← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin Sell-Off SHOCKS Markets. Here's Why Investors Are Flocking To Gold! | Macro Monday
00:52:43
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- [00:02]
Josh
That's dope.
- [00:15]
Dave Weisberger
Let's go.
- [00:18]
Noel Atchison
Hello everyone. Noel Atchison here, the author of the Crypto is Macro now newsletter and I am filling in for Scott today. Very big shoes to fill, but it is an honor to be here with you all, not to mention a lot of fun and there's so much to cover. I'm thrilled to be joined with by the usual gang. Dave Weisberger, Mike McGlone, James Lavish. Hi guys. Before we dive in, so much to talk about. Please do hit the subscribe button right below. And if you've already done that then you'll see right next to it there's the like button. Please hit that also. So let's dive right in. Things are moving fast in the world, Mike. What are you all talking about at Bloomberg on the macro front?
- [00:59]
Mike McGlone
Well, I'm a bit concerned after our morning meeting. Our two major economists and equity strategists, Anna Wong and Gina Martin Adams. What kind of came out for me from them is it's clear that they're not influenced by senior management. You're on a sell side shop. You have to be very careful being bearish. And they were very hawkish today. I was quite impressed. Some key quotes is from Anna. The FOMC is coming up market. Her quote is market's not ready for a hawkish fomc. The Fed puts not there. Fed's very reluctant and to put. To put a basis of whatever happened to really put a put on basis of what happened last few weeks. I'm expecting the revised core PC up to 2.8%. 20% increase in tariffs is part of it. And the same thing from Gina, just very bearish the equity market. So that's the key theme from our morning meeting with the chief Bloomberg people. I just want to tilt over a little bit. This stuff I'm seeing is. So we've had a 10% finally got that 10 correction in the equity market. We all knew that was overdue. We finally got. We have a little drawdown in S and P. I'm sorry and. And Bitcoin 25% that's the beta. I talk about S P down 10, Bitcoin down 2.5%. Okay. Good news is it's not down to 3% which is its volatility difference. The S and P 500 typically on a one year basis. And we also had the Bloomberg Galaxy index. It trades about three, four times the volatility. S P 500, it's down 40 from the peak. Now these are just drawdowns but overall I certainly feel Much more relieved that we finally had a little bit of backup. The questions where do we go from here?
- [02:39]
Noel Atchison
And Mike, I want to pull on one thing you mentioned there. The, the change in tone that you've seen over the past week. Do you think there's one, is there one catalyst to that or is it just the confluence of, as British PM Harold Wilson said back in the day events, dear boy, I think it's more.
- [02:52]
Mike McGlone
The latter, but it's not been recent. Gina's been quite bearish for a few months now. Anna has been, she predicted the recession way too early and had to pull back on it. Now we're kicking and those things I think are what the point is. Now they're getting the confirmation.
- [03:09]
Josh
Sure.
- [03:10]
Mike McGlone
The markets dropped 10%. We all know it's supposed to bounce. I mean crude oil got to three year low, it's supposed to bounce. Bitcoin dropped really fast, it's supposed to bounce. That's me 500 post bounce. But I can show you, if I can share screen show a few things, I think the macro they're kicking in if Misha can do that. But to me, the key thing about retail sales that came out weaker than expected is if you go back, I just take retail sales minus inflation. Most people know I've been writing about this for over a year. This level here, it's basically flat versus inflation. Last time we did that in history was the two times right before the recession, 2001 and 2007. 8. The difference is if you look at stock market cap to gdp, it's almost two times what it was back then. That's starting to go back down. The key thing I'm also worried about as a commodity guy is the rollover and the s and P500 versus gold. It's very similar to what it did in 1972. And I love when Dave kicks into the history, it's starting to roll over. At the same time you see stock market cap to gdp, all the things on the same scale here just starting to roll over. Hopefully it's over. Hopefully this is not going to be normal. And the best leading indicator for all the stuff to continue lower is the highly volatile speculative digital assets as measured by Bloomberg Galaxy Crypto index, which has dropped 40% from its peak.
- [04:23]
Noel Atchison
Dave, what odds do you place on this being just a correction or the beginning perhaps of a bear market?
