John Norris (00:30):
Well, hello again everybody. This is John Norris trading perspectives. As always, we have a good friend, Sam Clement. Sam, say hello,
Sam Clement (00:35):
John. How are you doing?
John Norris (00:36):
Sam, I’m doing okay today. I hope that you’re doing okay.
Sam Clement (00:38):
Doing great.
John Norris (00:39):
Well, I’m glad that you’re doing great and hopefully people around the world will start feeling much better, will be doing great, if we can finally stop the end of the bloodshed in places like Gaza as well as Eastern Europe.
Sam Clement (00:52):
I think that’s been a hope for quite a while now.
John Norris (00:55):
Quite a while, but at least now I think there maybe is some sort of willingness from all the various parties to try to do something meaningful about it. Obviously the Trump administration won’t take a lot of credit for it, but you also have to wonder just how much is exhaustion? Just realizing this is just going to go on forever and understand that no sides want to give in, obviously, in these conflicts and every side probably believes that there will be conflict in the future. Just how in the world do we extricate ourselves from the current bloodletting while allowing ourselves to save face in some form or fashion?
Sam Clement (01:30):
Well, a lot of people, and me included, when the war in Ukraine started and we’ll get to Gaza… but I don’t think expected it to go on as long as it has.
John Norris (01:40):
Well, I don’t think anyone thought it was going to go on as long as it has, and I certainly don’t think anyone thought Ukraine would still be around. I mean a couple of years later, close to three years later, I think everyone really thought that Russia would be able to go in and just pretty much push Ukraine around. And before you knew it and before the United States or Western Europe could do anything about it, Ukraine was going to be absorbed, backed into a greater Russian empire. And that clearly is not going to happen this time.
Sam Clement (02:07):
No, and really there’s been some lines moved, but a little bit in both directions. And so all in all, it feels like not a lot has really happened outside of the massive amount of bloodshed.
John Norris (02:18):
Well, massive amount of bloodshed. I would say that the Russians have probably been able to capture more territory than the Ukrainians, and there is no argument about that. But I doubt anyone in the Kremlin could seriously say that this a massive success and a major victory for them. However, in order to get both sides to the table, the current administration, the Trump administration is going to have to allow both sides to at least get out of there with a shred of dignity.
Sam Clement (02:52):
And we’ve seen it. There’s been a lot of, I guess not really development, but it feels like development in the last 24 hours or so with a call between Trump and Putin and then a call between Trump and Kiev. And what we’ve heard out of Ukraine is that there’s not going to be a deal made that they don’t approve of. And of course they’re going to say that. So it goes back to your point that everybody here needs to save face. Everybody needs to at least have a deal that they can take back and say, we got what we wanted out of this.
John Norris (03:22):
Well, without a doubt, and really, let’s face it, maybe some common senses returning to the negotiating table. Well, I mean there wasn’t even a negotiating table prior to this. Maybe some common senses coming around. Ukraine was not going to beat Russia. It was not going to get all of its territory back. Russia was going to make sure of that happening. Conversely, I’m not sure if Russia was prepared to pull out all the stops that it needed to in order to completely conquer the remainder of Ukraine. And in order to do so, it would’ve laid waste to an entire country, which not necessarily in their best interest. So short of an all-out war with tactical nukes and a bunch of other stuff that would’ve gotten the Western powers involved. Kind of taking a look at it, if I’m in Kiev, if I’m in Moscow, I’m going, I don’t see a real end to this. This is going to continue to go on. Yeah, Russia could probably continue to bleed with Ukraine white, but at what expense?
(04:26):
So the stated objectives, at least at the beginning from what I understand was Kremlin wanted free elections in Donbas. And now, I mean essentially for all intents and purposes have conquered those particular areas so Moscow can go back and say, Hey, we got what we wanted or what we had said that we wanted. And frankly, Zelensky can go back to his population and say, we’re still here. And so when I take a look at everything that’s out there, what I am most hopeful for isn’t necessarily Ukrainian sovereignty or shaming the Russians. I hope that our military is paying close attention to how this war was fought, understanding that a lot of wars in the future are going to be fought just like them, particularly land battles. And that’s something that generals from historical times don’t really always seem to learn.
