← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin Sell-Off: Why Crypto Markets Are Bleeding | Macro Monday
01:01:26
Bitcoin Sell-Off: Why Crypto Markets Are Bleeding | Macro Monday
Loading summary
Transcript149 lines
- [00:01]
Scott Melker
It is Monday morning and Bitcoin is once again slowly dropping and chopping sideways while altcoins bleed. All of this in the wake of the largest hack in crypto history last week and some very questionable economic data coming in from around the world. I can't wait to unpack everything happening in Macro here on Macro Monday with Mike McGlone, Dave Weisberger, and seemingly new regular Larry Lepard. Guys, it's going to be a great show. Let's go.
- [00:30]
Larry Lepard
That's dope.
- [00:45]
Scott Melker
What is up, everybody? I'm Scott Melker, also known as the Wolf of all streets. Before we get started, please subscribe to the channel. Hit that like button. I have regrets in there that I missed Macro Monday last week, something I try not to do. But luckily I only speak for about 30 aggregate seconds on this show each week. And I can easily be replaced probably by AI, but certainly by Noel Atchison and Larry Lepard, who is here once again today. I call you Larry. I know you write Lawrence, but you're.
- [01:15]
Larry Lepard
I'm married. Everybody who knows me, yeah, I just, yeah. Formal. And thanks for having me back, guys. Yeah. I have become a regular kind of strange.
- [01:23]
Scott Melker
We love it. We love it. So James is out of pocket, obviously, today. We'll all do our best to represent him well. So, Mike, maybe we should start with the morning meeting. Quite a bit happening. I actually have quite a bit that I was pulling up on inflation in Japan. Maybe we can touch on that generally. But what's going on around the world in the macro?
- [01:43]
Mike McGlone
Well, I'll start with the headline I thought most prominent this morning on Bloomberg. It's Trump targets China with biggest sell off so far in second term. I mean, that was stuff we all talked about and completely was predicted by the no trade is free. Robert Lighthizer just getting started, but from the morning meeting. Yeah, you're throwing that up there. From the morning meeting, Ana was focusing on Doge. Her conclusion is, yeah, they're somewhat overestimating the cuts, but this has only been a month for some of us. This is the most shocking thing I've ever seen, hopefully. And we were hoping for, you know, move fast, break things. But the disinflationary impact of Doge, she thinks will be a pretty significant deflationary force, quite substantial, and it might have marginal unemployment effect and Fed's going to be more likely to cut because of Doge was her key conclusions. The key thing from Gina, who's been uniquely bearish on the equity market. She's pointing out US Stocks are starting to lag the rest of the world this year. And that's very rare for that to not continue once it gets started, usually lasts for the entire year. And she's pointing out operating margins are falling. Expectations. Expectations for earnings were just way too high. And that's kind of the main key, the key things from the meeting. My bias is commodities are going down.
- [03:00]
Scott Melker
Larry, what do you think?
- [03:01]
Mike McGlone
Acceptable.
- [03:02]
Larry Lepard
Yeah, yeah.
- [03:03]
Mike McGlone
Speaking of. Larry.
- [03:04]
Larry Lepard
No, that's right. I mean, I, you know, look, I see continued. We're starting to see some signs of economic weakness. Last week I think we saw, you know, PMI was soft and inflation expectations are higher. The Japan inflation number, which you just referred to, I don't have the number right at the top of my.
- [03:17]
Scott Melker
Yeah, there's, yeah, Japan's about 4%. Japan's inflation rate climbs of 4% in January, highest in two years. And this is interesting, what you just touched on, the inflation expectations.
- [03:28]
Larry Lepard
Right. And I think that's just because people are seeing it everywhere. I mean, it's. How can you not see it? You know, my example this morning I went to do. I just got returned to Twitter, so I wanted to do a proof of me. I bought the Wall Street Journal. You know, the Wall Street Journal in a printed edition now cost $5. I was, I was shocked. I was just shocked.
- [03:46]
Dave Weisberger
They still make a printed edition.
- [03:48]
Larry Lepard
I guess they do.
- [03:49]
Scott Melker
That was. I guess that's the more relevant question.
- [03:51]
Larry Lepard
Yeah, there's that too. But still, isn't that, is that an amazing price? I just, you know, it's, I'm old fashioned. Yeah.
- [03:58]
Dave Weisberger
Yeah. It's funny, I always argue, I, I always hated newsprint, so I'm perfectly happy to do every.
- [04:04]
Larry Lepard
Yeah. Why I bought one in years. I only bought it for this one time purpose.
- [04:07]
Dave Weisberger
No, no, I get that. I get that. You know, I always used to look on this show at something. I was just looking at it this morning. Like one of my favorite economic indicator, you know, is the Baltic Dry Index, which, which. And what's fascinating about it is it looks like it really hit a, a pretty bad bottom at the end of January. And you know, and in fact, if you go back, even on a five year basis, what it was at the end of January was very close to it. We hit at the, In February of 23, we hit slightly lower than that, but it's still bouncing around the bottom. It's up a little bit from that, actually. I mean, in percentage terms, fairly significant.
- [04:49]
Scott Melker
Yeah. There's a monthly chart I brought up.
- [04:51]
Dave Weisberger
Yeah. The point is. Yeah. I mean, the Point is, is that we're kind of at that, that place where over recent history, economic activity is kind of bouncing around the bottom. And, you know, I, when we start talking about starting to roll over, I get worried because, you know, you have to go back a very, very long way going back to, you know, a very long way to find it, you know, much lower than, than where it is. I mean, it did get lower in 15, you know, significantly lower, like half of where it is today, actually less than half. You know, 15 or 16, you know, before that, you're going back into the 80s. And so when I look at this, it's like the world in early in January was terrified of Trump tariffs. Right. You know, you had a bit of an acceleration. So in December, people shipping stuff before the tariffs got hit, then, you know, January was weak, and now it's kind of looks like it's normalizing. If, in point of fact, tariffs ended up being reciprocal, then it will end up being a nothing burger because it'll be a negotiating point. And it's really a question of how the rest of the world reacts. I mean, the thing that's interesting about that, you know, Trump and the lighthizer and this philosophy is it really matters on what the other side does. We don't know what the other side is going to do. Right. We see, we saw a little bit of a salvo with some China news over the weekend that they're kind of saying, well, you know, we want to be able to keep doing the tariffs and keep doing the things to promote our trade. And so they're looking at other stuff and they're whining a lot now. Now they're, they're actually going into the press, which is, to me is kind of funny. You know, it's, it's like, you know, the political bedfellows nonsense, you know, where the Chinese are, are pushing Democrats to, you know, whine and complain and stir up people to try to, to get opposition, which will have as much as much success as the typical me arguing with my wife when I'm wrong, it won't work.
- [06:46]
Scott Melker
Does it work when you're right?
- [06:48]
Dave Weisberger
When it, when I'm right, it works very infrequently, but when I'm wrong, it never works. And since I'm wrong more than I'm right, you know, when it comes to that, that situation and I'm wrong all.
- [06:58]
Larry Lepard
The time, that's just by default.
