to say something like that. No. You know, but the conflict in Iran continues to go and that means energy prices keep going up. Except in France. It’s been said that the French have an adversity to making a profit.
Richard Taylor:
[00:06:23 – 00:06:23]
Right.
Brian Dunhill:
[00:06:23 – 00:06:53]
Which really makes me upset that we set up a French company last year. But it’s very profitable so I’m not going to complain too much. And Total Energy has proved that. Total is the, the national behemoth energy company in France. They’ve put a cap on gasoline at 199 per liter. So essentially the French are all driving anywhere they can to get to the total gas stations and making sure that they take advantage of it.
Richard Taylor:
[00:06:53 – 00:07:19]
199 A liter. That is still so much more than we pay here in America. And I have really noticed the increase in gas prices and I’m kind of not immune to it, but largely compared to the average American who is obsessed with gas prices and grocery prices. And if I’m noticing it, it’s never cost me more to fill my car up. And if I’m noticing it, you can bet you bottom dollar the rest of America is. And America is largely immune. It cost me over $100 for the first time ever.
Brian Dunhill:
[00:07:19 – 00:07:21]
But what are you paying? 460 A gallon?
Richard Taylor:
[00:07:21 – 00:07:24]
450 More than that now. I think it was almost five.
Brian Dunhill:
[00:07:25 – 00:07:33]
Almost five. Okay, so you’re nearly California prices. Yeah, it’s manic. Yeah, we’re closer to 10, but.
Richard Taylor:
[00:07:33 – 00:07:49]
But it’s crazy, isn’t it? But it, but it’s, it manifests itself everywhere. So yeah, we see it at pump prices, but it’s, it’s, it’s one of the reasons why the cost of food so much more, because how does food get onto our tables? Well, it goes by boat and by car and all they, they use fuel van, I should say.
Brian Dunhill:
[00:07:49 – 00:08:11]
I mean, pesticides. What are pesticides? Pesticides, variation, you know, so everything that goes into the entire processes is actually getting inhibited. But we’re already seeing government controls and companies actually playing into government controls. But Macron is leading the way right there in France. And it is one of those reasons that last year I think we only saw 1% inflation in France.
Richard Taylor:
[00:08:11 – 00:08:13]
1% Inflation.
Brian Dunhill:
[00:08:13 – 00:08:32]
1% Inflation. Take the Italians, they went 15 years only charging €1 for a little espresso. It went up to 125. The whole country was in bedlam. Yeah, it would. Could you imagine going into Starbucks and saying, what can I get for a euro?
Richard Taylor:
[00:08:32 – 00:08:42]
Isn’t it funny how different countries have their triggers and they’re so specific to the stereotype or the archetype is hilarious.
Brian Dunhill:
[00:08:43 – 00:09:00]
Wasn’t it Caesar that said, give them bread, give them circus and they’ll keep happy? Right. So essentially, if you keep food at an affordable price, keep us entertained, give us football, hey, we’re happy constituents, we’ll take part. Macron’s doing a pretty good job of that.
Richard Taylor:
[00:09:00 – 00:09:09]
Yeah. Well, where does this go? What do we take away from this? Just rising energy prices with the exception of total. Noted. But for the rest of us, for.
Brian Dunhill:
[00:09:09 – 00:09:43]
The rest of us, we really have to think about this inside of our portfolio. I think of this as our coffee analogy. Most people, if you ask them how they want to take their coffee, they’re going to use adjectives like dark, robust, full bodied, etc. But if you, if you watch the average American, how they take their coffee, they milk them down. They sugar them up, right. So they take them in a different form. Right now you have a lot of people going to cash inside of their portfolios, going to bonds inside of their portfolios, saying I want to be conservative.
Richard Taylor:
[00:09:43 – 00:09:54]
Are you seeing that or is this, are you seeing this like in the wider. I’m not. I think people are being, I think people are generally holding on. They’ve learned the lessons of the recent past.
Brian Dunhill:
[00:09:55 – 00:10:37]
Our clients are holding on. People that we’ve been talking to for years to get through these types of issues are the people that are calling us up. Had two phone calls this morning. I have X amount coming due from a sale of a house. I would like to keep it conservatively invested. I would like it to be cash or no more than two year bonds. Well, essentially if we get heavy inflation, which it’s starting to look like we’re going to have heavy inflation. Cash is trash. It is a very, very scary premise of what can happen with heavier inflation, as we’ve seen. And the real question is if America gets to be like Zimbabwe, who’s going to be on the trillion dollar bill? Probably Donald Trump. Right?