- [04:28]
Dave Weisberger
You know, I, I hate labels because look, I think that it's very, very clear that Besant came out this week and he hit the talk show circuit. So, you know he is. I'm actually very internally happy and hopeful and optimistic that we finally have an adult running the. As a Secretary of treasury that understands, you know, where we need to go as opposed to how to kick the can down the road. I think that that is a good thing. And curiously, that probably decreases my long term bullishness on Bitcoin from you thinking it will plow right past gold towards some stratospheric heights to probably somewhere around 3/4 gold, still substantially above where we are today, but it decreases. What they're targeting is next year. They don't want to see the market get absolutely annihilated. But the matter is that they really need to do some things. They need to cut the long term cost of financing our deficits and they need to deregulate and they need to get us back to what they want is a fair, you know, economic footing. You know, you probably, if you look at the, the rhetorical use of words, the word you're seeing the most. If you did a word cloud of articles about tariffs that weren't written by MSNBC or other liberal commentators, you would see the word reciprocal as the largest word, because that's actually what they're trying to do. And the fact is we haven't had reciprocal tariffs in this world for a long time now. That's by design. Who, who is one of the Trumpers who says, oh, well, you know, they're taking advantage of us. That's bullshit. We knowingly entered into relationships on a trade basis where we would export our services, export our dollars and we would import stuff. The result of that is something this administration wants to change. Now, that's going to create pain. There's no way around it. If you want to decrease the patient of stuff, you're going to have to make those imported, that imported stuff more expensive. But it's not like domestic stuff is going to be cheaper immediately when you deregulate. That takes time. And that's Mike's point. And it's very well stated. I think the two charts he showed are very clear. So the question then becomes, what are they going to do to keep things from imploding? And the obvious answer, as I often use with, you know, often use with, with fun graphics like from Game of Thrones is Printer is Coming. You know, Lawrence Leppard's been on the show a few times. He's written a book called the Big Print. It is very clear that they're going to increase liquidity. Liquidity is already increasing, by all means, anyway, throughout Europe, throughout here throughout the world, liquidity has turned up, you know, a couple months ago and traditionally bitcoin lags that around six weeks or so. The S and P is still elevated because of that liquidity. I always think that it's important and that's why I have this liquidity in the short option. The long term as far as bitcoin is concerned, that's about delinking. But that liquidity is what's going to end up in the markets. Now is there a Fed put. Not necessarily. It depends on what you do. They're being very, very what they're trying to accomplish, but I don't see any way that they can afford. And this is where Mike's point is incredibly important. The wealth effect that Mike always talks about. I'm going to bash Mike later on stuff he's written. I'm going to be all nice and happy. But when Mike talks about the importance of the wealth effect, don't underestimate it. American consumption right now is upon that wealth. And so if the stock market did correct 30% you would see real pain. And you know, in, in retail sales this morning is nothing. Is it, is it even surprising that retail sales undershot. No. In fact the I get bet you and I would ask would be an interesting question that retail sales expectations probably fell further for next month. Right. Because we just had that stock market correction and so that, that's what I'm thinking. I think these things are interrelated. But people need to be cognizant that the Fed is not necessarily. We don't know if they're going to completely play ball. But if I had to guess, I'd say they would.
- [08:54]
Noel Atchison
And the expectations are weak anyway as we're seeing the various surveys that are coming out weakest, some in some cases weakest ever. In others the weakest. The 1990s.
- [09:03]
Dave Weisberger
But I want to tee up James on one thing. So. James. But, but we should all be optimistic anyway because the, the, the, The Nostradamus prediction of 84000 came true. Right. So you know, 444 in July.
- [09:16]
Josh
Hey man.
- [09:17]
Noel Atchison
Anyways, we're starting off with way.
- [09:21]
Josh
Don't worry, we're gonna get to it, Noel. But this is just so organized and so civilized with Noel at the helm here.
- [09:28]
Noel Atchison
What can I say?
- [09:30]
Josh
Nice. Yeah, I know, I know Josh through, through the, the Twitter sphere. He's an old Solomon trader man. He was around when, during poker liars poker days. Right.
- [09:43]
Dave Weisberger
So yeah, we actually overlap it but I can't remember him.
- [09:46]
Josh
Yeah, I mean really smart guy. I mean, I haven't talked to him. It's kind of funny. We'll see how much he's messing with people and how much he's just having a vision. I don't know. But the, the reality is, look, we, the, the, the word, the key word here is uncertainty. I mean, if you look back to last, last few prints of, of inflation, you could say, oh yeah, inflation's coming down. It's still stuck well into the 2% range. It's like 2.5 to 3% range. PPI numbers were 3 over 3. You know, so which is the producer price index? You know, you've got, you've got uncertainty about Doge, how many jobs they've cut, how much of that spending coming out of the government, which was, we can all agree, last year, there's absolutely no question about it. The, the Biden administration was juicing the economy by hiring, uncontrolled hiring at the government level. And so now we're kind of clearing that out. How much that going to impact us? How much is going to impact the, the housing market in D.C. how much is going to impact the spending out of D.C. and then all of those people who are now unemployed and crying about it because they weren't doing anything and they don't have jobs now. Welcome to the private sector, everybody. So now the question is how much pain does it cause for Doge to come through here and clear house, just start, you know, burning the weeds and the brush and, and getting it cleaned out? Well, we're going to find out pretty quickly. On top of that, we have, we have tariffs, we have, we have now the threat of, and real tariffs are coming. You know, they're, that are coming down the pipe right now. So is that going to be inflationary? Remains to be seen. So again, uncertainty. How much of that spending we've cut about $200 billion just under that, according to the debt clock. How much of that spending is going to impact the economy remains to be seen. All right, so I, I shared a window here, Misha, if you could pull that up for Noel. But Mike is right. We, we've been talking about the mean reversion for a while and the question is it was there going to be enough liquidity to meet the, the expansion of, of multiples on the S P and the Nasdaq or are we just going to have a drawdown? Well, we've had the drawdown. One of the, the fastest corrections in the history of the market. This is, you know, top 10, 10 drawdowns, fastest drawdowns in the history. All right, so we can all see that. Yeah, it's due for bounce, just like Mike said. Is it going to bounce or are we going to, you know, draw down further? One correction that I want to make on Mike is that bitcoin has actually drawn down 30% from its all time high. And so it has had a real steep drawdown here.
- [12:38]
Mike McGlone
I use closing basis. Close to close. It's something you can actually trade. Selling the high and buying lows. I use actual closing basis.
- [12:44]
Josh
Yeah, well, bitcoin doesn't close, but that's fine.
- [12:47]
Mike McGlone
But you know, we vwap then a vwap price in the close.
- [12:49]
Josh
Okay, so, but the reality is that we've had a really steep drawdown here and we're finding, you know, we're finding footing. Question is, is the money supply expanding quickly yet or not? And the answer is the money supply is expanding. The question is just how quickly is it? And, and bitcoin does lag all of that. So it's been lagging two to three months on the money supply for years. And so you can go back and chart it right against the, the global money supply. And it, and it follows it lock and step. So did it get ahead of itself? It did get ahead of itself and now it's drawn back. So, yeah, go ahead, Mike. I want to hear what you.
