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- [00:00]
A
Rip it though. We got to rip it. It's a tight show. We have actual work to do and we're going to start before Nick, we start the timer. I'll just tee up this first topic and then we can use the full five minutes to actually discuss the take. So this is consumer prices rose 3 1/2% annually in June, less than expected as energy prices eased. And then if you were to scroll down a little bit, there's a quick blurb about how this was the fastest deceleration of inflation in year over year in the past six years. And so I'm going to hand it over to Brian. Let's start the timer. I want to hear Brian's take. I'm going to give him the hot seat. First official take on SVN signal or noise.
- [00:39]
B
Brian, first take, big honor. Appreciate it. Jackson. I'm going to go with this is noise for a number of reasons. The main one being that people are celebrating this. I guess the markets are celebrating it as a cooler print than was expected. And you know, we talked a bit about this maybe a few weeks ago on the last trade around. Kevin Warsh coming in as Fed chair and really having this game plan of reassessing or re underwriting how they even measure inflation and using some different measurements in order to basically continue to manipulate the data, which is what has happened with CPI historically for basically the past 50 years. So looking into this reading is really, you know, a short term market participant kind of thing. It's reading the Fed tea leaves. What are they going to do next? Does this give them enough sort of cushion or leeway to potentially cut rates? But in the grand scheme, the longer term trajectory, if you're a long term allocator, this is noise. Inflation is going to remain hot and heavy, sticky, persistent. We'll get to this later in the show. But you know, oil spiking back up, we're still at war. All of these things have longer term knock on ramifications outside of just you know what this print is. So I'm going to say it's mostly noise because the longer term trajectory is unchanged.
- [02:06]
C
Is there a version to go? Like an insane amount of noise? Because if you scroll back up, producer Nick I don't even know how to like interpret the top part about consumer prices rose 3.5% annually in June, less than expected and lowest print since a reduction as Jackson alluded to in six years. What happened in 2%? I mean I think we all acknowledge, anybody listening? 2% doesn't make sense. But 3.5% is coming in under. The reality is, to Brian's point, like it's, it's starting to become the layup for us. Last week we talked about people under the age of 30, 50% are living at home and they position it as a positive. And then here 3.5% is supposed to be, you know, clapped and applauded as something good, when in reality these things are insanely pervasive to the market, to economies, to individuals. And CNBC is saying that it's a good thing. This is the best example of why we're doing this show.
- [03:06]
D
Yeah. As of right now, it's been 64 months in a row with inflation above 2% and according to CPI, prices have rose, risen over 26% when it should have been 11. So that's a massive difference and people can't really feel it just because it's marginally, marginally over 2% on a monthly basis, at least based on what CPI says. And so it's just a little bit of a frog boiling in the pot. And it's a lot of signal that there's actually this being celebrated is a way that, you know, they're going to continue to have this above 2% and potentially even move up the target to be between 2 and 3% or 2% on a long term basis.
- [03:53]
A
Now what if we said it was signal? I mean, is it signal to the extent that we're now getting some air cover by we, I mean not myself or any of us, but I mean the people who are pulling the strings on monetary policy? Is this finally air cover for potential easing with really the, let's say the guise of needing to get the fiscal house under control? Brian, is there any credibility to that aspect? Or do you think that this is truly all noise? Is there any signal to be discerned at all from here?
- [04:24]
B
I mean, you could spin it like that. Like I said, like if you're, if you're thinking about this from the sort of Kevin Warsh angle, then it's signal in the sense that it's, it's sort of the next cog in his plan to be able to ease rates, they needed a softer printer. And whether those data manipulations I referenced are already baked into this number or if it's just happenstance is kind of besides the point, I think. Yeah, I mean, if you wanted to spin it as signal, it's like this is a signpost or a data point that Kevin Warsh, while he came in and tried to be very sort of objective, data driven. It was mainly A credibility push to say, this is what I'm going to do, but I'm going to follow the data and then ultimately he's going to be able to give himself some cushion to cut rates, because that's what needs to happen ultimately. One other thing just to add to
- [05:19]
C
the signal is whatever the CPI is, just add 10%. As crazy as that sounds to most people, it's much closer directionally than to anything that they're projecting. It's kind of like, so for fed funds rate, you add whatever on top. It's like whatever they're saying CPI is, it's plus 10%. And that's effectively what inflation is. On a month over month or year over year basis, it's much closer to 13. Oh, shit.