Richard Taylor:
[00:10:38 – 00:10:42]
He’s going to be on everything else at this rate. Passports, every building in Washington.
Brian Dunhill:
[00:10:43 – 00:10:46]
Could he not have picked a better picture for the passports?
Richard Taylor:
[00:10:46 – 00:11:08]
I think he thinks that’s, that’s him looking at his most imperious, isn’t it? You know, let’s, we’ve got to get talk about inflation and, and I want to talk about the, the, the change coming up in the Fed in a minute because I think that is, that is pivotal and it’s also, it’s a historical drama what’s going on here. It’s going to be talked about in years to come. So I’m, so let’s get into that. But you also want to talk about,.
Brian Dunhill:
[00:11:09 – 00:11:22]
I think, yeah, I think there’s a pivotal thing before we even get to the Fed because, because trade is that main issue. This is energy prices are affecting everything else. But right now, Donald Trump sitting in.
Richard Taylor:
[00:11:22 – 00:11:32]
China, which itself is super significant. Right. Absolute first China visit in 10 years. He’s arguably, I think he’s got, he’s not gone from a position of power.
Brian Dunhill:
[00:11:32 – 00:12:40]
No, not at all. I mean essentially he’s going in there trying to muscle China to not be trading with Iran so that he can get into a better position over there. But he’s more likely to be muscled based on, well, quit meddling with Taiwan. And we know emerging markets have been doing wonderfully because of the semiconductor companies, including Taiwan Semiconductors but one of the five main straits, one of the five big trading regions is right there. And right now we’re stuck in the Strait of Hormuz with Iran. 15 To 20% of the world’s oil is essentially not being moved in the ways that it could in the past. The Strait of Malacca. After getting the idea from Iran, which Iran stole it from the Tripoli pirates down in the Mediterranean, which sent Jefferson to form our first US Navy 250 years ago to go ahead and stop the pirates from meddling and taking tolls to go through the Mediterranean. Now they’re talking. Wait, wait, wait, go back.
Richard Taylor:
[00:12:40 – 00:12:41]
I need.
Brian Dunhill:
[00:12:41 – 00:12:42]
I went there too quick, didn’t I?
Richard Taylor:
[00:12:42 – 00:12:48]
No, no, no, I want to hear more. Right. So Jefferson thought there were pirates in the Mediterranean.
Brian Dunhill:
[00:12:49 – 00:13:33]
Oh, there were four sets of pirates. There were four sets of pirates. The Tripoli were the largest that fought the Americans the most. And remember, during those days, the main empire that the Americans wanted to trade with were the Ottomans. So that means they had to cross the entire Mediterranean. And that essentially meant that anytime a boat would go through, if they weren’t protected, the pirates come in, require a toll or take the whole loot, not a problem at all. That’s why most of those cities down in the south, France, in the Mediterranean, etcetera, they were either way in inland or not part of France. They were their own kingdoms. Because the pirates were that influential, that.
Richard Taylor:
[00:13:33 – 00:13:41]
Strong, and Jefferson formed a navy. The Europeans weren’t sorting this out, so Jefferson, in response, formed an American navy to go on, to go and put an end to it.
Brian Dunhill:
[00:13:42 – 00:14:22]
The Europeans essentially mostly had packs with some of the different pirates. You know, just as most of the famous pirates over in the Caribbean were just flying under the English, Spanish or other flags without being able to fly the flag, right, paying a repent back to. To their countries, but not under that jurisdiction. So the Americans, when they came over, naturally, the French were mad at them for, for not siding with them on their last war with the English. The English were pissed for other reasons. The obvious ones, independence.
Richard Taylor:
[00:14:22 – 00:14:35]
Americans only, basically only essentially only won the war against the British because of the French navy and, well, Lafayette as well. But the French. And then what? The Americans turn around and didn’t support the French?