- [06:59]
Dave Weisberger
But my point is we're, we're all the world's in negotiation. We have the chief negotiator in chief and an administration filled with negotiators. I mean, you look at that cabinet, you have a trader and secretary, you know, you know, a really, you know, accomplished trader as Secretary of the treasury, we have a really accomplished negotiator in business building and Secretary of Commerce. Right. You know, you look at the people he's staffing his administration with. I mean, this is a team. Even JD Vance walks into Europe and basically tells them, you guys suck in a speech. Brilliant speech, by the way, just from a content point of view, as a. As a. As a. What do you call, rhetorician or, you know, a student of rhetorical history. That speech will actually be studied years from now. But the fact is, this is a negotiating administration, and so we don't know what's going to happen, because it really is going to depend on what Xi decides to do. And, you know, I don't think anyone cares what Europe wants to do, because they can't. They can't figure out what they want to do themselves so much less anything else. And who knows what. What Starmer will do in the U.K. i mean, he's like, you know, whatever. I mean, we could go down that rabbit hole. But the point is, is that what I kind of think what Anna says is right. When you look at what Doge is doing, they. They are scaring the living crap out of all of the politicians and their families who are making money on the back of us in the business community. And they. And they're going to be talking about, yeah, there's going to be a lot of unemployment in the Washington area. That's certainly true. Northern Virginia already looking really sickly. But if that happens, then the Fed has some room, and, you know, we'll see how that goes. I mean, the last point that I'll make, because Mike didn't make it, but should, because you usually do, Mike, is the ratio of the stock market capitalization to GDP continues to look ludicrous. And so that's why the US Stock market is extended. Now, none of this, in my opinion, has anything to do with Bitcoin except for I look at this, and the most important stat with Bitcoin is if you. If you woke up three months ago to the day of where we are today, and you said, I'm gonna go to sleep for three months and come back, that's exactly where we are. If you did the same thing with altcoins, you're like, what the hell happened to my money?
- [09:25]
Larry Lepard
I think another interesting point that we should bring up is just that Friday was a pretty ugly day in the markets and the stock markets kind of all around. And I, I say that because I actually got a call from a friend who's a big fund manager, and he was like, what is going on? You know, it's. And I don't know if it's the start of a trend or not, but in the back of my head, one of the things I'm thinking is, you know, these guys are running around and they are going to break things and they are going to try new policies, and the market has been oblivious to it. In fact, has given them a lot of credit that, you know, they're going to solve a lot of problems. And I think maybe that will fade over time and that sentiment will start to wear off and people will start to realize that, no, this is actually going to be kind of messy. And in a market that's priced perfection from a risk point of view, you know, the Trump administration brings a lot of risks. And, you know, so I think the stock market is very, very vulnerable at this point in time.
- [10:22]
Dave Weisberger
The important point, Larry, is, I don't know. If you look at this stuff, and Mike, I know you do, is the dramatic increase versus previous eras of ETF and passive investing.
- [10:34]
Larry Lepard
Yes.
- [10:35]
Dave Weisberger
Matters a lot here because what actually is happening is, and I'm not plugging active managers, I know people like Cliff Asmith from aqr, if you were listening, I doubt he does, but if you were listening, he would be, oh, really? Weisberger is actually saying good things about us. But the simple fact is that you have a very large set of changes that are going to be implementing the economy. If you're a domestic manufacturer of healthy foods, you're going to do well. If you are a international manufacturer using agribusiness seeds, with what Kennedy is likely to do to try to fix the American diet, you're going to get screwed. You know, if you're a big pharma company that relies upon an FDA that's effectively captured not going to do as well as you would. But if you are a biotech company who may find an easier path toward approval of actual drugs with real clinical science without the 10 years of bureaucratic delays, you're going to be better off. But I could go on.
- [11:42]
Scott Melker
Yeah, but Dave, the question is how much of the materials for those are going to be under tariffs that are coming from other countries, which is the nuance of being obviously in a global economy. I mean, take this look. Apple will add 20,000 US jobs amid threat from Trump tariffs. Larry if you wanted some proof that people are taking this seriously. Right. As you said, I mean people are, they're concerned and actually making a move that's not a small drop in the bucket reactionary move from Apple. That's huge. They really believe this.
- [12:13]
Mike McGlone
It's a key thing that I think to remind us are about what's happening is Doge is a shocker. The world's largest employer and creation creator of excess liquidity is cutting back like something we've never seen before. And it's the fear that kicks in and it's happening with markets most stretched by most measures. When you can say ever that's kind of scary. Certainly US stock market on a global basis versus commodities versus gold versus that. But that headline is key. The key thing to remember about why has it been have the trend in most corporations offshoring things like towards China everything is for profits and earnings. Poof, those are going to be gone. And they're way over expecting not gone but they're going to be pulling back. So that's the key thing to remember is maybe the stock market can go up in the environment. So it's just. I'm going to put make some calls here. So first of all we end the month this year. So so far in the month bitcoin's up about 2%. I'm sorry in the year s and P500 total turns about 2.4% and TLT is almost, almost 3%. To me those are trends that also you have that little stock market down 10%. TLT is going to drop rally 30%. It's so overdue. So the key thing is also what's the best performing. One of the best performing this year is gold's up almost 3, 3 13%. The key thing that'll I think kicking I make a call. Gold ETF outflows for the last four years in a row. We'll switch to inflows this year. Just getting started. They're really kicking in. I think people are seeing that. Yeah, okay. Make America great again. It's kind of how much greater is it going to get? We have to get through discombobulation first. So I'll make another call. I think crude oil made a peak this year around 80. I think it's going to 60. You see that and also what's the key thing about ceiling and all Energy. It's our new administration. They want energy prices lower which means a floor in bond markets. So I think we have more of a federal of a government put in the bond market now than the stock market. Doge is not good for stocks, and tariffs are not good for stocks. So that's one call. I think crude oil's more likely to head to 60. Copper on Valentine's Day made a high at $4.84 a pound, very similar to last year's high, around 5.20. I think that's peaked for a year, maybe heading down to 4 or lower. Natural gas is still bumping up in their four. We've had an extremely cold winter and only getting to $4. I mean, that's probably against the Trump administration. We want lower energy costs and they can help get that by permitting things. And then you look at the agriculture we mentioned, food and energy. Corn is up around 5. And it's the longest I've ever seen speculators open. Open interest in futures, you know, what drives the market, are the longest ever. We've never seen futures as high. And speculators are. Net longs are 20% of that. So what I see in commodities is you need bullish fuel, but normal is they're stuck in ranges and typically they.
- [14:48]
Scott Melker
Go down really quickly. Larry, I know that you're a huge bond bull. They're your favorite. Okay, yes, sorry, I'm starting to trying to start a fight with sarcasm, but what Mike just said, they're obviously basically tlt outperforming, you know, bitcoin or S and P. Obviously. No, it's depending on timeframe. But I know you can't agree that that's where.