- [05:43]
B
We did pretty good there.
- [05:44]
A
Yeah, that was, that was good. All right, so we gotta move on to the next topic. Nick, if you want to pull that one off, we'll go to oil surges, the most since 2020 reflecting, bet that the straight won't go back to normal. And so before we reset the timer here, just to give some context, right, there's a war. For those of you who are not aware, there's a war in the middle, in the Middle East. And you know, truthfully, I'm, I'm, I really have a hard time keeping track of what's happening.
- [06:14]
B
Jackson, I don't think you're aware.
- [06:16]
A
I mean, I'm probably the least informed of the group here, but you know, there's escalating tensions in the Middle east and I, I'll give my take now, Nick, if you want to tee things off on the timer. So look at the end of the day, if you're an investor. So I'm wearing the investor hat when I give this take. Ultimately, this is incredibly noisy. I think we've probably seen dozens of these types of headlines over the past three months, or perhaps longer if the war broke out in February. And so this, I think, is noise to be ignored if you're an investor. And the opportunity that really could come from this is if there is a drawdown further in Bitcoin's price related to just geopolitical macro uncertainty. We know historically that Bitcoin tends to perform well after these types of events. And so I think it's a good time to be buying Bitcoin, especially if we were to go lower from here. But then the same thing could apply as well if you're someone who's sitting in the traditional finance world and allocating predominantly to equities. As an example Any sort of short term correction due to any sort of escalation I think will be resolved in short order. So I think this is incredibly noisy, but what do you guys think?
- [07:32]
C
I think they're signal, I think at the end of the day, oil, gold, Bitcoin, they're commodities, you can't produce them. Simply there's proof of work required. And in a world where there's more monetary units being inserted, the price is going to go up. I think this lull we reached six months ago roughly at 113 or $15 a barrel. And then we've kind of been hanging around 70, 80. And so in the context of the past year, this appreciation, even though in a short time frame it's significant, in the broader past year it's much lower than what we had when the conflict started. I think independent of where the conflict goes and we don't necessarily know because they keep going backwards and forwards. The reality is when you go into this new world that's multipolar and then especially when you're starting to create new settlement layers that are going against another fixed commodity, so not dollars for oil, but gold, you naturally going to have a repricing of energy independent of the AI narrative and the energy requirements there. And so I think individuals just aren't prepared for that. Whether it's you're driving a diesel truck or you think about commutes or you know, just especially on the day to day of individuals that hits the pocketbook. We saw that when it hit anecdotally people going to go get, you know, they have $25 set aside for their weekly know commute and then that increase is significant for them and then that obviously transpires throughout the whole global economy. So I expect this to continue to go up. Maybe in the short term it may not, but long term, fully expect an oil of a barrel of oil to be over $100.
- [09:09]
B
Yeah, I would say this like specific headline and what we've seen over the past several months in terms of sort of the whipsawing of we're at war, there's a peace deal, oil up down, like those specific headlines are you could view as noise, but partially to Michael's point, like the longer term story or narrative that's formed, there is signal to be gleaned there in the sense that financial markets are effectively in a stranglehold to these dynamics, whether it's the status of the war, the price of oil. And so I think the signal to gather from this is that there is, you know, whether it's commodities, hard assets, input prices that are directly downstream of whether we're, whether or not we're at war, whether or not the straight of Hormuz is closed. And so I think the that realization or that recognition that financial markets, you know, like you always talk about Jackson, it's not like, you know, your PE ratio doesn't matter anymore, like the S and P is moving on this stuff too. And so it's really like we're in this clown world of financial markets where it's like the geopolitics is what actually matters. We're much more sort of macro oriented in terms of the fluctuations of the market than micro oriented and business fundamentals, that kind of thing. So that's a signal to me is like this is the world we live in now. But each successive headline itself is noise. Because it's like, well, we're going back and forth here, we're at peace, we have a deal, we don't have a deal, they want to make a deal. So that, that part is noise. But if you parse sort of the longer term story here, what actually matters, it's oil, it's hard assets, it's commodities like that that is signal to me.
