The Market Is Mispricing The Inevitable | Peter Tchir
Summary
ProSec (production for security) assets look mispriced — most asset managers still haven't accepted the end of globalization, and governments are using their wallets more directly to support domestic production.
Tchir expects Kevin Warsh's Fed to look past BLS data and skip hikes; today's inflation sources (Iran war, AI data-center buildout) won't respond to rates.
10-year US yields look range-bound at 4.5–5%; Middle East buyers are fading, and high-grade corporates like LQD compete with Treasuries for safe-haven capital.
Processing and refining drive commodity returns in the ProSec era — Australia just announced its first new refinery in 60 years; the US hasn't built one in 40.
Cheap Chinese compute from distilled LLMs threatens OpenAI and Anthropic's economics, putting the over-extended AI capex trade at risk.
Adam Taggart's takeaways
- Top takeaway As host, Taggart structures the conversation around Peter Tchir's three top themes — the Fed under Kevin Warsh, the Iran war and oil outlook, and the 'ProSec' production-for-security thesis — while drawing on prior guests such as Michael Every to frame a mercantilist, de-globalizing backdrop
- He steers toward actionable investing ideas, prompting Tchir to name specific vehicles (TUA, LQD, TLT, SOXL, EPOL, GPZ) and to revisit themes from earlier Thoughtful Money interviews, including TC Energy's CEO
Peter Tchir's takeaways
- Top takeaway Tchir pitches his 'ProSec' (production for security) thesis: de-globalization is inevitable, large asset managers remain in denial, and the US government is finally using its procurement power — DOD data centers, 100% drone tariffs, seven-year defense contracts and the MP Materials price floor — to underwrite domestic capacity
- He argues the Fed under Kevin Warsh will not hike because today's inflation is driven by the Iran war and AI/data-center capex rather than loose policy, and he expects Warsh to broaden data inputs beyond official BLS metrics toward PCE, Trueflation and real-time rent signals
- He prefers long-dated US hyperscaler corporate debt (Google, Amazon, Microsoft) over Treasuries, arguing these firms now function like high-quality sovereigns and offer excess spread in the 6% area on long-dated paper — the LQD-over-TLT trade he is 'incredibly comfortable' with
- He sees the biggest winners of de-globalization as commodities processors and refiners rather than raw extractors, noting the US has not built a brand-new refinery in roughly 40 years and that China controls about 90% of rare-earth processing despite only about 60% of extraction
- He warns that cheap Chinese AI compute via model distillation is a real threat to US AI valuations and could trigger a broader market reckoning given AI's outsized share of market cap and capex — he wants to be underweight semiconductor-leveraged ETFs like SOXL and overweight energy and high-quality corporate credit
Kevin Warsh's takeaways
- Top takeaway Tchir describes Kevin Warsh as a 'new sheriff in town' at the Fed who has signaled that inflation control is his priority but who is expected to broaden data inputs beyond official BLS measures (e.g., Trueflation, Zillow real-time rents, PCE)
- He expects Warsh to run a more adaptive balance-sheet policy — willing to sell Treasuries when yields fall rather than mechanically buying $25B a month — and argues Warsh's reaction function will not differ much in direction from prior Feds, just in the inputs