← The Wolf Of All Streets
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- [00:01]
A
Bitcoin sliding near 62,000 as sailor skips the dip. Actually, he bought the dip on cash, not on bitcoin this week, but adding to his USD reserves, up to $3 billion. We've also got a big week ahead at the Fed, and apparently we're back at war in Iran. We got a very special macro Monday today. And by special, I mean you get just me and Dave. You're gonna love it. Let's go, let's go.
- [00:44]
B
Let's do.
- [00:45]
A
Good morning, everybody. Happy macro Monday. To those who celebrate, I'm gonna give Dave all the time in the world today. Dave, what happened at the morning meeting? Can you please tell me what Anna Wong and Ira Jersey had to say? Can you tell me what the key thing is and why bitcoin is going to $10,000 while leading cryptos down?
- [01:03]
B
Yeah, no, I can't crypto. I have no interest in it. I mean, look, the most interesting thing today, and it's, it's fascinating, is we're back at war in Iran. They're firing at boats. They're doing everything that, that the oil bulls said would be, would send oil to 150 and beyond. You know, kind of like Buzz Lightyear Infinity and beyond. We're doing all the things that should, should crush global markets. And markets are yawning. I mean, yeah, the NASDAQ's down a percent. Okay. And Bitcoin's, you know, back at, was it 62.5or something like that? I mean, I don't know.
- [01:41]
A
It's the same price every hour for a month.
- [01:43]
B
It's, yeah, it's not, not much is happening. You know, effectively. It's all a bunch of theater. And the only thing that matters. There's one thing that matters, Scott, and I'm going to keep selling this to people until I'm blue in the face. And it's that they're printing more dollars, they're printing more yen, they're printing more euros. That's. And they're printing more remny. They're, you know, they're, they're the only currency that's not getting printed is the Swiss franc. And the Swiss franc. The poor Swiss are like the people in the boat trying to bail as fast as they could to keep their currency from getting too strong. And, you know, that's what's going on in the world. And you can look at everything else. You know, I, I, I went back this weekend and I did just a stupid little analysis, and I said, okay, show me since, since 2000, what's been the performance of housing and the performance of the stock market versus the quote performance of M2. And by the way, M2 underestimates the amount of monetary printing. It's only the, the money in circulation doesn't include all the debt that was facilitated slash encouraged by central bank policies. And if you look at that, housing has underperformed M2 and the stock market has outperformed all of which by the way, in the last couple of years by less than a percent. And so you look at this and you say, okay, what's happened? Well, whatever your dollar loaf of bread is or whatever your eggs are, whatever your stock is, whatever your house is like, oh, my house has gotten worth so much more. It's like, no, my house hasn't gotten worth more. The dollars have gotten worth less. And that is the only effing thing that matters. And so in that world, the real question about as far as crypto is concerned and you look at it and Ethereum has outperformed Bitcoin over the last few days and there's a reason for that. And you look at some of the others and you know they're kind of holding in there. Zcash is outperformed. Everything else is underperforming. Where is the value? Where are people looking? Well, the new narrative on Ethereum is it's a safer network and it'll be quantum resistant faster. And the network and the narrative on Bitcoin is there's a bip 110 debate and you posted a great quote, great thing from Adam back. But there's some other really good people talking about this. And at the end of the day what matters isn't. I'm oversimplifying. What matters isn't bip110. What matters is the process. Because what people really care about isn't spam. People really care about is quantum resistance. And can the bitcoin network get its shit together to, to, you know, you know, to defend against quantum. And can they get their together to defend against theoretical attacks such as that Duke professor that you, you quoted or talked to last week. Right.
- [04:37]
A
And I struggled hard on that one. I was like,
- [04:44]
B
he's the bitcoin bull at Duke because. Yeah, because he's surrounded by morons. Well, morons. Too strong a word. They're not dumb.
- [04:52]
A
I want to point out how hard it would be to build a short profitable enough to do that and to buy all that with out the market knowing and miners see. But hey, whatever it's, you know, it's Worth. It's always worth listening to the other side.
- [05:04]
B
Well, it is interesting, but. And we should. We could talk about that. But the fact of the matter is the whole point of the BIP110 debate, the reason it scares people out and all of the. It's the same thing from the block wars and we all remember what happened after that is can the bitcoin network prove to be non suicidal, Right. Can people work together and keep the network moving and running? That's really all that matters.
