Investing Through The International Merry-Go-Round

Headlines promised breakthroughs; markets priced stalemates. We step onto the so‑called international merry-go-round and examine how Ukraine, Gaza, and Taiwan shaped 2025’s volatility—then we connect the dots to where risk and return may actually meet in 2026. Rather than reheating talking points, we look at what moved capital: elusive ceasefires, frayed Middle East ties, and a supply chain reality where rare earths and energy intensity dictate who has leverage and for how long.

We dig into why China’s grip on critical minerals remains a structural headwind for chips, EVs, and defense—and why the fastest path to resilience may run through Canada’s hydropower-backed smelting, not wishful reshoring. We talk through the European dimension of any Ukraine settlement, outlining a cleaner role for the U.S. that supports capacity without sidelining the countries most exposed. Along the way, we trace how policy style—short attention spans and photo-op diplomacy—filters into premiums for defense contractors, stretched lead times for industrial components, and a higher floor for commodity and freight volatility.

Looking ahead, we map credible 2026 scenarios: Russian hybrid operations testing NATO’s gray zones, tighter pressure on Taiwan and a more forward-leaning Japan, and rhetorical truces with China that stabilize vibes but not supply chains. Our takeaway is practical: position for sustained European rearmament, watch permitting, power, and processing as the real bottlenecks, and keep dry powder for dislocations that panic will misprice. If peace and prosperity still command the best multiples, portfolios need shock absorbers until diplomacy catches up.

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Chapters

• 0:00 Setting The Geopolitical Frame
• 3:09 Russia–Ukraine: Ceasefire Illusions
• 6:54 Gaza And Frayed Middle East Ties
• 11:45 China, Taiwan, And Rare Earth Leverage
• 18:10 Energy, Smelting, And North American Strategy
• 22:20 Policy Style, Markets, And 2026 Risk

Transcript

Clem Miller: 0:50

Hello, everybody, and welcome to Skeptic's Guide to Investing. I'm Clem Miller. I'm here with Steve Davenport. And today we're going to be talking about international merry-go-round. , we're going to be talking about some of the things that we've seen in 2025, , what our expectations as we approach or enter 2026. And we're gonna be talking about a few of the items, Russia, Ukraine, Europe, also Gaza. and and then also not to not to forget some of the issues we've seen in Asia, especially around Taiwan. so Steve, I don't know where you want to start, but you know, why don't we start with with Russia-Ukraine?

