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What’s Next for American Markets After a Messy Exit from Afghanistan?

What’s Next for American Markets After a Messy Exit from Afghanistan?

Episode #52  |  September 9th, 2021

In This Episode:

As the Afghan dust settles and kicks up again, every White House administration since 2001 deserves blame for the failure of America’s longest war. 

The impetus of capturing Al-Qaeda transitioned awkwardly into a misguided attempt at nation-building, with the Middle Eastern-American cultural gap proving too cavernous to reconcile. 

And the hubris and poor planning culminated in our shameful exit.

A joke amongst the American military stationed in Afghanistan: ‘How long does this last once we leave?’ Well, now we know the answer.

In this episode, Trish talks with the president and chief investment officer of Greylock Capital Management, Hans Humes.

There’s been much debate about how the Biden Administration exited Afghanistan, but how does that affect American markets – and what are the financial ramifications? 

Plus, with the 20th anniversary of 9/11 upon us, Hans discusses the role of Saudi Arabia in tolerating religious extremism.

Have a question or topic you want to hear in a future podcast episode? Send us an e-mail at


Hans Humes

President and chief investment officer at Greylock Capital Management
Hans Humes an American investor and commentator on financial markets and sovereign debt restructurings. He is the president and chief investment officer at Greylock Capital Management, an alternative investment adviser. He served as co-chair of the Global Committee of Argentina Bondholders following the 1998–2002 Argentine great depression, and most recently served on the steering committee of investors engaged in the Greek sovereign debt restructuring.


Trish Regan:               You know, most Americans are still going on about their life, they’re investing in retirement planning as though nothing really unusual has happened in the financial system. I think we all know that something pretty unusual has happened, and that’s the $11 trillion that has been pumped into the financial system just in the past 18 months.


                                    I mean, this is a big deal. You know many, many, many, many people are coming out and they are publicly stating that Americans just aren’t paying enough attention to this development. I’m certainly one of them, and we had a gentleman on the program recently, Dr. Eifrig. You remember Dr. David Eifrig, former Goldman  Sachs banker who is saying that you know what, millions of Americans they’re risking getting pushed out and pushed down from being in the middle class.


Or risking their retirement, basically, because of all this money that has been spent. I mean, you run the risk of not being able to have a really good retirement, and independence, and privacy. You know he refers to it as a “financial lockdown,” and he’s warning Americans about this. I want you to check it out because it’s important to think about these things.


You need to think about how to protect yourself, how to protect your money, how to protect your family. And he’s got a free copy of his new report that you can take a look at it. In it, he’s going to show you the four steps that he’s recommending you need to take in order to prevent yourself from really suffering in this inflationary environment. So I want you to go to to get your free copy. Again, that’s retirementwarning2021 – you can get a free copy of Dr. David Eifrig’s report. I think you’ll find it very interesting. Let me know what you think.


Afghanistan is a mess. The economy now is a mess. You have only to look at the jobs report to figure that one out. We’ve got inflation. I mean, we’ve got a lot of problems on our hands right now. And the political situation is such that none of it is helping.


Welcome, everyone, to this week’s edition of American Consequences. I am Trish Regan and I’m really excited… we have my friend Hans Humes on the program today. Hans is the founder and CEO of Greylock Capital. Greylock Capital is a company that, basically, goes in there to these extreme emerging markets and puts them back together, you know, when they’ve been really broken up. And represents U.S. bondholders to help restructure some of these places. So he’s got a ton of experience all over the world, restructuring some pretty dicey places, so I wanted to talk to him about what’s going on in Afghanistan right now and what we might see in the future.


But before we get to that, by the way, the anniversary of 9/11, of course, coming right up. Before we get to that I just want to talk a little bit about what we’re seeing in the markets right now, and what we’re seeing on the jobs front. We’ve got a miserable unemployment report… 720,000 jobs they thought were going to be added to the economy and instead, you’ve got 235,000.


Now granted, there’s for some reason something really off, like a huge disconnect between economists that try and predict nonfarm payrolls and then the actual numbers that we get. They’re just always off for whatever reason. They can never get this number right. They do a little bit better on the actual unemployment rate, they have more success on that. But just in terms of trying to get the nonfarm payrolls right? They’re always messed up.


I did not quite think it was going to be 720,000 but I’ll tell you this, I didn’t think it was going to be as bad as 235,000. I mean, that was really bad. It shows you that our economy is challenged right now. Part of this, of course, is related to people maybe not going back to work because of concerns about COVID, the Delta variant breaking through.