Brian Dunhill:
[00:14:36 – 00:15:10]
Remember, Remember, the Americans basically said, cool, this is now our backyard. You’ve got your own backyard. We won’t touch anything in Europe. And the French were like, no, no, no, you guys gotta come help us. Yeah, quid Pro quo, mate, 100%. But essentially, America was not a strong. It was 13 colonies, it wasn’t one strong country. It was 13 individual col that each had their own independence. And they weren’t about to say, hey, let’s send a whole bunch of our men with no navy over to Europe until they needed to trade it. And that was all to fight the Tripoli pirates.
Richard Taylor:
[00:15:10 – 00:15:24]
Doesn’t this tell you the strength of trade? The alliances can almost mean nothing. It’s about Britain and the special alliance. But really, is it worth the paper it’s written on until trade cash, money, dollars are involved.
Brian Dunhill:
[00:15:25 – 00:15:36]
Economic warfare is the name, the name of the game nowadays. You know, it’s not about missiles, it’s not. Not about other things. It’s how can you get the dollar across? How can you get the pay for.
Richard Taylor:
[00:15:36 – 00:15:45]
The cross dollar pieces of eight pound, whatever you want to, you know, sestercy. It’s always been about that from the. Because man. Because humans are human and they’re going to human.
Brian Dunhill:
[00:15:45 – 00:15:50]
Absolutely. You know the, the U.S. dollar symbol, do you know what it comes from?
Richard Taylor:
[00:15:50 – 00:15:50]
No.
Brian Dunhill:
[00:15:51 – 00:16:33]
So Ayn Rand used to say in her book that it stood for United States. Right. The problem was that that term didn’t come across until way. I think 50 years after they started using the symp. The symbol. There was a whole bunch of ships that came from the Spanish Armada up the coast. Hit a. Hit a hurricane just off Vero beach in Florida. They all sunk and essentially they traded under Spanish pesos. And basically the Americans sent all their ships down there to go ahead and try to hunt for these treasures. Actually, I think they were still English ships and so they were all Spanish pesos. So the first US Dollars were really Spanish pesos.
Richard Taylor:
[00:16:33 – 00:16:34]
Oh, wow.
Brian Dunhill:
[00:16:34 – 00:16:38]
So Ayn Rand, there’s one thing she factually got incorrect. There’s probably more.
Richard Taylor:
[00:16:38 – 00:16:43]
Are you and you and Ayn Rand fanboy. Some people really are, aren’t they? I’ve never met a box.
Brian Dunhill:
[00:16:43 – 00:16:51]
No, I think it’s one of those quintessential reads. But she wrote it as propaganda and so it should be considered.
Richard Taylor:
[00:16:51 – 00:16:53]
People lapped it up, right?
Brian Dunhill:
[00:16:53 – 00:17:05]
Absolutely, absolutely. I mean, it’s great stuff. It’s. When you rewatch Mad Men knowing that it’s a remake of her books and you’re going, oh my goodness, there’s characters named after the same characters.
Richard Taylor:
[00:17:06 – 00:17:15]
Wait, I’m actually rewatching Mad Men right now and I haven’t really, I haven’t read. And literally they just mentioned Ayn Rand book in one of the episodes.
Brian Dunhill:
[00:17:15 – 00:17:16]
Absolutely.
Richard Taylor:
[00:17:16 – 00:17:31]
Cooper’s office. And I, I’ve never read her books. I know how big they were. If I, if I’D grown up in America, I would have read them, but I didn’t. And because of my perception of them now I’ve just thought, I don’t even want to. I don’t even want to like read this propaganda to your point. But you make me think maybe I should while I’m watching Mad Men.
Brian Dunhill:
[00:17:32 – 00:17:54]
Richard, you know the, you know the expression is keep your friends closer, your enemies closer. You need to know her material, even if you disagree with all of her material, because it’s a fundamental understanding of how libertarians think. And libertarians are not wrong. They’re just oversimplifying things. A society can’t work exactly in those types of ways.
Richard Taylor:
[00:17:59 – 00:18:05]
A fascinating story. So that’s the origin of the US Navy. That is a great story. But we were in the Mediterranean.