Steve Davenport: 1:42

Yeah, I mean I love your concept here of the um the international merry-go-round, because I think it's kind of like each of the horses are countries that go up and down. And we decide to jump on the merry-go-rounds and take up become part of the ride, you know, for little periods of time, but our attention span in the United States or attention span in the world is keeps dropping. So we have to get on the ride, enjoy it for a second, and then we jump off and nothing really happens. No, that's not the way it's supposed to be. The way it's supposed to be is we thoughtfully engage with partners and we try to develop a coherent theme that'll last a long time, and we figure out how to work with our counterparties in these other countries to create a better economic unit and a better economic system so that we all can benefit. , and what we saw is Trump promised on day one of call Putin and the war will end with Ukraine. Not that didn't happen. It it there was no call, it was there was no ability for him to do that. , and as he started to bring, you know, he met Putin in Alaska in 25, and we all thought this was, you know, the beginning of the end for the Ukraine conflict. There was no ceasefire, with no ceasefire, it's hard to take any of this really seriously. Any military action starts with a ceasefire. You agree to put down your arms and negotiate. And what we've seen so far is people half-heartedly negotiating because they're still fighting. , so I think we've gotten on the Mary-Garral a couple of times this year when we met Putin in Alaska, when we recently um had some phone calls regarding this, and it it's it's been um more like a circus than it has been like real negotiation with Ukraine. I think that for all of this bluster and all of this talking, we're not getting anywhere. And therefore, I kind of look at it as a market event. It's hard for me to stop being a buyer of you know the Raytheons and the other industrials because there's gonna be more weapons needed and there's gonna be more weapons used. So, in terms of the merry-go-round, I'll tell you what some of the rides are. There's the you know, Gaza ride, where Trump was almost the only supporter of Netanyahu, and therefore he he burned a lot of relationships in the Middle East who were trying to negotiate a more lasting peace. A more lasting peace doesn't seem what to be what Netanyahu wants, so I'm not sure how we could say that part of the merry-go-round is, you know, we're riding and everything's going well. I'd say that our interest in the Ukraine and our interest in Gaza have been things we've been on and off again. And I think that that's a kind of a symbol of this Trump presidency is that he will bring up an issue and it's in truth social, it'll become a significant issue for the 25, 24-hour press, you know, day. But then the next day we go on to another issue. And so in Gaza, I think we've still got some serious issues to resolve, some serious questions about how and when there will or will not be a Palestinian state, there will or will not be negotiations between Israel and Saudi Arabia for a more lasting peace. I think that was about to happen, and um honestly, I think it kind of became one of the sabotage points was we don't want that to happen if you're Israel, and they just didn't want to say that um because it would upset the US. I I think overall, we're um where we are in the merry-go-round. I'm gonna go around a little bit further and talk about China. China is still very intent on making people realize that Taiwan is a part of China and it will become a part and more significant part going forward. I think that Trump tried to you know shape the X tree with his comments about you know what he was gonna do and not do with chips, and then Xi came back at him with what are you gonna do without rare earths? Since we're the producer that you know delivers about 70% of the world supply. And again, this issue deeper, more involved. It takes years to get mines up and running. And the processing from an energy perspective for these mines is four or five times what it is for a normal mine and a normal metal. And so when you look at that and say, why is it something that's really harmful to the earth and really harmful to communities and really generates and uses a lot of energy and therefore has a lot of off byproducts that are negative, why aren't there more of those in the US? I don't know. I can't imagine why we wouldn't have a lot of smelting going on in the US. It's not rocket science, it's about the energy, stupid. Canada has energy through aqua and um, you know, to dams, and they they are using that energy to be cheap source for their industries that are smelting and using metal, doing metal refining. They are the place we should probably be thinking about rare earths. They're the partner and neighbor that we've had for centuries, and guess what? We're angering and blowing up that relationship when we probably need it more than ever. We need it to combat China and their control of this market. We are on the roller coaster for a very short period or on the merry-go-round for a very short period of time, and then we had to get off because it really wasn't producing the quick deal and the quick um. So Trump went away from China and said, all right, if we just agree to leave things the same, then you know that's progress. No, that's not progress, that's standing still. So where are we when we get on these rides? We want to get off the ride, be satisfied with the experience, and feel like you know, the people we were on the ride with the Chinese, the um Ukraine, Russia, Saudi Arabia, Israel, the Middle East, overall, we should be getting along with all of these people. We want to talk about what's good for the economy and what's good for markets. Get along. Peace and prosperity is better for individuals than not. Therefore, I I don't see how this um, you know, this foreign policy can keep keep it up. And you know, I think right now there's a lot of pressure on the Trump administration. Focus on affordability. You said that was with Biden and failed. Why you would succeed there? Nobody's asking you to succeed in over overriding prior relationships with countries and trying to you know direct what should happen in Ukraine, Gaza, or Taiwan. You haven't shown the ability to cooperate and work with people in a way that's gonna be good. So I'm not sure how we you know anticipate this going forward. If I look at this, how things occurred in 25, and I think about the ups and the downs, I would say there was a lot of flurry and a lot of understanding that there was these issues were gonna get resolved, and none of them got resolved. So, therefore, the question going forward is is there an investment risk for us in 26? Yes, there is. I wish it were different. I wish things were further along. I wish we had an actual ceasefire, I wish we had agreed on you know something in regard to the US and rare earths and China, but we haven't. So this issue and getting on the international merry-go-round, I'd say has been a fail. So therefore, I'd say I hope things get better next year, but 2025 could have been a better year. , but it just didn't turn out that way.

Clem Miller: 10:47

What do you think, Clum? So so if you look at what the administration acts, how do they act, right? They act in the sense of on the surface trying to promote peace, and that comes from this personal desire for a Nobel Peace Prize. and I'm sure that the FIFA football peace prize is not going to be sufficient to quell that desire for a Nobel Peace Prize.