- [13:31]
Mike McGlone
No, you go. Well, no, can I just piggyback on that? Because I have. First of all, I want to fire up. No, a little bit, being English. Happy St. Patty's Day. I have my. I don't think you celebrate that too much in your country. But the key thing I want to point out is I'm glad. I'm, I'm glad Dave mentioned Larry Lupone because his book, I hope he sells a lot of copies, is great. But realistically, historically, it should have been published 2019, because we have had the biggest money pump in history and now we're starting to see the hangover from it. We had the Fed stayed too low for too long, created all the inflation that was part of it, and then got way too high. And then we all pointed it out this last year. If they start cutting rates, throwing money at the punch bowl when they should be taking a rate, it's going to create a big pump in assets. They're going to go up too much. And the risk is when they go down, they just started going down. Let's point out where that is now. Maybe we'll get lucky. Bitcoin's the best leading indicator in that place. The thing is, the facts have changed in all these places. We don't have the Fed put, that's gone, the fiscal monetary put we had. Basically one third of the economy has been US deficit spending for how many years now? That's poof, gone. And then there's a sentiment of looking around and seeing people getting fired and it's way overdue. So to me, this is a key thing that's kicking in macro. We're seeing it in markets. Or for instance, I mentioned like gold. Gold got to $3,000 an ounce partly because bitcoin peaked at 100,000. It was way too spent, expensive and dropped. So Yeah, I use 4pm Prices for that. But now to me, gold's a put on the stock market for gold to go above 3,000 and historically when it gets this stretched versus like the 50, 60 month moving average I used to use five years, it's 550% above that. It basically needs a stock market go down to stay up. So what does that mean? What is the key thing to make the stock market indicate? The stock markets going down is cryptos. And the most significant crypto on the planet is bitcoin. So I still think, and honestly I said it right, I think bitcoin is just like I said in 2018, on the way down, it can easily drop a zero and get to 10,000. Still in the big picture means the same. If we get a normal, we get another 10% correction in the stock market. Now that's very serious. That gets Bitcoin to 50, we get another 10% and gets it too close to 20, it's not a big deal. Maybe we'll get lucky and we'll see that divergent strength. But my point is, what we've seen now is the facts of beta. When beta goes down, risk assets are traded much higher. The volatility in beta go down a lot more. And it's key things that Scott, I really enjoyed listening to his podcast this weekend with Sergey Navarrov and Dan Taporo. They've really solidified my view what happens in the space. I'll point out what happens from commodities when you have you turn on the markets for markets for entrepreneurs to create businesses and create supply and commodities. Buy those markets, buy those entrepreneurs, buy their companies, they create revenue profits, but don't buy what they're creating. Like, I mean you can create gold and you can mine gold. You can mine, you can create crude oil and mine and create and crude oil and corn. Those prices will go down, but the companies will look that's my point is there is an unlimited supply of cryptos and that's showing up in the Bloomberg Galaxy crypto index. It could drop another 50%. It's still just a normal market.
- [16:35]
Josh
Yeah, okay, so, but part of that, Mike, is. Okay, we, let's go back to a little bit of like the, the hundred thousand foot view. Misha, I, I shared another screen. This is one of, this is one of Mike's firm's screens also. And it shows the probability of interest rate cuts. So this week we have the Fed and you know, again, once again, let's just talk about the reality of the situation we live in. And the, and the Fed put, we live in an, in a, in, in a system that is driven by central bank manipulation. Let's just face it, let's admit it. That's what it is. We have central bank market money manipulation reality. That's reality. You can't argue that. That's what it is. And so now we're looking at the, the probability of having Fed rate cuts through the end of the year. Well, the probability has dropped to about two and a half rate cuts through December. You can see that right there, the 2.449. That's where, that's where the, the market is now pricing in how many rate cuts. Why are we doing this? We're doing this because it's so important about what the Fed is, how their, their stance is. Are they going to be, are they going to be restrictive or are they going to be expansive? And so a lot of that's going to depend on the words that Powell uses on Wednesday when he, when he steps out in front of that microphone and uses the words. Look, it, the, the, the fact of the matter is right now we're doing QT that, you know, it's, it's super insignificant, right? So it's like $25 billion a month. And all they're letting, all they're really doing is letting Treasuries roll off the books, mature and not replace them. Okay, so we are going to, at some point here, we will have a Fed put. Because of exactly what you said, Mike. The fact is that we are incredibly financialized in this country and if you have a drawdown of 25 to 30% in the market, that will be so economically painful for this economy that the Fed will have no choice but to step in. Why? Because it will impact the Treasuries. And once that happens, then you have a problem because you need liquidity to, to keep soaking up these Treasuries. So now let's tilt over to crypto. Well, the crypto reality is that we're going to have some sort of regulation and clarity around, around all of the, the tether and USDC stable coins. Why are we going to have that? Because the government understands that we need those markets to keep buying the Treasuries, because who else is going to do it? We need, we need the Treasuries to be able to get into everybody's hands in the world. And that's reality.
- [19:26]
Noel Atchison
Sorry, I'm going to jump in a second and bring up the question of liquidity that we've all mentioned here. And I'm going to push back slightly on something that Dave said, as in, where is this liquidity going to come from? Shu? There may be some liquidity coming from the Fed when they meet, especially the wall of maturity that's coming later this year. All of the bonds that were issued during COVID very low rates, they mature this year and somehow they have to be refinanced. But apart from that, how is there going to be new liquidity in the market when we have collateral values going down, when we have either corporates or end users paying higher prices, and when people are just afraid to spend? Where's that liquidity going to come from?
