A (3:53)

We wish there were some adulterems. Mike, I have a follow up on oil. What's your sense of how much geopolitics is playing into that weakness now? We are arguably hopefully closer to the end of the war in Europe that we have been since February 22, hopefully, she says as a European resident on the panel. But I don't see any indication from that in the oil market.

B (4:15)

So I wrote about it in 2022. I enjoyed pointing out the best way to really hurt the Russian war machine is crush the price of oil. And where did Trump go when he first got elected? Straight to Saudi Arabia. So you should be. The market should be figuring out what's going on. They're trying to do everything. They can get the price of oil lower now, sir. And we had that little spike in hostilities in the Middle east that got it to near 80 and here we are pushing that 62 below last year's low and I don't see what's going to make it go higher. So geopolitics are completely coordinated on a global basis for lower prices. I think I don't see what stops some kind of shock. And the key thing is if there is some more detente in Europe, one of the first markets to get hit will be natural gas in Europe. But US natural gas has already started pricing for that. The US front natural gas price is back down to 287. That's down 20% in the year. The price way out in January was up at 5 bucks just a few months ago. Now it's pushing towards 4. And the whole world had a pretty colder than normal winter last year. We need another one of those else prices will go down so we need some kind of surprise. Geopolitics I think are completely coordinated towards lower oil prices at least for now and some kind of shock in that system will take it to go higher. I don't see what it is and that's where we head towards the end of the year we've already passed peak driving season or near it. And so the problem is everybody's bearish which tweaks my, as Scott said, Spidey senses of contrarianism.

A (5:40)

James, do you agree that all that dollar is heading lower?

D (5:43)

I mean look, if rates are heading lower so it's just a question of timing and so of course the dollar is going to be pretty tied to that and oil is in the mix too. But you know, I mean all eyes are clearly on the Fed. Almost 50% of the articles that are on, on my Bloomberg feed right now are something about the Fed or about Jackson Hole or about what Powell has done or what Powell might do. And you know I wrote about this last weekend in my newsletter for those who already read it. They, they know that my, I think that it's a very high probability that that Powell uses the data from last, the last few weeks to kind of have air cover to ease a little bit. But not, you know, they're not going to do a fit. I don't think they're going to do a 50 basis point cut right out of the gates. I think that would be, I also don't think that it's necessary. I think that might send the signal, the wrong signal to the markets that they're, they're, you know, it might be jarring even though the market's priced in a full cut and then some last week the Fed funds futures, they showed over 100 chance of a 25 basis point cut, which means that some, some investors are betting that or hedging against a, you know, a 50 basis point cut out of the gates like they did last year, like Mike, Mike was saying. But we're in a completely different position. You know, it's, this is not a federal, this is not a political move right before an election. This is a, you know, this is, this is a, a situation where you've got Powell who wants to cement his legacy that's closer to Volker than, you know, than Burns. And so he, what he wants to do is, is kind of have his victory lap, you know, like, like bloom. Like one of the Bloomberg articles I read this morning was. It's kind of like his valedictorian speech, you know, like he's gonna, he's gonna say, okay, I did it. You know, he, and often Fed chairs will use this last meeting and this situation to kind of write their, write their history, you know, their own biography to say what, what we did, how, how we're doing. So we'll see. It's, it's just a different kind of. For, for those people who are wondering what the heck we're talking about. The Fed meets at Jackson Hole this week, and it's actually a lot more than that. It's called the, the economic symposium.

A (8:19)

Everyone's there, right?

D (8:20)

And it's now essential. Bankers from around the world, economists, you know, leaders. There's. It's become a circus, a zoo. It used to be a really tight, small meeting and for them to kind of batter on ideas and, and, and maybe float some ideas of policy. But now it's gotten to be just a circus. And so the world descends on this little town in Wyoming, you know, the small city, and, and everybody is standing, waiting, waiting to hear comments from the Fed chair on Friday morning. How'd it go? You know, how was the barbecue? But really, you know, did you catch any fish? But, you know, and, and, and investors used to think it used to be where, you know, it's kind of off the cuff, a little bit more relaxed. It wasn't, it wasn't a, you know, you're, you're, it wasn't a formal setting where you've got a podium and, and a, a bunch of reporters that are, that are lined up for their questions. It used to be just kind of off the cuff. Well, this is how we feel. And so you might have gotten a little bit more, you know, a little bit less guarded answers in the past. But now I think it's pretty well scripted. You know, I think it's, they, they use this as a, oh, this is us off the cuff. But it's not off the cuff. Everything that he says, every single word and syllable he utters, he knows that people are hanging on and markets will react to it. And so what I think is, you know that there are a lot of different dangers to what he could say. But, and we can talk about that. But I believe that he's going to come out and be very, you know, he's still going to be very guarded with his words and very vague and he'll open the door to a 25 basis point cut. But he will not, he will, he'll pretty much shut the door on a 50 basis point cut and say look, we're, we're still data dependent. We think that inflation's moving in the right direction. We think that, you know, that the jobs are clearly there's there. We have to pay attention to those job numbers. And that's the second mandate.

C (10:31)

Right.

D (10:32)

So stable pricing, full unemployment, whatever that means. And so you know, but he's, but I think he's going to say something along the lines of we're still watching the tariffs to see if this is just like a one time pass through or if this is going to be structurally higher prices from, for a while. So we can all have our beliefs on what that really will be. It's a pretty complicated situation. But, but I think that's where he comes out and I think that that's what the markets are kind of pricing in here. So to Mike's point. Yeah, the two year treasury which is kind of the benchmark for inflation expectations and actually in, well no, the 10 years really the benchmark for that, the two years, the expectation for the Fed policy.