Also, you know just the reality that Uncle Joe had been paying everybody, President Biden has been paying everybody to stay home. That’s now ending. So you might, hopefully, start to see a shift, but how do you see the shift when simultaneously all through the south, especially, you’re seeing such a spike in COVID rates.


So we got a messed up situation. Now, as an investor, how should you think about it? I think it’s still game on. I realize that some people are worried about a potential pullback in the markets for September but here’s the thing… here’s what you have to remember: Jerome Powell has made it very clear the employment numbers are what he is watching.


So yes, he’s told he’s going to taper, but do you believe it? I mean, how can he taper when the one indicator that he watches so closely is showing that we’re not adding jobs the way we had anticipated? That’s a problem. Yes, we do have inflation. Yes, inflation is real, and well, we’re getting multiple new reads coming out. Of course, PPI on Friday, you got CPI coming out next week, so we’ll see whether consumer prices continue to spike. My sense is they did –  you’ve already seen, for two months in a row, a 5.4% increase in consumer prices. So if that continues, it really, you know, it takes a bite out of everyone’s spending power.


So you got inflation going on, which by the way, should actually help the equity markets, right? You want to be invested in equity assets if you have this inflation for real. The problem would be, of course, if all this becomes such an issue that you see a real, real slowdown in the U.S. economy. If that occurs, then you know what? All bets are off.


But nonetheless, if we continue on this pace and they’re so innovative with their strategies on printing money over at the Federal Reserve, then guess what? The markets should continue powering higher because everybody’s flush with cash and money is very cheap and easy to access. Where else are you going to go? I mean, when the yield on the Treasury is, you know, barely trending above 1.3%, you don’t have anywhere else to go.


And this is part of the problem, this is the “kicking the can down the road,” as they say. This is what we keep doing, and we’re getting smarter and smarter, I guess, about how we do it, which means the eventual pain may be that much stronger. But I don’t think that big pain is coming just yet.


September, I should point out, historically has been a challenging month for markets. In fact, October is the really scary one, right? Because you got big crashes that have happened in October, including ’29. But September, if you look at it on average, tends to have a lot of volatility and can be pretty tough on portfolios.


That said, again, if the Fed is not moving as much as people thought because they simply can’t because of the job’s numbers, then you don’t have the tapering. You still have low interest rates and you have an economy that thus far seems to be sort of hanging on, right?


I mean, you look at earnings… third-quarter earnings will be coming out next month in October, we saw a massive uptick in earnings last quarter – roughly, you know, a 95% increase. This time around, analysts are looking for 30%, just under a 30% increase in quarterly earnings. And so, it shows you we’re still getting stronger. Now, the pace of growth might slow, but still, if we’re growing earnings then that’s actually a good sign for equity markets.


So, look, my sense of things is that you still want to hedge. We had Ron Paul on the program the other day and remember he is still a big believer in gold. He’s very concerned about inflation. I would agree with that sentiment. Our friend Doc Eifrig was on as well, saying, “Look, you want to be positioned for the inflation that’s coming.” I agree with that. He also talked about the importance of gold. You can check out Doc’s entire thesis at Inflation Report 2021 – I’d encourage you to do that.


I would also encourage you to make sure you go to and sign up for the newsletter we have there, which I write regularly for… and Doc and Ron Paul and many others. And I think that this is a common theme that so many of us are worried about right now… inflation that is here and is going to get worse. And so, you want to position your portfolio with all of that in mind.


The other thing that – and this is the reason I wanted Hans on the show today – you need to think about is just exactly America’s place in the world and how that’s changing and how our policies from an international standpoint are affecting our position and our strength in the world. And we’ve talked about this before, this sense that the U.S. dollar is increasingly under pressure. Except that where else are you going to go?


I mean, it’s hard right because, you know, you’re not going to put your money in the Chinese yuan, not even in the digital yuan. You’re not going to put your money, necessarily, in euros that’s not going to overtake the U.S.’s place as the world’s reserve currency. But nonetheless, as we get ourselves into situations that really do not reflect well on the United States of America – such as what we’re seeing in Afghanistan – then that does put pressure in different ways on the U.S. dollar.


And it’s quite possible that many years from now we might have an alternative to the U.S. dollar that’s emerging as something that could be the world’s reserve currency. And we need to think about that and I think we need to protect our position, which means we want good, strong policy to help back a good, strong U.S. dollar.


So Hans Humes on the program today… I’m really happy to have him. You know, Hans and I go way back and Hans has experience all over the world investing in some really, really interesting places. He’s been in, basically, every extreme emerging market there is. You know Venezuela, Argentina, those are the more normal ones, I’ll let him fill us in on some of the more dicey places that he has invested and help try and really resurrect some of those economies.


