In This Episode
Buck channels his best Arianna Huffington to help Porter understand what’s happening to men in America’s boardrooms. Porter digs into auto loans and reveals the canary in the coal mine to watch in the oil business. Buck talks about Sleeping Giants – an underground digital activist phenomenon that has unknown origins, but is taking down major media properties. Special guest Steve Sjuggerud shares what he found on his recent trip to China and how to join his next investor webinar at www.MeltUpBriefing.com.
Male: Broadcasting from Baltimore, Maryland, and New York City, you're listening to the Stansberry Investor Hour. Tune in each Thursday on iTunes for the latest episode of Stansberry Investor Hour. Sign up for the free show archive at InvestorHour.com. Here are the hosts of your show, Buck Sexton and Porter Stansberry.
Buck Sexton: Welcome, everybody, to the Stansberry Investor Hour for the week of June 22, 2017. We of course have CEO of Stansberry Research, Porter Stansberry, in the house. What's up, Porter?
Porter Stansberry: Buck, always a pleasure. It's been a – it's been a strange week. I'm eager to get to all the topics with you.
Buck Sexton: Yes, indeed. And I'm, uh, Buck Sexton, nationally syndicated radio host of Buck Sexton with America Now, and of course your, uh, Stansberry Investor Hour, uh, buddy for all – all things that come up over the course of the show.
Um, Porter, I want – you got some stuff that you just wanted to chat about before we get into the, uh, nitty-gritty of investing and – and learning and – and the important stuff. Let's get into some slightly less important stuff perhaps. What's on your mind?
Porter Stansberry: Well, I'd like to go ahead and, uh, completely destroy my business career and ruin my reputation. And, uh, Buck, you should watch out because certain – you know, this – this might spread. [Laughs] But I gotta say I cannot –
Buck Sexton: There's Porter contagion.
Porter Stansberry: Yeah, there's Porter contagion. I can't understand anything that's going on in the business world between men and women this week. It's just been a wild week. So the Uber stuff makes no sense. Do you know, uh, Bonderman, who's a fantastic venture capitalist, has made billions of dollars for investors, has created probably hundreds of thousands of jobs through his – the investments he's made. He got thrown off of the board of Uber because he made, at best, a mildly off-color joke. I mean, it was nothing. He said nothing bad. He said, "If we put more women on Uber's board, then there's gonna be a lot more discussions. There's gonna be a lot more talking."
And my – that's been my experience with women in the workplace. Women like to talk about decisions a lot more than men do. Men tend to be much more hierarchical. If there's a decision to be made, usually the guy who has the most amount of experience or has the biggest paycheck makes the decision. He might ask for opinions, but he's gonna make the decision. That's been my experience working with men.
Working with women, I've found them to be much more collaborative. They're more interested in finding a consensus than men. Is that a generalization? Of course it is. Are there women who are domineering? Of course there are. And I've seen both. But what's so wrong with that comment? Why – why is it offensive to note that there's differences in general between the sexes? I don't get it.
Buck Sexton: I'm hoping that, if Media Matters gets ahold of this podcast, by the way, it'll just be Porter Stansberry in epic mansplain patriarchy rant. For your listeners, that's what it's called. We can even call it Portersplaining now.
Porter Stansberry: Mansplained?
Buck Sexton: You've been Portersplained.
Porter Stansberry: I – I –
Buck Sexton: Oh yeah, mansplained. You are mansplaining the crap out of this situation.
Porter Stansberry: [Laughs] But – but – but seriously, what I think is interesting is how often this kind of politically correct nonsense actually becomes a vehicle for something else. So for example, uh, last week also at Yale, um, an Asian American woman was thrown off of the – the – the faculty. She was an assistant dean or something. I forget her exact position, but she was a leader in the academic, uh, faculty at – at – at Yale. Obviously a smart person, probably very talented. I don't know her, of course. But she got thrown out of the – the – she got thrown off the faculty because of the reviews she had written on Yelp about Asian restaurants.
So she is an Asian American person and she's holding herself out to be, therefore, an expert on Asian food because, when she grew up, her family made a lot of Asian food at home. Now, is noting that Asian people, some of them, might have more experience with Asian food than others, is that –
Buck Sexton: Well, she really got in trouble, though, Porter, for – for the comments about white trash fat people at the – at the restaurants.
Porter Stansberry: I get it.
Buck Sexton: That was what –
Porter Stansberry: I get it, but what – hold on. Have you seen – have you seen white trash fat people at cheap Asian restaurants? I have. I've seen 'em there. And you know what? If I read a review and they say, hey, there's gonna be a lotta fat white trash people at this restaurant, maybe that makes me feel more comfortable there. Maybe I realize, oh, that's – that's the kind of Asian food I'm looking for. Or –
Buck Sexton: Sometimes the – go ahead.
Porter Stansberry: Or maybe you go, oh yeah, I don't really like, uh, the Walmart class, so I'm not going to go to that restaurant. But the point is no one – no one is denying that her – that her reviews were inaccurate. They're just saying that they were in poor taste. And they may be in poor taste, but so what? It's a Yelp restaurant review. It's not an official Yale policy statement. When did we lose the right to have a private opinion? And even if – even if we are in a board meeting, clearly Bonderman's expression was meant to be taken with levity and with jest and with the spirit of friendship. He's not saying to Ariana Huffington you talk too much.
Buck Sexton: But she's there for lifestyle reasons and also to bring, uh, to bring together, you know, like, make sure that everybody gets enough sleep and is doing the yoga and –
Porter Stansberry: [Laughs]
Buck Sexton: What does she know about Uber? That's what I wanna know.
Porter Stansberry: Buck is – Buck is coming out of his skin. I love it. [Laughs] Ar – Ariana – Ariana, I didn't know you were here on the podcast with us.
Buck Sexton: Oh darling, I love it. Yes, of course.
Porter Stansberry: [Laughs]
Buck Sexton: I'm an expert in business, growing the business.
Porter Stansberry: [Laughs]
Buck Sexton: She's really – you know, I knew people who work at the Huffington Post, and they would just tell stories about – I mean, to – to have gotten so far. The fact that that web site –
Porter Stansberry: How clueless she is?
Buck Sexton: …carried her name. Here's how just –
Porter Stansberry: Okay, hold on. Ariana. Ariana, I gotta ask you this question because when – when you started – when you brought in Eric Holder to do an investigation of sexist culture at Uber, I thought, oh my God, that's the worst idea I've ever heard. So you're telling me that Eric Holder doesn't have a preconceived notion about how rich, entitled white men may be misbehaving? Really?
Buck Sexton: Darling, Bill Clinton was busy.
Porter Stansberry: [Laughs] Anyway, that's like the worst idea I've heard in a long time. But – but then I did a little research on you, Ariana, and I learned that you actually married Michael Huffington after he told you he was gay.
Buck Sexton: Is that – is that really? I didn't know that.
Porter Stansberry: Yes. Yes. So – so, uh, Ariana, uh, was dating Michael Huffington, and he told her before they were married that he had had sexual relations with men. And she married him anyways. And here's what I love about this. Because, in the politically correct world we live in today, there's nothing wrong with that. You can choose your gender identity, and there's no problems. Well, listen. I don't care what you do in your bedroom, Buck. Doesn't matter to me at all, but if I was going to engage in a lifetime contract with someone to be their exclusive monogamous sexual partner, then all of a sudden, what you do in the bedroom does matter to me. And don't – don't you think someone with good judgment would go wow, I'm about to marry a guy who likes to give oral sex to other men? So hmm, I'm a woman, I might not have what he really needs to be fulfilled in that part of his life.