- [15:08]
Larry Lepard
Well, no, no, I think Mike is right and Mike is smarter and closer to the day to day, month to month, week to week movements in these markets. And, you know, if we get a big back off in the stock market, could, could a bid come into the bond market? Absolutely. I totally accept that. You know, but, but, you know, longer term. Am I a bond bull? No way. I mean, longer term. I mean, I just, I just wrote a book about how, you know, there's, in my view, to keep this whole damn thing going, they've got to continue printing money. And, and as we all know, that's very negative for bonds. But, but shorter term, you know, big, big stock downturn, people looking for a safe harbor. Sure, it could happen. I mean, interestingly though, the safe harbor to date has been gold and bitcoin. I mean, gold and bitcoin have outperformed bonds massively since 2020. I mean, Bitcoin's up 2000% since 2020 in bond terms, and gold's up 200% since 2020 in bond terms. And those are the two markers that I use to suggest that we really are in a sovereign debt crisis. Now, as I said in last week's program, Doge is going to try to help that. And I applaud the help. I applaud the notion of getting the waste out of government. But I also kind of say all the people who think Trump is going to solve all the problems quickly and that Doge can do what they say they're going to do in terms of balancing the budget, in my view, they're living in fantasy land. You know, 80% of the budget is, you know, Social Security, Medicare, interest, which you really, unless it drop rates, you can't solve. And what's the fourth defense? And so, you know, maybe they can take something out of that. So Doge will take maybe 3,400 billion dollars out of the budget. But you know, we're running at a $2.4 trillion deficit run rate up from 1.8 last year. I mean the first two months, first two calendar months or fiscal months of this year, the deficit grew 64% year over year in fiscal 25 versus fiscal 24. I mean, that stat just amazes me. I mean, you know, Washington is, is really out of control or was out of control and Doge is trying to control it. But I think the, you know, I think the trains kind of left the station and so, so I'm with Mike. I, I don't dispute that shorter term he could be dead ass. Right. But I, I know what, you know, all I make investments in 1, 2 and 5 year time frames. So I'm pretty comfortable being a bond bear over those longer time frames. I'd be curious to see what Mike thinks if he agrees really quickly.
- [17:22]
Scott Melker
I think, Larry, it's reasonable to support transparency and finding where the government is wasting taxpayer dollars and believe that Doge is a noble effort. But also understand that there's just not enough money for them to find that's going to solve any of the major problems. I think those are two reasonable positions to have at the same time.
- [17:41]
Dave Weisberger
I think you look at the debt.
- [17:42]
Larry Lepard
Crisis, it's gonna, it is definitely gonna help. It's gonna slow down the train. As Lynn says, nothing stops the train. That's right.
- [17:50]
Dave Weisberger
Yeah. I mean Lynn Alden has been very, been spot on on this. I mean the fact of budget situation is there, there are a few crosscurrents here. Cross current. Number one is entitlements are the boogeyman. And that's why it is so important to actually Find out if Elon is full of or right. And honestly, I don't know which. In terms of fraud in Social Security, Medicaid rolls, Medicare roles, etc. Right. If he's right that there's a lot of fraud there and we actually can do something with entitlements, then we all may be underestimated. What Doge can do, I think that most people don't believe that that's real. I think that in defense, I think he's going to find quite a bit. But you know, 20, 30%. You know, you're right.
- [18:35]
Scott Melker
They haven't passed an audit ever. The Department of Defense can only account for 35% of their budget. So, yeah, I would imagine he'll find something.
- [18:42]
Dave Weisberger
I believe that there's going to be significant savings. I think we'll get back down to, you know, where we were probably four or five years ago pre pandemic. I don't think that without major structural changes, that is Congress deciding that they want to actually do their jobs as opposed to continuing to spend to provide. You know, Congresspeople believe their job it is, is to campaign for the next session of Congress. And what's the single best way to do that? And it's to give money to your constituents by pork. Things that you insert into omnibus spending bills. And until you fix that, you don't, you don't get anywhere. But they're, they're going to make a lot of changes. But the one place where I dispute Doge being bad for the stock market is I think Doge is not uniformly bad for the stock market. I think it will be bad for the largest companies in the stock market, which had been the single things driving the S P. But small companies are going to find things to be different. If you're a big company and you're outshoring and you own the regulators and you've been setting up regulation for the last five years in or five years, probably 30 years in your favor. Now we have an administration that says, oh, wait a minute, we don't want to have these very complex, you know, regulations. It means that companies that don't have 5, 10, 15, $20 million compliance budgets can now compete. And so I think you're going to find, starting probably around the back half of this year, significant outperformance of what will be the newly reconstituted Russell. As of, you know, because Russell reconstitutes themselves every, every June. I think you'll find a small benefiting over large trend will establish itself. But it's don't do not. Anyone listening? I'm not saying this is happening now and in fact the Russell fell more on Friday than the rest of the market. But I do think that this trend toward regulation as a way of establishing competitive moats is going to go away. And oh, by the way, for crypto, that's going to matter a lot for issuers who actually are creating value as opposed to extracting rent. And we can talk about that as well. That's a totally different topic.
- [20:52]
Larry Lepard
Did you guys see the Luke Gromen tweet where he retweeted somebody who said that maybe they, they don't have the keys to the crypto that's. Or the bitcoin that's owned by the government?
- [21:01]
Scott Melker
There was a shady news organization and went viral and I saw a lot of people retweeting it, so I could not verify that, but nothing would surprise. I mean this is along the lines of there's no gold in Fort Knox. Right.
- [21:14]
Dave Weisberger
Well, let's actually talk about both of those stories. I want to hear Larry's opinion on the fortnight. But, but I have an opinion on the other. How could it be that everybody who was staring at the wallets owned by the U.S. marshals in December and in October, we're talking about large movements of coins from those wallets inside Coinbase and to now they don't have it just the two are completely irreconcilable.
- [21:40]
Scott Melker
I don't know who leading report was, but this is where I saw it. 43,000 likes. As you can see. Every bitcoiner jumped right on the train to tweet that.
- [21:48]
Dave Weisberger
I mean, I saw it and my.
- [21:50]
Scott Melker
First thought was it's a public blockchain.
- [21:53]
Dave Weisberger
You can't, you can't have those two. The two stories. The market gets knocked down because Biden is going to rush to sell his bitcoin. And here's the forensic proof on the public blockchain. And then a story, oh, Biden lost the keys. The two things are just not.
- [22:09]
Larry Lepard
Yeah, no, I agree.
- [22:11]
Dave Weisberger
Those two thoughts can't be in your mind at the same time.
- [22:14]
Larry Lepard
There's a lot of, there's a lot of noise on the web. We'll have to see if it's.
- [22:18]
Dave Weisberger
Here's an interesting question. I personally think that I don't see how they would even know because you could have spray painted, you know, gold plated in there and they would have absolutely. Or tungsten. Okay, whatever. But you would have, could have spray painted, you know, gold, you know, whatever. And they wouldn't know whether it's real or not real, but. But let's just game theory it out. Let's say some of the gold is missing. I think that's highly unlikely. What happens? And let's say the most likely scenario. Okay, great. US still has everything we said we're going to do. All is well what happens. I mean, to me, the latter is far, far more likely. Whether or not it's really true or not is independently irrelevant. But the fact that you'll get an all clear seems the most likely scenario to me. What about you?