Brian Dunhill:
[00:18:05 – 00:18:55]
Only reason that the US Navy left America was to protect against these toll. Now because of what’s going on in Iran, we have essentially Malaysia and Singapore talking about introducing a toll in the Strait of Malacca. We have President Xi over in China essentially threatening Trump to get out of his way so that he can be looking at potentially going into Taiwan. We still have environmental issues in the Panama Canal to where they can’t get the same level of boats as they could through the area. And actually Suez Canal is still taken over by the conflict in the Middle East. So of all the five major transit areas, they could all be shut down in this same year and we could be talking about a lot of trade not moving through because they’re all going to be.
Richard Taylor:
[00:18:56 – 00:19:04]
Well, that would be, I mean, first of all, can you imagine the inflationary pressure that would put on. I mean, that would be cataclysmic. It would be awful.
Brian Dunhill:
[00:19:04 – 00:19:07]
It’s something that we really have to prepare for in certain regards.
Richard Taylor:
[00:19:07 – 00:19:12]
Do you mean going back to CVS and stocking up on toilet paper and kitchen roll like Covid style?
Brian Dunhill:
[00:19:12 – 00:19:37]
I have a room full of toilet paper because I’m not going to go through that. I almost said a four letter word right there again. But no, no. I think when you look at last month to this month, electric cars sales went up 34%. That’s preparing for some of these types of issues. Gas prices increasing so significantly. You don’t see me complaining about G prices. Why? I’ve got an electric car.
Richard Taylor:
[00:19:38 – 00:19:43]
My wife hasn’t even noticed she’s got an electric car. She hasn’t even noticed. She’s not the one going to the gas station.
Brian Dunhill:
[00:19:43 – 00:20:17]
Absolutely. The price of certain goods don’t go up. You know, when it comes to our Portfolios increasing nice and well instead of having cash. Okay, so we’re isolated from some of that inflation risk on those sides, but essentially we should be structuring ourselves and our financial lives in a place where we don’t have to deal with these shifts in such big ways. We’ve got to make sure that we’re in line with our financial plan in a good way.
Richard Taylor:
[00:20:18 – 00:21:23]
I’m excited to announce that Expat wealth has its first sponsor, the Global Financial Planning Institute. The GFPI exists to provide education, community tools, resources and ongoing research for financial planners and other advanced financial professionals working with international and cross border clients in the US And Americans abroad. I’m a GFP Institute fellow and I’ve put all our employees through their GFPI programs when they join us. I’ve met some great people, I’ve learned a ton. It’s a genuine community of internationally minded folk doing their best to serve their clients properly and critically sharing what they know in the oftentimes challenging and ambiguous US cross border environment. And as anyone in this sector will tell you, you’re always learning. So if you work with international clients and or Americ tokens abroad or if this is an area you’re looking to get into, check out the gfpi@www.gfp.in stute you will be glad you did and I hope to see you there soon. Do you think that China’s actually going to make a move to take over Taiwan?
Brian Dunhill:
[00:21:23 – 00:21:28]
I don’t think it’s a question of will they make a move. I think it’s the question of when they’ll make a move.
Richard Taylor:
[00:21:28 – 00:21:47]
Yes. I used to think that this was just like, just not really possible. You know, it’s 70 years since the, since the split and Taiwan is its own country, but they’re not letting it. They are never going to let this go and they’re only getting stronger and more emboldened, I think.
Brian Dunhill:
[00:21:47 – 00:22:20]
Well, and you know, their main foe in America is distracted right now. We’re not going to sit there and move our military that was in the Caribbean or went to the Middle east. Now some of them have split back to the Mediterranean or to, to, to the Caribbean on talks of us invading Cuba and then we’re going to shift them to the Pacific. I don’t see that really happening. So they know they can pretty much walk in and nobody’s going to resist in any way, shape or form.
Richard Taylor:
[00:22:20 – 00:22:28]
What do you think? I mean that sounds to me awful for the, for the world. Much bigger than what the US is doing.
Brian Dunhill:
[00:22:28 – 00:22:40]
In Iran to the same level as Russia walking into Ukraine. It’s strategic moving points that essentially give them much more power than just the land that they’re sitting on.
Richard Taylor:
[00:22:41 – 00:22:46]
Well, Taiwan’s more important to the global economy though, than Ukraine. Right. With the semiconductor industry and everything.