But I want to welcome, of course, my friend Hans Humes, the CEO of Greylock Capital, to the show today. Hans, great to have you.


Hans Humes:              Hey, Trish, it’s good to be here.


Trish Regan:               So quickly, just before we get into what’s happening in Afghanistan, I did mention that you’ve been in some pretty exotic places as well. Give us a sense of some of the well, shall we say more flavorful, more interesting places where you’ve had to help them with the restructuring of debt and get investors interested in these opportunities.


Hans Humes:              Sure. I mean, you know really, it’s trying to fix things and then, you hope the people get invested three, four years down the line. I mean, probably the biggest one I did was with Greece. I was the only American on the steering committee and even there, I mean, now, Greece is fine. I think they’re borrowing at negative rates like a lot of other European countries.


                                    But it wasn’t that long ago the people were talking about Greece falling out of the euro. I mean, I think everybody forgets that before there was Brexit, there was Grexit. And Brexit was derived from something that was all forgotten about, but they went through some pretty tough times. And now, they’re just part of the EU again.


                                    But maybe places that sound somewhat cooler… I’ve done a lot of restructuring in African countries, then obviously, Latin America. Interesting transactions in places like Nicaragua, Liberia, Togo, the Ivory Coast.


Trish Regan:               OK, so clearly I was not doing it justice. Like I’ve said, you know, I once did a story years ago on extreme emerging markets. This is effectively the space that you’re operating in, right? Extreme emerging markets… when you start talking about Liberia, the Ivory Coast – even Venezuela probably qualifies as that these days.


                                    But I know you’ve watched Afghanistan sort of from afar, I don’t know, as you’d be jumping in there. There’s talk of maybe China, Iran, kind of like, you know, the “axis of evil” as they’re known, getting involved in some of these places. There’s a lot of very vast rare earth mineral supply, including lithium, in Afghanistan.


We’ve exited, of course, and a lot of people feel that was just the right thing to do and it was inevitable at some point. But nonetheless, this administration has taken a lot of heat on how it’s gone down. What’s your reaction? The idea that we still have Americans there right now? The idea that the military got out ahead of Americans getting out?


As someone who’s looked at some of these, you know, I don’t want people to criticize me for saying hellholes, right? Because I remember, I think, well, Trump said something a little bit worse but you know, these really challenging, challenging places. What’s your sort of reaction to how this has all been managed? Your gut reaction right now, Hans.


Hans Humes:              Well, you know, I guess I’d have to say that this administration is getting criticized for how they managed the process because they deserve it. [laughs] But I think everybody deserves all the prior administrations to maybe when we first got in there – deserve criticism of how things have been managed.


                                    I think Trump, to give him credit, at least called it for what it was… that it made no sense and pulling our troops out. I mean, it may just be inevitable that it’s going to be messy, but it has included negotiating with some people that, I think, maybe should never have taken their word on it.


                                    But it’s an interesting sort of philosophical discussion because you know, what were we doing there? We were going in there to get, you know, get to al-Qaida. It was “negotiate with the Taliban to get to al-Qaida, if you don’t let us have them, we’re going in.” We went in.


And then we started building a country and I think, as you and I have spoken about, “Hey, the Marshall Plan worked really well in Europe.” And you know, maybe it was a bit more of a stretch culturally with Japan, but these were countries who we had a sort of cultural similarities, common heritage. I mean, all of Europe that’s where a lot of us came from.


So I think we were kind of building things back in a way that made sense there because the people that we were trying to do this with could relate to us culturally. And I think I’ve probably told you in the past also. I mean, my first entry into emerging markets was my dad, you know, worked with Spiro Agnew while my uncle was working for Nixon.


And we went to Nigeria, he was supposed to be designing the local government system for the country. And so he was a city government expert, and he put this whole thing in place and it didn’t work. So what’s going on here?


Trish Regan:               And what his sort of takeaway from that to you, because I have heard this story before but I know the listeners have not…. your dad goes into to try and restructure Nigeria and fix it, and we put a lot of our sensibilities and our culture onto them and yet?


Hans Humes:              Spot on. Well, what he did was he realized it wasn’t working for cultural reasons. And it wasn’t one solution for the entire country but he adapted the sort of Western model – sort of more or less how it worked – to the different cultures, whether it was the house of Ibo or Yoruba cultures, and then it worked. This is just the local government systems and it’s actually still how things work in Nigeria.