- [23:04]
Larry Lepard
Well, it's interesting that the scent came out and said it's all there. My sense is he got read in on US national security and what he had to say.
- [23:12]
Scott Melker
They do audit that gold. No, they don't.
- [23:14]
Dave Weisberger
Correct.
- [23:15]
Larry Lepard
No, they don't. They don't. They haven't audited since 1953. You know, so there was something called the London Gold Pool that operated from the early 60s until 68 when it blew up. And that was a, that was an effort to keep the price at $35, which of course Nixon abandoned because the pool blew up. And, you know, it's very possible that we were using some of that gold to keep the pool in place because the US Fed was a party to it and the treasury were party. That gold pool, I don't know. It's, you know, is the gold there? Isn't it there? I mean, I'm sure, look, there is gold in Fort Knox. There's probably no doubt about that. Mnuchin went down there with his w. Wife and took pictures of him in front of gold bars, you know, so, so there are gold bars there for sure. Are they, Are they all. Yeah, right. Are they all there? You know, it's unclear. And probably more importantly, has it been rehypothecated? You know, what is the exchange stabilization fund done in terms of selling paper gold in the marketplace? So, and that would involve an audit of the Fed's exchange stabilization fund. Of course, you know, the odds of that happening are kind of zero. I mean, I, I think it's great when Musk says, oh, yeah, we're going to send Ron Pauling to audit the Fed. Well, good luck. I mean, the Fed is going to push back so hard on that. The Fed's controlled by Congress. Until you get a Congressional act, you're not going to touch the Fed. So, you know, I don't know. I mean, Ron Paul, pull me, told me personally he doesn't believe the gold's there. If you think of all the bad things that the government has done over the years. I mean, you know, as an example, you know, the Kennedy assassination story doesn't really hold together. Doesn't it seem possible that somewhere along the line we needed some money and we. We sold? You know, we, we rated that gold? It seems possible to me. Did it happen? I don't know.
- [24:50]
Dave Weisberger
Did Rand Paul tell you that it.
- [24:52]
Larry Lepard
Was Ron, but not Ron Paul tell.
- [24:54]
Dave Weisberger
You that the physical gold isn't there or that they've. That they've actually sold?
- [24:58]
Larry Lepard
He told me it was his belief. He told me it was his belief that it has been diminished over the years, that various administrations.
- [25:08]
Dave Weisberger
Let's just play out the game theory. What happens if 25% of the gold in Fort Knox is not there and that comes out publicly? What does that do to the price of gold? I think it goes rather higher.
- [25:21]
Larry Lepard
It does. But, you know, here's the thing about gold, and this is why bitcoin is so superior. I mean, you know, anyone could say they have an amount of gold, but it's very hard to verify. Do you have a. Do you have a tungsten plated bar? You know, can we see the bars? Can we audit the bars? I mean, you know, China's gone the other way. I mean, they claim they have a couple thousand tons, and yet they have so many imports from Switzerland and London that it's almost obvious to any of us who are gold analysts that they probably have 12,000 tons or more, maybe 15 or 20. So, I mean, gold's one of these opaque neutral reserve assets that's hard to see and hard to test and hard to verify. Kind of unlike, you know, the bitcoin blockchain. Which is what? Which is why, you know, bitcoin better chance of being the neutral reserve currency in the longer run.
- [26:05]
Dave Weisberger
So. So let me ask you, the game theory piece, and I'm sure Mike's gonna want to jump in on this, is if xi actually has 10,000 tons more gold than he says he does?
- [26:16]
Larry Lepard
I think he does.
- [26:17]
Dave Weisberger
What are the odds that in his conversations with. With President Trump that he doesn't say, you know, Donald, you know, one of these days that little, you know, this little fact could become public, and this might not be really good for your fiscal stability here. You know, we probably should be working together, you know, kind of like, you.
- [26:37]
Larry Lepard
Know, I think it's clearly a negotiating chip that they have. And the problem is that the yuan and their currency and their society and their system is, you know, no better than ours. In fact, it's probably more corrupt than ours. So, you know, backing the yuan with gold is not really a solution necessarily either until they get a better political system. So look, I think the bottom line is that the world universally, everywhere is losing faith in fiat currency. That's the big picture trend, right, that governments have been shown. I mean, what did Satoshi say? There are lots of examples of abuse of the trust of not printing money. Since nobody can really trust anybody else in this sound money game. And since the gold is hard to verify, I know who has what. You know, the bitcoin ledger, which is very, very friable, is actually quite a step forward in terms of solving the problem.
- [27:34]
Mike McGlone
So there's gold, silver, platinum and palladium. There's only four precious metals and there's 12 million cryptocurrencies. So yes, I'm a former bull on, on bitcoin, I am bearish. I think bitcoin is more likely to go to 50 than 150. I think Ethereum's ripe to drop below 2000. And there's a massive simple reason. We've all seen it before in history, human, these highly speculative digital assets. And now we're doing like Fantasia. I forgot what the German offer was. We're just creating way too many of it. And the key thing is there's just an excess of supply and speculation. So I just keep tracking this bitcoin to go ratio. Now we're down to 32 ounces of gold for Bitcoin. Why doesn't it go to 20? There's not a big reason why it shouldn't. And I think we're going to get a little bit of realization that a space with unlimited supply, unlimited competition is not good for prices, particularly when you have massive hubris and speculative excesses and depending on a US government to make it go up. So I'm tilting over to gold and long bonds partly because one thing is, first of all, we're talking about something before. We're talking about is a very low probability, hypothetical thing. As a trader. Yeah, you might talk about it, but it's just not worth it from a pure position standpoint. You look at gold versus the long bond, the treasury bond, I go back 30 years and the Bloomberg 20 plus long bond index, gold is most expensive versus long bonds ever compared to where it was in 2000 when the stock market peaked. And this is where I think we are right now. I think we're very similar to we were almost exactly 25 years ago. We do have the earnings in the equities. We're much more expensive when we are in terms of GDP in the rest of the world. But we do have massive speculation and unlimited supply in cryptos and everybody's bullish. Not everybody, some rational people. The insiders who got in early probably smart enough to sell out with the ETFs. And so far they have. So to me, this macro is everything is dependent bottom line on this US Stock market staying lofty, which it might do, that might stay up. But I just point out, give us a little 10% correction and that's a mass trading environment we're already seeing. I just point out in commodities you're seeing pretty severe deflation with the exception of some of the equator commodities. But crude oil at $70 a barrel, copper looks like it's peaked. This space is there's a lot of opium. But the realistic, the reality of a very limited supply of precious metals and gold and unlimited supply of cryptos is starting to show up in like the Bloomberg Galaxy crypto index. It never made a new high and it's ticking down, down.
- [30:00]
Dave Weisberger
So I, I need to respond to this first because I always talk.
- [30:06]
Larry Lepard
You go first, Dave.