Brian Dunhill:
[00:22:47 – 00:23:38]
I think of Ukraine is much more important because of their proximity to seaports for, for the Russian navy. By the Russian navy not having Crimea, it meant that they didn’t have an access point to the Mediterranean. Essentially China, it’s the same thing that they lose this huge corridor. You know, you keep hearing about the Chinese going over and assaulting different fishing vessels from, from all their surrounding countries to make sure that they have that main trading, trading territory. And here, what are we talking about with Iran? We’re not talking about a huge population of 60 million. We’re not talking about a huge landmass in a, in a very influential area. We’re talking about the Strait of, Strait of Hormuz. So these are, it’s those transportation hubs and that’s where naval powers and, and trade of goods get through. And that, that becomes that important part.
Richard Taylor:
[00:23:38 – 00:24:12]
I don’t want to be one of these like, oh, it was better in my day kind of folks, and I’m not, I’m not convinced it ever was better. It was obviously different, but I do think we were fort. And maybe even our parents were more fortunate to grow up in a period of just unprecedented peace. And certainly in the European American sphere, Post World War II, because it’s all just seems to be disintegrating. But then even as I say that, I think Vietnam and Iraq and China, revolution and, you know, everything else, Cold War.
Brian Dunhill:
[00:24:13 – 00:25:10]
There hasn’t been a decade in the last century that a major developed country hasn’t been at war. So you can’t be that old to be from a time that there wasn’t a major war going on. But I think the change of it is that the news is right in our face on a constant basis and we’re thinking about it constantly. That’s the bad news. The good news is when you look at the number of fatalities, it’s insignificant when you compare it to World War I, World War II, Vietnam, Korea, any of these types of conflicts. So there, there is good news in those conflicts. It just is falling back into America and Manifest Destiny, right? Russia trying to get back to its Soviet levels. China getting, trying to get back to, you know, their, their old land masses. These are things that we would have hoped that we would have gotten beyond.
Richard Taylor:
[00:25:10 – 00:25:15]
What’s going on at the Fed. So we have a new Fed chair, he’s just been confirmed. Right, Kevin Walsh.
Brian Dunhill:
[00:25:15 – 00:25:21]
Yep. Kevin Warsh, longtime proponent for low interest rates.
Richard Taylor:
[00:25:23 – 00:25:30]
Long time, short time. There’s two parts to Kevin Walsh’s journey so far,.
Brian Dunhill:
[00:25:32 – 00:25:39]
And this is to where, instinctively, when he was nominated, however many weeks was it five weeks ago?
Richard Taylor:
[00:25:39 – 00:25:40]
I think it was further than that.
Brian Dunhill:
[00:25:41 – 00:26:01]
Good, long while ago. Yeah. Because it was before the Iran conflict, when he was originally nominated, we were thinking, oh, my goodness, Trump has corrupted one more form of government that’s supposed to be independent. But now how are we going to do anything during this summer? How would he actually do anything this summer if inflation’s going up?
Richard Taylor:
[00:26:01 – 00:27:59]
Let’s just go. Let’s just tell the story of the Fed. What’s going on here? So Fed role is Fed chairman in many ways. I think it came more and more important. They set interest rates, but also more and more they intervene in the economy when things go south and prop it up. So they’ve got a hugely important role in the economy now. And Fed chair Jay Powell, his chairmanship is up and normally he would exit, right? He would. And he certainly planned to resign entirely, but he has decided to stay on the board. And he decided to stay on the board because of this ridiculous, ridiculous and complete spurious criminal investigation that has apparently been closed down now. But the risk, it hangs over him that it could be brought up again. And basically Trump, who nominated Jay Powell years ago, is furious with him for not putting rates down more. So Powell oversaw Covid, arguably kept rates too low for too long when inflation was going skyrocketing, but brought it under control by bringing rates up without triggering a recession, which is pretty impressive. And throughout all of this, Kevin Walsh has been hugely disparaging. He was a fed governor from 2006 to 2011. He argued for, he said back then, in the wake of the global financial crisis, we were keeping rates too low for too long. He argued against quantitative easing and expanding the balance sheet, something he argued against again in Covid when they expanded the balance sheets again. And yet he’s been brought on, as of Trump’s guy, to bring down interest rates at a time when inflation is spiking again. It is heading because of energy, because of transport, because of all this stuff. It is on the march and I don’t see how he is, how is he not in a complete bind?