- [10:52]
D
Yup. I think that to further that point, each specific headline is noise. You can't trade the market unless you literally work for the government and have inside information on what they're going to do with oil. And the signal is that the world is going to continue to Balkanize and will continually be a degradation of the, you know, essentially uniparty globally. And so we're going to continue to be in a multipolar world where energy is going to become more and more valuable and have a continued premium from here.
- [11:27]
A
All right, we got some time back. Let's move over to the next one here. Shot clock has got me. And I think producer Nick is eating lunch or something. Those hands aren't moving quick enough. All right, so we got the next topic coming up here. The super rich aren't just buying mansions, they want the entire block. So before I give my take, we'll just set the stage here. This article is from the Wall Street Journal, was published yesterday about the, you know, call it the.01% or 0.1% of the United States specifically and their strategy of landmaxing, which is their quest to acquire as much land as possible. Some for inflation sake, some for privacy sake. And I'll go ahead and give my take now. So I thought this one was particularly interesting because the culture and the terminology that has arisen on Twitter or is making its way into the mainstream. I don't know what to discern of that if that signal noise. But I think this article is signaled because it actually supports a lot of the different topics we discuss on our shows, on our research. If you really dig into the data here, this article talks about the fact that in a lot of markets in the US Things are starting to cool off from a housing perspective. But if you were to look specifically at ultra luxury homes at the ultra wealthy, it is probably the hottest market on record. So it naturally supports the divergence that we talk about. Post 1971, post 2020, you have all this liquidity and money entering the system and it really is advantageous to a select few in the system. And then I think the other aspect of this as well is at the end of the day, why are people doing this? Well, they're actually buying properties. So there's a couple of cases here in Palm beach, they're buying the property and then buying adjacent properties and there's a scarcity component. So they're buying property that they perceive to be scarce in areas that are scarce. And then they're also doing it because it was cited in this article for inflation protection. So I think there is signal to the extent of this is just really speaking to the fact that there is this growing wealth divide. And if you actually click into the comments, you don't need to, and then I'll pause is most of the comments are about eat the rich, tax the wealthy. Wall Street Journals typically has been more of a conservative publication. And so I think it's interesting that we're starting to see these narratives or these socialist ideals bleed into this publication and their readership. Because at the end of the day, this is where it all goes, right? The end of the day, this is, you know, the Cantillon effect is leading to this upheaval in the social fabric of the United States.
- [14:00]
C
Yeah, I mean, I think this is a lot of noise. It snuck into the list. I didn't know we were going to have it on there. Jackson somehow turned into a real estate thought leader. I'm not sure if he's looking to buy a house or somebody to deposit, but I've been seeing on Twitter he's talking about it, so I guess I'll talk about it here. I don't think any of that's true on like wealth preservation. I think these people are buying that much real estate because they want to be away from everyone else. Because at the end of the day, with that disparity to your point, you don't necessarily want to be. You're so far in your cultural divide and everything else around it. It's why that K shape you see, like Discovery Land is a great example of these like ultra premium places where people will buy acreage and it's very close community and that's always existed. I think that individuals are just preparing for that. They don't want to be near anybody. But I think these people have much better places to park their capital. But either way, I think people really care. If this was a topic we should have covered, it's like, what does it mean for the housing market softening? How does that not really translate? Because of the notion of interest rates are still super high, people are stuck. It doesn't really equate or reflect it in people's ability to purchase a house even though the price is softening. But I don't necessarily know how many people care about the ultra rich like Jeff Bezos buying a block of Palm beach land.