(05:31):
Because when I take a look at this war, it’s kind of like Russian military just never seems to learn. It’s just a blunt forward instrument. It’s attrition. It’s never been an awesome offensive military, great on the defense, but the way that they invaded us, what in the world are you doing? I mean, I’m not a military expert by any way, shape, or form or strategist, all that stuff. But I could see that that was not going to be the most effective way. But what this has taught us is apparently tanks aren’t as useful as they used to be.
(06:13):
Moving massive numbers of soldiers and material up to the battlefront at one time is not all that useful because very cheap drones can get up there pretty quick and take care of these things. And from what I understand, Russians and Ukrainians are moving their troops and their material in much smaller quantities, not just because that’s all they’ve got. It’s just because if they do anything significantly more, the other side of intelligence will find out. It’s a big target and it just gets blown up before it gets to the battlefield. So that’s one of those things that hopefully the Pentagon will be able to learn going, okay, alright, we’re still going to have to fight conventional wars, defensive wars and conventional artillery still has a part, but these drones are really going to make or break the battlefield just like the machine gun did during World War I.
Sam Clement (07:12):
And the thing I don’t know if we know, and you’re spot on, but is the technology that Russia has, I would probably say is not up to par with what we would have.
John Norris (07:24):
I would say so. I mean, that’s maybe me waving the flag a little bit. I mean, if you were to take a look at Jane’s military power rankings or what have you, they still have Russia up there pretty high. We don’t know if we’ve seen all of Russia’s big guns yet, and maybe we have a false sense of security that the Pentagon’s technology is as awesome as we think it is.
Sam Clement (07:53):
See, I believe it is. I think our military power is vastly superior to that of Russia.
John Norris (08:01):
Well, I mean, one can only hope. I mean seriously, one can only help what’s, except we can use it effectively.
Sam Clement (08:06):
I think back to how we killed some of the leaders in the Middle East with projectiles that were largely a flying blender with blades that had no impact outside of the target. Things like this I don’t think are things that Russia has or to the same capability that we do. This is a country that has been behind the US for decades.
John Norris (08:30):
USA baby. USA.
Sam Clement (08:31):
I mean that’s right. And part of our, we don’t want to fully show the capabilities that we have, and I don’t think we’ve ever fully had to show the capabilities. I think if this was something that was starting to be fought on U.S. territory, I think it’d be a whole different story in terms of what we were using in our military capabilities.
John Norris (08:51):
Well, I would tell you, I mean kind of the one-off precision munition, that’s fantastic, but does the U.S. have enough of them to win a more conventional war? And that’s the question. That’s the question. I think for the Pentagon. That the U.S. military has advanced technology that the average American doesn’t know about and dare I say, probably doesn’t need to know about. I hope that’s the case. I certainly hope that’s the case, but do we have enough of it in order to potentially fight a two front war in Eastern Europe and then in East Asia, do we have enough to fight the Chinese or do we have these cool smart weapons, but we only have a limited quantity of them that we’re going to expend in a month’s time and then it takes so long to produce them that perhaps they’re not as effective as we would like? That’s my biggest concern. I think the takeaway is, yeah, new technology is certainly pretty helpful, but some of the old ways of fighting: good old fashioned machine guns and conventional artillery of 144 millimeter artillery pieces, all that stuff, I hate to say it still has a part to play when we’re talking about moving hundreds of thousands, if not millions of troops, into a military theater.
Sam Clement (10:13):
And part of it for the U.S. aspect has been, in my opinion, that we want to do this as cleanly as possible in terms of casualties or,
John Norris (10:24):
Well, that’s the way the U.S. has been, at least since the Civil War.
Sam Clement (10:29):
And even opposing casualties in terms of civilians and what have you. We’ve tried to do it without as much collateral damage as possible. And that has clearly not been the case in the war in Ukraine. I mean, there’s missiles that are being, whether intentionally or not, just exploding apartment complexes. This is not what the U.S. has historically done. And so
John Norris (10:54):
At least not that we think that it’s done. I would imagine some people in Fallujah, if anyone’s listening to this, might take the exception with that statement.
Sam Clement (11:01):
But that’s part of why we’ve put boots on the ground so significantly in the Middle East when we did for decades, was to at least avoid civilian casualties.
John Norris (11:12):
To minimize them as much as possible.
Sam Clement (11:17):
We have the ability to turn some of these areas into parking lots, and we have chosen to instead put us boots on the ground.
John Norris (11:24):
Out of the the goodness of our hearts.