                                    You know, there are some like it should work there. But that’s a really like – I will give credit to my dad, he also went to the Netherlands to get his PhD because he was kind of interested in it… which back in the ’50s. was more of an adventure than it is now. He defended his thesis in Dutch.


                                    But the takeaway on that is we really need to know the culture. And there’s a problem with how our government sometimes can work at perceiving something through hope rather than practical, on-the-ground feedback. And I think, you know, we’ve all heard lots and lots of interviews with military people who are “boots on the ground” for the last, I don’t know, how long in Afghanistan. And the takeaway is every time something would happen, you know, the joke amongst each other is how long does this last when we leave? And now we know the answer, we start pulling out, and this whole thing sort of implodes on itself.


                                    But think about going back to why we’d go in there… 9/11, OK, maybe we’re supposed to get Osama Bin Laden but to try to completely restructure the country… doesn’t make any sense at all. And you know, I think that’s probably where people like Ron Paul and Donald Trump had a very good perspective on it.


Trish Regan:               Right. Yeah, I mean, look, and I empathize with that and I understand it. I’m a little troubled by sort of how we pick and chose our humanitarian issues because I think that there’s a real humanitarian crisis there in terms of how they’ve treated women. For example, it’s always bothered me long before we were even – I remember taking a class in international relations and learning all about the Taliban and Afghanistan back pre-9/11 while a student at Columbia University and being so troubled by that.


                                    And yet, you know, you look around the world and there’s plenty of places where there are these humanitarian issues, and it’s very interesting where we choose to intervene and not. And I think what you were saying is somewhat in line with what Dr. Ron Paul was saying recently on this podcast was that you can’t fight everyone’s battles. And so, you kind of need to think about what’s most important for you as a country.


                                    All that said, you know what? I don’t disagree with getting out but gosh, Hans, I mean, was this way to do it? For goodness sakes, could they not have come up with a little better of a plan? I mean, what the heck?


Hans Humes:              Yeah, it’s hard to argue with that. And I think, you know, this will all sort of come out in some form or another – the mistakes like not having the military infrastructure in place to sort of provide cover. I mean, it’s just in the last couple days, all of sudden there’s this great big thing that the State Department was able to get four Americans out across land. Well, OK, [chuckling].


                                    You know, I don’t really have all of the answers. What I will say –  since you mentioned 9/11 and going to your point about where we choose to make a humanitarian issue of a political situation – where’d the Taliban come from? You know, Afghanistan… at least Kabul used to be somewhat westernized. The Taliban came from a bunch of people who were educated in madrassahs that were funded by Saudis, you know, the Wahabi part of the Islamic state.


                                    Where did al-Qaida come from? Started by a Saudi, 11 of 13 hijackers, you know. So I mean, we’ve got a long-standing diplomatic relationship with a country that I don’t think would make it through the checkbox that you have as a person, you, Trish, of what would be desirable in terms of human rights and position of woman.


                                    So I kind of agree. We’re very good about papering over things that we shouldn’t be doing for other reasons. But, you know, the whole Afghanistan story, it’s, you know, a lot of natural wealth but boy we put a ton of money into that place and we haven’t seen much out there.


And quite honestly, everybody’s worried about the Chinese and Russians going in and exploiting all the natural resources. As far as I’m concerned, let them try, nobody seems to work very well in that environment. You know I think the mistake we’re making is fumbling around with a much easier situation in South America, which is Venezuela that you brought up earlier.


Trish Regan:               I want to get to Venezuela in a moment, but before we do, I mean, here we are just ahead of the 9/11 anniversary, the families that had loved ones that died they have said to President Biden that they would prefer that he skip the 20th-anniversary event because they said, look, you know he hasn’t fulfilled his commitment.


And that since the conclusion of the 9/11 commission in 2004, all this evidence, investigative evidence has been uncovered implicating somehow the Saudi government and perhaps its role in the attacks. And yet, none of this information has been properly disseminated to the families and so, they’re very upset about that.


Do you have a view on that? I bring it up because you mentioned Saudi Arabia and this is, of course, a big concern for these families.


Hans Humes:              We say the Taliban are the bad guys and they grew out of a very deliberate effort by Saudi Arabia to market, to sell, to put in place an extraordinarily reactionary, conservative splinter of Islam. The Wahabi faith, I don’t think anybody contests that it’s the most sort of conservative, most anti-sort of normal civil rights, you know position of women in society.


