CHARLES: ECONOMIC THEORY THAT
GUIDED AMERICAN STYLE CAPITALISM
IS CENTERED ON COMPARATIVE
ADVANTAGE.
THAT IS NOT NECESSARILY BEING
THE BEST BUT MOST EFFICIENT.
WE'VE BEEN TOLD EVERYONE WINS
WITH FREE TRADE AND CELEBRATE
WHEN OTHER NATIONS PROVIDE
CHEAPER VERSION OF STUFF WE
COULD PRODUCE.
I GENERALLY AGREE.
THERE ARE VARIABLES TO THE LINE
OF THINKING WE'RE LEARNING AGAIN
TODAY THE HARD WAY.
YEARS AGO THE UNITED STATES AND
OTHER COUNTRIES STOPPED MINING
RARE EARTH MATERIALS BECAUSE
THEY WERE BEING PRODUCED CHEAPLY
OUT OF CHINA.
WELL THIS MORNING, TALK OF CHINA
WEAPONIZING RARE EARTH MATERIALS
TO HURT AMERICAN COMPANIES AND
CONSUMERS AGAIN PROVES THERE ARE
SEVERAL WAYS TO MEASURE
OPPORTUNITY COSTS OR WHAT WE
GIVE UP IN ANY TRADE
RELATIONSHIP.
THE CONCLUSION IS, THERE ARE
GREATER BENEFITS TO SOCIETY THAN
CHEAP STUFF, NAMELY OUR JOBS,
PHYSICAL AND ECONOMIC SECURITY,
AND OUR INDEPENDENCE.
JOINING ME NOW TO DISCUSS, LUKE
VENTURES MANAGING DIRECTOR GENE
MUNSTER.
GENE, ALL OF A SUDDEN RARE EARTH
MATERIALS COULD BE WEAPONIZED BY
THE CHINESE.
BY THE WAY THEY DID THIS NOT TOO
LONG AGO WITH JAPAN OVER A
DISPUTE.
SO IT WOULDN'T BE THE FIRST
TIME.
>> CHARLES IT WOULD NOT BE THE
FIRST TIME.
THIS IS THE OTHER EDGE OF THAT
SWORD WHEN WE THINK ABOUT
COMPARATIVE ADVANTAGE, SOMETHING
THAT I TOO BELIEVE IS IMPORTANT
FOR TRADE, EQUITY, AND FOR
RAISING THE OVERALL STANDARD OF
LIVING ACROSS THE GLOBE BUT
THERE ARE SOME CONSEQUENCES.
WHAT WE'RE SEEING FROM BEIJING
TODAY IS A PERFECT EXAMPLE OF
THAT.
AND ULTIMATELY, THIS IS THE,
MOST CURRENT LAYER IN THIS TRADE
DISPUTE.
ONE THAT IS GOING TO HAVE SOME
CONSEQUENCES ON SOME COMPANIES
OVER THE NEAR TERM, NOT
NECESSARILY THE LONG TERM
THOUGH.
CHARLES: I WANT TO TALK TO BUT
THE COMPANY SHORTLY, BUT TO THAT
POINT, IT IS JUST, RIGHT NOW SAY
PER -- CONTINUE TO PUSH THE
ENVELOPE ON THIS SORT OF STUFF.
THEY RUN OUT OF THE CLOCK.
SUPPLY CHAINS IF THEY MOVE,
THEY'RE NOT COMING BACK.
IF THEY FORCE US TO DO THING
ACTUALLY EXPLORE OUR OWN RARE
OTHERS THEY WILL NEVER BE ABLE
TO HE WILL US ANYMORE -- RARE
OTHERS.
THAT IS CALCULATED GAMBLE ON
THEIR PART, ISN'T IT?
>> THAT IS TYPICAL GAMBLEnd
U.S.ING A CULTURE AS WE INCREASE
TARIFFS OR CHINA INCREASES
TARIFFS ON AG SS GOING TO CHINA,
U.S. AGRICULTURE GOING NO CHINA.
THE CHESS MATCH IS SIMILAR ON
BOTH SIDES THIS IS CHINA'S
LEVERAGE POINT HERE.
AND A BIG ONE.
THIS IS 80% OF RARE EARTH
MATERIALS THAT THE U.S. LOSES,
TECH INDUSTRY COMES FROM CHINA.
I'M GLAD YOU POINTED OUT.
THERE IS A DIFFERENCE BETWEEN
RARE THAT'S RIGHT THESE ARE IN
FACT ABUNDANT, OVER LONG TERM
THE SUPPLY CURVE, THE U.S. WOULD
BE ABLE TO FIND WAYS, WHETHER IT
IS FROM OUTSIDE OF THE U.S.,
OTHER COUNTRIES.
BUT I WANT TO QUICKLY EMPHASIZE
SOMETHING RELATED TO THE TOPIC,
CHARLES.
I RECENTLY SPOKEN TO A FORMER
U.S. TRADE OFFICIAL.
TWO THINGS WERE CLEAR.
ONE IT IS, DIFFICULT TO PREDICT
HOW THIS PLAYS OUT.
THAT WAS MOST CLEAR.
THE SECOND PIECE IS THAT, WHAT
CHINA AND U.S. CAN BOTH REPLACE
IS SUPPLY SIDE.
SO THE U.S. CAN FIND OTHER WAYS
TO GET MINERALS.
CHINA CAN FIND OTHER WAYS TO GET
AGRICULTURE.
ONE THING THAT CANNOT BE
REPLACED, U.S. ECONOMY,
CONSUMER, 5% OF THE GLOBE'S
POPULATION, BUT 25% OF THE
BUYING POWER.
THAT ULTIMATELY IS A GREATER
LEVERAGE POINT FOR THE U.S. IN
THESE DISCUSSIONS.
CHARLES: I AGREE 1000%.
WHEN I HEAR FOLKS SUGGEST
OTHERWISE, THAT CHINA WOULD
SIMPLY FIND OTHER CUSTOMERS.
I SCRATCH MY HEAD, WONDER, MAYBE
IF THEY FOUND LIFE ON MARS.
GENE, WE HAVE A MINUTE TO GO.
A LOT OF PEOPLE THINK THE
SEMICONDUCTORS ARE THE BEST WAY
TO GAIN MARKETS AND ECONOMIES,
PARTICULARLY GLOBAL ECONOMIES.
SEMIS OBVIOUSLY THE EYE OF THE
STORM GETTING HIT PRETTY GOOD.
WHAT DO YOU THINK ABOUT THEM
NEAR TERM?
>> SO I THINK THEY'RE GOING TO
CONTINUE TO BE UNDER PRESSURE.
I THINK THAT, I WOULD AGREE WITH
THAT.
THEY'RE A GREAT BAROMETER JUST
HEALTH OF DIFFERENT ECONOMIES
ARE TRADING.
ULTIMATELY AS I BELIEVE THAT
LONGER TERM, ONCE WE GET THROUGH
SOME OF THE TRADE DISPUTE, SEMIS
WILL START TO MOVE HIGHER.
SO NEAR TERM, CHARLES, TO ANSWER
YOUR QUESTION, I DON'T SEE ANY
REAL CATALYSTS TO OWN THESE.
BESIDES NVIDIA.
THAT'S ONE COMPANY I THINK HAS A
PARTICULARLY GOOD POSITION.
BUT LONGER TERM THEY CONTINUE TO