- [20:01]
Dave Weisberger
Well, what I'm talking about, liquidity, Noel, is the deficits that all the governments are running. There was exactly one country in the, in the civilized world that didn't have a fiscal deficit, and they're now projecting to have a 500 million euro. This is liquidity that is 100% structural, can't be changed. They're trying to change it with Doge, but DOGE is a, is. The Doge impact will be on regulation. The Doge impact on the deficit is incredibly hard. All you have to do is look at the stories and the rhetoric and I'll make the point that I think that this may be the only opportunity we have. Because, you know, other than someone like Elon Musk, the amount of crap that he's taking for cutting anything is ridiculous. It's like everyone screams that the fat they're cutting, there might be a fragment of bone or a fragment of muscle in the fat, and they scream about it. You know, I personally have no care. I mean, I call me heartless, call me whatever, but, you know, Biden didn't care when 10,000 people were put out of work with a stroke of a pen on the Keystone pipeline. And those are engineers that have been working on a project forever. They didn't care when our industry had thousands of jobs shift offshore, thousands and people who had to move to other industries or get put out of work and I quite a few of those people because they clamped down on our industry. So honestly, I'm tired of what I would laughingly call whipping to a popular frenzy based on anecdote. I like data and actual data is as James said, we hired way too many people at the federal government level as a percentage and we need to normalize that. And so you can look at that. But the, the, the liquidity is coming from the fact that they need to kick the can down the road. The you said it. They need to refinance debt. And Scott Besant has said and he feels that this kind of ridiculous theater, kind of like the debt ceiling theater, the idea of having debt that's really short term is very problematic to him and to me too. So he wants to what we use the words we say term out the debt. What we mean by that is being able to finance the debt up to 10 years from now so that we have time to work on what's going on structurally. And so that's where liquidity is. But let's make no mistake, the entire system is based upon the notion that asset prices will go up over time. And so when Mike is talking and when Gina Martin Adams is talking, when Anna Wong is talking, what they're basically saying is there is a structural threat in the short term to what you think you need in the economy in order to keep Americans buying stuff. And that matters. And so you this a correction can happen. I mean sure, 10%, 20%, that doesn't really matter as long as it gets back up on the train. The real question is is there a risk to the train itself? Now bitcoiners will tell you lots of them. Of course there's a risk of the train. The train, there's no track up there. Look at that. And if you did a cartoon you would see a train going along a track happy and not realizing that there's drop in a track and a thousand foot drop on the other side. They say the fourth turning is among us. You know, all sorts of things, things are going to break down. Let's just be really simple about this. Politicians don't want that track to go, the train to go off the tracks.
- [23:23]
Mike McGlone
I got to pick up that. So we can agree, I think that a lot of the over we could say 12 million cryptocurrencies, so called, millions of them can lap off three zeros. I mean some of them are silly Speculative.
- [23:36]
Dave Weisberger
Can I stipulate to a fact here? I would make the argument that there's probably fewer than. I don't think there's even a snowball's chance in hell that within three digits of cryptocurrencies right now that have any value.
- [23:50]
Mike McGlone
Okay, so let me piggyback and I'm glad. And so to me then it's logical when that happens to say okay, well then Bitcoin lops off 10 in fairly not a big deal. It's still much better performer. It's going to bitcoin dominance to 90%. Fact is it was upon the launch of ETFs that really started tilting my bearishness and I was waiting it for five years. So on a one year basis we're right after the big pump in ETFs gold's up about 40% and Bitcoin's up about 22%. So everybody's starting to get in those ETFs are starting to realize they bought leverage beta. And I want to show a screen and show you exactly what's happening and the trend expect to continue. Misha, if you can show my screen is this is what's happened. We had four years of outflows from Boomerang. It's one of those great vernacular words. I love learning from crypto from crypto people. Gold is ETFs are just starting to turn up. That's what you see here. At the same time the whole entire commodity, entire crypto markets is just starting to turn down. You expect that to stop overnight. I'm like good luck with that. We're just going to mean revert a little. That means another 50% in total cryptos which means pressure for everything to me. I want to point out another key thing so I'll make some predictions recently. So also and it's what what you said James, that really strikes me is the technology is awesome. It means we're going to be able to tokenize everything, particularly the dollar. Okay, so the dollar is going to me. Why did Kai Shai Sheffield point out how he's visa starting to use stable coins to help trends help close their transactions years ago Partly because why would he bother to use bitcoin? We can use a dollar token that has no vault. That to me is part of tilts over my problems. I'm going to make the prediction. So recently XRP flipping the total market cap of tether and then flip back down. I think it's going to continue. Let me finish. And I think Ethereum is going to get flipping by, by tether. Now there's a bunch of other stable coins that are better because that's just a trend. I think Ethereum's more likely go to a thousand. It's bumping up against resistance now 2000 but it's got tons of competition and same thing I don't want to get Dave into his rant is when you can transact instantly in a stable coin without the risk of xrp. Why would you use xrp? I still don't get that. I understand it but here, here's the macro of what's happening is lean to the chart. Cryptos are heading lower, gold's heading higher and we've only had a 10% correction in the stock market. We get to 20%, the Fed turns back on. That's the key point where we are right now. There is going to be no Fed put until we get risk assets to go down more and then maybe it'll be time to buy. And there's certainly gonna be no fiscal stimulus for a long time. Everything that the market's been driven up and then we have tariffs. Tariffs means corporate profits are gonna get hit hard. These are things that have driven markets for decades, are just starting to revert right away. So I look at it as okay, trend is gold should tend to go up. Cryptos continue lower hit, tilting towards deflation. We definitely need for cryptos to go up. You basically need the stock market to go up.