Sam Clement (11:28):
But that’s something I think that is not necessarily the case with what Russia is willing to do, especially if their backs were against the wall.
John Norris (11:35):
I would imagine if you were to get a sober person in the Kremlin, which might be a difficult thing to do, to talk about what the war aims were back in what, 2020 end of February, they probably would’ve said they honestly believe that Ukraine was going to topple pretty quickly. They’d be able to get in and get everything east of the Dnister River and they would occupy it and be on their merry way with maybe no more than five to 10,000 total casualties. And they certainly did not envision what has transgressed. I mean, without a doubt.
Sam Clement (12:16):
Even the name, they called it a special military operation. That is when you say that, that is not implied, that this is a several yearlong millions of lives being lost.
John Norris (12:25):
They truly believe this was going to be a short glorious war. As a lot of military planners in generals always think the next war is going to be short and glorious and galvanize the population. And unfortunately, they often and normally turn into protracted affairs that wreaked economic and rack and ruin as well as cost.
Sam Clement (12:48):
Almost nobody wins .
John Norris (12:49):
I mean, no one wins. No one wins.
Well, let’s shift a little bit over to the Middle East and I mean, I got to ask you, what do you think about the administration’s proposal to turn Gaza into a resort for fat Americans?
Sam Clement (13:02):
I’m not very bullish on that happening ever. Not in four years. Not in 400 years.
John Norris (13:12):
Well, 4,000 years as the case may be, but what do you think, I mean, armchair quarterbacking at the average American on the street, that sort of type deal, member of the millennial generation, what do you think could or should be done about Gaza?
Sam Clement (13:28):
Well, it’s difficult in that there’s so many conflicting interests being head-on with this. You have Netanyahu and wanting to keep his power and keep his government in power, which is maybe not in line with what a lot of the people want in terms of some of these hostage deals. What is Hamas willing to give up? You have the powers that be in that organization that are not going to want to give up their power. And you have the U.S.’s interest and then the other Arab countries around it that Trump has said is going to be taking in all the Palestinians. And they’re not necessarily wanting to do that. There’s been pushback from Egypt, there’s been pushback from Jordan.
John Norris (14:16):
There’s no place to go in Syria, truthfully.
Sam Clement (14:19):
And so how do all those interests, the U.S., Israeli Netanyahu and his government, separate from the Israeli civilian interests, and then these countries as well, and I’m just not sure there may be some solution. Egypt has started to, sounds like come to the table a little bit more, but I’m not sure there’s a solution that works for everybody. And when the solution doesn’t work for everybody, it tends to maybe kick the can down the road a little bit. But these same issues are going to flare up when someone feels like they’re getting screwed over.
John Norris (14:53):
Oh, without a doubt. And the thought process behind the Jordanians and the Egyptians taking in a couple million Palestinians, well, they haven’t done it previously.
(15:03):
No, they really don’t want to. And I think part of that, if not a huge part of it, if not the primary reason, that the Jordanians and the Egyptians have refused to do so in the past, although plenty of Palestinians have been able to infiltrate those countries, even if that’s not the right verb choice… is if they do that, then they’re completely validating Israel. Israel’s right to be a Jewish state in the Middle East, as long as they have Palestinians that are in there waving the flag, demanding a two state solution, there is at least maybe some argument that Israel is an occupier of Palestinian land, but if there are no Palestinians in there, it’s a Jewish state and they’re just going to have to deal with it. So I think that’s going to be a hard sell on the Jordanian and Egyptian populations. Just getting Palestinians out of there because then you’re saying, Hey, Israel, you have every right to exist, which a lot of Arabs probably really would not want to see that. But let’s face it, what’s currently happening there doesn’t work. I mean, it just doesn’t work.
Sam Clement (16:08):
But it hasn’t worked for thousands of years.
John Norris (16:09):
It hasn’t worked for thousands of years, but it really hasn’t worked since end of the 1940s. It just hasn’t worked. And it’s dragging in the remainder of the world. So however, what you said is absolutely right, while it hasn’t worked, it’s never worked. And I can’t envision what would happen to make it work moving forward. I mean, if you’re not religious and you’ve never read first Book of the Torah, the first book of the Christian Bible, I got to tell you, there’s passage in there saying that from Abraham’s sons that they’re just going to continue to fight with one another. And the son of Hagar, Ishmael, generally being believed to be Arabs and the other side is essentially being construed or believed to be Israelites or Israelis. So it’s written in the Bible, it’s written in the Torah. And now if you’re not a religious person and say, that’s a bunch of hocus pocus, that’s fine. But I would tell you it’s been going on forever. Forever.