C (11:19)

Right.

D (11:19)

So where are Fed funds going to be over the next couple of years? And this kind of averages out that because it's on a duration curve. So it averages out what people's expectations are. It doesn't mean that people think that rates are going to 375 in two years. It means it's going to go lower than that because it's got to average out your duration over that time.

C (11:40)

Right.

D (11:40)

So, so that's, that's, that's what you're looking at. And that, and when you had those unemployment numbers and then the CPI coupled with it, you know, you had this two year really drop hard and yield drop hard from, from just on just about 4% down to 370365 and so, but that's, that's come up a little bit and people are tempering their expectations of the cuts. It's a long answer, but that's kind of where my head's at.

A (12:10)

We also on Friday will get a review of the Fed policy targets when they share their new framework going forward. That could also add some confusion as if we didn't already had enough. Dave, you've been nodding and shaking your head through James Lancer there.

C (12:26)

I mean, part of me is just disgusted with the notion that, you know, these group of policy wonks who have basically been wrong for 40 years in their economic projections. You know, 20,000 employees, 900 PhD economists, and frankly, a monkey throwing darts does a better job of predicting what's going to happen in the economy. That we hang on their every word. That said, we do hang on their every word and markets do react to everything they say and they will care if he had a bad cup of coffee on Friday morning versus a good one where he's happy. And that's just kind of the world we live in. And it's, it's sad, it's, it's all theater. The reality is they are going to print money in order to fund fiscal deficits. That it is them and all the other central bankers. In my mind, the most important story of the last week is the one that we haven't talked about. And it's, it's actually a very interesting one. It's Larry Fink becoming the head of the World Economic Forum. Now we laugh, but ask yourself a question. What is the final boss for Bitcoin to actually make? Mike say oops, vis a vis gold. And the answer is when central banks consider it an asset. Right now, central banks do not consider Bitcoin a viable asset. They consider it a speculative piece of, of something. I don't know, you know, they have different words for it, but no central bank has adopted it whatsoever. And they are 100% believe that gold is a strategic asset and that's why central banks have been buying it. Ask yourself the question. Having someone who is on record as Saying Bitcoin at 500,000 is a completely normal and 700,000 wouldn't be crazy based on the price of gold as it was when he made those. Those things. Being head of the World Economic Forum is relevant. And the answer to that is, if you're not paying attention, the answer is of course yes. And it does matter. And the theater that we're all subjected to from the Fed and from all the Talking heads that we see, really. It's a question of where does it emanate from? Now I'm not going to get like some of the conspiracy theorists on X there, There are lots of them who think that these guys are, are plotting to make us all eat bugs or whatever. I'm not going to go down that rabbit hole. That's nonsense. But they do want to control the economy and by having somebody who believes that Bitcoin can be a part of that reserve asset conversation as one of the key power. He already was one of the key power brokers, but now officially. So it's very, very relevant. So yeah, we'll have our Central bank theater on Friday and yes, in September they'll wave his arms, he'll take his victory lap, whatever. I mean, look, there's three ways Powell could go. He could go, he could, he could identify himself as an anti Trumper with severe Trump derangement syndrome and say F you, you're wrong and effectively fight. In which case you'll have a split vote for sure. We already, we already split vote last time. It'll be even worse because there are a bunch of other Fed governors that probably want to stay on the as Fed governors who won't if they, if they go along with it. Or he could go the opposite way and say, you know what, wave the white flag and do a 50 basis point cut. But I agree with James. I think that that is exceedingly unlikely, regardless of the fact that some people do have that as possible in the dot plot. So we're left with what is going to happen is almost certainly what James said, which is to say, no surprise, things move in that direction and the markets are left to their own devices. So that's my thought on the Fed. I think there are and what's going on on that part of the macro picture. The other part of the macro picture that people refuse to talk about is the dichotomy between the consumer prices and producer prices. A large part of that is expectations of rent. You may have noticed that mortgage prices have been steadily creeping downwards and that because 40% of CPI is owner's equivalent rent. That is why CPI and PPI are diverging slightly. That is one of the reasons. There are some other reasons in there, some of which are transitory. It's not worth going into. But I think all of that matters. Now why does that particular fact matter? That particular fact matters because if you are trying to control inflation and if you actually care about such things as opposed to the theater, then what are you going to try to do. Well one of the things you want to have happen is long rates to come down and so you're literally targeting the long end in order to decrease consumer inflation because of own equivalent rent. And the long end is kind of tricky because mortgages are based on a, a blend. There's arms there, there's a lot of different pieces. We always reflexively say it's the 10 year. It's not really true.

D (17:29)

It, it no, but they're keyed up, they're keyed off of it.