- [26:38]
Josh
All right, so let's unpack some of this. I, I agree with you on two points wholeheartedly, 1,000%. Number one, we are not going to get a Fed put until we have more of a correction. I agree we're not going to until we get more of a correction. But when we do get their correction, we're going to get the Fed put it. There's just no way around it. You have to print more money. You have to expand the money supply. So that's number one. Number two, XRP has no, there's no reason for you to be buying XRP over a stable coin. Fully agree. Have no, have absolutely no argument there. Number three, let's go back to the expansion of money supply because here's the problem. And you know this, Mike, you know this. You're a bond trader. We do not, not have real returns and bonds. We do not have real returns and bonds. The, the return for owning a Treasury is a negative real return for anybody who's held them over the past however many years, since at least 1971. So if you're looking at bonds and you're looking at tether and you're looking at USDC as a, as a store of value. You're making a mistake. You're, you can put your money there, but you're going to lose money on it. Why? Because you're putting your money in the US dollar. The US dollar is a great. And will continue to be. I am not one of these maximalists who think that in the next few years we're gonna, Bitcoin is going to overtake the US dollar and it's going to become the global reserve currency. The dollar is going to continue to be the global reserve currency and USDC and USDT are going to be a key part of that because it's going to enable people to buy Treasuries anywhere in the world very easily and put them on any, any platform that they want to be in. And by the way, we haven't even Talked about Saab 121 being repealed and the fact that banks are going to be able to hold all these things too. But now why would they hold Bitcoin? Why? It's not because it's the oldest crypto. It's not because it's, it's, you know, the, the boomer crypto. It's be. It's because it's the only one that's fully decentralized. It's the only one that is completely trustless. It's the only one that cannot be expanded. That it is going to be, it's going to continue to take, to take market value. As the US dollar continues to debase. Bitcoin will continue to rise in value. It's, it's just, it's, you know, it's the, it's that coefficient, there's just no way around it. Now I did share something with T. I'm going to tease Dave back up here. I did share something. Misha, if you could bring it up. Talking about the, the expansion of the money supply and, and liquidity. Not that one, buddy. That's, you can see it's probably an orange screen here. There you go. So this is Michael Howell. He does a lot of work on, on global liquidity. You can see that global liquidity bottomed out in this, in this mini cycle. Okay. He, he says there's like four to five year cycles or five to six year cycles on, on the total money supply expansion and contraction. But in this little cycle we, we bottomed out in at the end of 2024, beginning of 2025 and we have risen sharply okay, why does that matter? It matters because we've been talking about this, I've been saying this for so long that you, you have. Bitcoin got way ahead of itself. Yes, we all agreed. So the question was, was bitcoin going to correct down 50% or was the money supply going to come up and meet it? Somewhere there we could see what's happening. It's meeting it. Remember, this is it. This is a, a money supply curve that's, that's delayed by three months because it's the, the way that the you would be because bitcoin lags. But look at where it's about to touch. So I just disagree wholeheartedly that we're gonna see Bitcoin at $10,000. That makes absolutely zero sense to me. It doesn't make any mathematical.
- [30:35]
Dave Weisberger
There's no difference between 10,000. Okay, so, so look, there's two assumptions that Mike made that are completely flawed. I mean, that, that literally may as well. You may as well be comparing. Forget apples and oranges. It's apples, Noel.
- [30:46]
Josh
You thought this was going to be civilized.
- [30:48]
Dave Weisberger
Now we're getting real and assumptions. The first assumption he talks about is, well, cryptos can't go up because they can create infinite numbers of them. Let's go back to the Internet bubble. Bubble. And people learn from mistakes. People sold Amazon because of two reasons. Reason one, it's only books. No, the people who, who were Amazon bulls were looking at what Bezos did with the $2 billion that he raised and knew that he was going well beyond books. And, and I find it one of my favorite things about the XRP people. I'm going to make fun of them and tee off the whole. Piss off the whole XRP army in a heartbeat. Is like Brad Garlinghouse said about Amazon and books. But just remind me of that, Noel, because, because it's a funny anecdote. But in any case, in the Internet bubble, there were 14,000 Internet companies that popped up in the OTC world and IPOs went absolutely ballistic. And that is the playbook that Mike's coming from. He's saying, well, look, all of this took liquidity away and all of them dropped at the same time. What you're not seeing are two things. First, people overreacted on Amazon and it created generational wealth opportunity. If I'm looking at that, my learning is don't sell. Don't throw the baby out with the bathwater. And bitcoin is completely different than the rest of crypto. Bitcoin is a store of value. We're going to talk about Bitcoin and gold in a second. But other than that, the other big difference is there was enormous generational wealth made by VC's Internet bubble because there are companies that were not publicly traded and they became the vanguard of what we now call the Mag 7. Right. None of those are publicly traded except for, for, for Amazon. All of them were owned by VCs. Now in the world of crypto, those ones exist almost as soon as they get, as they get started. I am not smart enough, I am not prescient enough to know whether xrp, Ether, Solana, obviously, Avax, Cosmos, whatever. I don't know which layer ones are going to be the ones that are running inside the financial system. What I do know is this. Step one, stable coins and the, if you read the editorial from the American Bankers association guys that have come out over the weekend, they are unbelievably funny. I'm going to give a props to Austin Campbell. He wrote a thread that I can't possibly, I couldn't improve it. I was hoping to quote, tweet it and come up with something that he missed, but he didn't miss anything. It's a brilliant takedown of just how insipidly dumb the, the criticisms from the bankers are. But the reason the bankers hate stable coins has nothing to do with why Bitcoin should hate it. It actually helps bitcoin stable coins to buy Bitcoin. They don't. It doesn't compete. Bitcoin is a store of value. Stable coins are for people who want to buy dollar based. But understand something, the banks make a lot of money from float and stable coins. Instead of three days or a month or a week or whatever it takes for where the money can't move, takes that float away from them. They're going to fight it tooth and nail and they're going to lose. You had 2/3, you know, 2/3 majority in the committee. That bill will pass. And so the banks are going to lose. And you're going to see it's, it's with the first step of disintermediation. The other thing that's going to lose are the people that are going to lose are companies that rely upon inefficiencies throughout every other aspect of the financial system.