Brian Dunhill:
[00:28:00 – 00:28:28]
Absolutely. I mean, you look at the 30 year bond, it crossed 5% here in the UK, we’re crossing 6%. How are you going to manage that? Balance sheet. Without quantitative easing and lowering interest rates, we’re still printing 40 billion a month just to control the balance sheet. We’ve got $6 trillion on the Fed’s balance sheet. Can you imagine the losses that have piled up in the last year as we’ve moved from 4 1/2 to 5% on the 30 year.
Richard Taylor:
[00:28:28 – 00:28:29]
Yikes.
Brian Dunhill:
[00:28:30 – 00:28:34]
I wouldn’t want that task. I wouldn’t want that job. And he only gets paid 180 grand a year.
Richard Taylor:
[00:28:34 – 00:29:11]
What’s he going to do? The first meeting is in June. First of all, how awkward is this going to be? He’s going to be. He’s going to. The old guy is going to be in the room. Jay Powell, who he has disparaged constantly, who’s been completely critical of. He’s got Trump who wants to bring down interest rates, but he’s going to be. He’s going to know inflation is rising. He’s going to know the walls ongoing. What’s he gonna. He’s also gonna be already thinking about his legacy. He doesn’t want to be the guy who said one thing for 20 years, 15 years, then did another thing at the behest of the President and. Yeah. And got it. And then let’s say he doesn’t put interest rates down, which I can’t see how he can. How’s Trump going to react?
Brian Dunhill:
[00:29:12 – 00:29:41]
Trump is going to be mad no matter what happens, and he’s just going to point his finger at everybody else. So we know how Trump will behave. But the Fed is still aboard and he still needs the vote. We’ve just been used to it in our lifetime that for the most part, the Fed unanimously votes together, that the chairman directs the position and everybody kind of falls in line.
Richard Taylor:
[00:29:41 – 00:30:06]
But then he’s going to look weak after June. If he says, I voted to put it down, everyone voted against me and not. Yeah. Then he’s going to look like a. He’s going to look. He’s going to look pathetic. He’s in such a bind. He’s got the job he wants by doing what he needed to do to get the job, and now he’s got the job. It really is going to be fascinating. But you can’t put interest rates down right now. I just don’t see how that could be. That’s feasible.
Brian Dunhill:
[00:30:07 – 00:30:17]
He’s got to sit on his hands and hope for the best that this Iran conflict disappears. And Trump’s going to do everything he can to make it disappear, but he’s not been able to do a thing.
Richard Taylor:
[00:30:17 – 00:30:30]
We came so close to having inflation under control and now it’s creeping up again quite substantially and it’s entirely self inflicted. It’s tariffs and then more so it’s Iran war.
Brian Dunhill:
[00:30:30 – 00:30:42]
But I’ll tell you what, you know what really surprises me? Every day we’re getting a new company laying off thousands and thousands of people. But unemployment, the unemployment rate’s still not going up significantly and apparently they’re not.
Richard Taylor:
[00:30:42 – 00:30:46]
Hiring because AI is doing so much of the entry level jobs.
Brian Dunhill:
[00:30:46 – 00:31:43]
My thesis is demographics. It’s that it’s still the number of baby boomers, they’re fully not retired until 2030. And so back when Obama was president, back when times were normal, we didn’t talk about what percentage of the population was unemployed. We talked about what part of the population was employed and paying into the system. And it was 71%. So that meant 29% were either kids, disabled, retirees or unemployed. Right? 79, 29. Now it’s around 66% are paying in that difference is the thing that we were talking demographically for 20, 30 years. You know, hey, the baby boom generation is the biggest generation we’ve ever seen. As they get to retirement, we’re not going to have that many people working in the system, but we’re going to have a lot more taking out of the system.
Richard Taylor:
[00:31:43 – 00:32:32]
This you’ve touched on something that logistics. One of my biggest concerns is this, the demographic changes. And another what I think is going to be tremendous own goal and damaging to America is this anti immigrant position it’s taken. America is not having enough kids. The replacement rate for kids is well below. But, but America managed to, to get its replacement rate up because of immigration. And not only is it trying to kick out a load of immigrants, but it’s also making immigrating to America less attractive. And yeah, I’m not saying people are going to start wanting to come to America. There’s still so many good reasons to come to America and hopefully we can get back to a better place. But, but, but I do think it’s having, you can see it’s having an impact already and I think there will be far reaching consequences for this. Less people paying in, more people taking money out.