C (17:32)

They're keyed off totally right 100 anyway that's that I think that that that's what people need to watch watching the longer end. Maybe you know, somewhere in the 2 to you know, the 2, the 2 to 10 matters, the 7 and and how it gets there matters that's going to matter for a lot of financial assets. Lastly, I want to tee up Mike and that is a lot of people have asked a lot of questions of you know, what is, what is all this saying as we enter the fall? And the answer is I think this fall is a high risk season from a market's point of view. Full stop. Not saying it's going to crash. I'm saying there is. If I were, if I were if there was a crash o meter that says probability of crash that it is a double digit integer, probably a low double digit integer but still a double digit integer. Why valuations are extremely stretched. The Fed is likely to be, you know to kind of start doing what people what, what the administration wants which means people will have the perception of less artillery in the chamber, as it were, you know, behind it and the fall when asset managers want to sell, the question is to lock in their gains. The question is will there'll be liquidity there. And I think and I'm talking about the stock market now I haven't mentioned crypto yet because there's some other things in crypto we should get to but I don't want to monologue to that but I do think that and it really is interesting to understand whether or not we are entering a risky period in stock assets and extended assets, assets that are directly tied to earnings in the economy which by the look good right now and, and all the analysts are saying anal earnings look good if by good we mean continuing to increase at you know, close to a 10 clip. So I'm curious, you know, what, what are your people around? What do the Bloomberg folks think about you know, projecting into October of this year? Mike?

B (19:33)

Yeah, well that's the million dollar question and Dave, I think you nailed it. And we all know veteran traders that this is, we all know the volatility is going to pick up and we'll get that dip he was going to buy. It's going to go straight back up. But I do appreciate you mentioning things like Larry Fink. I don't know how you did in 1998 when long term capital collapsed. I did very well with clients just noticing patterns and out of the money Eurodollar options that were Fed was tightening and these option, these out of money prices kept going higher. I'm like all right, something's wrong here. We just bought some, they expired and the ones that finally worked went up 10 20x. It just took a while. I see similar situations now. Yeah, it's a, it's a, it's a volatile time of season, time of year. We all know you don't want to be buying volatility or buying the market and selling volatility in August. You want to wait till it spikes and it's going to spike. We're getting a little bit of that now. It's just minor stuff. The key thing I like to point out is the macro. First look back from the future of the macro. We have a most discombobulating, unconformist president in somewhat maybe history measures now you can, it's not, it's not making a point about him but it's point about markets. To look at back this period from the history and say oh that was awesome. Within the first few months of becoming president we corrected less than 20% of stock market. It recovered and everything was fine. And all the cryptocurrencies that helped get him elected were fine. He went straight up. Well, I'm going to look into, look back at that kind of scenario from the future I think is very unlikely. We're going to look back I think from the future and expect and have read about a lot more volatility as we shake up the world order. So what's happened so far this year? Let's just tilt over the bitcoin. It's proving it's a risk on asset. The absolute high for the year in bitcoin came last week when VIX traded at the low for the year 14.5. To put that in context, the last few years the vix average around 14 or 15%. This year the average is 20%. I suspect by the end of the year it's going to head that way. Yes, I have a bias. Volatility is going up. Stock market's going down. I've been wrong on that. The year so far, bitcoin's low came on April 8th. That was the day that the Vix peaked at 52. That was the closing basis. So you see the difference now. That's why I'm sticking with gold. Gold's becoming more and more of a risk asset. Central banks get it, investors are now getting it. And what you're seeing in crypto I think is mass spectacle excesses compared to similar what I saw with the Hubery of long term capital management, with the peak of the Internet bubble 1999, with the pink of the Japanese stock market 1989 and now we're going to start a little bit of a flush. So the question is how far, how fast and what are my indications? So I look at commodities, clear deflationary forces in crude oil, happening in natural gas, happening in all the grains. You're not seeing those demand forces. That's a typical cycle to a lower price after a higher price. I think we're getting that in cryptos and bitcoins. There's again bitcoin might be different but I'm sorry, there was one cryptocurrency in 2009, now there's 19 million. So there's massive supply. I think they're going to get towards a low price cure. Right now it's just a little bit too high and I think they're the best leading indicator on the planet. So to me that's the things to watch into the year end. Let's put this way, so how are we going to end this year is going to be major setup. We're going to get some volatility. Maybe it's starting now. It's only August. Let's see what we feel about this in September. October does it bottom and go back up. It basically the way I look at the stock market has to go back up or things like copper starting to tilt lower. There's really no hope for crude oil. There's really no hope for you know, even some of the grains. Unless the stock market in the industrial metals, unless the stock market stays lofty. And I think then the whole world facing these tariffs is going to start kicking in in matter. And the one key thing that will start be hurting eventually is US earnings. As you know, US companies pay those.

A (23:15)

Tariffs, not to mention skepticism about the vast amount of capex for the AI productivity boom that we are no doubt. James, I want you to run with that but first could you open with a view a year from now you're looking back on this year and what was the biggest change?

D (23:31)