Sam Clement (17:16):
Whether you believe it or not.
John Norris (17:17):
It’s been going on five, 6,000 years.
Sam Clement (17:20):
This is maybe the most concentrated religious area on earth. And the most passionately, for good or bad, religious areas on earth. And so you have people with ideological differences that have gone back thousands of years, literally, that people are willing to die over.
Without question, willing to die for.
John Norris (17:47):
And that’s not going to change overnight because we turn Gaza into a resort.
Sam Clement (17:52):
And it goes back to my point that as long as someone feels like their ideological belief is getting screwed over, I’m not sure how you come to a solution that works for everyone. These are not people that are… they believe that this is their right to this land written in their holy scriptures thousands of years ago. And there is not a solution that, hey, we now have some nice living, some apartment complexes in Egypt and Jordan. That is not going to change that core belief no matter how nice they are.
John Norris (18:24):
That’s very well put. And no matter what 47 does, that’s not going to change. So I guess what I’m hearing you say is there is greater potential for some form of peace in Eastern Europe than there is in the Middle East.
Sam Clement (18:41):
I think so. Again, there’s some history between the Ukraine and Russia as well. Clearly. But it’s less off than I think the Middle East is. And I think there’s maybe some solutions, things like NATO membership, if everyone gets on board with Ukraine not becoming a member of NATO…
John Norris (19:04):
Apparently that’s now off the table.
Sam Clement (19:06):
And so that seems to be like that’s a big step that I think everyone may be able to get on board with. And so we have these things that are less ideological. We may be able to find some middle ground that at least kicks the can down the road significantly.
John Norris (19:25):
At least maybe a decade, maybe two decades. I think if we try to turn Gaza into a playground resort, that’s fine.
Sam Clement (19:32):
I’m not sure I’ll be going.
John Norris (19:33):
No, I’m not going to go, because there’ll be bombs in there. I mean, they’ll blow up places. I mean that’s just get out of there. I mean, you’re not any better than the Israelis as far as the Palestinians would be concerned.
Sam Clement (19:44):
It’s their holy land.
John Norris (19:44):
Yeah, it’s theirs. I mean, how dare you come in here and do this up and do undoubtedly a lot of Haram activities there? No, they won’t allow for it. So I don’t think that’s a workable solution. I think he might be able to come up with some form of Band-Aid or a tourniquet in Eastern Europe, and I think we’ll probably have one within the next three months. Truthfully, both sides are tired of being bled white. I think Zelensky can certainly save face. I think Ukraine can certainly save face. And now it’s only really up to the Russians to be able to save some face and give them those lands, which they really kind of already occupied ahead of time and promise that Ukraine’s never going to be part of NATO. And guess what? You’re at least in the negotiating table.
John Norris (20:33):
And so there will be Ukrainian independence, at least for a little while. And I will tell you, there will never be a resort in Gaza. And so I think we can just pretty much punt that one. That’s not going to happen. If it does happen, it’s just going to lead to significant terrorist activity. And I am hopeful that by the end of the second quarter of this year, the hostilities in Eastern Europe will be a memory.
Sam Clement (20:59):
Fingers crossed.
John Norris (20:59):
Fingers crossed. All right. Well guys, thank you all so much for listening. We always love to hear from you all. If you have any comments or questions, please by all means, let us know. You can always drop us a line at Trading , or you can leave us a review on the podcast out of your choice. If you’re interested in reading more or hearing more of what we got to say or how we think, you can always go to our website, O-A K-W-O-R-T h.com. Take a look underneath the Thought Leadership tab and find access to all kinds of exciting information, including links to previous Trading Perspectives, podcasts, links to our newsletter / blog, which comes out every Friday called Common Cents links to our quarterly analysis on all various topics, the economy, the markets, stock market asset allocation, special reports that we call Macro & Market Magazine. That’s also out there, as well as good pieces from our advisory services group headed up by Mac Frasier. Alright, Sam, with that, you have anything else to say on this? An interesting topic here today. That’s all I’ve got today. Y’all take care.