Brian Dunhill:
[00:32:33 – 00:32:38]
I couldn’t agree more. But you’ve heard the stories of Sean Duffy, the Transportation secretary, right?
Richard Taylor:
[00:32:38 – 00:32:42]
I know who you talking about. He’s a bit of a clown, right?
Brian Dunhill:
[00:32:42 – 00:33:23]
Real world, real world guy, administration. They’re all clowns. You know, it’s a giant clown car. Sean Duffy, Sean Duffy’s the, the transportation Secretary. So, so now he has essentially, instead of using government money, he’s getting money from basically. What is it like Royal Dutch Shell, Boeing, like all these companies that are part of the transportation sector. They’re sponsoring a five part series on YouTube where he’s taking his family of nine, all nine kids on a road trip throughout America to demonstrate what transportation in America looks like. First of all, doesn’t that sound nice and corrupt? But at least you got one guy that’s got nine kids out there.
Richard Taylor:
[00:33:26 – 00:33:36]
Nice and corrupt. That’s the moniker for this administration. You know, he, he, he made, he was, he was on the Real World, wasn’t he? Or something like that.
Brian Dunhill:
[00:33:36 – 00:33:41]
Yeah, that’s how he met his wife was. Yeah, it was the Real World. They, they did one of those travel trips.
Richard Taylor:
[00:33:41 – 00:33:59]
Fox News in Real World is make up half this administration. What, what, what, what, what is going on? You mentioned back when things were normal in Obama. That is 10 years ago. 10 Years. Yeah, it is. I can’t believe. And we’re not. We got, we’ve still got years ahead of us.
Brian Dunhill:
[00:33:59 – 00:34:10]
The other thing that is spot on that you brought up, I think it’s the first time in nearly 100 years that we’ve had a net outflow of Americans instead of an inflow of Americans.
Richard Taylor:
[00:34:10 – 00:34:12]
Yes, I read an article on that as well. Yeah, yeah.
Brian Dunhill:
[00:34:12 – 00:34:52]
And that’s a scary thought when you start thinking about one of the big proponents of growth of wealth in America is based on housing prices. And housing prices grow because essentially there’s more people coming in than there’s houses being built. If we have a net outflow, too big of an outflow, we’re going to see regions that are going to suffer from what happened in Detroit where what the population went from 4 million to 400,000. And I can’t remember how long ago it was, but I remember there were houses that were for sale for less expensive than cars that were made in Detroit because of the net outflow out of Detroit. And we’re going to potentially see it across the country.
Richard Taylor:
[00:34:53 – 00:35:44]
A huge part of America’s success has been inward immigration. It’s been people coming to America in large numbers and working hard and making this country so successful. And the narrative, not just America, but the global narrative against immigration is so overwhelmingly negative that it’s literally Turkey’s voting for Christmas. There are vast wilds of Americans and Brits and all Europe everywhere. They are voting and advocating for policies which are going to make them and their children significantly poorer. And you know, we can get angry and annoyed by them for the. For the ignorance and the xenophobia and the outright racism. Yes. But also, why is the anti immigration negative, the narrative winning so conclusively when we’ve got a hundred years plus of evidence of the benefits to all of us?
Brian Dunhill:
[00:35:45 – 00:36:11]
It’s a simple rhetoric of frustration. And that frustration is easier to exude in the way of basically putting up a middle finger to those that are coming in to help instead of reaching out with a welcoming hand. And we’ve gone through it generation after generation and we’re just not learning from our lessons from the past.
Richard Taylor:
[00:36:11 – 00:36:32]
But the narrative, somehow the other side needs to just throw out the rulebook and come up with a better narrative. I don’t know what it is, but somehow we have to get through that. This is the path of prosperity. America has a unique advantage in that it can attract these people and that’s a good thing. And we should attract them and support them and welcome them.
Brian Dunhill:
[00:36:32 – 00:36:38]
We always have. We always. Yeah, this election, this last week in the UK was just as embarrassing.