- [05:29]
A
I mean, interesting that to. To like as a corollary to that. And I want to use it as the kind of bridge to the next story, which is obviously we have some Sailor news. So strategy increase, increase its USD reserves by 450 million. They didn't buy or sell bitcoin. They used the strategy atmosphere. So now they're at 3 billion, obviously 843,000. But just because of what you just said, it kind of reminded me of my. A conversation coming out with Matt Hogan. I'll say camera. He may have said it on the show, we've done so many conversations, but he said the market just wanted to see that Saylor is not an irrational actor. Right. Like that's what, that's what was causing all the volatility and fear, uncertainty and doubt. Because they didn't know if he would do, quote unquote, the right thing, you know, as a fiduciary duty to his shareholders because he was kind of buying a little bitcoin and selling the convert, which they've now admitted was not maybe the best idea. But now that you've taken out the will he buy bitcoin at all costs? Will he be rational? And that's the same thing you're saying, I think with bip110, right. It's like, can the developers get their shit together enough to be rational and protect the network? It's the same argument. And now I think you can think whatever you want of Sailor, but I think the market is saying, okay, he's out, like now we can proceed without Saylor and we don't need to be concerned that he's an irrational actor.
- [06:46]
B
I think that is exactly right. I mean, look, my view on strategy will not change. It is that they had, you know, Saylor had an idea, it was a good idea. I think it's the correct idea that bitcoin will outperform soft assets, that hard assets will outperform assets linked to the dollar and the dollar only because frankly, the dollar is a melting ice cube. That said, the Notion that you can do things with bitcoin on a collateral basis is premature. And so he did the perpetual preferred, which is no different than high yield debt, except that your credit worthiness is based on your belief on the future price of bitcoin. That's it. That's what it is now. To do that, you need to be able to. To go through downdrafts and periods. And he didn't have the SDRC in 2022. If he did it, the bottom wouldn't have been 16, the bottom might have been 12, might have been 8, I don't know. But it would have been lower. That's absolute fact. You know, and people don't like hearing it. The sailor bills don't like hearing it. And the sailor bears who think he's going to sell don't like hearing the fact that if he didn't have to sell everything in 2022, why the F would you have to sell now? And give. Given that he has years of interest coverage, he doesn't. And so you get really in cash.
- [08:13]
A
I mean, it's two full years now to cover the press, right?
- [08:17]
B
But Scott, here's the bottom line. What sells on X? It's tragedy porn, right? You know, it's like literally watched the
- [08:26]
A
guy get hit by a bison at, you know, Yellowstone like five times. Every time I open it, it's a guy flying through the air.
- [08:33]
B
It's. And so the, the takes, people, I, unfortunately, will never happen, but it would be great if people who have horrendously bad takes actually suffered for those horrendously bad takes, but it doesn't happen. So, you know, you get, you get the opposite. Yeah, you get the opposite. They get the engagement and, you know, whatever. So, you know, McGlone seen his, his stuff, you know, rise because of his constant carping, but his constant carping is. And look, I like Mike, but there is no way there are two sentences that cannot or one sentence that cannot exist in a sane mind. And that is that Bitcoin to $10,000 in $2026 is a normal reversion. That is simply not true. That is. That is. It's like saying, you know, well, I Normally would be 6 foot 4. The fact that I'm 5 foot 8 is just random. I mean, you know, it's almost as dumb. Actually, the dumbest.
- [09:39]
A
We have Stronger Gravity in 2020.