- [34:04]
Josh
I would also argue, Dave, that they're not going to lose because they're going to, they're going to pivot, mature into a new set.
- [34:12]
Dave Weisberger
Well, let me finish the thought.
- [34:13]
Josh
Right.
- [34:13]
Dave Weisberger
I just want to finish the thought. So when we look at crypto there are, there is a major pivot that's going on. And I want to acknowledge something that Mike has said because he's right. But I also want to say where the assumption is, there are. What's happening in the, in the world of crypto, despite what you see in crypto, Twitter is because there is going to be, and we know this already, it's already happening. The regulatory shifts are changing. People who are building real stuff are going to be able to raise money again and actually provide some of the value of that real stuff to investors. And so cryptos that provide no stuff, I mean, people buying coins that, you know, fart coin, I'll pick on that one. But it doesn't matter. You could pick on lots of them. Investors buy that with zero hope of anything else other than to sell it to the next investor. Bitcoin, you're buying it. Most of the people who are buying bitcoin, a huge percentage think that it's going to flip in or at least materially come close to gold's market cap. So when you're on looking, you could believe that, but I pointed out they already.
- [35:16]
Mike McGlone
It already reached its cap at ETFs.
- [35:21]
Noel Atchison
I want to get us away from the debate about whether bitcoin is going to succeed or not, because it's something that we've done many times on this show already.
- [35:28]
Dave Weisberger
And I want to get back to the fundamental assumption. But the fundamental assumption that Mike is making is that the adoption part is literally irrelevant.
- [35:36]
Josh
Okay, so let me.
- [35:36]
Dave Weisberger
You can't make that irrelevant.
- [35:38]
Noel Atchison
Okay, so then continue. Sorry, James. Rather than continue to go down this debate about the adoption, because again, I've watched the shows and I know that we do this quite often. Let's focus on what really is changing these days, and that is the liquidity narrative. And we've got the FOMC coming up this week and maybe we'll get some indications on what they're going to do with the quantitative tightening. It'd be good news if they let that, if they stop doing that. But I want to go even further back and leave the United States for a second and talk about liquidity. New liquidity coming in from China, from Europe, from other areas in the world that are going to, that is going to impact global demand for risk assets. Global demand, not US Demand. It's the largest market easily, but it is not the only market that can move these things. So let's again get away from the, from the arguments which we enjoy, and that's why we're here. But let's go bigger picture because the liquidity narrative that you brought up in the beginning of the show is what is changing these days. Do you guys see China impacting crypto markets anytime soon or do you see what's happening in Europe impacting crypto markets anytime soon?
- [36:40]
Mike McGlone
They're fighting for survival. Let's remember what's going on. And Dave, I want to hear your views but right now you have to completely expect fiscal monetary stimulus from China just for the regime. One person Z. I mean there's no natural check and balance in that country to survive, to not get kicked out. It just they're doing what Japan did 30 years ago. Those of us who trade JD JGBs in the 90s, we've seen this before and Europe are doing exactly what they have to. What Just imagine if Donald Trump succeeds, what's Europe going to do? What you're seeing in Germany, they're breaking some of the rules they learned from the Weimar Republic partly because there's a war in their backyard. They got to do something. So I definitely hear Day's view but this is fighting for survival.
- [37:18]
Dave Weisberger
I agree. I was actually to say over the weekend I was reading, you know, China is accelerating their provisions of liquidity and so that's, that's part of it. I mean Noel, I. There is in a world, in a fiat world, there is no way for governments to juice the economy other than adding liquidity. What are we really talking about? We have a debt fueled economy and it's not we. We is not the United States we. We is the global we. I mean you borrow money to build stuff, hope that people will lather, rinse, repeat and that's been going on everywhere. And so what are we talking about? The reason that I get so agitated about the adoptionist thing is because there is a cadre of people who buy based upon the notion we don't know when it will happen. And it's the same people buying gold. The same reason I own gold is the same reason I own bitcoin. The difference is one is an option and one isn't right. I mean put up a chart last weekend that I saw which is that gold has done incredibly well at preserving purchasing power parity based on cpi. And my first thought when I heard this and James, you've looked at this data and Mike you have too, is that Hedonics And Vincent, it's CPI except for the stuff we really need like insurance, education, etc. And when you take the financialization into account, gold bugs will tell you it's lagged now, it's lagged less now. I think the average gold bug thinks gold probably at 5,000 takes into account financialization. And so that's still a pretty substantial rally from here right now. Why are they saying that? They're saying that because they think liquidity is going to ultimately go in and devalue other assets in real terms. Right? Because I say it all the time. The denominator matters. And it's not just dollars, it's every currency. And I wonder the trend that I think is going to be the most interesting one is if it actually turns out to be true that Germany goes towards deficit spending, will the fact that when you look at bond yields, will Germany still have a percent and a half premium over the United States, the UK and a lot of other countries in the world, will they have much lower long term bond yields? If people sees them joining the party, the obvious answer is no and do they care? And I think that's another macro trend that matters because now you don't have any place that you can't say, well, the US Dollar is, you know, you can't go on about the bond spreads. The Japanese and Chinese bonds are obviously manipulated, have been manipulated for so long that we take it for granted. I mean, is there any rational reason other than the Japanese aging population with all their savings in the postal system that are kind of forced to buy JGBs? You mentioned JGBs. Is there any rational reason in Japan or JGBS to be where they are today other than the fact the government needs them to be there and they have enough control to keep it there? That's interesting. What happens if JGBS normalize and go and a half percent.
