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- [00:01]
A
Bitcoin whales have dumped 115,000 bitcoin in the past few weeks. Yet bitcoin price remains resilient, trading around the key level of 112,000. We know that Wall street is stepping in to buy through treasury companies and that retail also stepping in through ETFs and spot Bitcoin. But all of this obviously happening in the context of macro. With the Fed meeting next week last year likely to finally get some cuts. We're going to talk about all that and more today, Mike, Dave James and I here on Macro Monday.
- [00:35]
B
Let's go. Let's do. Let's do.
- [00:51]
A
It is the greatest hour of my week and definitely the greatest hour of all of yours. I can't speak for Dave, James and Mike, but I know that the audience just waits with bated breath all weekend for Macro Monday because you're all liking and subscribing and doing all the things you need to do. Gonna go ahead and bring on Dave James and Mike. Good morning, gentlemen. I hope you had a wonderful weekend. Dave, I know maybe you did not.
- [01:15]
B
No, it's okay. Yeah, I told everyone I was. For the first time in 35 years, I had a fever for longer than 24 hours. But it broke. I'm fine and no big deal. It was okay.
- [01:26]
A
Broke his fever by buying bitcoin.
- [01:28]
B
Curious. And of course I had to watch Jets.
- [01:34]
A
They played pretty well. That was a pretty good game for the jets. But yeah, Mike, let's go ahead and start.
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C
I was gonna say you must have been, you must have been rooting for the Cowboys.
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B
Yeah, they did good.
- [01:44]
A
So here we go, Mike. We got, I guess PPI and CPI are the big news this week. But give us what's being chatted about in the morning meeting.
- [01:54]
D
Well, we'll start there with Ana came out somewhat swinging this morning. A little bit of a switch of tone for her. She expects CPI and PPI to be hot partly because it's discretionary services, leisure and hospitality, which typically doesn't happen in an economic downturn. So she's pointing out that we're seeing a potential recovery in the economy. The non farm payroll for Argos is notably undershooted. Typically gets revised higher and. And she thought it was exaggerated in the weakness. So she thinks the potential upward revision for the August number from 20202000 is going to be. To be towards 50 to 90,000. July was revised up. Up. She thinks it's going to be revised up, but she says revisions may suggest negative payrolls last October and the labor market has been stall speed for a year. But her point is the slowing labor market is well into the business cycle may have hit bottom slow recovery phase and if we get we may see a V shaped recovery. Okay that's quite impressive. So she's key thing about core PC starts to be a little bit hotter mostly because cars are jumping. So I thought that was quite substantial. Ira Jersey came out sticking with his bull steepening. He's pointed out the rates are set to drop to the 3% level or so by next December. But he thinks it could be pulled forward particularly if the economy moves moves a bit lower and refundings are going to be focusing more on bills less coupons so trying to help the long end stay lower. Our equity strategist Michael Casper pointed out that obviously this is a very seasonal weak period September the average minus for September since 1928 has been about 1.2% the S&P 500 SEP's the worst month. It's one of those notable notables that everybody seems to be well aware of and maybe have set up shorts for already. Audrey Chill for even pointing out dollar dollar weakness has resumed obviously really focusing on the Fed. Will The Fed cut 25 or 50 at the next meeting in September and obviously see what happens that French no confidence vote my take is and market starting to set up expect 25 cuts 25 base points. If it doesn't get it it might be disappointing. And I focus on commodities are about gold versus everything else Obviously today's another record high in gold. That old resistance around 3,500 an ounce is probably now support and it's exact opposite in the world's most significant commodity crude oil. Last year's low is 65. It can't get above that level. And as we get towards the end of the year crude oil has significant companions in iron ore fine yields in China the grains pretty significant deflationary forces and things that typically need to go up. And copper is the one main that's kind of the outlier. So my fearful by the end of the year if the stock market just gives back some of these gains retro setting gold and declining crude oil will make a lot more sense is my take and that's why I'm sticking on copper has to go up like bitcoin it's got to go up or risks are we just get a little bit of normal deflation from inflation Back to.
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A
You that's the gold chart pretty astounding.
- [05:04]
D
Yeah.
- [05:04]
A
Currently trading at 3628 Goldman saying 5000 if Fed standing damage and we have A great tweet here that says we're living through a 1970s style gold boom and nobody's noticed. Gold doesn't rally on good news. It rallies when empires crack. That's a little dramatic.