Now, Buck's going – this is – this is the end of my career. I'm talking about Ariana Huffington's sexual habits. But the point I'm making is actually important. It shows a complete lack of judgment, in my opinion. If I am a heterosexual person and I'm going to make a lifetime marriage contract with someone, I at least wanna make sure that they're heterosexual too. So anyways, Buck, you'll never guess what happens. You'll just never guess what happens when a heterosexual woman marries a man who is either gay or bisexual, not quite clear on that. You'll never guess what happens. Does the marriage work out well? Is there a happy ending? No. Ten years later, they have two kids and they're divorced.
Now listen. I think that's a tragedy. I think – I think divorce is a tragedy. I think that – I think, especially when you're raising children, having a unified family is good. Now, is that a judgment? Am I – am I mansplaining? I guess I am, but I just think that if you – if you have a – if you have someone, doesn't have to – doesn't have to be a man or a woman. If they can't run their personal life any better than that, why would you expect them to help you run your company? I just don't get it. And then that – that's –
Buck Sexton: I just don't know what expertise she has in the space that Uber's in at all. I mean –
Porter Stansberry: None.
Buck Sexton: And also, the Huffing – Huffington Post, by the way, has been losing money for a long time, and they've been – they've been papering over that with, uh, the – with the acquisition, uh, acquisition by AOL and – and what, didn't AOL get acquired as well. It's just – they keep – I think they keep, uh, pretending that this is a more successful business venture than it is, um, and – and it's really not.
Porter Stansberry: But – but look. What I'm saying is look at every decision that – that – that she has famously been a part of, right. She built a business that loses money, she sold it to AOL, and the losses from that acquisition led to them being acquired by Verizon. That's a failure. Uh, look at her – look at her personal life, look at her marriage. Didn't – didn't work out very well. Uh, and – and now, she's the person who – who, as soon as she got involved in Uber's problems, the whole thing blows up in a million pieces.
And I don't know what's gonna happen with Uber or its board. And I don't know the real reasons why Travis was forced out, but I can tell ya that all this nonsense about, uh, the throwing Bonderman off for making a comment that was viewed as sexist and the fact that there were some executives at Uber who were not very nice, that's no reason to fire the CEO. There has to be something else, something bigger that's going on, a power struggle, something we don't understand. And all of this sexist talk is just a veneer, a cover for what is really happening behind the scenes. And one last question about this, Buck. Do you know that the guy, Travis, the CEO of Uber, he controls more than half the voting stock?
Buck Sexton: Hmm. Did not know that.
Porter Stansberry: So – so the board can't do anything that Travis doesn't approve of. And so what I think is happening here is that the board had to come up with something that was big and embarrassing and shaming him into giving up some of that power, and I think that's the real reason why all this stuff happened. And that's the real reason why, as an outsider when you're looking in on it, it doesn't make any sense.
But, uh, we're not quite done, uh, ruining our reputations. We also wanna weigh in on the, uh, on the, uh – we brought in, uh, Country Club Guy, uh, one of our, um, one of our friends here locally who, uh –
Buck Sexton: Oh, thank God, 'cause I know nothing about this. I plead the fifth on what they're gonna talk about.
Porter Stansberry: So Country Club Guy, uh, you are an expert at, um, you – you spend your – your days playing golf at the country club here, and you read a lot of People magazine.
Buck Sexton: [Laughs]
Country Club Guy:I have a lotta time – time on my hands, yes.
Porter Stansberry: So can you tell us what's going on with the Bachelor in Paradise situation?
Country Club Guy:Well, uh, I think you know more than I do, which is pretty scary. You should be running this corporation ______.
Porter Stansberry: I – I – I couldn't sleep last night. And – and the story was too good to put down.
Country Club Guy:But apparently, uh, two of the contestants, a male and a female, got together, had relations of some sort, and now the woman is saying she's the victim and, uh – well, first of all she said it never happened. I mean, there's 50 cameras around. Of course it happened. And now she wants to back away and say I'm a victim, it should never have happened to me.
Porter Stansberry: This is – this is fantastic because I think this goes to how crazy the allegations of abuse or assault or rape can be. And listen, I don't have any idea what happened to her. I haven't seen any of the – the cameras. I don't know, but what I do know is that Warner Bros, whose production this was, had all of this film. Everything that happened was on film. And they had an outside law firm come in to review all of the evidence, and they said nothing happened. So –
Country Club Guy:I thought – I thought it was an internal investigation that said nothing happened. Was it an outside firm?
Porter Stansberry: Yeah, it was an outside law firm that came in to review all the film because Warner Bros executives didn't wanna be accused of covering anything up. So they brought in outside lawyers and they said review all the tapes and tell us what happened. And the – the tapes came back and the outside lawyers reviewed it, and they said nothing happened. Nothing. Meanwhile, this woman says – this is a quote. This is the statement that she gave. She says, "I am a victim." That's the first thing she says. "I am a victim and have spent the last week trying to make sense of what happened on June 4th. Although I have little memory of that night." I wonder why she has little memory of that night. Was Bill Cosby down there? [Laughs]
Country Club Guy:He's still on the loose.
Porter Stansberry: [Laughs] Anyway, "I have little memory of that night. Something bad obviously took place." Now, we don't know why it was obvious to her, but not to anyone who investigated what happened. So she says, um, she says, "As a woman, this is my worst nightmare," which leads you to, uh, assume that, uh, some kind of an assault, and she says, "As I pursue the details and facts surrounding that night and the immediate days after," she says, "I have retained a group of professionals to ensure that what happened on June 4th comes to light, including hiring an attorney to obtain justice and seeking therapy to begin dealing with the physical and emotional trauma."
Now listen. If something happened to her, it's not funny at all. It would be a crime. It would be terrible. What I can't understand is, if – if you're a woman and you think that you were assaulted and there's cameras everywhere, why wouldn't you call the police?
Country Club Guy:Well, I've also, uh, read about this case is that, uh, if you know anything about reality shows, that the contract that comes with them to appear is like 600 pages, and one of the things on there is, hey, you cannot sue us for basically anything. And guess what she wants to do?
Porter Stansberry: She wants to sue 'em.
Country Club Guy:Yeah.
Porter Stansberry: Anyway, I just – I think –
Buck Sexton: I knew a – I knew a young lady who was cast to be on one of those Real World shows. Uh, very – very – very attractive young woman in her, uh, early-20s, and her father was a lawyer. I remember she told me about, uh, how they give you – they gave at least the time, 24 hours, uh, for one of these reality shows, I forget which one, to review the whole – and it's a huge contract, and most people just are so excited that they're picked that they sign it, and they have no idea that they have to appear for, like, the next decade, they have to – it's the most one-sided contract you can possibly imagine, but because people are so excited to be on TV, they just sign it, so that tends to be the way that it goes.
Country Club Guy:So we – so we can expect, uh, uh, maybe on TV, Gloria Allred taking the, uh, taking this case on?