- [40:22]
Noel Atchison
And as Mike is fond of saying, things do tend to revert to means, so normalize they will. What we don't know is when. But one thing we're overlooking also is that a weaker dollar does boost liquidity pretty much everywhere else in the world. And again, pushing back on your comparison to Amazon, which is very apt, except Amazon was not necessarily interesting to people in Brazil or India or Bangladesh or Russia for that matter. So there's a whole different wave of liquidity and demand, potential demand for crypto coming in there. James, you shared a chart a moment ago that showed global liquidity, liquidity and crypto prices. Again, it's not just a US question because of the very few assets out there today. Crypto is global. Gold you can argue is global, but we've seen not so much recently, especially with the scurry to get shipments across the ocean. And the gold bar in the uk, Go figure. Is not the same as a gold bar in the us. They're different sizes. They got to go to Switzerland to be melted down. So it's not as global an asset as we think. If you're actually going to use it or hold it in a self sovereign manner. Crypto does satisfy that.
- [41:27]
Josh
Yeah, well, I mean, look, the reality is what Dave said is that we live in a debt laden society. There's no way to continue to have economic expansion without it being nominal. We have to have nominal expansion. Jeff Booth talks about this all the time and you have quoted him before, Mike talking about this. And that's the fact that you have this deflationary pressure of innovation and technology. It's reality. You, you know, you, you've got, you know, I can pick up my phone and have access to millions of songs here. I don't have to go down to Strawberries or Tower Records to buy a CD for 15 bucks anymore. You know, most of people on the show don't even know what the hell that means.
- [42:13]
Dave Weisberger
But.
- [42:16]
Josh
The reality is that you've got millions of songs at your fingertips for, for like 12 or 15 bucks a month now. It's just insanity. Okay, so that is tremendous innovation and deflationary pressure on that industry. So why does it still, why are those people still worth hundreds of millions of dollars and making so much money? Well, part of it is because global distribution, but part of it is just because the money doesn't it just not as worth as much. You continue to debase the currencies and I agree with Dave wholeheartedly. And it's not just the US It's a global phenomenon and it must continue. And if we're gonna, we're gonna. The reality is those, that inflationary pressure versus deflationary pressure is. Yet that's what you see when you have these central banks step in and have their put. They have to expand the money supply because we are, we are living on debt. And look, I want to make this clear again. I've said it many times before, but the reality is that debt is okay if you use it in a responsible way. What we're finding out is that we are not being responsible in the US and the whole globe is not being responsible with using it. We have no idea what China is doing, except we, we can pretty much all agree that they're going to expand the money supply rapidly to keep the train going. Which to quote Lyn Alden, another one that we all that we Love here is nothing stops that train, Nothing stops this liquidity train. It has to continue to expand because otherwise all this debt is going to be an avalanche that we can't get out from under. It's already bad enough. So as much as I, I love what Elon and, and Doge are doing, they're not gonna, they're not going to balance the budget this year and they probably won't do it over four years. I would be shocked. You know, Pomp thinks they will. I just don't see it. But, but they're not going to balance this budget. We're going to continue to operate in deficit. We're going to continue to issue more debt, which means that we have to have those stable coins and that legislation to have buyers of this debt around the world. No, brics is not going to come up with their own currency, but yes, they're going to find ways around the dollar unless we give them a really easy way to hold it without being subject to being confiscated because they didn't do something that we wanted them to do do.
- [44:44]
Noel Atchison
We're already, already seeing that. And we got two opposing forces here. Competing, competing forces. Even we have one there. The liquidity has to keep going up. There's no other option. At the same time, we're also told again and again that it is unsustainable. And generally when something is unsustainable, it isn't sustained.
- [45:02]
Josh
Noel the US The US treasury said it themselves. They put out reports warning the government. The tre. Remember, the treasury is not the one who's spending. The treasury is the one allowing the spending. They're the ones who are doing the bidding of our government. And so they're out there saying, stop, stop. We can't, we can't find places for this debt. You've got to stop spending. And what does the government do? Oh yeah, don't worry about that. We don't even have a debt limit anymore. Just keep, just keep borrowing, don't worry. But it's going to be fine. So the unsustainable part may be very long term. I don't think it's going to come crashing down this year or next year. I love Larry. He's one of the partners in my hedge fund. I think that he's a little bit, you know, he, he is a little bit more pessimistic about how long this can go on. I think go on for a long time because the US dollar is the global reserve currency, you know, and it's going to continue to be global reserve currency. And that's not going to change for a very long time. Which means we're going to be able to keep doing this for a very long time. But that's us, not the rest of the world. You will see other, other fiats collapse in a decade. In this next decade. You will see it because they're, they're just being completely irresponsible and they will lose the buyers of their debt and, and the confidence in their currency. We'll see it happen in some sort of major, in some sort of major sovereign will collapse.
- [46:25]
Mike McGlone
Absolutely. Let's piggyback on what's changed. On November, November 5, the world changed. We have the most significant combinations of austerity and tariffs ever from this country. Those are major discombobulating events. It's just getting started. And there's no where the tariffs are.
- [46:41]
Josh
Going to go though. That's very, very early.