Richard Taylor:
[00:36:38 – 00:37:26]
Yeah. Well, I’ve got the news up here. The UK is just the uk from an outside point of view, a very concerned. Outside of the UK’s falling apart, like politically, it’s just a complete. It’s a complete show. This Prime Minister who was the most uninspiring man on the planet, he. Have you ever seen the original Spitting Image? I don’t know if you’ve seen it. I absolutely love the original Spitting Image. You know, where the political figures are like, not cartoons, but figuring this is hilarious. There’s a very, very infamous one of John Major, spitting Image, and he’s like this gray character eating a pea with a knife and fork. And I always think Keir Starmer, who I think is a good man, but Keir Starmer makes John Major look charismatic. He is just awful. But come on, we need to just. Can we just not have a new prime minister every 10 minutes?
Brian Dunhill:
[00:37:26 – 00:37:41]
Well, I mean, Keir Starmer was elected on the premise of I’m not a Tory and I’d vote for him again because he wasn’t a Tory in this last election. And the Tories, as bad as Keir Starmer has been doing. The Tories were worse the last 17 years.
Richard Taylor:
[00:37:41 – 00:37:42]
100%. Yeah, yeah.
Brian Dunhill:
[00:37:42 – 00:37:55]
And that’s, that’s not a political view. It’s just them being so silly on every single move that they could make. But Keir Starmer didn’t actually build a platform after being able to say, I’m not a tort.
Richard Taylor:
[00:37:55 – 00:38:02]
Such a good point. Yeah, he’s Such, and there’s a lesson there over here. We need more than just I’m not Donald Trump.
Brian Dunhill:
[00:38:02 – 00:38:17]
Absolutely. I tend, I tend to think that we’re back on the path to the same, the same reason we got into the European Union the first time, which is, hey, we’re going to have to seek an IMF bailout. I mean, you saw it, we hit 6% on a 30 year UK.
Richard Taylor:
[00:38:17 – 00:38:19]
6%. Yikes.
Brian Dunhill:
[00:38:19 – 00:38:25]
Which is insane when, when you’re talking about a deficit of 97% of GDP on a slowing GDP.
Richard Taylor:
[00:38:26 – 00:38:31]
Yeah, we’re just going to strangle the, the already strangled UK economy. The maths ain’t mathing.
Brian Dunhill:
[00:38:37 – 00:38:46]
What we’re going to get is we’re going to get another IMF bailout and then basically the US is going to say, yeah, we’d rather you be inside of the European Union instead of outside.
Richard Taylor:
[00:38:46 – 00:38:48]
Why would the US say that?
Brian Dunhill:
[00:38:48 – 00:39:01]
From a security vantage point, from a monetary vantage point, not under a Trump administration, but under any other administration, they would rather one of their closest allies be inside of the mix instead of outside.
Richard Taylor:
[00:39:02 – 00:39:06]
Makes total sense. Yeah. I was just, I was thinking about from this administration point of view, but this, this, this will pass.
Brian Dunhill:
[00:39:07 – 00:39:16]
UK has they, they have a lot more years to survive than this administration, but they’re not going to be able to get a launch pad from there.
Richard Taylor:
[00:39:16 – 00:39:27]
Oh dear, dear, dear me. Right. And again, totally self inflicted. Right, Ryan, I have a client meeting to get to, so I’m going to have to dash. Great to chat with you as always, my friend. We will do this again in a month’s time.
Brian Dunhill:
[00:39:27 – 00:39:32]
Always wonderful to see you, Richard. And we will see you next month. Stay safe as always.
Richard Taylor:
[00:39:32 – 00:40:32]
Thank you too, mate. All right, speak to you soon. Bye bye. All right folks, that’s another episode of Expat wealth under our belts. Thank you for listening. I appreciate it and I appreciate you. If you’re enjoying the show and would like to support the mission, which is to help ambitious expats thrive in America and ask you to subscribe to the POD wherever you listen and also consider leaving a rating and review. This stuff really does matter. Please help us get this information to the people who need it. That is to your fellow expats. Just a quick reminder that this show is brought to you by Plan First Wealth. We are a US based financial planner and wealth manager and we help successful American and international families living across the US to make the most of their opportunity and ultimately to retire happier. If you’d like to know more about how we might be able to help you do. You can find us on our website, www.planfirstwealth.com, or you can look me up on LinkedIn. Do get in touch. We’d love to hear from you. As always, thank you to the podcast guys for their help producing this episode and the entire show. See you next week.
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