- [15:17]
D
I think this. Go ahead,
- [15:20]
C
o'.
- [15:21]
D
Brien.
- [15:22]
B
I was going to say, I mean, I think I'm more on Jackson's side of the house in that it's not like people caring about these billionaires and what they're doing, but it's in sort of an educational path for people to understand scarcity. And so that's the signal I would take from it is like, well, why are they doing this? Michael, to your point, they maybe could park their money in better things, but do they want to buy bonds? Probably not. Do they want to buy the S&P 500? Do they want to stock pick in a hyper competitive overvalued stock market? Probably not. The one thing I think they understand that works is scarce real estate. So whether it's beachfront or otherwise, near lakes in the mountains, to your point, it's away from things, but it's scarce in the sense that there's only so many places that are that far away from a city center or population. So I think it's an illustrative sort of discussion that to Jackson, your point in this mainstream periodical, like the discussion of, well, why, why is this happening? It's because this is scarce and it's a way to preserve and combat inflation. So I would, I would take signal from it.
- [16:27]
D
Yeah, I think that there's signal, but I think it's more on the barbell side of things. I think that they probably are doing it a little bit less so from speculating on the actual land value and just want to live there because It's a, you know, nice place to live in Palm Beach. And then I would say on the other side of the barbell, we've seen land, the OG land maxer, Bill Gates do this with farmland for a very long time and he's like the largest farmland owner in the U.S. i think that this is going to continue to be a barbell situation where you either want the nicest real estate or completely land in the middle of nowhere that could be developed as the robotics continue to get further and further out in the productivity curve. Just because they're going to be able to create a lot of the buildings that we haven't been able to with, you know, the productivity constraints of humans.
- [17:20]
A
Perfect. Good job.
- [17:22]
B
Well done, boys.
- [17:23]
C
This just goes back to we're gonna have people vote on this stuff because again, I don't, I'm happy to be wrong, but I don't know, who cares about people buying mansions in Palm Beach.
- [17:31]
A
Hey man, we're over time perspective. I think people care about us not talking when we're over time. All right, so next topic here, New York to impose the country's first statewide moratorium on data centers. The order will pause state permitting for new large data centers and direct state regulators to create standards that address environmental impacts, energy demand, water usage and other factors. The governor's office said, Liam, you flagged this one, so why don't I give it over to you first to present your take on the New York State data center moratorium.
- [18:04]
D
I think that this is just showing that we're going to continue to move towards different states that allow for, you know, building businesses and being productive and try to at least slow down the rate at which new regulations are put up. And there are going to be other states that, you know, or New York is the prime example that try to move more towards Europe and socialism and trying to prevent progress. I think that this will only become less or more and more prevalent as the midterms come up. And it's extremely popular to be anti progress as so many feel left behind by inflation, etc. So I think this is a signal that it's going to continue, although it's just not a, a great trend that we like to see.
- [18:48]
B
Yeah, I would say on the surface this, you could view it as noise because it's kind of to be expected. Like New York has historically been very against or you know, aggressive against like bitcoin miners and other forms of energy capture or usage. And so it's not entirely surprising that they would be one of the first States to come out against the data center infrastructure build out. But I think the. The signal takeaway to me is. Is kind of to your point, Liam. Like this is popular in the sense that the average person who's not, you know, super in the weeds of using AI tools and getting a ton of productivity benefits from it have a very negative view of AI in terms of, you know, taking jobs and the robot overlords coming in. So this is a popular narrative for politicians to grasp onto. So I think there's signal in the sense of the trajectory from a political perspective of there's going to be a lot of support for things like this, unfortunately, sort of, you know, ultimately it's a bad thing for the people that are not going to benefit from these things. But in sort of the near short to near, you know, near term it's a political tailwind for someone who's sort of capturing the anti AI ethos of a lot of America, frankly.