Steve Davenport: 11:21

That's one nice way to stick your neck out, though, and potentially, you know what I mean. You can understand why he did it. The head of FIFA, it takes the the whole attention away from him, you know?

Clem Miller: 11:35

Right. So that's number one. that's what's driving one thing that's driving U.S. foreign policy. The other thing that's driving U.S. foreign policy is everything seems to be driven by this desire for the U.S. to capture other people's minerals, right? You see a lot of that, you know, capturing energy resources, capturing mineral resources, either directly or through ownership stakes or what have you. So this seems to be driving a lot. And so when Putin's team, especially the head of their wealth sovereign wealth fund, Kiril Dmitriev, sit down and talk with Whitkop and Kushner, two real estate guys, do you think they're really talking about borders in the Ukraine? No, they're talking about future deals between Russia and the United States and reviving some of the relationships that existed, contractual relationships, joint venture relationships that existed prior to the Russian invasion of Ukraine, you know, in the in the oil and gas sector primarily, I would say. So that's what they're that's what they're focused on. They want the Russians want sanctions removed without them having to withdraw from Ukraine. And that doesn't sound like a negotiation. No, it's not because Witkoff and Kushner, you know, this is what they want. They of obviously they want their cut of that deal as well. , but you know, at the at the surface level, they want the U.S. to benefit financially from any kind of post-war relationship. And you've got, on the other hand, you know, Ukraine and and especially Europe trying to be more pure about this and saying, look, we you know we don't want our national security interests to be compromised by a U.S. desire to you know procure resources from Russia. So and and what what the US government is missing, what what the Trump administration is missing, is the fact that Russia, while it has a lot of oil and gas resources, is not a very large market. It's only the size, I mean, GDP-wise, it's only the size of Italy, right? In terms of GDP. So it's it's quite a small market. And and and it's it's really just a it's a a nuclear power, nuclear-powered gas station. That's basically what it is. People have referred to it as a gas station with nuclear weapons. And , and that's that's what it is. It's it's it's a resource power, um pretty much like pretty much like an Australia or a Brazil or or a Canada, , except um you know more corrupt.

Steve Davenport: 14:39

I mean, I combine this. We we came up with this concept of the international merry-go-round, and I guess I I still go back to I don't really have to get into the details of how you're negotiating a ceasefire and an ongoing peace with Ukraine. I'm not saying I could do it. I'm not saying you should do it. I'm just saying, as an investor, this doesn't seem like an issue that has much upside for us and seems like it's gonna have downside in terms of more military activity and more things to get U.S. troops and U.S. resources involved with. And my question is, is that is it gonna be better in 26? Is it gonna be the same as 25?

Clem Miller: 15:25

No, it's gonna, I think it's potentially going to be worse in 2026 because we're already seeing Russia engage in some hybrid warfare activity in Europe, in Poland and the Baltic states, and and in some Ireland, Ireland, , and some some other places in in Western Europe. And so that could lead to that could lead to some serious problems if they get out of control in 2026. I think in in Asia, in Asia, Steve, you've got increasing pressure by China on Taiwan, but then you have this new government in Japan that has expressed a desire to become more engaged, good word, in the Taiwan situation.

Steve Davenport: 16:20

So yeah, I mean that's what I guess what I'm saying is I would love to be able to lift up and say, boy, getting on this merry-go-round, we really were able to meet with people and do things and and really create what is a positive ground for future growth and future peace and future you know stability for world markets. And instead, I think what we did is we got some thrills jumping on, we got some thrills when the horses went up high, but then we went strictly down and the the the ride ended. And we asked ourselves, was it worth going on this ride? I I don't think that trying to beat everything in every negotiation, aka I really want a peace prize, is that the approach to foreign. What happens is you make a difference, you come up with an agreement, you work with a counterparty, and then you receive a result. And for that result, you then are evaluated. No result, no award, no result, no evaluation. So in my mind, what we've we've had is a is is in my mind something that is a distracted individual who has taken us on a ride to different places, but they haven't really. I would have preferred we focused on one solution and said, we accomplished the Ukraine, we accomplished the Gaza peace. Both things still remain open here on December 10th, 2025. And in my mind, the ride hasn't been much fun. A lot of people have been hurt, and I gotta say, I would have rathered a more consistent and disciplined approach. Yeah, is that unfair?