The biggest change? Well, look, I think a year from now, we, Liquidity starts to dry up. So where are we? We're, we're in August 2025, August 2026. I, I do think we've already cycled, Pete. You know, I think Mike is right. I just think he's a little bit early here. Look, for volatility to drop off the map any minute, you know, or volatility to pick up, and for the, the stock market to drop off and have a serious correction, I just think that it's going to take, it's going to take a while. We, we still have expansion liquidity happening from central banks, and, and we're going to continue to see kind of what Dave was alluding to, some sort of yield curve control at the long end of the curve. And what that means is, you know, we've got, we. Look, we're still running $2 trillion deficits. Doge tried, but, I mean, it's, it's like taking a couple of deck chairs off the Titanic, you know, I mean, like, it's still pretty heavy. It's going to, you know, it's still, it's still weighted. So the, the issue is here that we're running those deficits. We're, we're continuing to expand liquidity to match that. And we've, you have to, that's, it's a first principle. Even if we do get a drawdown, they're going to come back with some sort of fire hose. I don't know if it's a, if it's a money bazooka. It really depends on the kind of downturn we have. But, you know, if you, if you pull back and go really, really big picture. Yeah, Mikey's Trump, you know, like, I'm not a. Yo, rah rah. I love, you know, Trump. And in everything he does, he's, he's made plenty of mistakes, you know, and he is unorthodox, and that's what has people on edge. You've got a, you've got a, you know, a cadre of, of European leaders flying to, to plead with him to be, you know, to, to be on Ukraine's side here, whereas all he wants to do is stop the war, you know, in, in. Well, at least that's what he's, that's, that's how he's positioning. So. But the point is, unorthodox or not, what does Trump care about? He cares about his legacy and what, what is really his biggest benchmark to his legacy, the stock market. You know, he talks about it all the time. He talks about rates because he wants rates down, because he wants GDP nominally to up to expand liquidity. So the stock market will go up and we have, we have one year until midterms now. And so we're already halfway there. He can't have a full on collapse between now and midterm. So that collapses his legacy. You know, so I, I do believe this is going to be extended for a while. I, I think it's gonna be really hard. This is the, probably the most difficult part of this cycle is trying to time just how long this could play out. And I think it's going to catch people off guard and we're going to continue to expand into next year. And, and so yes, Bitcoin has been and continues to be treated as a risk asset on Wall Street. No, it is not one of the thousands of cryptocurrencies. It's clearly separated from that and it's been, and it's been separated from that because it is talked about separately from every other cryptocurrency. So they all key off of Bitcoin. The only one that is kind of beginning to march in a different direction a little bit is eth. And that's because I think that you know, with stablecoin Bill, that, that changes the, the use case for Ethan strengthens it although it's not the only one that could be used for stable coins clearly. But there is a use case for it and that's kind of solidifying. But bitcoin is different, you know, and we don't, we're not going to get into that argument again and debate again here today because I think our, our listeners are tired of, tired of hearing it. But let's go back to the point. The point is that it is still being, being used as a risk asset. You could see it, it moves in, in weekends where there's uncertainty just like this weekend and on such little volume. I mean like this is super unimpressive. The volume was, was anemic this weekend. So it's not that big of a deal. In my opinion. It was more of a buyer strike than a deluge of sellers. Okay, so.

A (28:07)

And a short term, and a short term movement. But you've been stressing that this is a longer term play anyways that isn't just susceptible to us liquidity outlook, it's a global liquidity.

D (28:16)

Exactly. All central banks, but they're all keying off each other, you know, so they need, they're all in, in deficit, the developed countries and they need to, they need to continue to expand liquidity to, to match it. So.

A (28:30)

And the lower dollar helps.

D (28:32)

Yeah. And will bitcoin, will bitcoin be suffer in that environment? Of course it will. I mean it's still, that's, that's how it's been positioned. Unless we have something with, that's more catastrophic that I don't wish for. If we have something that's more catastrophic, which is meltdown in the banking system. I think bitcoin acts a little bit differently than you would expect and it would be, it would act much more like gold. So. But that's not what I'm hoping for and that's not what I expect. So whatever the black swan is, buckle in.

A (29:03)

Dave, could you talk about what you see being the main bitcoin drivers now as opposed to ETH drivers, or do you think they're starting to run in tandem?

C (29:11)