- [09:41]
B
I have a. I have a better example. It's the idiot coach Kenny Atkinson and the Cleveland Cavaliers who insisted that based on analytics, they were beating the Knicks in the series. That they got swept in. You know, it's like, it's the same. Bitcoin at 10,000 in 20, $26 is like Bitcoin at, I don't know, 2000 in $2022 or $2023, you know, given how many dollars have been printed and how much stronger the network is, whichever way you want to look at it. So the people who make these predictions are doing it just, you know, irrespective of any of the factors that matter. I mean, when you're predicting oil, what matters the most? Well, there are two things that matter the most, right? In any. In predicting oil price. Prediction number one, what is the cost to produce it? Prediction input number two, what is the demand and what can people afford? That's what you have to care about with oil, right? Well, when the price of oil to produce it hasn't moved in, know, actually it's gone down, if anything, over the last 25 years, right? Despite monetary inflation being somewhere, you know, depending on how you measure it, you know, being on average 6% per year for 25 years. And you do the math on that, then you understand that technology has been deflationary to oil price. And so, yes, you can, you can look at that, and that's important. But at the same time, there is no such factor with either gold or bitcoin. And so understanding why gold has outperformed oil, by definition, it's the denominator of money. So when you look at a chart and say, well, the chart is looking based on what it used to do versus what it is now, well, it's fundamentally different now. Not because this time is different, but because the denominator, the thing that you use to evaluate, has changed. And so I will look at all these predictions as until somebody owns and normalizes based on. You could do it on M2. It'll be close enough for government work. Right? It's as I said, it underestimates the effect, but it's reasonable. But until you do that on a pure monetary asset, your charts are useless. They're not showing you anything in terms of magnitude, the direction. Sure, there are lots of good reasons why technicals do direction. So you asked about the morning meeting. It's that now, why does this matter? Why am I going on this rant this morning? Scott? It's because this is literally exactly core sailor. His image of strategy, why it matters, is a melting ice cube of dollars. The fact that he has to champion dollars now is because the market has told him you have this debt instrument. You need to prove that you have the ability to raise dollars. And so talking to my friend Mike, you know him as grain of salt, and grain of salt talks about strategy. Well, what does he care about? Well, the market cares about two things. One, what's going to be the value of their bitcoin reserve? And two, does he have access to capital markets? And all the doomsayers, Scott, every one of them assumed he had no access to capital markets. And if he sold his bitcoin, bitcoin would plummet like a rock. What have we learned the last two weeks? We've learned that he could sell bitcoin and the price could rise and go up.
- [13:00]
A
Yeah. And he's not buying.
- [13:02]
B
And we learned that he could access capital markets without touching bitcoin and, you know, raise cash if he needs to. Basically, what he's done in the last two weeks is disproven the entirety of the mega bear case of the, the, the, the, the disastrous circle, you know, the flush down the drain, you know, circle.
- [13:21]
A
I do actually wonder why. I, I mean, I don't really, but. Because I'm not in the boardroom. But I wouldn't have been surprised to see them do nothing this week.
- [13:31]
B
Yeah, I think that this was a
- [13:33]
A
screaming narrative right now that he's diluting MSTR shareholders, and that's one of the huge things that was pissing people off. And he definitely just did that without adding any bitcoin. Right. So there's no question that what he did this week is reducing their bitcoin per share. Right. So I guess he doesn't care what people say. I get why he wants to have more cash, but it felt like at, you know, 2.6 billion is not that different than 3 billion. And he could have just kind of done nothing.
- [14:01]
B
Look, I'm not in the boardroom. I, in fact, they probably should put someone like me in the boardroom to help them with their trading strategies. But. But I'm not there. But I will say this. If I was sitting there and having a conversation, I would have said, well, it's the summer. What are the. What is the narrative that's running against the stock and running against bitcoin right now? Well, the narrative is you're going to be forced to sell and you will have no access to capital markets. And proving that he still has access to capital markets is a good thing because he's literally knocked out. It's like, you know, if you're, if, if, if the metaphor of you're building a bridge to prove that, that the microstrategy is going to die and going to bring bitcoin. Bitcoin. Then he basically took out the two pegs that are holding the bridge up in place. And so anyone who walks on that bridge now is going to fall into the chasm. Because the reality is there's no need for him to sell any more bitcoin and he has no issue with raising money if he needs to raise money right now. Meaning that to even talk about a death spiral of strategy, selling bitcoin and selling its stock at this instant makes no sense. Now bitcoin drops to 20,000. Okay, yeah, maybe it will be a disaster if the bitcoin network collapses upon itself and fails completely. Sure. You know, you know, then it could become an accelerant. But by having 3 billion in, in cash, what he did is he basically said, listen, we've taken the accelerant and we moved it out of the building that might catch on fire because we don't want to be the one to cause it to die. If bitcoin's going to die because of some stupid exogenous reason, sure, we can't do anything about that. But if bitcoin is going to survive, it's not going to be us that damages it. And for the next year, year and a half. They just did that.
- [15:56]
A
Yeah, totally agree. The other big narrative this week that's worth touching on since we'll have a bit of a shortened show today, obviously. Will Kevin Warsh offer any clues on Fed rate outlook? I'll go ahead and outright say no. But I mean, just so people know what is coming this week, we have Fed Waller's. Fed Waller's speech. Today we have Warsh testimony to a House committee. Tomorrow we have core inflation Tomorrow we have PPI Wednesday, and then we have Fed Chair wars testimony in front of the Senate committee on Wednesday and then retail sales on Thursday. So for those who are paying attention and watching what the Fed does, they're going to have a whole lot of ammo this week.