- [30:07]
Dave Weisberger
Okay, so first of all, the most important trend in the crypto market, which I, I started this show with Mike, is a dawning realization that there are two markets that to actually even talk about. Bitcoin is the same as every other altcoin out there is dumb. Now, I'm not Eden Yago, although I do agree with Scott that he is a brilliant man and there are many things that I learned from him. I've been on the stage with him, I've talked to him, he's a smart guy. I don't necessarily agree that the entire world will, that all the rest of crypto will go to zero. In fact, I definitively don't agree with that. But I do think all the rest of crypto is going to suffer like the Nasdaq did in 2000 and 2001 and 2. I do believe that that is in the cards. I do believe that we don't know know what coins are going to be the ones that win, but the winners are going to look more like Amazon than they're going to look like pets.com but there's going to be, you said there's 11 million crypto, there's going to be 10 million 999, 900 cryptos that are going to look like pets.com and the rest of them are the ones that are going to look like things that are going to really do well. I've been beating the drum about Meme coins for, you know, months now, ever since the election. And I said, listen, listen, we've had four years where the only way you could create a token in the United States and not have the SEC bang on your door is to literally pass on no economic value. Which meant either do meme coins or governance tokens. Now the smart governance tokens are talking about where there is actual economic value, talking about changing that or a framework to do it. That's why Ondo has done okay. Right. But most of these tokens are going to go to 00. They just are, you know, there's no value there. The ones that can actually pass on value are going to do well. It's going to be a very small percentage of them. I don't know which are the ones that are going to happen. But none of that impacts bitcoin. And if you look at the market, I mean just look at bitcoin's outperformance to non stable coin altcoins. Just look at it. We had an all time high right now, Scott, we must be.
- [32:11]
Scott Melker
I only have, I don't have the. I have bitcoin dominance coincidentally pull up right now. But this is not without stable coins. It's Obvious probably around 70% if you take, take stable coins out of it. You've got to imagine.
- [32:21]
Dave Weisberger
Yeah, it's very high and it's going higher. So this argument that other things are competing with it. The only community which claims to compete with bitcoin are the. Is the. Is the XRP army. And I will take and look, I own some xrp. Okay. I understand the investment thesis. It's not. Is nothing close to my bitcoin position.
- [32:42]
Scott Melker
But it's not hard money and digital gold. That's the.
- [32:45]
Dave Weisberger
But I'm telling you you got, you know, you got to stop with that one. You want to use that to talk about Ethereum, the Galaxy, you know, Bloomberg index. Yes, I, I totally understand your point and there's, there's logic there. But, but I really, you know, after Lawrence, you know, talks, I really do want to hear your opinion on, on the whole gold thing because you know, you've been talking about gold have been a gold bull for, for a long time here. I mean what I'd love to hear what you think about the whole Fort Knox and confidence and paper gold and what that means.
- [33:15]
Larry Lepard
Yeah, let me just address. You covered it pretty well. But I just want to emphasize the point you made, Mike. I mean Mike, I think a mistake you're making in your head is you're conflating bitcoin with all the other cryptos. And you're right, there are thousands of cryptos and they're. And there's all kinds of speculation and they don't have legitimate use cases and that they, they sadly really confuse the whole story a lot. They've hurt a lot of people. People have lost money in Sam Bankman fried all these guys. And I actually address all this in my book as well, that sadly it sent a lot of people away from the track of understanding what bitcoin really is. Bitcoin is a technological invention. Bitcoin is legitimate, immutable digital scarcity. So just go through that slowly. It's truly a number of units of digital units that are only 21 million of them ultimately will be produced. And, and therefore in a sense it really has become a digital form of gold. People are buying it because it's the hardest money around. Right now. It's stock to flow ratio is higher than anything else. It's twice the ratio of gold and it'll get higher, higher every four years. So. So I think it's very important to separate that away from all the crypto noise and nonsense. And you know, I mean, look, in a big downturn, everything's going to go down in the liquidity crunch, you know, everything's going to go down in March of 2020. Bitcoin got hit. They all got hit. Gold got hit. But by the way, when Powell turned on the printing press, you know, that Monday morning, they all recovered very rapidly. Gold and bitcoin kind of the fastest. Gold actually. Gold the fastest. And bitcoin followed. So the point is, I just, I think it's. Don't, don't confuse the two. They really. We're talking. I mean bitcoin is a completely different animal than crypto. Unfortunately the market and most people don't understand that, but that'll become clear over time, in my opinion.
- [35:09]
Mike McGlone
I want to go down and this podcast is the dumb one I love. No, no, I want to be my job. Those of us who worked in the trading pits and from big families, I love being the dumb one when it comes to market calls and what you just said, Larry, I love it. I said that 10 years ago. I loved it then. But now we have 12 million. Us humans are messing this one up and I just wish you luck. I'm still bullish gold and I still think long bonds will be the next big trade. Been completely wrong, but I got to be considered really dumb before I get it right. It's usually the way it works. And I feel like. But how many times in my career I've said what you just said, let's just not waste time with that oh, divinable diminishing supply. I get it. All that silly stuff. But now it's not. It's just there's unlimited competition of this first born crypto. And I wonder what Satoshi would think about 12 billion copycats now.
- [36:01]
Scott Melker
He probably would, apparently. Apparently he's Jack Dorsey by the way, in case.
- [36:06]
Mike McGlone
I think it was.
- [36:07]
Larry Lepard
Because I agree with you, Mike. I think it was lens essence.
- [36:10]
Scott Melker
But let me just say really quickly in context of the Trump token, I think that Trump put in a ceiling for all of those 1112 million cryptos that you talked about by launching the Trump Token. I think that was sort of the beginning or the top of that trend for a very long time. And I think Libra destroyed it almost entirely. It took a long time to bleed out. But I mean I don't know if you have seen but Meme Coin launches were down from like 62,000 two weeks ago a day to I think sub 20,000 now. I think volume on pump fund down about 40% from pre Libra. I'm not saying it's dead, but I'm saying a lot of people finally had it with that nonsense.
- [36:56]
Dave Weisberger
Mike.
- [36:56]
Scott Melker
Listen, I'm not saying that it's going to go anywhere the Meme Coin casino will thrive, but I do think that judging by what we've seen in the volumes and the outright grift, people are a little more skeptical and it's hard to argue that those are competing directly.
- [37:11]
Mike McGlone
So I agree with that. I just say there's certain things, sometimes the bell rings at the peak. Those. That was the bell.
- [37:17]
Dave Weisberger
I think that it's. Look, the bell that rang and I agree about rain. The bell that rang is people are starting to learn that value and economics matter and, and understand what that means. What that means is that you can't just be a, a, you know, a rent extractor and take as much money. You still can extract rent, you can still play for it. There are a few bells that got rang in me meme coins. Number one, the notion that you can have something that you'll have value and you can call it value. The idea of building a community that doesn't pass on any of its value to its members is going to get harder. I mean the attention economy and Rand talks about this all the time. You know, when you're, when your attention is, is I put my finger in this fire, it hurts. I Say out the second time you don't put your finger in the fire. If you put your finger in the fire and it's like, oh, this feels great, right? You know, which is what was happening with meme coins on the way up. Then you keep doing more. Well, we've had a lot of people put their fingers in fire and that's not going to help them. And we have a, a complete change. A 180 in the world's largest regulatory market which says. Which is going to. It hasn't physically changed yet.