- [20:12]
C
Yeah, I mean this is a hard one because energy markets are one of the least free markets in the US when you think about the grid, you have west and east and then you have Texas as its own grid and a lot of power production and a lot of mining production went to Texas because of its deregulated grid. It doesn't mean there's no rules, it just means it's a free market for energy and there's a lot of different structures that come from it. I say this is like nuanced and hard because if you start from that lens, then you can let a free market flow on how do you manage the politicians, how do you manage infrastructure, and how do you go and do the right process to build the right data centers in the right place that you can get local communities, municipalities and everyone on your side or not on your side if you don't have a good value prop in providing more GDP to that local market. This is the complete other side of it where you have from first principles, just not a free market in energy production. And then you already have what's happening in the coast, specifically California, New York, where you take this lack of understanding of a lot of markets, including energy, and then you put on the narratives around loss of jobs, data centers from water as an example, which it's empirically not true about the usage that takes away from it. And so you end up where this is just going to continue to occur. It's sad to see. I don't really know the example. We were at a, some, some deal where Ron DeSantis was talking about this Specifically and even like they were thinking about it and Florida's pretty, you know, conservative and open from, from a market competitive nature. And they were even talking about we don't want data centers here. And so I think there's just like going to be a lot. There's so much nuance that I don't necessarily know how this is going to reconcile itself, but it's not great if you don't, if you have this effectively imposing their will on what can and can't be done from a GDP perspective in their local region.
- [22:05]
A
Yeah, I would actually love to see the numbers behind the water usage for data centers relative to other major industries, just because I know that was one of the key points cited by the Governor's Office of New York as to why they were doing this as well as just other environmental concerns. But yeah, I mean as we know as a team here and for people who are kind of on the frontier of using this technologies, they're incredibly beneficial. They make I think people more productive. And it remains to be seen how it's going to impact the labor market and the workforce. And so I think that this is a, is a net negative. But I'm also not surprised to see that news like this. And Michael, to your point, I entirely forgotten about that presentation or discussion down in Florida. And so I think it's going to be a pretty common theme. I don't necessarily know how it resolves, but we'll have to monitor the situation here and see what else comes of it because this is probably going to be one of the, the first, if not, you know, many, many headlines like this going forward. To wrap things up, the last topic will be the Bitcoin Bank Adoption Index. So Nick, if you could just click on that image there so it can be a little bit bigger on the screen. This is from Fong Lee, his post the CEO of Strategy. I'm gonna try to read it.
- [23:23]
D
The.
- [23:24]
A
The text is a little small. Introducing the Bitcoin Bank Adoption Index. Adoption of Bitco related digital asset ecosystem across major banks and financial institutions is accelerating but still early at 32%. Methodology and updates to follow. Institutions with questions, corrections or additional public information can reach out to their investor relations team. So for anyone who is on the podcast and not on video, what we're looking at here is the largest banks across the world. You got Fidelity, bny, Goldman Sachs, State Street, Barclays, bank of America, ubs, et cetera. A lot of different banks. And they're being measured across trading, trading and custody products, margin and leadership and Essentially how forward or how behind they are as it relates to Bitcoin and digital asset adoption. Now, Brian, I'll hand it over to you first for your take, since this is the one of the topics that you had flagged.
- [24:15]
B
Yeah, I mean, I think there's a couple angles to this. I think coming from strategy, it's a bit noisy in the sense that, like, this type of research or analysis, like, doesn't really have anything to do with a bitcoin treasury company per se. I will say the data itself to me is signal. There's a firm, TEFRA Digital, who had previously been putting out similar charts or infographics over the course of the past year or two years. And I found a lot of signal in that because it's a nice way to track sort of institutional adoption of Bitcoin. And as you can see, like, we're still, you know, we, we say this a lot, but we are still early in this process. You know, we had the ETFs go live over two years ago now. But in terms of trading in custody, spot, spot trading, like that stuff is all super early in terms of these institutions turning it on. But at the same time, it's, it's important to recognize this because we are in a, you know, proverbial bear market sentiments down. But a lot of these institutions are still moving forward with a lot of their plans in terms of turning this stuff on, which I think is very constructive. And shout out to Fidelity being at the top of this list with the best score, they've been around the longest, they have the most tenure in terms of these types of institutions being involved in Bitcoin. So directionally I agree with it because Fidelity should be at the top of this list.