Porter Stansberry: I don't know, but again, what I – what I don't understand, and – and in business, I've unfortunately been a part of this. We – we had, uh, we've had people who, you know, with 300 employees, there's conflicts between employees. And we've had one employee accuse another employee of acting inappropriately. And – and they – and they – and then they sued us, or they threatened to sue us. They didn't actually bring suit 'cause we of course just wrote 'em a check and said good luck.
But what I don't understand is why didn't you call the police? If what you're suggesting occurred in Mexico on this show, and you believe that you were sexually assaulted, call the cops. Why are you calling – why is your first move to hire a bunch of lawyers to sue Warner Bros? It wasn't Warner Bros who got drunk with you that night. That's what I can't understand, and – and I gotta – I gotta say one last thing, which is, for – for the women who are out there in the workplace who think that they're gonna get ahead in life by identifying themselves as a victim, that's the absolute wrong thing to do. Don't – don't put yourself in a position to be a victim, and – and don't ever accept the idea that you are a victim, you know. Be responsible and – and don't look to these – to these people who, Ariana Huffington throwing Bonderman off the board for making a – a – a very minor light-spirited comment about women. Why – why is there so much – I mean, how – how are you gonna get anywhere in life if you are – are professionally offended? No one's gonna want to hire you. No one's gonna want to promote you. No one's gonna wanna work with you if you behave that way.
Buck Sexton: Except at MSNBC. They'll give you your own show, Porter, but – but yeah. There's some places where you get really far, actually, if you're perpetually offended and perpetually, uh, a victim. And by the way, one of the, uh, one of the ways that victim politics works in our – in our culture right now is that even if you – if you claim victim status and it turns out that you were in no way victimized, and if it does turn out that, in fact, you were – you were trying to, uh, uh, perpetuate a – a hoax, then you can retreat into the cocoon of, uh, I was just raising awareness. That's the key phrase.
Porter Stansberry: Well, how about –
Buck Sexton: So – so if you – so – but that – so whatever it is. If it's a hate crime or if it's a – if it's sexual misconduct, as long as you're raising awareness about that issue that is of concern to the left, people will come to your defense and say, okay, well maybe you lied about everything, but you were raising awareness.
Porter Stansberry: But these are serious matters. I mean –
Buck Sexton: Of course they are.
Porter Stansberry: …accusing someone of sexual assault is a very serious accusation. And think about Lena Dunham. I'm probably pronouncing her name wrong.
Country Club Guy:Dunham. Lena Dunham.
Porter Stansberry: Lena Dunham? The – the new – the new media darling, um, and I'm trying to figure out how she became so famous or popular because it seems like what she did was she took off all of her clothes in a fountain in college and put the pictures on the internet, and that somehow makes her famous, and I don't understand that. I don't – I don't understand why taking your clothes off and putting the pictures on the internet should signify you as being anything but, um, an attention seeker, right? I mean, what's – what's – that doesn't seem like it'd be a very hard thing to learn how to do. Just seems kinda crazy that you'd wanna be famous that badly.
Buck Sexton: My understanding is there's – there's a lot of naked photos on the internet in general, Porter, so yeah, it's not – not – not a skill set that anybody should be bragging about.
Porter Stansberry: I – I've heard that.
Country Club Guy:None of this guy. None of this guy.
Porter Stansberry: I – I – I've heard that. No, Country Club Guy keeps his clothes on.
Country Club Guy:You know, at the country club, we have strict rules. Collared shirt, you know, the shorts down to your knees, all – all the nine yards.
Porter Stansberry: But, uh, so – so she, as you know, I'm sure, Buck, she wrote a book about, um, how she is "not that kind of girl" and how she suffered a sexual assault, and she described the person who assaulted her at – at – at her university, and the person she described in the book never assaulted anybody. You know – are you familiar with the story?
Buck Sexton: I'm completely familiar with the story, and it – it falls right in what I just told you, which is that once it – once it came out that she had concocted this, uh, this story and that it was based in – in nothing, uh, in terms of, you know, the individual that she named didn't do anything to her, well then it was a – a composite and it was about all women on campus, and the sexual pressures they face, and it was raising awareness.
Porter Stansberry: So I don't understand this because – follow me for a second. Did you ever read –
Buck Sexton: Well, you're mansplaining a lot today, Porter, so –
Porter Stansberry: I'm mansplaining. So do you remember the book A Million Little Pieces?
Buck Sexton: Uh, yeah.
Porter Stansberry: It was a – it was a memoir about, uh, someone who suffered a terrible drug addiction and his path to sobriety. And it was a very well-written book. Um, the – the author was – is brilliant, and even invented his own kind of grammar that was really fun to read. I don't know if you remember that about the book, but it was a really cool breakthrough novel. And, uh, he had the best – the best literary, uh, agent, uh, whatever he name was from, uh, Random House. I can't remember – she was a big shot. The book was a big success. And then of course, a year or two after it came out, uh, there was some inconsistencies, right. There were some people who were there and said, well, it didn't quite happen the way this guy said. James Frey was his name, I believe. Didn't quite happen the way this guy said. In particular, he – he started the book writing about the ordeal undergoing, um, a dental procedure without any – without any, um, morphine or without any, um, painkiller because –
Buck Sexton: Anesthesia, yeah.
Porter Stansberry: Without any anesthesia because he was a drug addict. And – and dentists said that's not true. Drug addicts – we – we use anesthesia on drug addicts all the time, you know. So he had exaggerated, uh, the memoir. And it was – it was essentially true, but parts of it were exaggerated. And, um, his – he had sold the book to Random House as fiction, right. So as an author, he wasn't claiming that it was true. Random House decided it would be easier to market as a memoir. So they changed the genre without having him rewrite the book.
Now, do you recall what happened? Oprah had an entire television show where she excoriated this guy for "lying and defrauding the buyers of the book." And Random House had to refund anyone who bought the book and asked for their money back, okay. But what happened when Lena Dunham was revealed to have made up a sexual assault out of whole cloth.
Buck Sexton: She made a lotta money.
Porter Stansberry: She got her own show on HBO. [Laughs] Anyways, I can't – Buck, I cannot for the life of me figure out this double standard. I guarantee you Oprah's never gonna have Lena Dunham on her show and excoriate her. She's gonna do the opposite. And at the U2 concert, uh, uh, two nights ago here in Baltimore, uh, uh, Bono had Lena Dunham's picture amongst the 50 greatest women of modern times. You know, she was up there with Mother Teresa, and I'm, like, what's going on?
So anyways, we have – we have totally jumped the shark as a society where people are encouraged to lie and make false accusations, and unfortunately, the worst part of all that is it makes it –
Buck Sexton: Wait, but only – only part – as part of the progressive orthodox, you know, Porter. You've got to establish that, right. You can't get away with lying. I can't get away with lying. It's different.
Porter Stansberry: But these – these ideas and these attitudes are not just shaping the – the – the left fringe. They're shaping how a company like Uber is governed.
Buck Sexton: Oh yeah. But – but corporate culture has now been overtaken by what was campus culture about – what we call – I'm trying to introduce new terms, by the way, just for those listening. Mansplaining is a feminist term for when a man is speaking to women about either issues that he can't know about because of his gender or is doing it in a domineering and hyper masculine fashion. Not to be confused with manspreading, which, Porter, is also a real thing. Are you familiar with manspreading?
Porter Stansberry: No, it sounds disgusting, though.
Buck Sexton: No. Manspreading is merely when a man is on a – a public transportation and allows his thighs to take up too much space because it's a way of asserting himself in public. This is a real thing. I mean, feminists write about this.