                                    And then you look – I mean, let’s go back to, I mean, you want to take a knock at Biden, I mean, –


Trish Regan:               No, and by the way, I realize everybody sees me as very political. I want to just reiterate I’m an independent who has voted for both sides and is really, you know, keen on anyone who has good economic sense and good sort of protection for our country’s sensibility, right? So it’s not that, I don’t want to pile on Biden and I know you don’t either, Hans, but you know, it’s just let’s call a spade a spade. And when he screws up, I think we have to be there to recognize that. So I’m not trying to pile on, it’s just like my gosh, come on.


Hans Humes:              Well, I’m, and I’m, I’m sort of, he already showed his hand on that. When he came in, I think you and I were both somewhat rightfully, with many others, horrified about what happened to Jamal Khashoggi and you know, at least Trump characterized the decision about not pushing back on MBS and Saudi Arabia in economic terms.


We can dispute, you know, they certainly do buy a lot of our stuff. Is it good that it’s military? I mean, I’d rather be selling Coca-Cola and Levi’s to Iran than nuclear or you know, not quite nuclear but you know, the weaponry, our cutting-edge weaponry to the Saudis.


                                    Biden, he didn’t address the issue he just also didn’t do anything. And I think it’s a huge flaw, every single diplomat I talk to when we start spouting off humanitarian this-and-that, it just – our relations with Saudi resonates. And you take a look at it, there’s no question that there was Saudi participation, if not, you know, just because most of the hijackers in 9/11, the guy who planned it, who started al-Qaida, is a Saudi. I don’t, I’m sure there is a lot of funding but still –


Trish Regan:               Why would they do that? I don’t know, like I’m a rational player, right? And if I’m the Saudis, I have an important ally in the United States of America and an important trade relationship. So why the heck would I jeopardize that by funding a bunch of nuts that are going to do bad things? I mean,  just from a logical – that doesn’t make any sense to me.


Hans Humes:              Maybe at some base level they’re happy to make the money but they still think we’re infidels. I don’t know.


Trish Regan:               No, I mean, I just, I, but I don’t, I struggle to understand that. But I hear what you’re saying in that for some reason like they have – is it because if you’re, you know, in charge and you’re in Saudi Arabia you realize that you have this sort of extremist group and are you sort of helping them along the side so that they don’t try and topple you? I mean, what’s the real reason behind it?


Hans Humes:              Oh yes, that’s a very good question and I think it really does cut to the heart of the whole thing. I mean, three, four, five years ago Iraq was the war we messed up but Afghanistan was good. Now it’s pretty obvious none of these were a particularly good effort. Our rationale for going in, you know, go in, take out the guys who don’t like us is fine. But then, staying and trying to rebuild something when it’s really the religions’ philosophy now between al-Qaida and the Taliban are fighting each other, both of them derived from the Saudi Wahabi tradition, they’re just competing.


                                    You know, we really need to think, you know we should be doing things that are really, that are good for us. And we, at some level, can want people to have civil rights. We can have an idealized view but we need to be very careful about where we can do it for cultural reasons.


                                    And secondly, are we doing it, you know, it’s got to be good for us. I mean, we’ve got to be setting these things up in a way that helps our country.


Trish Regan:               Well, I mean, and that gets at that “America First” sort of agenda and policy, which has come under so much criticism but I think is – and by the way, Ron Paul is no fan of Donald Trump but is a fan of America First in terms of the policies itself. I should also point out just to update the story that I was telling you about, Joe Biden has announced that they are going to have a review and declassification of files from the 9/11 investigation.


This is, of course, in response to all this pressure from congress as well as victim’s families that are currently suing Saudi Arabia. And so, as this anniversary approaches, he has said that he is going to this via an executive order. It will take about six months because they’re going to review the documents.


I mean, why is it 20 years later that it’s still going to take six months? What is it that our government is trying to hide? And I mean, we’re being super speculative here but you know, you’re the guy with all the sources in the State Department so what do you think they’re trying to hide?


Hans Humes:              I think unfortunately Ron Paul would probably say we went into a lot of these places for the wrong reasons and we’re being nudged by economic interests within our country that aren’t consistent with economic interest of all the country. And it’s, you know my suspicion is that they want to be careful to see what they can maybe not hide but, you know, if they put out everything they know about the origins and the execution of the 9/11 plot, I would expect that they’ll be showing light to parts of our foreign policy that they just don’t want people to see.


                                    I mean, it’s interesting, there is really, you know even if you have a change in administrations, it’s kind of on the surface as radical as we’ve seen from Trump to Biden, but it’s still this kind of passive thing about not wanting to be embarrassed. And as the United States and you know, they often get caught in this very uncomfortable situation of trying to validate stuff that’s happened.