- [16:37]
B
Nothing's changed.
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A
Yeah, he's not that tall.
- [16:42]
B
It's for those who haven't watched this show before. You talk a lot, you say a lot, but what you're doing in the background is you're priming the pump on markets. Look, markets are doing well. They're not going to inject liquidity or do anything until one of two things happens. Until we're right at the run up to the midterms and they want to start pushing the economic data. That's in two months. That's Basically end of August, beginning of September. But until then, unless the stock market does something negative, they're not going to do a damn thing. We all know what's happening here. The Fed is in a box. There's no question they're in a box. Warsh knows they're in a box. And the goal here is going to be to encourage investment in America because that's what the, the entire goal of this policy is. And how do they do that? Well, they need to lower rates, but they need to lower, not overnight rates, need to lower the rates at which business invests in, which means they're targeting, I don't know if they're, if it's the seven year or the ten year somewhere on the curve, but, but it ain't overnight. Now overnight is a tool for that as, as are other things that they have in their, in their toolbox. And the other big question is the Fed balance sheet. Warsh personally feels like you and I do, which is they shouldn't have it. It was a terrible idea. It did bad things. It caused monetary inflation, it caused financialization, it caused capital to go over labor, and it caused investment to flow out of the United States into other places. These are all bad things that we want to reverse. But at the end of the day, if you reversed it now, it's sort of like what happens if you take away heroin to a heroin addict without giving them something else. They die. And the one thing that you don't do if you're given stewardship over a patient who's a heroin addict is make them go cold turkey. And that is a situation that Warsh is in. Call it whatever it is, we are addicted to debt. You want a soundbite for the week? The United States, the entire industrialized world is to addicted, addicted to debt and free and cheap money. And that debt and free and cheap money is what's sustaining everything. And the reason we bitcoin is we understand that eventually it has to end and hard assets are going to matter. But does that mean it ends today? And the answer is not on my watch if I'm Kevin Warsh. And by the way, Kevin Warsh is probably smarter than me, but he agrees with you and I on most of these key issues because he's talked about them in ways some the past, so I don't have to guess about it. Scott Bent agrees with you and I once again smarter than I am, but understands that what the thesis behind bitcoin is, and has articulated it fairly well, understands the thesis behind sound money. But he once again is a steward of a country that has spent 40 years hollowing out its industrial base and doesn't produce anymore and just finances. So they need to guide that transition. And the sole thing they can do to do that, the most important thing is to encourage business investment in new infrastructure. Now the good news for them is we're in the middle of this AI boom and AI is changing the way all business investment is happening. But it's not the magic wand that people think it is. I mean, I know people, there are some people out there who think it's bullshit and it's overblown and it's a bubble. They're dumb. And there's others who think that you're going to flip a switch and every company is going to immediately automate everything and replace their staff with a bunch of robots and they're dumb. The reality is in the middle and depending on which country, which type of business you're in, you're going to have new investment that's going to make yourselves more productive and more capital efficient and you know, et cetera, et cetera, and new jobs come out of it and other things happen. It's a very complicated subject, but what is absolutely true is that business investment at a time of a rapidly escalating technology is hyperproductive. And so their job is to encourage investment. So what does that mean for your assets? Well, it means that they know they cannot cut the liquidity spigot now. It would be self, it would be disastrous to do so. And so, yeah, they're going to talk to the Congress people and say, yeah, we worry about the price of a loaf of bread, we worry about the price of eggs and all this stuff. And in his testimony is going to be bland and pablum and, and you know, we're data dependent and all the same stuff that got him elected. And it'll probably cause the market to sell off because people have irrational expectations. But the truth is nothing's changed. Those two Besant and Warsh are working together to try to encourage business investment in the United States in as benign a manner as possible without triggering a round of inflation expectations. Sorry for the rant, but that's the only thing I think of out of this.
- [21:35]
A
I mean, Jordy Visser articulated this way better than I can when we spoke, but he sort of made the point that this AI, you know, the AI infrastructure boom is going to require so much debt and already does, that there's money printing, liquidity and stimulus happening with these private companies beyond even what the government is doing. And you look at these projections like 7 trillion by 2030 just to build the infrastructure. That's all debt too, right?