Porter Stansberry: Is that what they call –
Buck Sexton: And in fact –
Porter Stansberry: Is that what they call a microaggression?
Buck Sexton: It – it is – it is – it is a form of microaggression. There you go. So one of many microaggressions. You can mansplain while manspreading, and they are microaggressions, and it's all part of the patriarchy, which is male dominance in our society, but these terms are necessary for the people who – who are listening to understand because serious academics, which maybe now is an oxymoron more and more, but serious academics use them, and they are now considered to be necessary in – in the boardroom as well. I mean, it – at serious companies, at enormous companies, some of the biggest ones in the country, the politics are similar to what you would see on a college campus now. That's how far this has all gone, and that's why they have people that – look at the – you knew there was trouble when that guy from, was it, uh, Firefox or Mozilla got fired because of his support of, I think it was Prop 8 in California. Do you remember that guy? CEO. He – he didn't – he basically gave money in opposition to same sex marriage in California, and many years later, they forced him off the board because of that. Or they forced him out of CEO because of that.
Porter Stansberry: I don't understand. That seems like that's a private matter. It seems to me that your political beliefs or your religious beliefs or whether you're a traditional person or whether you're a secularist or whatever they call that, that seems like it's a private matter. I don't – I don't – I don't understand any of this, but, Buck, let me tell you the worst part about it all.
Buck Sexton: Brendan Eich was his name, by the way. He was CEO of Mozilla, just for those wondering. Go ahead.
Porter Stansberry: The worst part about it all is that none of – none of this addresses the real problem. Right. The real problem are men who are bigots. The real problem are men who are chauvinists. The real problem are men who are rapists. And by – by blowing even the most minor comment from someone who is clearly – David Bonderman is clearly not a chauvinist or a rapist, right. By blowing out of proportion and – and painting everyone with the same brush, I think it makes it much harder for the people who are actual victims to be taken seriously. The woman –
Buck Sexton: Oh, absolutely.
Porter Stansberry: The woman at Uber who wrote the letter to Ariana Huffington or whose HR complaints led to Ariana Huffington bringing in Eric Holder and starting this investigation, she wrote a blog about working at Uber, and I urge you to read it. I don't remember her name, and I – we'll have to find the link so you can read the letter for yourself, but this is a young woman who's – who's in her – one of her very first career jobs. I think she's in her mid-20s. And she's describing a workplace, Buck, that would sound very familiar to you and me. People who have been involved in business for a number of years and who are used to the chaos and constant change that happens, especially in a startup. And – but from her perspective as a new employee, she's saying that the – the workplace is so chaotic and that she doesn't understand how her bosses are making all these decisions. But in her eyes, that chaos and that constant change becomes nefarious because she's convinced that the people who are running the company are chauvinists.
And so if you read her blog, you can see how even the most innocuous things to her become very offensive. And so I think in her first year of employment, she went to HR about 20 different people. And of course, the company reacted by saying this is just a troublemaker. And I don't know, I wasn't there. Maybe she was absolutely on point. Maybe everyone at Uber was a chauvinist pig and everyone should be disciplined. I don't know. I wasn't there. But it seems much more likely to me that this is a person who – who –
Buck Sexton: Is hypersensitive because of the culture of the –
Porter Stansberry: Who began – who began to take offense at every slight, real and imagined, instead of realizing –
Country Club Guy:This is the snowflake phenomenon. Have you heard of the snowflake phenomenon?
Porter Stansberry: Yes, that's what I'm –
Country Club Guy:People call each other snowflakes. Yeah, this is snowflakeism. Everyone's so delicate, they can't handle anything anymore.
Porter Stansberry: I – I just – I don't know where it all leads, but, uh, I think it's interesting that it – it's not nothing anymore. It's not something you just scoff at because it's now impacting major companies and the trajectory of – of major businesses. And it's insane.
Buck Sexton: I mean, I remember even when I was applying for jobs out of school, having College Republicans on your resume was considered to be something you might wanna hide. I mean, now I don't even wanna know what it's like. So it's gotten outta – it's gotten outta control. Do you wanna talk Sleeping Giants, by the way, Porter, or do you wanna hold that and get right to investor education?
Porter Stansberry: Oh, let's talk about Sleeping Giants.
Buck Sexton: I think it's fascinating. So for those wondering, there is this group out there. It's really just a Twitter account, but they're called Sleeping Giants, and they have been engaged in digital – a digital boycott movement. The way, uh, ads work for a lotta web sites is that you have an ad company and they have inventory of a whole bunch of different ads, and they'll just try to run the different ads in your space, and then there's CPM. You get a certain amount of money per click, and a lotta companies just work through the ad agency. They don't necessarily know which web sites specifically are running their ads. They just know that there's X amount of clicks happening or X amount of page views for their – for their ads.
And so what Sleeping Giants has done, and done effectively, by the way, is to target – to find out anytime there's a conservative or even Libertarian, right wing news site or – or, uh, entity, they go after the digital advertiser. And they've done this successfully to completely crater, uh, Breitbart's traffic – or Breitbart's money, rather, from traffic. This was similar also to the campaign that's been waged at Fox News against advertisers to get Bill O'Reilly pulled off the air. So I mean, that should give people a sense of how powerful some of these, uh, boycott – they're really digital boycott movements because it's all about the online space and all about going after people with social media pressure.
Uh, if they're powerful enough to force O'Reilly out of Fox News, uh, who doesn't think that they could get pushed out or fired? I mean, this – this is, uh, this is the – the tactic of the new left that I find most concerning. And, Porter, they say they wanna go after Amazon and they wanna go after Google. If they can shame Amazon and Google into politicizing decisions about who they'll, you know, have on and whose ad they'll sell, the power that these groups can wield is enormous on – on discourse.
Porter Stansberry: Well, here's a – let me give you a great example of fake news, because what these guys do is they allege that anyone whose politics is different than theirs, typically more conservative, is – is – is a liar and shouldn't be published, and so they shame these guys into – into stop allowing alternative voices online. But look, there's a new – you can Google this right now. CNN has a headline, "Guns Kill Nearly 1,300 US Children Each Year Study Says." Okay. Wow, you think, that's a lotta kids being killed by guns. And you – and you – and you open the story, and the story starts with a – with a – putting you in a – a rambunctious class of third graders. And then this horrific event happened. A student brought a parent's gun to school, was carrying it in his backpack. When the bag fell to the floor, the impact caused the gun to fire, sending a bullet straight into another, uh, third grader's abdomen. And Dr. Thomas, uh, Wiser, the trauma surgeon at Stanford, healed this poor girl who was shot.
So you think, oh my God. 1,300 kids every year are being – are being shot by stray bullets or gun accidents. And of course, Buck, what – politically, what – what enters your mind? We need more gun control. This is terrible. The kids are being – kids are being murdered, you know, by gun – gun-related injuries. This is awful. Okay, so the study actually came from the Journal of Pediatrics, and if you go and you read the actual study, you're gonna find out something that CNN basically doesn't mention, which is that only 6 percent of those deaths were related to any kind of accidental gunfire. So 1,300 kids, 6 percent, that's like 60 kids. And it's not that I want kids to be accidentally shot, but where you have guns, you're going to have accidents. It's gonna happen.