                                    I mean, I think that the best, I mean, should we get out? Yes. Should we do it in a way that works, that maintains enough of the integrity of our ability to make sure it does go well? Yeah. And that’s the knock on Biden for that is just sort of stumbling along on a timetable that probably was too fast to make sure that people wouldn’t get mad at him because he’s still in Afghanistan. You know maybe by the midterm, I don’t know.


                                    We do need to think. You know, you and I have laughed about how many Democratic candidates are now saying exactly what Ron Paul has been saying for how long?


Trish Regan:               Well, I mean, it’s funny how – look, you know, it’s not funny… it’s actually tremendously sad how political everything is, right? You saw it during the Trump administration, Democrats sounding like hawks. I’m like whoa, where did this come from, right? And because he wanted out of Syria and he wanted out of Afghanistan. And you can’t have it both ways.


I mean, look, I hate the politics of it because I think fundamentally, we just should be doing what’s right for our country and for our people, period, and ignore this sort of posturing. But there is a lot of politics, there is a lot of posturing, which actually, brings me to the next topic because I know you’re still heavily involved representing a lot of U.S. debt holders in Venezuela.


And that’s a country where we do have some cultural similarities unlike places like Afghanistan where’s there now talk that Treasury Secretary Yellen, she’s debating whether or not to give them the $9 billion that we’re holding that was originally for the Afghan government. Venezuela is still struggling with all the tariffs, etc., a huge home to an enormous source of oil there – I’ve traveled to the Orinoco region.


And Hans, I don’t know if the listeners know this, I’ve told you this, but actually my first job at Goldman Sachs, my first real job in the real world, not like you know waitressing and bussing tables and all those things I did as a kid or teaching sailing lessons, all good jobs. But my first real job was actually at Goldman Sachs where I was working on the emerging debt market desk… Venezuelan, Argentina, Mexico, and Brazil’s debt.


And I would be responsible for sort of writing up all the news that was coming out of Venezuela at the time and these other countries and that was a big part of my job. Again, entry-level position there in the emerging debt markets desk. And I remember, I mean, this was a while ago, this was when Chavez was first coming to power and we were like, “Oh, you know, OK maybe it won’t be so bad.”


We were worried about Lula in Brazil, and it turned out that Lula, at least temporarily, did a little bit of a better job. Chavez, though, really sent the country on quite a spin downwards and something that it’s still suffering from. But nonetheless, throughout my reporting career, I’ve traveled there, I’ve seen the Orinoco region – tremendous source of potential wealth for the country but it’s been a real disaster and now we have all these sanctions – but there’s a political reason for that too, right?


Hans Humes:              In my opinion, yeah. I think that the – I think the Biden administration realizes that the sanctions that were imposed don’t make much sense. There was a real kind of frenzy of just throwing sanctions on everybody because, as you probably remember, there was the sense that as soon as push Maduro out, so recognizing Guaido, within a couple months everything’s going. You know, Maduro kind of knew it was coming.


                                    As you know, his discussion with Trump and you know, our fear was at some level we all thought that Trump sooner or later would just sit down and talk to him. But there’s such a strong voice for the Cuban American population, maybe the Democrats are just scared that if they do anything with Venezuela then they lose house seats in Florida.


                                    But it’s really interesting because we sort of skewed our interests for political views pretty small subset. And I’ve been to Cuba, I’ve been to Venezuela lately and there’s no comparison. I mean, Cuba, you’re talking about 50 years of sanctions and populations, well-educated but sort of stripped of any kind of market sensibilities maybe they’re building them back a little bit now. And all the people who left, they’re not really going to go back. Venezuela, it’s been bad, I mean, it wasn’t good before he signed the sanctions on and it’s much worse now.


But if you think about it, Bloomberg did an interview with Maduro around the streets of New York City and he loves playing basketball and he loves America. You know, we’re not going to hear that much from the Taliban, are we? And yet, we negotiated with them and for some reason we’re saying we’re not going to negotiate with this guy because he’s a thug.


What’s in our interests? I mean, we don’t need you know they’ve done a radical change on their economic policy and they put in place something that looks a lot like an IMF program. The guy who’s sort of acting as their finance minister is an Ecuadorian who was able to turn Ecuador away from being a complete outcast in the markets in a seven-year period to bring them back to the capital markets. He’s a really strong economist and that looks like what’s going on with Venezuela. They’re doing a lot of privatizations, a lot of debt for equities and because of our sanctions we may, if we don’t adjust, we’re going to be left out of it.


Trish Regan:               Can I ask a question? So sort of like a basic because like I don’t know how the sanctions affect everything, but like if you’re a debt holder suppose you were buying those bonds that we were selling at Goldman Sachs, you know way back when, actually, it would probably have to be a more recent issuing. But my point is like what happened to those bonds that were issued? And can U.S. investors, I mean, like you can’t, can you buy Venezuela debt now or that would be a complete violation of sanction?