- [38:34]
Larry Lepard
People.
- [38:34]
Dave Weisberger
The only thing that's changed is people know they probably won't get sued if they do something that isn't horrible. But the second bell that rang is. There are a lot of people out there saying, wait a minute. These rules against market manipulation are probably a good thing. What is this sniping anyway? Is it. What's the difference between this and what we accuse HFT traders of doing back in. When Michael Lewis wrote Flashboys, which by the way, by that point was mostly. And there was still 60 Minutes talking about it, it was a major news.
- [39:09]
Scott Melker
We have it. We have not invented a new grift here. We just have a faster technology to do it.
- [39:14]
Dave Weisberger
That's exactly right. So, you know, speaking of someone who ran a high frequency trading firm at the time of Flash Boys, I can tell you that the most likely scenario is going to be that if you're a defi market, your code has to be open source and people have to understand what's going on and publish what the grift is so people can know it. And if you're a CEFI market, you're not going to allow market makers have special access anymore. That is literally what's coming, people. And. And if you don't see that, then your heads are in the freaking sand.
- [39:47]
Scott Melker
The only difference here is that it wasn't presidents that were tweeting them the second that they launched.
- [39:53]
Dave Weisberger
You know, it's not very clear. It's not clear at all. Whatever my thing, they just wanted to create it. I don't. I think they were ignorant of, of what people were doing on the back of it. And it's extremely clear that Melee was ignorant.
- [40:11]
Scott Melker
There's no question there. And by the way, if you want to know when the real top comes, it's when Kanye west launches Swastiko this week. We're not going to talk about that because my brain just can't handle it.
- [40:21]
Dave Weisberger
But the meta point here matters. The meta point. There are two meta points. Meta point. Bitcoin different than the rest of crypto. And the meta crypto is going to go through a a serious purge of over the next two years. Some of which internal by people getting pissed off and losing losing activity and some of which is external.
- [40:44]
Scott Melker
I would make the argument Dave I don't think we're going to see a serious purge of bullshit. I just think that most of it will fall completely flat because yeah, that's what we're actually. I think we're actually going to see on a percentage basis a lot more bullshit because of great news like this. I'll show you SEC ENDS investigation into Robin it right. We haven't even talked about the fact that they dropped the investigation against Coinbase, they dropped the investigation against OpenSea. We now have an environment which is much better where it's been deregulated and people can innovate and we can build things in the United States and entrepreneurs will be let free. We also know that that means that scammers are going to go absolute wild and the casinos are going to are going to go nuts. And I'm not saying that's a bad thing. This should be the environment. People should be able to do what they want to do. But like I don't think we get less bullfit bullshit. What I can hope is that we get less attention on the bullshit and it comes back to utility.
- [41:39]
Mike McGlone
So one key thing remember about places like Robinhood and Coinbase and certainly what you said Dave is let's remember what this space is. It's the best casino on the planet for beyond the click a button and trade. Remember what it's wonderful trading those of us who came from the day trading environment and trading pits and just remember it's wonderful for that people should do it and continue to trade, have fun doing it but probably better off selling. And when we lop off zeros and most of most of these cryptos bitcoin will suffer a lot. And I think that's just getting started. It's going to continue diverge just like Amazon did. And you know when the big crunch happened down to the peak, the bottom 2002 would it drop like 90% now that's what picking a point in time I get that but this is, this is things only happen a few times in history and in a lifetime. I'm saying to me this whole market looks to me exactly like it did 25 years ago and those of us were considered dumb then for recommending 30 year long mile. I'm so actually zeros back then I remember I was at a trading desk. And I was told that a few times, but it just emboldens the view. Like, yes, I know you pretty much made a lot of money. I just wish you luck. But sometimes you got to just come out and point out that there's value.
- [42:48]
Larry Lepard
Yeah, I was around in March of 2000 and it has the same feel to me. I mean it has the exact same feel. The speculation is just absolutely out of control role and you know, it is not going to end well for many, many, many people. And, and there's no doubt if all that liquidity goes away and all that paper wealth and fake wealth isn't there. You know, some people, they're gonna have to sell the bitcoin. They have just to, you know, to sell gold too.
- [43:11]
Scott Melker
Right?
- [43:11]
Mike McGlone
Yeah.
- [43:11]
Scott Melker
And go sell what you have to.
- [43:13]
Larry Lepard
And not, you know, everything will go down. It's just that in five years, you know, and particularly after the big print occurs, which we know mathematics kind of has to occur, you know, then everything will go back up again.
- [43:27]
Mike McGlone
I hope I'm alive five years from now. For five years is a long time.
- [43:29]
Scott Melker
And I was saying, Mike, if you were dumb 25 years ago, that was the year after I graduated. Stupidity of my entire life.
- [43:36]
Dave Weisberger
So Larry, you just made pretty well, Larry, you made the point here and you have explained what's happened for three months and what seems to be hitting a crescendo soon, which is the washing machine of crypto is exactly what you just said. The people who are diversified in crypto or who speculate in crypto have been selling bitcoin to people who look more like the three of us than look like the original bitcoiners who take the bitcoin, either stick it in cold wallets or have it in their ETF in their 401k and are leaving it sitting there. So you've seen the great washing machine. From weekends to strong hands, where the weekends are are the crypto bros who, oh crap, I will, I, you know, 10x leverage. Solana bought it at 250. Damn. I, I just lost all my money. I need to sell some. My bitcoin collateral just got, got flushed.
- [44:31]
Scott Melker
Right.
- [44:34]
Dave Weisberger
Then, then it's getting sold to ETF holders and boomers and pools of money, sovereign funds. And that's.
- [44:43]
Larry Lepard
And by the way guys, that's why when I recommend bitcoin to people and to my, my clients and to others, I say, you know folks, this, you know, let's study the history of this asset class. This asset class has had three or four drawdowns that have been 70%. So you know, whatever you buy in bitcoin today, you have to be ready. You have to understand that in a four year time frame or five year time frame you'll be fine. But you have to be prepared for that drawdown and you're not going to get blown out because the way you get hurt in Bitcoin is you buy a peak and then the drawdown comes, you think you're wrong and you sell it.
- [45:12]
Scott Melker
Okay, here's a question, Larry. Microstrategy, excuse me, Strategy, has acquired 20,356 Bitcoin for $1.99 billion. So he just spent another 2 billion. Is he prepared for a 70% drawdown?
- [45:29]
Mike McGlone
What's he doing to do? He's borrowing money to buy a highly speculative digital asset. History proves I just learned this in the trading pitch. You always learned, oh, everybody want to be a trader and you've learned that one out of ten do. Okay. You just don't hear the stories about those who affect get the Ds, the D, the death and divorce. It's just good luck.
