Podcast Summary

The Wolf Of All Streets — Scott Melker

Episode: Bitcoin & Gold Stall As Markets Brace For Rate Cuts! Are All Time Highs Next?
Date: September 15, 2025

Overview:

This Macro Monday edition, hosted by Scott Melker, dives deep into the global macro landscape as markets prepare for the much-anticipated Federal Reserve rate cuts. With Bitcoin and gold both pausing near historic highs, a panel of market experts probes the likely outcomes of coming policy shifts, the “wealth effect,” the divergence between Wall Street and Main Street, and the perils lurking in the shadow banking system. The conversation is lively, skeptical, and rich with actionable insights for investors in crypto, equities, and commodities.

Main Theme:
Will the expected rate cuts unlock new all-time highs for risk assets, or are markets (and the Fed) setting up for a reversal? How do these dynamics interplay across traditional assets, Bitcoin, and gold — especially given today’s financialization and underlying economic frailties?

Key Discussion Points & Insights

1. Market Outlook: Rate Cuts and Asset Price Expectations

[00:01–06:10]

• The market broadly expects a 25 basis point (bps) rate cut at the September 17th Fed meeting (“CME FedWatch puts it at 94.2% odds”).
• Mike: “It’s unusual for the Fed be cutting at the top of an equity market... It still pointed out how expensive stocks are versus bonds.” [01:42]
• The “wealth effect” is front and center: stimulus and inflated asset prices foster more spending, but underlying job data is weakening.
• Ana (via Mike): Retail sales expected to drop month over month; continued wealth effect highlighted as a fundamental driver.
• Consensus: Rate cuts are all but certain, but the Fed is likely to remain “less dovish than the market expects.”
  • Scott: “This will be the most non-committal rate cut in history just to confuse people as much as humanly possible.” [05:49]
• Dave: The direction of risk assets (stocks, Bitcoin) post-cut depends on Powell’s press conference — if he’s hawkish, expect short-term pain; if not, perhaps renewed risk appetite. [06:22]

2. Underlying Macro Tensions: Commodities, Deflation, and Financialization

[06:22–21:00]

• Discussion highlights the inflation-adjusted prices of commodities:
  • “Commodities are deflating assets — we create more with less every day ... the only main commodity that doesn’t deflate is gold.” — Mike [08:17]
  • Corn yields, oil production, and other efficiency improvements have made most commodities long-term deflationary.
  • Copper and crude oil discussed at length: prices versus production costs, global demand trends.
  • Dave: “There’s twice as many dollars as there were five years ago—charts don’t tell the whole story if you don’t adjust for money supply.” [07:41]
• Wealth effect revisited: Markets are financialized; the Fed is “the arsonist in charge of putting out the fire.” Jobs data is increasingly unreliable, revisions are large and lagging.
  • James: “The Fed doesn’t care about the stock market. Unless it crashes. Then the whole economy crashes.” [10:18]
• James: “I expect three rate cuts this year. The data is coming in worse and worse… except for inflation.” [12:23]

3. Valuations: Disconnects Between Wall Street and Main Street

[13:33–21:35]

• Chart reviewed (around [13:59]): Corporate profits and equities as a % of GDP are at record highs, but wages and income as % of GDP are falling.
  • Dave: “This chart shows the financialization of the economy… When you make money cheap for too long, this is virtually guaranteed to happen.” [17:06]
• Why are US long-term rates (10- and 30-year) so much higher than in Europe and Asia? Reserve currency status, policy divergence, and demand factors all play in, but panel members admit there’s no rational (macro) explanation.
• Pushback between Mike and Dave over whether the US stock market is as overvalued as Mike asserts, especially versus global peers and gold.
  • Mike: “The S&P 500 vs. gold ratio is breaking down… every time Fed funds drop, stocks usually underperform gold.” [18:15]
  • Scott: “Gold and Bitcoin — both haven’t been as overbought as you would expect at peak enthusiasm.” [04:02]

4. Crypto & Stablecoins: Regulation, Shadow Banking, Tokenization

[21:06–32:40]

• The group muses on the significance of Bitcoin and gold as “hard assets” in a world of “easy money,” and the limits of expanding supply.
  • “Less is more. You can’t create more supply in Bitcoin. You can’t (meaningfully) do it in gold either.” — Dave [21:06]
• UK’s plan to “cap” stablecoins ridiculed as self-defeating and emblematic of a regulatory dead-end. US Dollar stablecoins expected to continue booming.
  • Mike: “$2B in 2018 is almost $300B now [in stablecoins], going to $3 trillion.” [23:29]
• James’s Newsletter – Shadow Banking: $240 trillion in capital is “sloshing around” private, unregulated corners of the financial system (hedge funds, PE, private debt funds).
  • “Sometimes it’s predatory, high-yield lending… That’s how private credit works: less oversight, more risk, not enough transparency.” — James [26:34]
  • Concerns over tokenization of opaque private credit, possible shift in risk to retail investors.
  • James: “Just be careful. You’re getting better yield, but you don’t always know exactly what you’re getting here.” [29:53]

5. Banking Risks: Unrealized Losses, Yield Curve Dynamics

[33:34–38:11]

• US banks now sit on $395B in unrealized losses (as of Q2 2025), especially on long-term securities — “same situation as when Silicon Valley Bank failed.” [33:34]
• James: “The US hasn’t been able to term out their debt… interest payments over a trillion a year… The Fed does NOT control the long end of the curve.” [34:14]
• Debate over whether a Fed rate cut actually brings down mortgage rates (not directly); long rates can rise even as policy rates fall, especially if the curve steepens.
• Mike: “The stock market absolutely has to go up in the next few weeks/months because if it doesn’t go up with the Fed easing, that’s your signal to buy bonds.” [36:06]
• Panel notes that, historically, equities often correct after cuts begin.