Hans Humes:              Yeah, you can’t buy them, you can sell them. So the sanctions we put on the debt basically, lifted a bunch of language that we developed when we sanctioned Russia on some bonds that were trading above 100 cents on the dollar. And the intent was to get Americans to sell the Russian exposure.


In this case what they said was we don’t want the Maduro government or anybody associated with selling to Americans so that we do directly, you know, fund their operations. They slapped the sanctions on them and the stuff was trading at 20 cents on the dollar and now it’s trading at less than 10 because none of the Americans are buying it. But the debt’s going to be a form of capital for buying what the government is selling and that includes all these areas that are rich with oil.


So if we’re not in the game we’re going to lose the opportunity. So it’s just, you know the idea of running these kind of philosophical, you know, tracks on who we deal with because of bad guys when meanwhile we’re talking to all these other people. You know, but that’s, I guess that’s just the way the world works, it’s just it would be really, I think, bad for the United States to let people who are, no question, are competitors have a long-term foothold in a country that’s so close and so rich in resources.


Trish Regan:               So you can’t actually buy it. You can sell it, which actually puts the bondholders I would think, like anybody who owns – what do you do you just hang out and you hold that debt?


Hans Humes:              Well, what’s happened is I’d say at the beginning when the U.S. put the sanctions on, one person in the Treasury put these sanctions on, I think the Americans owned about half the Venezuelan bonds. I think that’s down to maybe, maybe 25%, 30%. All the Americans have been selling to non-Americans.


Trish Regan:               Oh dear, that’s so messed up, right? Because now instead of America having a stake and therefore influence, you’re forcing, I guess, you know, Americans to turn that influence over to the likes of China or Russia or anyone else.


Hans Humes:              Anybody else who wants to have a seat at the table of Venezuela they can buy in at five, 10 cents on the dollar and the Americans take the loss.


Trish Regan:               You could hold the bonds and hope that like at some point, things improve.


Hans Humes:              Yeah, exactly. But you know, you get fatigued, you have a big mutual fund, a portfolio manager at least, you’ve been in the business you know how it goes, the more time that passes the more likely sort of positions will be moved off the books. And it’s just his is really bad because things are turning down there and we’re getting – I mean, the craziest thing is and I don’t want to get too much in the nitty-gritty, but there’s one bond that was a PDVSA at 2020 maturity that was collateralized with a huge stake in Citgo.


Because of the sanctions sooner or later, people, because this bond was defaulted on, will be able to go and get an equity stake, close to 50% in an American oil company because that was the collateral on this bond issue. Because of the U.S. regulations, Americans can’t buy the PDVSA 2020s – foreigners can – the Americans own it now and they’re selling it. So every time they sell this bond, they’re giving part of an American oil company to a foreigner who we have absolutely no idea who they are. It’s absurd.


Trish Regan:               Yeah. No, but I mean, this is why people get so frustrated with our government because these decisions are made and for whatever reason, they don’t understand the law of unintended consequences.


And so, I think there’s some similarities whether it’s, you know, inadvertently turning Venezuela over to the Russians and to China or whether it’s getting out of Afghanistan boom, presto, out while simultaneously having all these people that are still left there. And the idea that now – I mean, I’m sorry, but Glen Beck is sending planes that are stuck on the tarmac at 750 grand each? He’s got a couple air busses over there waiting to try and be able to fly out.


 I mean, this is wild to me like that charity groups and private citizens and groups are getting together to try and get these people out. Or the woman who just got out of Afghanistan, right? She was someone who went over to visit her parents with her children and got stuck in all this and they had to get her out via land. I mean, wow, I mean, it just shows you, it shows you and I hate to say this, but we just gotten so darn big and it’s like things just get so messed up along the way.


Hans Humes:              We get played by people from that country who try to, you know use their connections with us, so you know, you get somebody like [inaudible] from Venezuela who went to Harvard and therefore, you know, he went to school with a bunch of people.


And I would listen and the same thing with [inaudible] going into Iraq, we get, you know, Gulf War I and II, we listen to sort of one group, and we build our considerably powerful foreign policy around the input of one group from that country that’s got interest. They’re not doing this from the good of their heart. They’ll co-op all the phrases and we get played, you know.