Well, there are about 300 million licensed firearms in the United States. So 60 out of 300 million. That's a very, very small incidence of accidents that are involved in children. So where did all the deaths come from, you ask, Buck? Well, uh, half of them were homicides. And then you dig in a little further and you learn that most of those homicides come from Detroit, Baltimore and New Orleans. So these are technically children, but they're children who are involved in the drug trade. These are –
Buck Sexton: _____ like 16- and 17-year-olds that are getting shot.
Porter Stansberry: These – these deaths are not caused by legally-owned firearms. They're caused by illegally-owned firearms that are used in the – in the drug trade. But the headline doesn't say the drug trade is killing thousands of kids every year. The headline says guns are killing thousands of kids every year, and the story is about the accidental death of a third grader. That's the kinda crap that is fake news. But is CNN gonna get banned from advertising on the internet anywhere?
Buck Sexton: Nope.
Porter Stansberry: By the way, almost all the other deaths – half of them are homicides. The other – the other 40 percent were, uh, suicides. So those aren't accidental deaths, right. Those are – those are kids who, for one reason or another, wanted to kill themselves, and that's terrible, but the problem with suicides is not guns. Those people were gonna kill themselves anyways. There's this thing called a rope, and if you think we should ban ropes so that people don't hang themselves, you're outta your mind. Likewise with the guns. This is the problem –
Buck Sexton: This is – this is also changing the way that people talk about, uh, terrorism. 'Cause there has been an effort after a few of the big terrorist incidents, Porter, to use that as a gun control narrative. But now, given how many major incidents there have been, including some mass casualty attacks using vehicles and using knives, the gun control narrative as a form of defeating terrorism has gone away at least temporarily for the most part.
Porter Stansberry: Yeah, and by the way, there's a reason why terrorists don't try shit like that in Texas.
Buck Sexton: [Laughs]
Porter Stansberry: Right? I mean, if you wanna stop terrorism – if you wanna stop people from hijacking planes, just allow people who have a license to carry firearm to walk on the plane with it. You're not – you're not gonna have any terrorists if you've got, uh, five or ten or twenty or thirty people on a plane all packin'. 'Cause they're gonna get – they're gonna get shot as soon as they try to, you know, steal a drink from the drink cart.
All right, so one – one last thing about this. You did see the effort that Scott Pelley made to blame the actual victims. And let's be clear what a real victim is. A real victim is someone who is, uh, um, uh, the unwilling participant in a violent act, right. That's a victim. So if you're playing second base and you get shot through the abdomen, that makes you a victim. And, uh, if you're a Congressman who gets shot because someone out there doesn't like your politics, that definitely makes you a victim. And did you see what Scott Pelley said? He said that –
Buck Sexton: Somewhat self-inflicted, right?
Porter Stansberry: Right. He said that the – exactly. He said that that wound had been self-inflicted because of the rhetoric of that person. So in Scott Pelley's mind, uh, having a political opinion that's different than his is a legitimate reason to initiate violence.
Buck Sexton: Well, he – he couched it a little bit more – there was a little more than – he said it was, uh, in some way, I think, if it was self-inflicted, but just using the term, self-inflicted to some degree is what he said.
Porter Stansberry: But the narrative is –
Buck Sexton: To accurately quote him, but yeah, it is an incredibly stupid thing to say.
Porter Stansberry: The narrative is that if you hold the conservative political view, that you are inciting violence.
Buck Sexton: Well, you see this on campus, though. Back to how does this get into the media, how does this get into the boardroom, this, uh, leftist psychosis? On campus now, Porter, they will use violence to stop speakers because they believe that the speakers' point of view is a – is a – and I'm – I'm quoting what the – what the, uh, discourse here is from the left. Their speech, their point of view is a form of violence itself. So speech equals violence, therefore, violence can be used to prohibit speech is a formulation that is common on college campuses now across the country. And they've attacked speakers and professors, and you get this anti-fa group, the great irony being the antifascists are actually the fascists, but yeah.
Porter Stansberry: Now, Buck, have you interviewed that guy – I don't – I can't remember his name, but he is the – he is the flamboyantly homosexual conservative speaker that causes – you know, causes all this drama wherever he goes on college campuses.
Buck Sexton: Are you talking about Milo Yiannopoulos?
Porter Stansberry: Milo Yiannopoulos. Am I describing –
Buck Sexton: Yeah. I had Milo on radio. I knew Milo before anybody was really talking about Milo. Yeah, I've had him on radio before.
Porter Stansberry: Okay, so I – I – I don't know him. I've never – I've never spoken with him, um, but that's a fair description, isn't it? Isn't he a flamboyantly homosexual conservative speaker?
Buck Sexton: He is – he is definitely an openly homosexual conservative speaker, yes.
Porter Stansberry: Okay. Um –
Buck Sexton: He is very open about being gay, yes.
Porter Stansberry: Right. So I've always thought that the reason why he provokes so much anger is because isn't it – isn't it like that narrative doesn't match with the – the progressive view that homosexual people are – are going to have, uh, left-leaning political opinions? Isn't it like, um, isn't it like he's from some out –
Buck Sexton: Yeah, you're considered a traitor. You're considered a traitor to progressivism. It's the same if you're a minority who's – who's conservative. Or if you're a woman who is opposed to third wave postmodernist feminism. You're a traitor to your identity, politics, class, and that's a – so that's – yeah.
Porter Stansberry: Oh, is, uh, and is Ariana still available?
Buck Sexton: Yes, darling. I'm very – it's very – very busy, though. The schedule is very packed.
Porter Stansberry: Well, Ariana, um, do – do you – do you recall the first book you ever published at the beginning of your media career in the '70s? You actually wrote that the feminist movement was only attractive for lesbians. Do you recall that – that opinion?
Buck Sexton: Are you serious? Did she actually write this?
Porter Stansberry: Yes. She – she became famous as an archconservative pundit.
Buck Sexton: I knew that. Yeah.
Porter Stansberry: And she – that was her view, that feminism – the feminist movement was only attractive for lesbians, which is of course – that was the faults and error that the conservatives were using to, uh, you know, to attack the – the – the idea that women should be treated with full equality, which I completely support. Anyway, it's just so funny that – I love watching people whose opinions change based on their ratings. [Laughs]
Buck Sexton: Well, there's a lotta that.
Porter Stansberry: Oh, it cracks me up. And that is a fantastic Ariana. I hope Ariana will come back and visit sometime.
Buck Sexton: Oh, she can come visit whenever, for sure.
Porter Stansberry: All right, so, Buck, let's get to something, uh, that can help put a little more green in everybody's wallets and not just, uh, give 'em belly laughs. Um –
Buck Sexton: Sounds good to me.
Porter Stansberry: Uh, I know you're not a car shopper because you live in, uh, the big New York City, but, uh, you probably have seen some things about, um, shocking declines in used car prices and the extent of the overhang in dealer inventories.
Buck Sexton: Mm-hmm.
Porter Stansberry: And I think that's a – it's a very interesting trend. We started writing about this in 2014, and here's the narrative. It's very simple. The carmakers and the banks have been giving out loans to people who can't possibly afford to pay them back. And subprime lending, as a percentage of auto loans, has grown from less than 10 percent to over 30 percent. And, Buck, you'll never guess what's happening now. You'll never guess.
Buck Sexton: Some – some people that don't have the money to pay the loans they've taken out, they're not paying it, are they, Porter?