Well, they're definitely not running in tandem. The bitcoin driver is adoption. That's the only thing that matters. Other than that we're in a trading range. You know, we, you know, we've been in it. I, I, I, I'm a broken record about this, but when you look at the, you, you zoom out even a tiny bit. You know, we broke through, we had a, a trading range where we had a dip down into the 70s. It was the 70s through to, you know, 112 was a very serious resistance level that people talk about. And it sat in that range for many, many months. It broke through that range and to become into a smaller range, which by the way is a classic bull market setup of between, you know, where are we? 112 as support down up to 122 with some, you know, some flipping around and you know, we're settling down, we're in the middle of that range. Settling down on low volatility as it waits. If you look at bitcoin volatility and it is at lows we haven't seen since the summer of 23. Do you remember where we were at the summer of 23? We were in the 20s. In the summer of 23 we had some rather substantive interest. Its volatility was really low. That was when we had the, the fake flush from 29 to 26 that got everybody panicked because in percentage terms it was a big deal, was a liquidity, casc gate, etc. We're not seeing any of that right now, but it is relevant because, and, and by the way, I can coordinate, I was just checking volumes. Yeah, the weekend volumes were, were the lowest we've seen in a long time. So it's, it's classic summer doldrums, that's fine. But the, the, the reality of bitcoin is it's range bound with low volume, nowhere near enough sellers. And look, I, I'm preparing some reports on, on TCA during, you know, July and transaction cost analysis from coin routes clients in July and the amount of institutional orders that were absorbed by the market both buying and selling was extreme with costs that would effectively be cheaper than any top 10 market cap stock. And so there's a lot of liquidity in the market that's there at a certain price. But right now we're not near there. Now eth is something total. And oh by the way, there's two other things in bitcoin. One is the microstrategy effect when volatility people do not understand this and there are a lot of people are about to get caught off sites. I see James smiling. Maybe you know where I'm going with this. Microstrategy is a major seller of vol. In order to buy Bitcoin, microstrategy stock has been languishing Ms. All of their, their stuff has been languishing as bitcoin volatility plums toward the lows. As Mike is fond of saying, don't buy, don't sell the extreme low. Don't buy the extreme high. Volatility in bitcoin terms is approaching the extreme low. That is what is depressing the prices of the microstrategy complex. And a lot of people that are in there. There are a lot of shorts that are piling up because it's become a very Derek or trade to short microstrategy. Which effectively means if bitcoin volatility picks up, just volatility picks up, that the whole thing is going to create a gamma squeeze. It is definitely building towards that. It's not there yet, but we could enter September with very, very interesting short leverage play on bitcoin in a place that people aren't looking. Everyone thinks of the digital asset treasuries, so called DATs as the reason for the next crash. I actually think it's the opposite. I think the dats are the reason for the next rally because when people are forced to scramble to cover their shorts and we've seen this time and time again in markets when things get irrational. Now ether is something totally different. Ether, if you look at it, had really, really bad news. It was trend, it was dramatically Lower. It was a hated asset. And into that, into that world, Tom Lee jumps in with a really good track record and a bazooka full of money. And so what happened? It was an epic short covering rally. An epic, you know, lack of sellers. People stopped selling. And the, the, the path from 2000 actually 1400 but 2000 is more of a stable price to 5000, which is a huge rally in percentage terms. I mean, you know, put that in perspective. If Bitcoin rallied the same amount, you know, we'd be at like 250 right now. So it's a very big difference. But the reason behind it is the earth is the stablecoin bill. Yet there was news that the markets ignored in Ether, although it doesn't see, it seems like it's not no longer ignoring it that the two that the largest stablecoin issuer that for under the genius act circ is not going to use Ether. They're going to use their own blockchain. Right. And the news that stripe is going to build their own blockchain and effectively you could get wrapped around the axle about whose blockchain people are going to use. But understand something, this is important. When Wall street or banks or anybody else wants to use a financial technology to underpin their product set, the most important things they care about are it works and it's cheap. They want it to work because obviously they want it to work, but they don't want to pay a lot of money to the underlying plumbing if they don't have to. So then you ask yourself the question. Well they have to. And if they have to, like in the case of a Swift, they have no choice because it's the only thing. In the case of stablecoins though, you know what blockchain they want to use. I mean tether, you know, it does most of its volume on Tron. Tron's market cap is just a little bit below Ether in right now. Where's Tron? I have to go down a while to find it. Tron's market cap is $33 billion. Ether is over $500 billion. Right. So you, you start asking yourself the drivers should it doesn't make sense. Well the answer is sort of it's not stable coins that are going to drive Ethereum. It's the ability to tokenize assets and have them transact easily. And so you have to ask yourself is that a long term or a short term and what does that mean and who's going to win? And there's all sorts of uncertainty there. The Potential is still huge, there's no doubt, but the risk is much higher. And when the market starts pricing the risk of ether the same as the risk of bitcoin, it's fundamentally wrong. And so I just want to conclude by saying that the 19 million, forget the 19 million because most of that is pumped up fun. But when you start talking about a thousand serious crypto, you know, assets that people look at and probably, you know, a few hundred, there's one. And then if we're looking at a few hundred and 299, if you're looking at 300 ether leads, the list of the 299, Bitcoin is the one. And, and that doesn't mean I'm a bitcoin maxi and I don't think there's value in the others. It does, however, mean you have to look at them differently. Just like you look at Nvidia different than, you know, than JP Morgan. They're very different. And you can see days or Nvidia goes up and J.P. morgan goes down. Sure there are days when they both go up and down at the same time, but there are quite a few days when they go the opposite.

A (36:27)

I want to wrap that into what you were saying earlier Dave, about Larry Fink assuming temporary directorship of the World Economic Forum and whether this is, you know, where the biggest impact is going to be. I want to throw it first to James and then Mike. I want to get your take on that. James, do you think the World Economic Forum is relevant? Relevant enough for this to have an impact on how global markets develop?

D (36:50)

Sure. I mean, you know, they, the Claus Schwab has created a situation where he's in every single major leader's office continuously in their ear telling him what to do. So remember though, the blackrock's Fink being the head is, is temporary. So we don't know who's going to be in there long term term. And do we know how long he's going to be there, Dave?

C (37:14)

No, but I, I've seen all sorts of rumors and innuendo. The problem is, is the innuendo mill when it comes to blackrock. There's so many conspiracy theorists. There's so much which is, which is ridiculous. I mean.

D (37:30)