6. Risk Asset Rotation & The S&P 500: Concentration and Crypto Correlation

[39:57–44:46]

• S&P 500 performance is now extremely top-heavy (“Mag 7” — the mega-cap techs) — equal-weighted index tells a less bullish story. [41:27]
• Crypto indices (like Bloomberg Galaxy) reflect this dynamic: Bitcoin (like S&P mega-caps) is unique, while other coins behave more speculatively, akin to high-beta equities.
  • James: “Bitcoin is very different — it’s going to have a steeper drawdown if markets correct but will also recover slower but stronger than gold.” [58:30]
• The “wealth effect” is both a concern and a conundrum for the Fed: a flat or gently correcting stock market is preferable to either a speculative melt-up or a dramatic collapse.

7. Gold, Bitcoin, and Inflationary Endgame

[49:24–51:20]

• Can gold and stocks hit all-time highs simultaneously? The panel argues that in an environment of monetary debasement, all assets can go up, especially those based on “animal spirits and stories” (tech stocks, crypto), but gold is the “pure play” on inflation.
  • Dave: “When the denominator (the US dollar) moves, everything moves.” [49:37]
  • Mike: “At some point, this is the lose–lose that gold, I think, is figuring out.” [49:24]
• Bitcoin’s lackluster recent performance seen as a maturing market, its unique scarcity underpinning long-term bullishness — but warns of short-term volatility and drawdown risk in risk-off events. [55:19–58:30]

8. Notable Quotes & Memorable Moments

On the Expected Rate Cut:

“It would be the most non-committal rate cut in history just to confuse people as much as humanly possible.”
— Scott (A) [05:49]

On the Wealth Effect & the Fed:

“It’s the classic kind of philosophical argument: the Fed is the arsonist now in charge with putting out the fire. And they know it.”
— James (D) [09:54]

On Deflationary Commodities:

“The only main commodity that doesn’t deflate is gold. Everything else, we create more with less.”
— Mike (B) [08:17]

On Financialization and Income Inequality:

“This chart shows more financialization than we’ve ever seen—corporate profits and assets up, wages and incomes down.”
— Dave (C) [16:50]

On Private Credit and Shadow Banking:

“Just be careful. You’re getting a better yield, but you don’t know exactly what you’re getting here.”
— James (D) [29:53]

On Bitcoin’s Maturity:

“Bitcoin’s volatility is often upside volatility… It’s become more of a commodity now, with the mainstream in it, ETF flows, correlations to equities higher than ever.”
— Mike (B) [54:42]

Timestamps for Key Segments

• 00:01: Introduction, expectations for Fed rate cut
• 01:42: Stocks at highs, “wealth effect,” retail sales, rate cut certainty
• 05:43: Speculation: “Hawkish” 25 bps cut with non-committal guidance
• 07:41: Commodities, deflation, supply efficiency, money supply distortion
• 09:54: The Fed’s dilemma and the "arsonist" analogy
• 13:33: Banks, recession probabilities, focus on short vs. long rates
• 16:50: Chart: Wages vs. profit as % of GDP – the rise of financialization
• 18:15: S&P vs. gold, overvaluation debate
• 21:06: Bitcoin vs. gold/commodities – scarcity and fiat debasement
• 23:29: UK stablecoin caps, dollar dominance, crypto’s future
• 25:28: Shadow banking, tokenization, risk in private credit
• 33:34: US banks’ unrealized losses: “SVB all over again?”
• 36:06: Will rate cuts drive stocks? History, curves, and the next big trade
• 41:27: S&P “Mag 7,” index concentration, crypto and equity correlations
• 49:24: Can gold and stocks go up together? The inflation argument
• 54:13: Bitcoin’s volatility, mainstreaming, ETF flows
• 58:30: Pivot to Bitcoin’s uniqueness vs. altcoins, drawdowns, and long-term views

Tone & Language

The conversation is informed, occasionally skeptical, marked by good-natured debate and a willingness to challenge consensus. The panel mixes hard data and charts with candid, sometimes irreverent commentary:

• Repeated humorous references to “dumpster fires” (re UK policy)
• Scott’s trademark dry wit and sarcasm (“Happy rate cut week to those who celebrate…” [00:01]).
• Riffing on “alchemy and asteroids” as future gold supply [21:34]
• Candid admissions of missing big moves or being wrong (“I hope my mother’s not listening” [19:47])

Takeaways

• The market consensus for a “dovish pivot” is dangerously crowded; history shows big reversals can follow such certainties.
• The “wealth effect” from high asset prices is both a macro tool and a source of economic bifurcation — and may now be more fragile than it seems.
• Deflation remains the structural state for most commodities, except gold. Bitcoin’s case as a “digital commodity” is tied to its unexpandable supply and fiat “denominator” risk.
• Private credit and shadow banking pose growing, underappreciated systemic risks, especially as traditional banks show signs of stress from unrealized losses.
• Bitcoin and gold are positioned as insurance against monetary debasement, but are not short-term hedges for portfolio volatility.
• With cross-currents of macro uncertainty, the next few months represent an inflection point—watch for how the Fed squares its dual mandate and how risk assets respond post-cut.

Final Note

The episode stands out for its honest grappling with market narratives, skepticism of easy consensus, and nuanced takes on gold, Bitcoin, and the financial system’s hidden liabilities. Essential listening (or reading) for anyone trying to understand the “big picture” as rate cut season begins.