- [25:44]
A
Yeah, I can go. I would say this is signal. I think the main signal to discern from this would just be the fact of how most of these institutions are way, way behind in terms of offering any products for Bitcoin and the digital asset space. So, Brian, your point? Fidelity is 71% scored on this index across all those different criteria. And then you have, the lowest on this list would be RBC, the Royal bank of Canada, 13%. Most of these firms fall somewhere between the teens, 20s or 30s percent. And so just a testament to the lack of understanding, the lack of focus from these institutions and ultimately the gap that remains and the opportunity for firms that are leading in the space. So I still, you know, I think the silver lining here is why it's poor sentiment. Bear market people are not feeling great about the Bitcoin price and institutional adoption. Well, you can see here that really institutional adoption hasn't shaped up or hasn't materialized in any significant way yet. So I think there's a lot of signal to be gleaned just from how far these firms are from actually, you know, being active in the market.
- [26:46]
C
Yeah, agreed. We covered this yesterday on final settlement. I think that all these firms coming into this space, it's not really evident to most because it's happening behind the scenes. Maybe they haven't even turned on the full liquidity, but they're working on different initiatives and you wouldn't historically have seen that in a drawdown simply because the market blew up and it was too volatile and something nefarious happened and it kept a lot of people on the sidelines. So the overarching concept of large, the largest financial institutions turning on various digital asset products is a big signal because ultimately that's just the liquidity going to come in when the interest comes back 100%.
- [27:22]
D
Agreed. This is signal, just the fact that they are very, very slowly moving towards having these actual products come to market, even though it's taking a longer time than many would have hoped. There's going to be more acquisitions given the amount of, you know, bureaucracy that goes into these firms and the ability for firms to the need just for increased regulation. But some of these are noise. Just like products like blockchain native tokens and, and money slash yield, which is probably their digital credit type preferred instruments that they're trying to have out there as well. So I think that directionally there's a lot of signal in this though.
- [28:07]
A
Yeah. I mean even just what I find amazing on the etf, bitcoin trading, bitcoin custody standpoint. Right. Like Liam, to your point, a lot of these firms, probably none of these firms are ever going to offer digital credit, but a lot of these firms are going to end up offering bitcoin custody, bitcoin trading, and at a minimum, ETF and other structure or other securitized products of bitcoin. So it's still shocking to me that these firms have seen several years of ETF flows play out of several years of firms like Fidelity leading the charge and seen significant adoption and still have remained on the sidelines. So we'll have to monitor this going forward in terms of how this will shape up over the course of the year and into next. Well, I think that will conclude the inaugural episode of Signal versus Noise. Any parting thoughts, gentlemen? Before we wrap up, I want to just mention that for anyone who does want to follow? I know it could be hard to carve out time in the middle of your day to catch it live. So if you want to catch the episodes after the fact, they'll be published Wednesday and Friday mornings, 9am Eastern. You can find the YouTube channel Signal vs. Noise live on YouTube and also be posted on the On Ramp Media podcast feeds. Gentlemen, any final thoughts here?
- [29:25]
C
Have a great day.
- [29:26]
B
Good first rep. We were. We were timely with our takes and like we said at the jump, we want to get the audience involved in this. So whether it's commenting on the streams themselves in terms of topics you want for the next show or on the YouTube page, we'll figure out a way to bubble up the best suggestions and get those involved as well.
- [29:47]
C
I think the easiest way we do it and we hold it to Nick. We're going to give him the links. We get 10 links the night before and then we retweet it in the morning and we'll share it internally. Internally. So it might just be our team that's liking it, but whatever gets the top five likes that'll be objective what we cover.
- [30:01]
A
Wow. Michael's really upset about covering the landmaxing article today, but we'll go with that.
- [30:07]
C
I'm not going to lie. I don't like it.
- [30:10]
A
All right, man. It's going to be okay. All right, gentlemen, let's get back to work.