Yeah, the dumbest thing you hear. Well, the dumbest thing the, it's hard because it's confusing to people. It's, you know, blackrock bought this much bitcoin, blah, blah. No, they bought, bought the etf, bought the bitcoin and the ETF was bought by the, the investors, the Underlying investors. So, and you know, yeah, you, you have a custodian. They're the, they're, they're the, they're the creator of the ETF and you know, they're the manager of the etf. But the owners. It's just like the, the argument that institutions are only acting for themselves. Well, no, the institutions are acting for their underlying beneficiaries. So if you have a foundation, yeah, it could be a small number of beneficiaries. If it's a foundation for some sort of, you know, art museum or something like that. But if it's, but if it's a, if it's an endowment for a university, there's a lot of beneficiaries there. And then if, if it's a, a pension fund, you know, a retirement fund, well, there's thousands or, you know, tens of thousands or sometimes hundreds of thousands of beneficiaries. It could be millions for some. These companies have been around forever, but there, there are thousands or tens of thousands of beneficiaries to those pension funds. So that's one of the things that you have to look at that when people get upset about institutions being in the market and doing things. It's what goes back to what Dave was saying which is the most important development, long term maturity for Bitcoin is understanding. As more institutions get into this, there's more understanding which goes full circle. Back to your question, Noel, which is for Bitcoin in particular, I think it's very important because it brings it straight onto the biggest stage in the, in the financial leader world, meaning of the, the leaders of all these central banks and all of these governments, they have no choice but to listen now to why Larry Fink thinks that this is an important asset, why it is separate from everything else and why it is digital gold. And so they have to hear it. You know, it's kind of like when Microsoft gets they, they have a one shareholder that says you need to hear Michael Saylor tell you why you should have Bitcoin on your Treasury. And they say, fine. He literally has two minutes, you know, we'll give him two minutes on the board and you know, to go through his presentation and, and it's just, well, we'll hear it, but we're not going to hear it. Well now if you have BlackRock on this, in this position, which unfortunately does wield a lot of influence and power, then these leaders are going to have no choice but to hear it. It's going to be all over the place. Again, central to many conversations about global economy. And so that is a very important thing because it, it's not that it just gets, it gets shoved down people's throats, it's that they have no choice. But that's what's on stage, that's what they have to hear about. And if that's what you know, all of the, the mainstream media decides to focus on for a while, then you have no choice but to hear it. And that's kind of what the, the same situation here in my opinion.

A (40:48)

And he's also known for insisting that everything will be tokenized sooner or later rather than later. Mike, I know you touched on this earlier, but Dave's quite right. This is an overlooked development. So could you expand a bit more about why you think Fink is going to be relevant in his WEF role?

B (41:06)

Well, what's first, what you said about tokenization. That's exactly right. It's, I mean someone who came from futures and being in the trading pits in Chicago and all the New York traders used to get pissed off when the futures market in Chicago moved the treasury market, that's happening and it's just a better technology. Tokenization is overwhelming. It's a key trend I'll keep, keep, continue to point out in this space. It's the proliferation of crypto dollars now or stable coins now. Yes, most of that's used to trade cryptos, but all that's going to treasuries. It's a good thing finally our Trump administration figured it out. But just remember what Larry Fink is, he's in a great space. The thing we used to say when we're in the pits, we're selling shovels. He was great. He's, he's, you know, he's making money because people are buying his products to track etf. So let's dig into some of the things that's been said here and what's happening now. Everything that Dave said about how markets so bullish and thing is exactly very similar mirrors what I Remember hearing in 1999 with Internet sex in 2007 and 2006 with the housing market. Heard it before, sounds exactly the same. It's the hubris and it's the human nature of bubbles getting towards extremes. So Dave also mentioned low volatility and bitcoin. It's actually not very low. It's volatility and everything. So if you look Bitcoin 660 day volatility, it's at 26.6%. It's somewhat low. But divide by the S&P 500 at 10%, that's 2.6 times S&P 500. The average over the last five years is three. It's right there. See what matters. The stock market is all that matters. Then we point out over earlier about something about, you know, Trump and really into how wonderful the stock market's doing. But remember where he came in, the president in history, there's only one president in that country had a similar level of stock market capitalization. It was Herbert Hoover. Didn't work out so well. So that's my point is these things are all trickling down to things we've all seen before. And prudent investors don't just buy highs and try to put treasury and Bitcoin in the same sentence, which is an oxymoron. Treasury means Treasuries, not Bitcoin, a highly speculative digital asset. And then I'm sorry, I come from an index environment. S and P. When we create an index, we use an index of things that are similar. There's things called cryptocurrencies and they may. There's a thousands of them. Bitcoin's just one of them. You take out the stablecoins because they don't pay interest. And that's the key thing to remember about tokenization. Tokenization is going to bring on chain stuff that plays interest tracks actual markets, actual physical, actual markets that have earnings when we have thousands of cryptocurrencies are just numbers on the screen. They track nothing. They have to hope they're wonderful. And I just point out the key thing to remember. Michael Saylor. I completely agreed with him in 2010 when he noticed his microstrategy company at that time, which was a software company, was not going to be make it and tilt it over the Bitcoin and did a great trade. It was awesome. He got a 10x and now he's doubling down at the highest levels and markets at very expensive levels in August. Not a good idea. I like to say we're gonna at least get a little bit of a flush, maybe 20% correction in Bitcoin. Remember 50% corrections are normal. But now we're at the stage where this whole asset class, particularly Bitcoin, has systematic risk. I didn't say systemic systematic risk, which I have never seen. If it does what's normal, drops 50%, it takes the whole system with it. It's severe deflation, falling deflation. We've seen signs of that. Certainly in China right now they have minus 3.6 ppi, their money supply is running double. The US about 45 trillion. And their debt to GDP by some estimates is 300%. In Japan, it's 200%. The world's tilting that way. The whole world is dependent on US stock market saying lofty. And we have the highest correlation ever between cryptos in the stock market. And we have hubris and signs of 2000. 1999 X's is at the PE. I say stick with gold and what's been right so far, Gold, I think gold's going to continue outperform.

A (44:50)

Speaking.

B (44:52)

Sorry.

A (44:52)

Okay.

