Team,
Check out my interview today with Maria Bartiromo on Fox Business.
I discuss the Big Four Beef Cartel—comprising Tyson, Cargill, and Brazilian meatpackers JBS and National Beef—and the upcoming Department of Justice trial against Agri Stats, which is alleged to have aided broader Big Meat industry collusion, telling large meat processing companies what higher prices to set.
I also talk about the Iran Terror Premium, a persistent geopolitical risk component that has been embedded in oil prices for decades.
I previously wrote about breaking up the Big Four Beef Cartel in The Hill, about Agri Stats and Big Meat in Newsweek, and about the Iran Terror Premium in the Wall Street Journal and in a 13-page report titled “The Iran Terror Premium: How Iranian Geopolitical Risk Raises Oil Prices and Slows Global Growth.”
I always enjoy reading your comments. Please share!
Peter
TRANSCRIPT
MARIA BARTIROMO: Joining me now is White House Senior Counselor for Trade and Manufacturing, Peter Navarro. Peter, it’s good to see you.
DR. NAVARRO: Hi Maria.
BARTIROMO: And I look forward to you connecting the dots to what we’re talking about in terms of this backdrop and Iran and what has taken place in terms of markets. Also want to get into a little of this White House attempted coup constantly for the President. But you say this Iran conflict could actually lower energy prices over time, saying a longstanding Iran terrorist premium has been keeping oil and gas costs at artificially elevated levels.
DR. NAVARRO: Maria, the historical context here is really interesting. It was Madison and Jefferson who first cracked down on the Barbary pirates. They wanted tribute for ships to sail around, and then a century later Teddy Roosevelt sailed the Great White Fleet, established this doctrine of peace through strength. This is where we are now with a fourth president, a great President, Donald Trump doing the same thing. I can’t tell you what’s going to happen in the short run, but here’s what’s going to happen in the long run, and it all works for the United States and the rest of the world. What Iran has shown unequivocally is that everything that comes out of that Strait [of Hormuz] is going to move away from the Middle East, whether it’s oil and natural gas, helium, and aluminum. What’s interesting is that the U.S. is particularly well positioned for all of that. We have a strong position producing both aluminum and helium as well as, of course, petroleum. And that’s the long game. The other thing is I think the Saudis, Qatar, UAE, Kuwait, they all have to understand that there’s going to be boots on the ground in that area. It’s got to be their boots because it’s time for them to protect their interests. So, that’s where things are going. And if Iran thinks it can play the long game, it’s not going to work because the long game basically takes them out of the whole equation, and that’s where things are headed right now.
BARTIROMO: All right, so longer term you’re expecting oil and gas to come back. What about the latest PPI and CPI reports in terms of the conversation we’ve had around the headline price moves, but you say they’re not signaling a broad inflation surge. I mean, look, this President and the Republicans have to keep their eye on the midterm elections, as well. And before we went into the Iran conflict, it was all about affordability, right?
DR. NAVARRO: Right.
BARTIROMO: But these increases have been driven by energy. Core pressures are more subdued, but doesn’t energy create a spike of inflation even if it is just temporary?
DR. NAVARRO: Well, let’s start with that. Both Greenspan and Ben Bernanke, when they were managing at the Fed, had oil price shocks to contend with, and both of them were consistent to say that you never raise interest rates in response to a supply shock, and you could well lower interest rates because the supply shock of oil is very different from say, demand inflation. If you look at what the legacy media says every time a report comes out—and Maria, you cover this—every one of these reports that come out, they’re always like running around with their hair on fire, screaming inflation, recession, whatever. But the data—what the data tells us, Maria, very clearly is that the core rate continues to trend down towards the two-percent target. Manufacturing has begun a robust recovery as one would expect from the Trump tariff policies that are attracting a lot of investment onshore. And we as an economy are well positioned—I think one of the reasons why the market has been so resilient and bullish is because traders vote with their dollars and they understand what the underlying elements are. We’re going to have to watch this carefully. The lived experience of Americans still is troubled by some of the things going on. I’m doing a lot of work with the Department of Justice and Brooke Rollins over at the Department of Agriculture working to deal with higher meat prices, big beef, pork, chicken. Sure, drought’s a big problem. The Biden administration did us no favors by shutting down a lot of grazing land. That was, like, catastrophic for ranchers. But there’s a Big Four cartel: Tyson, Cargill, and the two Brazilians, JBS and National Beef, who have a chokehold on the middle of the whole supply chain there. And the Department of Justice Antitrust Division is cracking down hard on that now, and that’s going to make a big difference.
BARTIROMO: Yeah.
DR. NAVARRO: So, the midterms are coming up, but inflation is going down, and we’ll see what happens, as the Boss says.
BARTIROMO: Well, I mean that DOJ investigation into, you know, quote unquote Big Meat, alleging that there was data sharing used to coordinate pricing and weaken competition. You say this acted like a data grinder, giving companies insight into what their rivals were doing, and that’s why they were able to raise prices. Is that how you see it?
DR. NAVARRO: Maria, I’m an economist and an econometrician, which is statistics. I’ve never seen anything like this Agri Stats case. It’s going to trial on May 5th. What you basically have is this high-tech data aggregator that’s contracted out with all the different players in the beef and meat industries. And what they do is they collate all that data from individual sources and then they allegedly spit back monopoly prices. They tell the cartel what prices to set. I mean, it’s unbelievable. And good for the Antitrust Division of the Department of Justice for cracking down. That trial is going to be really interesting.
BARTIROMO: All right. We’ll be watching that one. Peter. Great to see you this morning. Thank you so much.
DR. NAVARRO: All right, you take care, Maria.
BARTIROMO: Peter Navarro joining us. Stay with us. We’ll be right back.