- [45:47]
Larry Lepard
The amount that he's borrowing relative to total enterprise value is very light. It's like 10% or less. And so, you know, and a lot of it, the cost of it is you know, close to zero on an interest rate basis because he's selling converts, you know, so I don't think he's at great risk of, of having to sell anything to repay those loans. And even if there was a time when he was underwater on his average basis when it was down at 15 and he had some loans that were secured and he was able to term those out into unsecured. And so I think he's executing a strategy that's rather brilliant actually. He's borrowing in the shitty currency and he's buying the sound currency.
- [46:30]
Scott Melker
To your point, that's a brilliant strategy as long as your downside is protected. If there's a 70% drawdown.
- [46:35]
Larry Lepard
Well that's right and I'm assuming it is. I think in a 70% drop he would be fine. I mean, you know, his stock price would come down. Obviously the stock price just, I mean really, it's a holding company. It's just a holding company for bitcoin. And the reason it trades, stock price.
- [46:48]
Scott Melker
Comes down, you just have a lot more problem raising money to buy more.
- [46:51]
Larry Lepard
Well, that's right. It becomes more difficult to sell new stock and to sell converts. But, but the point is that, you know, he's not ever at risk of going BK because, you know, the amount of debt he's got is so small relative to the total asset value that he could sell 10% of the assets. He'd be totally out of debt. So, you know. But could it come down to trade at book value? Sure it could. I mean it trades kind of at two times book right now, which is, you know, that's, that's a result of the fact that he's got kind of a, you know, the volatility in the asset provides him with a low, low cost source of capital. Now that volatility might not always be there and if that goes away, then he'll have to stop, he'll stop growing and so be it.
- [47:30]
Scott Melker
Mike, how do we square a new inflationary trend in Japan? And now fear again of another carry trade sort of explosion. We show that inflation in Japan is 4%, which could put pressure on risk assets. We've had the Japan conversation over and over again. How does that square with what's happening in China being deflationary and then what's happening in Europe? We've got hikes in some places and cuts in other places.
- [47:59]
Mike McGlone
We are turning Japanese. Right, let's see, we're tilting towards recession. In Germany and uk they have to cut rates, but only one bank in the middle, ECB is doing it. Japan's getting some inflation. It took three decades. I traded JGBs in the 90s, early 90s. I remember I worked nights to do that in New York. And to me, this is what's happened with CGBS right now in China. By saying this before severe deflationary forces. What they did do, the US cut them off from just exporting to US made in build hair. They still allow them to have a massive surplus with the US but that's what's happening in China. China is just 10 times the size. The key thing I want to point out, yeah, we're getting a little rebound in Japan, but their GDP at $4 trillion is the same it was 30 years ago. China's GDP is doing the same thing, except it's worse. It's from much higher levels. And not only that, they enabled a war in their neighbor's backyard. They pissed off the world's most significant demand pull force in the US And Trump's coming down hard. So I see what Larry mentioned. As far as you use the example of debt to GDP and pumping your system liquidity, look what happened to JGBs. They got to near like 1% or so. Look what's happened in CGBs we have a higher debt to GDP major significant in China than like 300% by some measures because all local debt is all, it's all national. It's only one person. There is no automatic check in that country. You want corruption, it's just one human being making all decisions. We know how that works out. So I'm, I'm pointing out this is a global deflationary force which is the lessons of all history Edward Chancellor wrote about in his book the Price of Time. It always happens. It's happened in Japan, it's happening in China. Signals just starting to happen in Europe. They made mistake of you know, having that war in the background and just a matter of time to get to us. That's why I pointed us bond market. I'll end with this. The average of the top five bond yields in the world including India and China, Japan and Germany is about 120 basis points below the U.S. that's the bond market rally I've been looking for. I've been wrong for two years. But you know I was able to say bullish bitcoin for a while now to me everything's tilting towards. There's only one asset I think is going to go up and that's treasury bonds because it's the cheapest on the planet and historically versus gold. So. But Japan's good to be roped in it. Just remember it took 30 years to get there. That's where China is now.
- [50:13]
Scott Melker
So in your opinion Japan is the outlier.
- [50:16]
Mike McGlone
Oh they're coming out. They're finally coming out of it. But they still have to export. And what's happening with Japan is they still have a focus on internal combustion engines and they're getting crushed by China byd what's happening in Germany just the technology is moving beyond them. So to me this is the part of the severe deflationary forces that Japan pushed a little bit on. Now China's kicking in. I just hear it from. I was at this mining and money conference last week. So Larry get a lot of gold bugs there. But the key thing I hear out of that is the deflation coming out of out of China with their renowned renewable vehicles. That's what part of what's crushing Japan. At least they're getting little inflation meantime. But think about their auto exporters. They have to defend and they have to. They're still focused on internal combustion and markets moving away from these vehicles.
- [51:04]
Dave Weisberger
Yeah, I just will continue to say something. I mean I know probably you say this in your book multiple times to be my Guess when you use the word deflation, I always talk about this. There's a difference in consumers, consumer inflation and asset inflation. If you're, if you're printing money constantly and the entire G20 is running at this massive yearly deficit with this huge debt backlog and debt to GDP that's over 100 on a global basis. To talk about deflation without considering what's happening to the denominator, which is that fiat money, money, I think, is misguided. Now, if you're talking about deflation in the sense of relative from one place to another, right. I mean, Chinese cars are kicking the crap. The only reason we don't see it in America is we don't let them hear, you know, my son, you know Ian and you know, coin routes, who's expanding in Dubai, right? You know, we, we see that. And so you see the Chinese cars and they go, oh my God, these things are great, you know, really well made much, much cheaper. We don't see it here because we don't have it. The Japanese car makers actually have a serious problem. Mike, you are 100% right. And they are cheaper. And so, yes, there are deflationary forces driven by technology in consumer goods, where technology can impact that. But what it can't do is change the fact that the denominator, I. E. The supply of fiat money, is continuing to increase. So based on that denominator, something has to give. And that really is the essence of the, the, the bitcoin argument for sound money. And oh, by the way, it's the same argument for gold. But, you know, which is why gold is continuing to move higher. Eventually the selling from crypto people will be overwhelmed by the, the people who believe that bitcoin is a better version of gold. And that's when the next big rally in bitcoin happens.
- [53:05]
Scott Melker
But I also just think that most honestly, I think we have such a bifurcated market. I know. And this goes back to the argument that we always have about how many millions of bitcoin competitors there are. I've done surveys on X. I know it's an echo chamber, but I think that these people don't own bitcoin. Like, when you talk about this person who got liquidated on a solana trade or the people trading memes, I literally don't think they. These are not the people who came in through bitcoin or speculating. These are people who came in through the Meme Point Casino, came in through NFTs, came in through Doge, and never bought bitcoin. Ever. And are most of them are not being driven there. I think it's a totally separate market.
- [53:43]
Larry Lepard
Yeah, I don't know. I don't, I'm not close enough to that whole marketplace to know.
- [53:49]
Dave Weisberger
But I'm sure you have an opinion about the, the denominator being the fiat currency side.
- [53:54]
Larry Lepard
Oh, absolutely, yeah. No, I'm with you on that. I mean, it's, look, they, you know, I wrote a book about it. They can't stop printing math just, just dictates that they will continue to print, that sometimes they print more, sometimes they print less. I mean, it's interesting to me. One of the big macro things that happened last week was besent said, thank you. Thanks, Scott, for the plug.