C (44:54)

I just have to point something out. Look, I, I was trading in 1999 and 98 and 2000 and Bitcoin, in fact, ether kind of had a shadow run that sort of looked like that maybe if you kind of squint at it through one eye. But we haven't seen anything close to Euphrates. Euphoria. We've seen no margin buying in the crypto complex. I mean funding rates have been below the below standard, below average now for, for so many months on end. You know, even in the liquidations over the last week, we saw something we've never seen before. We've seen, in fact Even the last 24 hours, we see Ether with double the amount of liquidation of bitcoin. Bitcoin liquidations are, are at crazy low levels because there's no leverage in bitcoin. Bitcoin very, very, very low. So every time you talk about hubris and euphoria, it's just missing the fact that there is no, no there there. It's just not true. Now there will be times when it will happen. We've seen it before. I've alluded to several in this conversation, but that's just not there. So other stuff you talked about. Fine, you know, we'll let Noel drive the conversation, but no, I'm sticking. You can, you're entitled to your own opinions, not your own facts. There is no froth in any measure, in any metric in bitcoin other than maybe price. And that, that's a matter of opinion. But there's certainly no leverage in the system. The liquidations are small, the fundings open interest, everything is low and volatility predicted volatility in the bitcoin market is at a bitcoin oriented low.

A (46:21)

Okay, relevant to that, I want to do a sidestep and pull on something that blew me away last week and does tie into everything that we've been talking about and that is the latest bank of America fund manager survey which has for the first time this cycle, long crypto in the most crowded trade section. Remember last cycle long crypto was a regular top of list vote from fund managers. And these are global fund managers surveyed as the most crowded trade. Now it's back for the first time this cycle, which suggests that maybe there's a teensy bit of froth coming in, but really not much because only 9% of respondents voted that as the most crowded trade, whereas 12% said long gold was much more crowded. Now what is interesting there is that most of the respondents don't even hold crypto to start with, which is another tailwind that I think is largely overlooked. And who wants to run with that? Who's actually paid attention to this?

B (47:15)

When the tide goes out, we'll see who's wearing clothes. Simple as that. Warren Buffett's way overweight cash for a reason. He obviously doesn't write the lock. I like the rock. I hate the fact the rocks outperforming everything. But if you look back, just The S&P 500 versus S&P 500 total return stocks rocks from beating the S&P 500 for almost 7, 8 years. The same level. I mean that's not good as Dave knows he doesn't like when I pointed out. But you have to go back to 2021 for the same level in Bitcoin versus Gold. These are bad signs with markets in August at all time highs and a new president that's completely dependent on the stock market and bitcoin going up and early on. So I just, you know, it's, to.

C (47:57)

Me that's, I mean, Noel, the thing that's interesting here is gold beating the stock market is another way of expressing the stock market denominated in dollars and there are more dollars and gold captures the effect of more dollars, full stop. That's what you're talking about. I can't repeat it for the thousandth time on this show, what I can say is that bitcoin, in that conversation, it's all about adoption. In 20, the Bitcoin network was 1/6 as strong as it is today. 1/6. And so yeah, I mean, am I saying bitcoin is going to 6x from here relative to what it is? I mean, I suppose Larry Fink has that. That's the middle of his range, by the way. So it's not like it's a crazy number. Is it going to happen immediately? Of course not. Well, I shouldn't say of course not. Unlikely is probably the best answer. You just have to look at it now. Now when you talk about crypto though, ether had Huge inflows right in, you know, over the last week. I, I'm not. Hold on ether, I've, I've been, I wouldn't say I'm bearish on it particularly in the long run. I don't know, I just think that on a risk adjusted basis, ether's price seems very expensive to me on a risk adjusted basis compared to bitcoin. That's the way I would phrase it. I think that a large amount of it has to do with will Tom Lee and others, you know, continue will those out inflows that came in last week be sticky or not? And that's going to be a fascinating topic. I don't know the answer to it. I just don't see it in the same breath and that makes me, I had a very convivial conversation with Max Kaiser on a spaces last week where he and I were, were in agreement. Now over the, in the past there are a couple things he says that drive me nuts but, but the truth is is that if you look at the value proposition for Ethereum versus Bitcoin, they're very different. Now he of course calls, says all sorts of really nasty stuff about every altcoin whatever. But you know, it is, we are getting to a point where, where there's different investor cases for different cryptos just like there's different investor cases for different stocks. And you have to. And we could go through all of them but this is a macro show so that's not really the point. The point is, is that on the macro level saying they're all the same, probably not a good idea.

A (50:18)

Speaking of altcoins, I've been asked a couple of times over the past week, does the ETH run signal the beginning of altcoin season? And I'm going to go on a limb and I say most of us here would say no. But James, can you expand on that? What would you look for for a sign that altcoin season is starting?

D (50:36)

Well, I mean look, I'm, I'm, I'm not an expert by, in any, by any means. On all coins I've, I've only traded a handful of them. That was in the beginning of me even entering this whole space and trying to understand it. So I don't trade any of them ever. That's just me. But you know, what I do know is that bitcoin is the bait. Like that is the ballast for all of them. So if you're looking for a clue of where, where everything goes, look to Bitcoin. And if bitcoin rips higher. Well then of course altcoins are going to follow and, and they're going to, they're going to outpace bitcoin, some of them, because they have a higher beta to bitcoin. It's not the reverse. And that's, you know, now I do believe that we, we could have a downturn here in the next couple of months. We, it's just, we're in the summer doldrums. Like we're literally all on vacation here. You know, I mean, I'm on vacation but like the, the market is so quiet. This drawdown this weekend from bitcoin was again, it was on anemic volumes. It's a buyer strike, not a herd of sellers. It's a big difference. And so people are just kind of stepping back to see what's going on. They're, they're nervous and it's, and they're the ones that are standing around because there's no, like, there's just not enough people around right now. There's not enough volume.