Porter Stansberry: That's right. And as – as a result, uh, the default rates are way up, the repossession rates are way up, and then now the market is being flooded with not only subprime loans that have gone bad, but also leases because the percentage of leases went way up, and now there's too much return leases. So car prices are plummeting, and today, Ford announced that they're halting the entire production of their – their basic sedan, which is the Ford Fusion. That's a really big deal, and the slowdown in autos, of course, which dominates the whole manufacturing industry, leads me to believe that it's likely that economic growth in the second half of this year is gonna be weaker than people expect because of, uh, rising losses related to bad auto loans.
The other thing is you've gotta watch the stocks of, uh, a company called Santander, which we have actually recommended shorting in the newsletter, and Capital One Financial. Those are two of the largest of the subprime loan issuers. The other big one is Ally Financial. And the irony with Ally is it used to be owned by General Motors, and when General Motors blew up and went bankrupt in '09, it was spun off. But, uh, it's just amazing that less than a decade after the subprime mortgage debacle, we are now approaching a serious crisis in manufacturing for exactly the same weaknesses in our – in our basic banking underwriting and lending standards. It's madness.
Buck Sexton: How big is the auto loan exposure, though, compared to what it was for mortgages? I mean, I think people would wanna know that, right. Mortgage is obviously huge bedrock of the economy, part of the American dream, but car's part of the American dream too, at least until people figure out ride sharing and, you know, Uber turns itself around and all that or gets – gets going with what it's planning in the future. So how big is this, Porter?
Porter Stansberry: Well, it's bigger than everybody thinks. So there's one way of looking at it that makes it seem very small, and this is what you constantly see written about in the Wall Street Journal and places like that. Oh, there's nothing to worry about because auto loans are only around $1 trillion in total outstanding loans. So nothing to worry about. It's only $1 trillion. Mortgages, of course, I don't know where they are now, $7 trillion or $8 trillion. So mortgages are much larger, okay, and that's completely true.
But what they're – what they're neglecting to tell you is that what really matters in terms of the stability of the banking industry as a whole is how many of those auto loans have been securitized and what kinds were. And you'll – again, Buck, you'll find this shocking, but like 80 percent or so of all the subprime auto loans were securitized. Because if you're a bank and you're making a loan to someone who you know probably can't pay it back, that's the loan that you package and sell. So you retain the prime auto loans and you securitize the subprime ones, and you get people to buy them.
Buck Sexton: So it's like passing the stinking fish around to somebody else.
Porter Stansberry: Yeah. So there's about, uh, there's – off the top of my head, I really don't know the exact – the exact number, but it's around $250 billion or so of securitized auto loans. And they're everywhere – insurance companies, banks, everybody owns 'em. And none of these securities have ever gone bad. One of the things that was used to sell these securitized loans was that auto loan securitization has never – never defaulted. And of course, they said exactly the same thing about the mortgage securitizations until 2007.
So they're all rated AAA, and everybody owns 'em, and I think that it's gonna be a bigger problem than people expect. And to give you some idea of the actual scope, you know, there is probably something like $1 trillion in subprime mortgage securitizations. And there's probably $250 billion of auto loan subprime securitization. So yes, the mortgage problem was bigger, but it wasn't ten times bigger. It was only about four times bigger. So I think this is gonna cause more of a problem than anybody expects yet. So we'll see. So far I've been right. We'll see if it continues.
The other thing I wanted to mention about finance before we, uh, move on to the big China story is oil. Uh, we have been – we have been all over the story, Buck. You heard me talk about oil ad nauseum. And, uh, the thing you wanna look for here is the rig count. So you guys have seen oil prices have fallen from $60 to around $40 now, and you're gonna see a – a big wave of bankruptcies in the U.S. as more and more oil companies go broke. The – the one you wanna watch most closely is Chesapeake. Chesapeake has been a bell weather for U.S. onshore oil and gas production, and if it goes bankrupt, that is gonna be a sign of the bottom. So watch Chesapeake and expect oil prices to go back below $30.
And, uh, the rig count, interestingly, has not declined yet because U.S. producers have been using the futures market to sell production forward. So they've sold out three or four years of production now. Well, maybe not quite that much. They've sold out 18 to 24 months of production at the higher prices. So that rig count probably won't begin to fall for another three or four months, and that means that the surplus and the inventories are gonna get even bigger, and that's what's gonna drive the spot prices below $30. So watch spot price for an important bottom in oil that could – we could have in maybe the next six months, and watch Chesapeake for another sign of the bottom in oil.
And now I wanna, uh, bring in another guest. We had Country Club Guy to talk about politics and, uh, People magazine. And now we've got, uh, Steve Sjuggerud to talk about China.
Steve Sjuggerud: Hey, Porter.
Porter Stansberry: Steve, uh, thanks for joining us.
Steve Sjuggerud: Thanks for having me. It's, uh, it's always fun to be on the web – on these, uh, on these event – it's a podcast. Is that what they call 'em these days? Radio shows? I don't know what they call 'em these days. Um, yeah. No, I just returned from China, and my mind was blown. I think the big deal is the difference in perception versus reality. The American perception of China, the investor perception of China versus the reality of what's going on on the ground. I've never seen, uh, such an extreme in my entire investing career.
Porter Stansberry: So the common American view is that China is a Communist dictatorship and that it's a poor country and that it's probably a someday maybe a military rival to us.
Steve Sjuggerud: Yeah, yeah, and I think you saw one of our subscribers wrote in when I was over there. Do you remember what he said?
Porter Stansberry: Yeah, he accused you of being a tourist.
Steve Sjuggerud: Yeah, he said, uh, they are only showing you what they want you to see.
Porter Stansberry: The Potemkin village idea.
Steve Sjuggerud: Yeah, yeah, and I felt like what is this, 1990? I mean, you know, I think the American view of China is China in 1990, but the reality of Beijing and the major cities, all of them that I've experienced in China is, uh, it's actually more advanced than any city in the U.S.
Porter Stansberry: That's been my experience too. And as far as being a tourist, uh, you have been going to China on research trips since 1996.
Steve Sjuggerud: 1996, exactly.
Porter Stansberry: And, uh, I don't know how many times you've gone, but you go every year, it seems like. And then the other thing is your – your contacts there are incredible. So the panel that you put together for our subscribers at the meeting you held in Beijing included, uh, Peter Churchouse, who –
Steve Sjuggerud: Legend, yeah.
Porter Stansberry: Who's been, um, directing investments in – in Asia and China since the early-1980s and was the former head of, uh, Morgan Stanley's Asia equity operation.
Steve Sjuggerud: All of Asia for Morgan Stanley, actually.
Porter Stansberry: Yeah. And then, uh, the other – the – the woman.
Steve Sjuggerud: Well, Jonathan Garner took his, uh, position at Morgan Stanley. He's currently the, uh, the Morgan Stanley head of Asia, and he literally wrote the book on the Chinese consumer in 2005. And then, uh, the last guy, um, on the panel was Christopher Wood, who's been Asia's top strategist for 13 out of the past 15 years for CLSA.
Porter Stansberry: Right, so the point is, uh, uh, dear subscribers, Steve isn't a tourist. [Laughs] And, uh, and – and, Steve, the message that you have been giving our subscribers for almost a year now is that, uh, China is – was going to boom, that the China tech stocks were the buys, and that this huge shift in capital as Chinese local stocks became part of the global stock indexes.