You know, there is not enough sort of cynicism and there is definitely not enough communication with the people that we have on the ground. I mean, going back to what I was saying before, you hear all the soldiers who were there and what they were seeing, you know. I mean, I heard one interview with a guy who’s there said that they’re supposed to be giving updates on how the Afghan army was doing. And he just wanted to be honest and he was told by his superiors, probably under the direction of somebody from D.C., “No, no, no, no, you can’t say that – you have to say it’s getting better.” All right.


Trish Regan:               Hey, very quickly, just before I let you go there’s some news that’s just crossing and I wonder if you have any thoughts on it because you, sir, have been detained in Tehran, was it in Tehran at the airport that you were questioned?


Hans Humes:              Tehran… Moscow.


Trish Regan:               OK. OK, so you have experience in these things. Jason Miller, who was one of Trump’s aides and advisors, was just down speaking at a CPAC conference in Brazil. And it has just crossed – he was apparently detained at a Brazilian airport on his way back to the United States. That’s just the news we have… he was trying to board a plane back to the U.S. and he was detained. It’s investigating that under the federal police detained him under investigation 4874, which investigates the organization of the anti-democratic acts in Brazil.


The order came from Alexandre de Moraes, a justice of the Supreme Federal Court. It has since been announced that he and his team have been released and allowed to return to the United States. Any thoughts on that as someone who has been detained in some of these dicey places? I wouldn’t have thought Brazil would be one but your reaction?


Hans Humes:              Yeah, yeah, yeah, you know, he’s sort of getting caught in the crossfire between the supreme court and Jair Bolsonaro, the president of Brazil. They’re pushing pretty hard on Bolsonaro, you know, just recently he came out with some pretty extreme statements about social media, who censored him, which OK, I understand. But there’s a big feeling that what Bolsonaro is going to try to do is get his supporters out in the street and people are worried about a coup.


                                    So he’s had a very big standoff fight with the supreme court and I think Miller probably just got caught up in the crossfire a little bit. But a lot of our boys have been caught in much worse crossfire so I don’t feel that sorry for him.


Trish Regan:               Yeah, he’s been able to fly back. But I figured you might be one to ask as having been detained multiple times yourself.


                                    Anyway, it’s so good to talk to you, Hans. It’s so good to have your perspective on all of this that’s going on internationally right now. We’re all, of course, thinking of the families that lost their loved ones in 9/11 and thinking about the future of this country on the 20th anniversary of 9/11.


And really, you know, I think you hit spot on where we just need to be really thoughtful about where we are focusing our efforts and how we are focusing our efforts because we’re pretty important and we can have a pretty big impact on the world in a good way for some of these countries and, of course, for ourselves.


I want to thank you again, Hans Humes, who is the founder and head of Greylock Capital. Thank you so much, loved the insight.


Hans Humes:              Have a good day.


[Bumper Music]


Trish Regan:               So my thanks to Hans Humes. Again, you know if you’re interested in investing in emerging markets, I encourage you to look at this space. It’s not for the faint of heart. We used to say when I was on the trading desk years ago that it was kind of the Wild West, right? Emerging markets… EM desk was the Wild West of investing and this was before bitcoin, of course, because cryptos are a whole other kind of Wild West.


                                    But indeed, emerging markets can be pretty stressful, I think, but in some cases rewarding so it’s an interesting space to check out and I would encourage you to at least look at it.


                                    Anyway, I would say my base of concern at this time, still remains inflation. My concern is for a deterioration of the U.S. dollar and thus, a reduction in what we, as Americans, can afford, right? I think you need to think about in terms of your retirement, in terms of your planning. Because look, if the dollar continues losing ground and is not able to buy as much as it once could, thanks to inflation, then all the money you’re saving is not going to be worth as much.


                                    And so, this is what as investors we need to guard against. Yes, you want to be maybe in some of these exciting places like extreme emerging markets, again, if you really got a strong stomach. Or you might want to be in equities markets, tech, I mean, you look at those FAANG stocks, all still to me very, very interesting. Tough to get in right now given that the valuations are so high, but nonetheless, I do think over the long term, those investments will pay off. You do want to be in equities with an inflationary environment in mind. But simultaneously, you have to be thoughtful about the other positions in your portfolio which is why I encourage you to go to… do sign up for the newsletter. Go to, my daily blog where we talk about these issues as well.


Sign up for my newsletter there, get my daily podcast, make sure you’re getting this weekly interview podcast. The point is you’ve got to seek out information right now. It is up to you to figure out how you’re going to manage this. The onus is on us as individuals. Do check out Doc’s 2021 inflation report – He’s got some ideas there for you. There are a lot of resources right now, so make sure you use them. And I will be right back here with you next week and we’ll continue the conversation.


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