B (52:04)

Volume.

D (52:05)

And as we get into September, we, this is classic, you know, end of the year window dressing season where portfolio managers have to put their, they reposition their books to either take in some gains and lock them in or get some losers off the books or whatever it may be and just reposition it. So when they come up for review, then their, their book is positioned the way they want to be able to talk about it it, for their bonuses. I mean that happens every year. This is how institutions work. They get paid at the end of the year and it, you know, this last quarter is when things are priced out. So it's, and that, that produces a fair amount of uncertainty and repositioning in the markets typically in September, October. And that's, that's just the reality of, of of, you know, the financial market.

A (52:56)

So yeah, and we got quarter end coming up and then there's always the dreaded October, which is generally when big crashes tend to happen starkly. I have no idea why. There's also marking to be made that altcoin season already started a while ago with the meme coin frenzy. And will any new altcoin season be any different from what we've already seen? Again, these are, this is not necessarily going to be what we're going to be talking about here because it has nothing to do with macro except risk sentiment and liquidity. Obviously.

C (53:26)

One point, Noel, which is a large part of all coin season has to do with their, when your quants, when they look at Markets measure two things. I mean, you know, people talk growth and value, but really it's momentum versus mean reversion. All coins are the ultimate momentum play. People buy them because they're hoping that it will continue to move and when they stop moving they tend to go in the other direction. Right. So the question is, is it a pause or is it a stop? And that, you know, if you're asking is there going to be an altcoin season, an altcoin season is really just an excessive amount of momentum playing in the market. Right. That is the key is understanding how. Because these markets. Mike, Mike. One of the points he. Mike makes all the time, which is 100. Right. Is that. And this is true about crypto. Crypto is a trader's market. There are investors in bitcoin now, there are some investors in Ethan other places, but there are. Traders love these assets because of their volatility. Now what does that volatility mean is it becomes self reflexive. When momentum moves, they move. When it stops, what happens next? And it's instructive to look at what you see here. And I think that we'll get a pretty good idea in the next three to four weeks as to whether or not there's any momentum that's going to be reintroduced into this market one way or the other. Because that is what matters. Because these things do tend to feed upon themselves on the macro side because momentum is quite literally how almost the vast majority of crypto traders play it.

A (55:02)

Yeah. Especially in such a narrative driven market. Now we've only got a few minutes left and so I want to go from the medium term view to the short term view again. And let's end with what each of you think will be the big takeaway from Jackson Hole on Friday. And notice that again, this is on a Friday, so there's only one day of trading before we all take off for a nice, well deserved weekend. But Mike, to start with you, what do you think the main market takeaway from Jackson Hole will be?

B (55:26)

Meh, I think it'll be a big fat nothing. And they're not going to do what they did last year and hint at cutting rates because things are signaling that way. I don't think he's going to solidify the view of cutting rates because we still have a lot more data to see before we get to the September meeting.

A (55:41)

Dave.

C (55:44)

I mean, honestly, I don't expect a whole lot. I think that, you know, we are. I just think it's more of the same. I mean, who knows, people will Parse his words. And just like you know, when Besent said an offhand comment last week that took bitcoin down, who knows there could be offhand comments that matter but my, my dead middle of the range is no more of the same.

A (56:08)

James?

D (56:09)

Yeah, I think that he's going to point to things going the right direction because that is, that that's good for the narrative of his legacy and in saying that it's going to open the door to that first September rate cut but it's not going to be like he's not going to solidify like Mike says. He's not going to come out and say we're definitely cutting because then the, the market will rip and the, you know, the, the rates will, the probabilities will go to 50 basis point cut and I did. That's not what he wants but so he's going to temper it. He's going to remain, you know, he's going to continue to lean on that, that line that they've been leaning on which is we are data dependent and it's going to leave the door open to him to change his mind when we get another CPI number, the PCE number, another PPI number, unemployment numbers, all before the next Fed meeting. And so he's going to leave it open for him to pull back and say the data's not there. But as it stands now, all things being equal, likely a cut is what will, what will be gleaned from his comments sense. But again the most important thing is the stuff he's not going to say. So that's, that's really what, that's really what you've got to pay attention to in my opinion.

B (57:31)

So to hear what he doesn't say. Yeah, exactly, of course.

A (57:36)

And I have one quick follow up for James and zooming out a bit. Besant said last week that he thought the bank of Japan should be raising rates. Now here we have the U. S. Treasury secretary getting involved in foreign central bank bank's economic monetary policy. What's your take on that? Is Besson just trying to talk down the dollar or is he just posing for the tv?

D (57:55)

Yeah, I mean it's a little bit of both probably, you know but like Japan is, Japan's in just a totally just different situation here. Maybe they're 50 years ahead of us but everybody's turning Japanese just like Mike said and I think you know, we besent is trying to help rein in that situation there too. You don't want hyperinflation anywhere and that would be bad for, for the entire market.

C (58:25)

So.

D (58:27)

Yeah, it's just, I think it's just, again, it's just posturing.

C (58:30)

Yeah.

A (58:31)

Yeah, let's. Let's hope so, because things are changing. But we can only take so much change at a time, right? That's all we have time for today, unfortunately. I could, as always, talk to you guys all day, but I know we have things we have to get back to. So, seriously, Mike, Dave, James, thank you so much. Thank you all out there for joining us today. And don't forget, tune in again next week.