Clem Miller: 18:14

No, that's perfectly fair.

Steve Davenport: 18:16

And um I just think Mince, wrap it up for me, Clump. Yeah, take it home. Did you enjoy the ride? Did you enjoy getting on these? No, I you know, I enjoy talking about year. We felt like some of these things might happen, right? no, I I think I didn't you think the condos were gonna start to go up on the on the Gaza strip?

Clem Miller: 18:40

Oh, absolutely not.

Steve Davenport: 18:41

Okay, they have a lot of you. What do you mean? Everybody wants a one of you.

Clem Miller: 18:49

I you know, I I just think that as we go into 2026, certain things have to happen. One is that with regard to Russia-Ukraine, I really do agree with the notion that Europe should be taking the lead on that, and the US should be taking something of a back seat. Yeah, sell. I think we should be selling arms to the Europeans who can then decide to sell them to Ukraine. But I think it should be the EU, , European nations, those who want to participate, in working with Ukraine to try to bring about a settlement with Russia. So I think they should be the ones to do it. I don't think the US should be involved.

Steve Davenport: 19:40

I think the US should take a backseat on well I would like to to take kind of the the way that um Sadat and Begin got together, and the US was kind of the the ground where the deals were broken, or that the idea that they were brought together because of the influence of the U.S. Well, ultimately all of the other parties need to be there too.

Clem Miller: 20:05

Yeah, well, I mean the U.S. had to be involved in that one because of who had relationships with Egypt and Israel at this at that particular time. I think here in the in the Ukraine situation, in the Ukraine situation, I think that the US, you know, the US cannot be the broker of of a peace between Russia and Ukraine. Just can't be, right? It has to be Europe. This is it's a European issue, and the US can't negotiate over the heads of the Poles and the Baltic states and the Germans and others, right? They're the ones who have to take the lead in dealing with in dealing with Russia. And I think our role should be one of helping to support the Europeans. , I think a logical way to do that is to sell arms to the European. Europeans and have the Europeans then decide which ones to to sell on to Ukraine. But that that I think is a a logical position. That's not inconsistent, by the way, with um you know the whole sort of you know no f foreign entanglements MAGA kind of perspective on the world. I think that I guess I would say Steve, we didn't even we didn't even talk about Venezuela and Latin America, and I'm trying to keep the merry-go-round going, Clem.

Steve Davenport: 21:40

I'm not trying to talk about I don't want the kid to fall off and hit his head. I want the kid to go up and down on the horses for a while and enjoy the ride, and and we all benefit. I mean, I I have a good idea. I've enjoyed going on the merry-go-round. You want the kid to be crushed by the merry-go-round, fall off and be. I I think you know, it's it's it's all fun when it's somewhere else and it's somebody else's problem, but it worries me that we didn't address these issues well, and we're it it wasn't as serious and as as thoughtful as it could have been.

Clem Miller: 22:18

Yeah, an invasion, an invasion of Taiwan, more hybrid warfare in Europe, , an invasion of of Venezuela, these are things that could have serious impacts on on financial markets, and I think we need to watch them carefully.

Steve Davenport: 22:35

Yeah, I mean I think this is a good point for us to drop this. I think most of the skeptics followers realize we're a little bit worried about this. We're it's unfortunate it didn't go well, but it did occupy a lot of mind space. And again, this is one of those things that we probably should have all just hit the mute button and said, this isn't really going to happen, so why invest the time and energy to understand and evaluate it? I think we're a long way away in all those situations to resolution. And I think we need a different set of values and a different attitude from our negotiators in order to really negotiate an ultimate solution to some of these problems. The merry-go-round needs to slow down. We need to get off, we need to sit and talk. And I think then we'll try to get with prioritization of the Ukraine first, the Gaza second, and then Taiwan third. I would love to see us try to approach things in a more holistic and thorough way so that we could get a solution that really matters and stays around for a long time. Yeah. So okay.

Clem Miller: 23:42

Well, thank you, Steve. And , and this concludes this episode of Skeptic's Guide to Investing, and we're going to be doing some more um short episodes about about international about investing and the end of 2025, the beginning of 2026. So thanks everybody. Bye.