- [22:01]
B
As I said, M2 is a shit measure because it doesn't include all the debt creation that has happened and is going to happen. And Jordy Visser is right. I agree with him completely. In fact, that is a large part of why I believe what I believe, which is that monetary assets will outperform. I mean, I find it amusing, I mean, not to pick on Mike when he's not here, that I'm more of a gold and silver bull than he is. But the reason is because you can't make more of it. It's what's in the earth's crust. It's the same stuff. And you know, you look at, you look at silver and yeah, okay, you know, we're sitting, where are we? 58 and a half. I mean, whatever. We're below 60. The days of 20 to 30.
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A
Silver.
- [22:46]
B
Based on Mike's charts, we should be back down to 20 or 30. The bubbles pop, boom. There's no speculative interest whatsoever.
- [22:51]
A
Well, or buying. We might have been.
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B
What'd you say?
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A
So without seller, buy, buying, we might have been in the 40s, you know,
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B
I'm talking about silver.
- [23:00]
A
Oh, silver. Sorry, yeah, yeah, sorry.
- [23:01]
B
Yeah, yeah, no, well, I mean, look, silver and bitcoin. I, I that on this show silver and bitcoin would become more correlated over this.
- [23:08]
A
Yeah.
- [23:08]
B
I said it earlier, you know, in January or something. And, and by the way, the fact that the prices are similar and you could confuse them. Yeah. Isn't is not remarkably surprising. I think they will be correlated for a while because they're, they're a similar, There's a similar thing. I mean bitcoin is a monetary thesis and silver is an industrial thesis, but it doesn't matter. You can't make more of it. I mean, you just got to pull it out of the ground. And we only have limited capacity. But the point on all of this stuff is about credibility and people. You know, look, we have a market of narratives. It's just that that's what we have. Right. You know, it's like if Jordy is right, and I think he is, then explain how some of the sectors that have been worse performing over the last month are infrastructure companies that, not the ones that have to make money based upon people using AI, but the ones that make money by providing that infrastructure and have, and have pole position for monetizing that 7 trillion in infrastructure those companies have been doing Terribly over the last two months. Right. Explain the rationality of that. Because here's the question that nobody wants to ask is, is that money going to happen? Are people going to make these investments? And the answer to that is almost certainly yes. The harder question is, will OpenAI xai anthropic make the money that the private market is valuing them at? The answer to that is much more complicated. Right.
- [24:41]
A
100%. And the acceleration of the model. We were just joking about it before the show. It's like every day I turn on either ChatGPT or Claude and there's 17 new models that don't know what to do with.
- [24:52]
B
Well, I mean, look, you know, I'm not a power user right now because I've been frankly on vacation.
- [24:58]
A
Not that I know what being a
- [24:59]
B
power user means, but you know what I mean. I mean, I have not gotten into either Claude, programming, etc. I mean, you know, Ian was showing me at coin routes. They built their own AI model to do help desk and production support. Not using, you know, using open source models and building using their own hardware.
- [25:19]
A
Yeah.
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B
Purchase. And by the way, that is unbelievably efficient. I mean, comparing that to what Zendesk was a year ago, you know, or any of the other help tools, I mean, it's orders of magnitude more efficient. Right? It really is. I mean, you could program. In fact, they did a Mandarin version of a help desk and it actually works.
- [25:40]
A
I need that.
- [25:41]
B
So, I mean, you know, things, things like that are amazingly helpful for businesses. What is not helpful for businesses is doubling their IT expense because of, you know, having to have this model and that model and etc. Etc. And having it not quite work. So you still have to have the engineers to make it work. And people don't understand that a lot of the stuff around the edges isn't so easy, but they'll figure it out.
- [26:08]
A
Agree. Well, this is going to be the shortest macro Monday ever because I got to got to catch a flight. So that's why you get Dave and I ranting for 30 minutes. So Dave, thank you. I will not see you on Crypto Town hall, but I assume you'll be there today.
- [26:20]
B
I will do that. Where are you off to? Is this vacation?
- [26:22]
A
Yeah, just one day for. For work. Yeah. Nothing, nothing major. I'll be back tomorrow. Okay. And that's all we got. So we missed Mike James, the ghost of James and. But next week we'll be back. Mike just takes every year, for those who don't know, he takes two. Two weeks off every year, turns off his phone, doesn't look at markets, which I highly recommend around this time of year for everybody, by the way.
- [26:46]
B
Yeah, I more or less did that over the last two weeks. I've looked, I've been, I blinked at it, but that's about it. I don't want to talk about poker right now.
- [26:56]
A
Next time. Thank you, Dave. Thank you everybody. We'll see you tomorrow. Bye. Let's do.
- [27:15]
B
That's dope.
- [27:17]
C
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