- [54:11]
Scott Melker
Buy the book, guys. It's up on Amazon.
- [54:13]
Larry Lepard
The big print macro things said last week is, you know, that maybe, you know, it would, I think he had a conversation with Jay Powell and, and he indicated that, you know, it would be helpful if, you know, he wants to term out more of the debt if the, if the Fed stopped reducing their balance sheet and selling into the market and competing with the new debt that's going to get sold. So I, you know, to me that that's a clue that, you know, very soon quantitative tightening is about to stop, which makes sense because the reverse repo has been drawn down to a very small level. And, and they, you know, they've got a real problem here. I mean, I, I think this has got to come to a head in the next six to 12 months. You know, but that's the cap on.
- [54:52]
Dave Weisberger
On, on why tlt? I mean, look, I believe I've been saying this. I've been pounding the drum on, you know, James will tell you this, that the scent and Trump care more about bringing down, you know, and having that, that rally that Mike wants in tlt. I just don't think that's the amount that they have to refinance. They can get an explosive rally. I do think, however, that those who are selling it and shorting it it and the expectation we're going to see long rates go between 5 and 6 or 7% are going to be poor. And so, you know, I think that, that there'll be a happy place and that happy place is anywhere where we have close to a flat yield curve where he can term out the debt.
- [55:39]
Larry Lepard
Correct.
- [55:40]
Dave Weisberger
And I think that the, the need to term out the debt more or less caps the, the, the upside to the TLT trade to where the, the short end of the curve is. And so you're not going to see, you know, short rates at 4.2 and the long bond at 3. That, that isn't going to happen because they're engineering it. Now, I don't want to use the word yield curve control, but honestly, because it's it that's backwards. It's not that they're control, trying to control it, it's that they have to, they want to term out that debt. That's what they want. And, and they need to honestly, for a lot of very, very important reasons.
- [56:17]
Larry Lepard
And arguably these tariffs are a club to, you know, to do international yield curve control. You know, hey China, stop selling our debt or maybe buy more debt or we're going to put tariffs on your goods. Right. I mean don't be surprised.
- [56:29]
Dave Weisberger
People don't.
- [56:30]
Larry Lepard
They got a lot of lovers they can pull and I suspect they're pulling them behind the scenes.
- [56:34]
Dave Weisberger
I mean you, you probably are closer to it than I, but I, I, none of that would surprise me. The point is, is that I generally agree with Mike on the notion of technology driven deflation. I certainly agree with Mike about the recessionary forces, but I don't believe recessionary forces are what triggers inflation and deflation. I never have. I've been arguing, you know, from a monetarist perspective at a Keynesian school. I went to Northwestern and looked longingly at the Chicago Economics department and agreed with them and actually got into arguments with my professors at Northwestern about it. That will surprise anyone on this call.
- [57:09]
Mike McGlone
But you know, you proved them wrong.
- [57:12]
Larry Lepard
Dave.
- [57:13]
Dave Weisberger
It is. Well, I, Yeah, you've been very successful. But we're in a situation where when the government wants something and they have the tools to make it happen.
- [57:24]
Mike McGlone
Exactly.
- [57:25]
Dave Weisberger
Expect it to happen and they have.
- [57:26]
Mike McGlone
Pre existing trends in their favor. That's why I say anybody who's bearish, like you said, you're supposed to be selling energy on rallies and buying bonds and dips.
- [57:34]
Dave Weisberger
Right. I mean to the extent that you're a trader and if you're a long term investor, I would say, you know, there are better things to be in. And that's where I'm with Larry. So you know, it's sort of like that, charting the course. But people really need to understand that there's a supply demand dynamic going on in Bitcoin. And a fact is that it is we are being given an opportunity because of what's happening. And you know, we look just the largest hack in history in crypto.
- [58:04]
Scott Melker
We didn't even talk about it, but.
- [58:05]
Dave Weisberger
Yeah, and you know, a 1.4 billion dollar hack which the exchange because they're so damn profitable. I mean how binance paid a 4 billion dollar fine. It didn't blink. You know Bybit had to pay a billion and a half dollars, you know, their own profit to restore the eth, to make their customers whole. But you know, hey, they did and you know, hopefully they'll learn, you know, from their mistakes etc to, etc. This is the people who are out there and there are people this morning and on last, on the weekend and whatever last night saying oh my God, this is gonna be another ftx. I gotta get ahead of it. They're all gonna buy back in at higher prices, right?
- [58:40]
Scott Melker
Yeah, I mean that's, that's over 6 billion in outflows from I think 16 billion to 10 billion on Buybit in 24 hours.
- [58:48]
Dave Weisberger
Right.
- [58:49]
Mike McGlone
So, so I, I'll say the prerequisite for people, anybody encryptors to buy back at high empire prices based on than facts of the last couple years of trends is this US stock market has to be higher. That to me is the problem. It's the elephant in the room for everything now. It's just so expensive on most measures. Got to go up. It's okay if it goes up, but what if it just has normal backup and fill? That's what the cryptos are way overdue to see the normality of when you just don't create unprecedented wealth every day.
- [59:15]
Scott Melker
Well, we're going to finish the show right now. It's showing Larry's book.
- [59:20]
Larry Lepard
Thank you very much. I appreciate that. You know that the, I wrote it to try and explain to the average person why they're getting screwed by inflation and then that's the bad news and then the second half of the book is the good news. How to deal with it. So it's written at a very basic level and I hope it helps people. That's, that's, that was the, my purpose behind the book was to try and spread the word about inflation. And I actually have a policy response in there where I call for ending the Federal Reserve which I think make our world a lot better place.
- [59:50]
Scott Melker
So you know, as a, as a final story as we wrap Caitlyn Long and I interviewed RFK at oh, I think it was at, in Nashville at Bitcoin, Bitcoin Miami. And I was meeting with the team about the interview and kept meeting with Kennedy about it and we almost had him committing to say that it would be a policy position of his. This is when he was still running to end the Fed. But then he kind of at the last second said, that's probably how my uncle died and maybe I want to make it through this election. So we'll just stop short of saying that the Fed is a corrupt organization, needs to be looked into. But isn't that interesting?
- [60:28]
Larry Lepard
I think it grounds well. I mean, the system is so broken, so many people are hurting. I think people read this book and they continue to see they're hurting and this inflation problem doesn't get solved. And I think what's going to ultimately happen is it's gonna, the Fed's gonna end itself. I mean, it just, it's gonna become obvious, right?
- [60:45]
Scott Melker
It does seem that way. Gentlemen, thank you so much, Larry. Always. I think James will be back next week. People think he's just gone forever. He's not.
- [60:54]
Larry Lepard
Yeah, no, I'm. Yeah, I can't do this every week.
- [60:57]
Scott Melker
James will be back, but thank you very much, guys. Buy the book. Follow Dave, Mike and Larry now that he got his X account back. And we'll see you guys guys next Monday, of course. But I'll be back tomorrow at 9:00am Bye, guys.
- [61:10]
Larry Lepard
Let's do, let's do.