- [46:43]
Mike McGlone
And it's just not. I mean, like I said, these are things that someone like I was with customers speaking about 30 years ago.
- [46:48]
Josh
Yeah.
- [46:48]
Mike McGlone
Everybody in the world wants free trade. As long as they're gonna have a surplus with the US that switch has flipped. It's over for now. We'll see where it goes. But it means major shifts in market. So I want to correct two flaws. First of all, one thing that Dave said is, yes, we learned from our mistakes while we haven't. We learned from too much liquidity, inflation. That's my point about Larry's book. It's great. It should have been published. We've learned that lesson. The next single time we start seeing corrections in market. You already seen it right now markets down 10% and the Fed says we're not easing. It's just getting to the point inflation's too sticky. And another thing from one of your former prime ministers, Benjamin Disraeli used to say, what we anticipate does not occur seldom occurs. It's just anticipating that bitcoins, the next Amazon is a very, very, very risky thing to think. There's Bitcoin was launched in 2009. That's why I got to show you this screen. And now there's 12 million different types of cryptocurrencies. I got to show you what's happened since Bitcoin was launched in 2009 is we've had this massive run up in bitcoin. At the same time we've had the biggest one, the biggest stock market rallies in ever. Misha, if you can show the screen. The key point is if we just get a little bit normal version stock, but here's bitcoin. It's rallied with the stock market. His stock market, the GDP, maybe it just drops back from 1.9 to a very health historical elevator about 1.7. That's Bitcoin at 10,000, unless we show divergent weight strength. But at three times the volatility, it's not a big deal. That's just normal reversion. The key thing is now we have the potential that's going to happen. We have the means for it to happen. So I'll make predictions for the midterms. By the time we get to the midterms, the price of average price of gasoline this country, I think, will go down from three to two. I think the average mortgage rate will go from six or six and change to four. If you make over 50, 150 or 100,000. Mr. Trump says he's going to make no taxes. I mean, this is all win, win, win. It's all tilting that way. And the key thing for making that stuff happens. And Scott, and I'm so. Dave, you said in the beginning, that's one thing I love about Besson. He's a trader. He gets it. The number one way to get the Fed ease the turn on the spic is you got to get the stock market to go down. He won't say it, but he keeps saying we're going to get lower yields and lower energy, I believe.
- [48:52]
Josh
Please share my screen, Misha, so I can just, so I can, I can, you know, we can, we can put something in context here. So, okay, for everybody to understand, yes, Bitcoin is, is, is only. It's, it's a small, it's, it's a young asset, right? It is the 9th largest asset in the world, Mike. It, it is right up against silver. This is not something that is just, it is a fly by night. It may or may not be adopted. It is larger than Meta, Berkshire, Broadcom, Tesla, Eli Lilly, for God's sakes. Walmart. Like, this is a major, major asset that people are looking for as a store of value. And to talk about how the, the difference between Amazon being adopted and not being adopted, one of the biggest things for the people who, who weren't around in 1998, 1999, one of the hardest things for everybody to understand and get their heads around was that people would actually put their credit cards online on the World Wide Web, whatever the hell that was, and actually use it as payment. And they refused to believe that the world would go to that, that avenue and, and have the trust in this Internet thing where they'll actually put their credit card online and buy something. One of the mat. One of the biggest fights I ever had with a, with a hedge fund manager that I was, I was working for at the time. We, we were debating about whether or not people would actually put their credit cards online to, to buy things on Amazon. And he shorted it from 50 or $60 all the way up to 300. Got his face ripped off because he just refused to believe. And we all pled with him. The younger guys around the table were like, please stop. Just got to cover this thing. But he didn't because he just couldn't believe that people would use their credit cards.
- [50:39]
Noel Atchison
Because habits, because habits do. Habits do change. We do need to start wrapping up.
- [50:44]
Josh
The exact thing with it. But, but the adoption hasn't do. It has, does not have to do with just ETFs. There are massive tailwinds to do with.
- [50:52]
Noel Atchison
The currency collapse that we're no doubt going to be.
- [50:55]
Mike McGlone
No, no, no, no.
- [50:55]
Josh
I'm not saying about the currency collapse, Noel. I'm saying that has to do with massive adoption across all kinds of different investors who are looking for a way to save their money other than just gold. I like gold. I'm actually, I, I own gold. I think it's great, but I can't go anywhere with it.
- [51:14]
Noel Atchison
Yeah, I agree. And what I mean by the currency collapse, it does add a whole new use case for the global market because we're talking about global assets and that's new liquidity coming into the market now. And it's new liquidity always that moves the price. But we do need to wrap up and I want to go back to the predictions that Mike was making earlier between here and the midterms. Mike, between here and the midterms, I know what you're going to say, so let's be brief. Gold or bitcoin, which outperforms gold. Dave?
- [51:39]
Dave Weisberger
Well, you know, I answer bitcoin and not by a little, not by, by a small amount.
- [51:43]
Noel Atchison
James, between here in the mid coin and the midterms, which outperforms bitcoin, will.
- [51:47]
Josh
Out outperform gold from here by a factor.
- [51:50]
Noel Atchison
Yeah, I actually agree with, with Dave and, and James on this one, Mike. Sorry, but that doesn't mean you're necessarily wrong. One thing we know is that the narratives are going to change as the stage changes and we're going to be seeing a lot of that in the coming months. It was amazing to talk to you about this. These are arguments that we will be rehashing many times again, I'm sure, because things do change. There are new narratives coming into play, and we all have deep backgrounds that we're bringing to this. So thank you very much for being here, all of you. Thank you, everyone, for watching, and see you soon.
- [52:26]
Dave Weisberger
Let's dope.