Steve Sjuggerud: That's it. It's truly three separate stories as you –
Porter Stansberry: It's three stories. And would you give us a – a brief summary of those stories and how they're panning out?
Steve Sjuggerud: Yeah. I mean, the – the China boom is – is unbelievable. Um, you know, you can see it in the other two stories. The tech story, uh, it really – the WeChat story is the focus of this tech story. Uh, when I say Beijing, for example, is the most modern story you've ever seen, it's really Beijing plus WeChat. And WeChat is an app that we can't even imagine in the States, uh, how – how powerful it is. Um, as – as one example, do you understand really why Uber lost – just – just as an aside here, do you – do you understand why Uber lost in China?
Porter Stansberry: No.
Steve Sjuggerud: Yeah, so Uber did everything right. They came with billions of dollars, they came with all the time in the world, uh, they worked with local government officials, they hired local drivers. They couldn't have done anything more correctly, and they lost. They lost because they did not have the button on WeChat. So WeChat had invested in Didi. Didi is the winner and Uber was the loser. So I call it the $50 billion button because Didi is valued at $50 billion today, and the only reason that Didi beat Uber is because the – your payment mechanism and your ride was right there on your home screen when you download WeChat. So no matter what Uber did, uh, WeChat was already there.
And this is – this is gonna be the case for U.S. firms competing in China, but it also shows the power of this – this WeChat app because WeChat owns a portion of Didi. Tencent, the parent of WeChat, and it's – it's like this in the bicycle business, bike rentals, you know, everything. The power of WeChat, the power of Tencent, if you wanna go anywhere, there's a bicycle sitting there, you walk up to the bicycle with your WeChat account, you can rent the bike and ride it for 30 minutes and leave it where it is, and you've already paid for it, it's all taken care of. WeChat owns the bicycle business, it owns – it owns the payment mechanisms on both sides. It pays its taxi drivers – the Didi taxi drivers are paid from their WeChat payments.
Um, you know, it's just one example but, uh, the power of WeChat – you don't call someone on the telephone in China. You call them on their WeChat, uh, on their WeChat username, kind of like a Facebook username. You don't e-mail someone in China anymore. You – you contact them on, uh, WeChat. Uh, and this is just one small piece of – of – of a very incredible technology story that's happening in China. I think, uh, China is far advanced. Beijing, you know, the major cities, the life experience is a, uh, more modern experience by far than we've experienced in the States. Kinda gives a blueprint for what's possible here, but meanwhile, Americans have no idea, international investors have no idea, so we have huge upside in these names. They're still cheaper than the U.S. names, the Facebooks and all these things. They still have more upsides in revenues 'cause they haven't tried to monetize these opportunities yet nearly as much. So, uh, so it's – the tech side is an incredible story.
Um, now meanwhile, the – the – the other huge story is this MSI – MSCI story from last week where China was finally admitted, the world's second-largest economy, the world's second-largest stock market, was finally admitted into the global stock market indexes. To me, this is crazy. It's kind of like having an index of mobile phone, uh, operating systems and not including Apple iOS, you know. It's like you can't – you can't exclude China, right, but China was excluded from the global indexes. Um, now they are included, uh, Morgan Stanley – MSCI gave them the green light this week to be included, so the actual inclusion doesn't start until May of next year, but of course hedge funds are gonna be front-running it. Money – hundreds of billions of dollars will ultimately flow into Chinese equities whether or not they are a good buy.
Meanwhile, all global investors are underweight China. It doesn't matter who you are, local, institutional, American, everyone's underweight. So, um, so the upside's incredible.
Porter Stansberry: I – I just wanna go on the record. I am not underweight.
Steve Sjuggerud: Yeah, okay good. Okay, good. I'm glad.
Porter Stansberry: But I'm – I'm workin' on it.
Steve Sjuggerud: Yeah. So we – we've had some great fun. I – I predicted that, uh, Tencent – when I came back from China last year and I saw the power of WeChat, I thought it was a big of a – a scam going over, like, the hype was not real until I experienced it. Then I came back and said I believe Tencent will be the world's largest company someday, and having come back a year later, having gone to China a year later, I – I still believe that down to my toes.
Porter Stansberry: Yeah, and it's all – it's also – the stock is now up 50 percent since you first recommended it. I think it's interesting, um, I'm looking at a portfolio here of all the stocks that you recommended in your China opportunities special report that you put out. It's a special subscription service where Steve's focusing on these big, uh, trends in China, and every single stock recommendation is up.
Steve Sjuggerud: That's right.
Porter Stansberry: Every single one of 'em.
Steve Sjuggerud: Everyone's up year-to-date, that's right.
Porter Stansberry: And the returns on the – on the tech portfolio have just been incredible. Uh, 60 percent, 50 percent, 30 percent, 40 percent. Amazing returns. The worst performer on your entire China opportunities portfolio is up 7.5 percent.
Steve Sjuggerud: That's the worst one year-to-date.
Porter Stansberry: That's the worst.
Steve Sjuggerud: That's right. Yeah.
Porter Stansberry: Well, you know, Steve, I have, um, I've seen you do a lotta things in finance, and I have to say this is the most impressive thing I've ever seen you do.
Steve Sjuggerud: Thank you.
Porter Stansberry: When you came back from China, I thought you were a little bit, uh, I thought you were a little bit too gung-ho. I know there's big opportunities in China, but I figured there'd be – I figured the road would be bumpier than it has been. But you have been exactly right. You've been right about the MSCI inclusion, which we still haven't yet really seen the returns from.
Steve Sjuggerud: That's right. Yeah.
Porter Stansberry: They're coming in the next year.
Steve Sjuggerud: Exactly.
Porter Stansberry: You've been dead right about the Chinese technology stocks, and you've been – you've been right about the banks and the properties, although those are such – those are bigger, uh, slower moving, uh, industries.
Steve Sjuggerud: Those are the value plays, really.
Porter Stansberry: Yeah, but – but what – fantastic job, and, uh, subscribers who took Steve seriously and who, uh, moved capital in this direction have been incredibly well rewarded.
Steve Sjuggerud: Um, one last thing, by the way. I do think Tencent will become the world's largest company, but, uh, in my newest issue of my China letter, there is a company, um, there is a company that I will guarantee will outperform Tencent in my latest issue.
Porter Stansberry: Yes.
Steve Sjuggerud: And that issue, uh, comes out this week. So, uh, I don't wanna share exactly what it is, but, uh, you know what it is, and so you can understand why it will – why I can guarantee that it will outperform what I believe will become the world's largest company.
Porter Stansberry: And, uh, this is – this is a wonderful, nifty story, and it's one of the things that, uh, most investors, they just never have information like this, and this is why I love what we do in our research company and, uh, the advantages that we're able to give subscribers are tremendous, and this is an amazing opportunity.
Steve Sjuggerud: So we're gonna share – we're not gonna – we're gonna share a way to get into our China letter, I believe for free, um, next week in a webinar. So anyway, it's the best deal ever offered in our China letter, and – and you'll get that story.
Porter Stansberry: Very good. So if you're interested in investing in, uh, China, and I believe you should be, uh, sign up for, uh, this webinar. It's called, uh, MeltUpBriefing.com, and it's free. That's www.MeltUpBriefing.com. MeltUpBriefing is one word, no spaces, no hyphens, just Melt, M-E-L-T, Up, U-P, Briefing, B-R-I-E-F-I-N-G. MeltUpBriefing.com. It's a free webinar, and we'll talk about how you can get into the China opportunities.
Steve Sjuggerud: Yeah, these tech-type names.
Porter Stansberry: This research for free. Also, uh, don't hesitate to visit our web site here at InvestorHour.com. That's www.InvestorHour.com. You can get transcripts, uh, links to past episodes, special content, and most importantly, if we offended you with all our mansplaining today, you can let us have it. Feed[email protected] [email protected] You can, uh, love us or hate us, just don't ignore us. Let us know how you feel.
Buck Sexton: Let's get into our mailbag here. By the way, mailbag sounds like a microaggression. Really it should be gender neutral bag. Um, you know, if we're really gonna just keep it totally – keep it totally real. All right, but here's what we got. Uh, Porter, how do you reconcile your debt warnings with average credit scores hitting a new high? You can't have a 700 score while being delinquent on student and auto loans, can you? Thank you for starting the podcast. From Mike.
Porter Stansberry: Uh, this is a fantastic question. Um, so – so people believe that – Steve, you'll love this. People believe that, um, an all-time high average credit score signifies a safe time to be buying up consumer debt.
Steve Sjuggerud: Yeah.
Porter Stansberry: [Laughs]
Steve Sjuggerud: What were – what were the credit rating agencies, uh, giving, uh, these lenders back then, right?
Porter Stansberry: So – so just – just, uh, a little hint for ya here, dear friend. Um, credit ratings peak at the same point credit peaks in the cycle because the two are related. So the – the credit cycle, um, sorry, credit ratings would be a contrarian indicator of a peak in the credit cycle, not the other way around. And the reason why the credit ratings are now higher is because we are now more than seven years outside of the mortgage crisis. So everyone who defaulted on their mortgages more than seven years ago suddenly has a good credit rating. But the fact that those people are gonna be able to go get more credit is not a sign that you want to be lending them money, trust me.
And regards to student loans, it's a great question for a different reason. Uh, there are all kinds of ways you can get forbearance on your student loans, and forbearance doesn't mean that they go away. It means you don't have to pay them back but the interest continues to build. And so there's all kinds of ways you can prevent paying your loan back, including by going back to school and borrowing more money. So if you look at student loans, more than 40 percent of them are not performing, but the official default rate is only around 20 percent because of all these little games that people can play with these particular, uh, bad debts. But no, in general, I do not – I do not think it's wise to – to have the idea in your head that because average credit scores are high, that the credit markets are safe. In reality, it's a sign of a top in the credit markets, not a sign of a buy.
Buck Sexton: We got another piece of mail here. Dear Porter and Buck, I think the best show yet, especially the Middle East conversation. Hey. Regarding Qatar, look at the natural gas aspect along the pipeline plans. Qatar has the largest natural gas reserves in the area, and I think the funding of terrorists is just a smokescreen for the neighbors to control the gas. Just a theory, but would like to get your views regarding this, and this is from, uh, Alan, who's an alliance member.
Our Qatar conversation still having ramifications to this day, Porter. By the way, Secretary of State Rex Tillerson has been telling Saudi and some of the others that drop the hammer on Qatar for this terrorism support and funding thing. Maybe you guys should back off a little bit. Uh, probably in part because of the natural – natural gas situation, but also because of, uh, U.S. military and strategic interest in Qatar.
Porter Stansberry: Buck, uh, this is – this is all you. I don't – I don't know anything about Qatar. I've never been there.
Buck Sexton: Well, I mean, I can say – I can say the following, that Qatar has the largest U.S. military base, uh, in the Mideast so, you know, that's – that's one part of this – of this piece I think you have to keep in mind. And the – it's not really clear why this all broke out recently other than the Trump visit to the region, uh, which maybe Trump gave a little too much of a, uh, of a wink and a nod to the Saudis and others. 'Cause remember, it wasn't even just statements. I mean, they cut Qatar off from their airspace and – and they closed their borders to – to the Qataris, so it's been a – it's been a rough patch to be sure, but, uh, they've got a big air base there so that matters to us.
And I think this is gonna – you're gonna see this, uh, recede as an issue in – in the weeks ahead, but it – it did surprise a lotta people because it was such a long time in coming, um, that, you know, Qatar's been supporting the Muslim brotherhood and also the ties to Iran caused problems for the Saudis and others. So it's a lotta – lot of reasons why these different countries – I think people have a sense that the Gulf states all kinda get along just because same area, same religion, uh, but no. That is not the case. There's a lot of animosity that exists between – you know, ask a Saudi about a Yemeni or ask a Yemeni about a Saudi, and you'll hear some unpleasant things a lot of the time.
Porter Stansberry: I think it's gonna be really interesting to see what happens as the Saudis lose their ability to control oil prices. I think it'll be very interesting to see how that whole region becomes a lot more conflicted because they're – you know –
Buck Sexton: Yeah, I mean, the reason – one of the reasons we've been so pro-Saudi and don't call them out for public beheadings and, uh, the human rights record and oppression of women and all that is, one, they're an ally in a region – at least the government's an ally in a region where we need them, but also because of their role in the global oil markets. They're just viewed as a – a bulwark of stability, but if that starts to shake – and people have been saying for a while they think the Saudi regime – it's just a question of when, not if. Um, but you know, they've been saying that for a long time, so who knows.
Porter Stansberry: Yeah, it's gonna be very hard for the Saudis to maintain their influence and their control of that region of the world if we enter a prolonged period of very low oil prices, and I happen to believe that that's occurring. It's gonna be also interesting to see how they can manage their own population because, you know, the idea of paying everyone off is very expensive.
Buck Sexton: Porter, can I give a – for those who want more Mideast and national security analysis, can I give a shameless plug for the, uh, three-hour nightly radio show that I do?
Porter Stansberry: Please, please. Buck, we – we love your three-hour radio show.
Buck Sexton: Why, thank you. Yeah, those of you listening, uh, you can go to, uh, on – well, it's on over 100 stations. I'm nationally syndicated by Premier, so the lineup is Rush Limbaugh, Sean Hannity, then Buck Sexton. Uh, so you might be able to listen in your area. If you go to, um, BuckSexton.com, we also have all the downloads available there. You can subscribe to Buck Sexton with American Now on iTunes, and, uh, the show will be free. We have a show five days a week, 6:00 to 9:00 Eastern is the live time. You can listen on the iHeart app. But I have – I mean, I had a great Mideast expert on yesterday talking about the true ideology of the Islamic State. Uh, I think I get the best people on in the national security space 'cause I get real experts instead of people that just play them on TV. So, uh, do – do check out the podcast, Buck Sexton with America Now, and listen live if you can.
Porter Stansberry: Don't miss it. All right, guys. I think that's –
Buck Sexton: Appreciate that sir.
Porter Stansberry: I think that's it for, uh, for this episode. Uh, can't wait to see how bad the fallout becomes for – for all of my mansplaining.
Buck Sexton: It's been mansplainarific today. It really has been.
Porter Stansberry: And, Buck, I hope it doesn't, uh, end up, uh, causing you trouble.
Buck Sexton: That's all right. I just – I just know I can always – I can always, uh, go – go hang out with my Stansberry family, so I'm good to go.
Porter Stansberry: All right, everybody. Thanks for tunin' in. We'll see you next week.
Buck Sexton: Thank you, everybody. Take care.
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