- [05:22]
D
Well, I like that. So I went back and I just published, I haven't put on the web yet my update on what's happening with managed money net positions. That is futures and ETFs. And they're still. Well they're rarely. They typically lead gold rallies. They're way far behind. So right now the total ETFs around 94 million ounces. Add in manage money net future longs which are much more speculative. It's about 111 million ounces. The peak was closer to 125 in 2020. So. And typically these things lead the gold rally now they're lagging now I'll put that on the web in a little bit and I can feature it on this program.
- [06:01]
A
I mean is that obviously telling us that this is central bank buying rather than retail buying or that people are actually buying the underlying asset? Because that's what you do when you're truly hedging and not trading. I mean, you know, why. Why are people choosing spot gold? Why is that leaving in this case?
- [06:16]
D
Well, the first thing I look at is signs of speculative excess is to show signs of a correction. And typically that was my first sign and they're showing no signs of that and that secondary. And then you do you figure out like you said, so what's really pushing the gold rally? Well, obviously central banks are buying and I think there's a decent amount of buying we're not aware of. But this is the stuff that us big hits and when and commodities. When you see these speculatives spec, you know, the hedge funds getting way overweight long or overweight short. Typically they put in peaks when they're overweight long and they put in bottoms normally short. And we're far from being overweight long in this rally. So I'm just looking for signs of a peak. And you're certainly not seeing it from positions.
- [06:57]
B
Yeah, I mean I think on the gold. Look, I'm with you on gold Mike. I mean we all know that. But it's important. The most important thing I think in gold has always been the kind of very happy feet of gold investors worrying that the government is going to say okay, enough is enough. I know that there's a lot of debate about whether the gold market's manipulated. In my mind that's an asinine statement because the gold market is 100% been manipulated in the past. The question is when is there manipulation? The manipulation happens when people in power say this is signaling stuff we don't want to signal and we got a problem with it. This administration doesn't seem to care, not even slightly. And if they don't care and there's no pressure to push down the price of gold in the futures markets or everywhere else, the rally has legs. My guess is they don't care until north of probably as you start approaching 5,000. That's a guess just. And the guess is because of monetary aggregates and the amount of M2 that's been added. And look at it where it's been in the past. There are so many people in the gold community that are focused on not getting steamrolled by paper gold. And your analysis is very important there because if you don't see it in the cot, if you don't see it in the futures markets, then it's not happening and that's what people are looking at. So I do agree with you. I think that there's no reason to think that this, I think gold at 4,000 is baked in the cake. I don't see any way that it doesn't get there. You know, it'll get there at meander its way there as it gets and then we'll start to see how the policy responses and things go on. And that's why you're seeing people like Ray Dalio kind of not even bang the drum nearly as much as to state matter of factly that that's where, that's where value is right. And so you know, I agree with you. I think that's what, that's what you're seeing. I know people don't like it when we agree so I apologize to the audience but I'm just, I love it.
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A
I love it when you, I'm gonna.
- [09:00]
B
Find something to say to you know, call him an idiot for later but on this one I think he's right.
- [09:05]
D
Well that's darn, that's no fun Dave. But I, I, I just showed that screen. I, I always better talk to a picture. You can show that screen Scott. It's something that's very rare that happens and go where what I did is I've, I've been separating commitment traders for some reason.
- [09:22]
A
Mike, real quick he's just coming up blank.
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C
So I don't, you know what it might be because I something up to them.
- [09:27]
A
It's not, this is just showing blank. But if he tries Again, we might be able to get there. Yeah, go ahead, Mike.
- [09:31]
D
No, no worries. It's, I'll just stop that. So no big, no big deal. It's very rare. So I guess we can move on for gold. The key thing I think about gold is what happened Friday was somewhat significant. Again. This 30 year bond yield I can't get out of my head. Obviously that's why I started in the pits. It can't get above 5%. It's been the, you know, the market I've traded the most in my history and I've been the most wrong about in the last two years. It's quite right to just be able to nail bonds. I feel like an idiot in bonds. And if they can't get above that 5%, which I think is a risk, it's going to drop to 4%. But right now we have that 10 year note yield holding that support at around 4%. It's what gets these out of these ranges. And to me that's why I'm thinking, okay, the end of the year is everything here. We need to stay elevated, we need cryptos to stay out, we need copper to stay up, we need the stock market stay up because we just start trickling down. That's all that matters. Because when you're at 2 times GDP, 2.2 times GDP, even, you know, people are not saying it. But to me that's the only thing that's going to really matter with consumer discretionary spending is when that wealth effect starts reversing. It's not if, it's when, but for now it's doing great.
- [10:34]
B
So I want to amplify one thing before James goes, because what you said before from Anna I think is incredibly indicative of that. Things like leisure and things that are, that what the people who actually have the wealth effect are still fine. Things that require wages are not fine. And so we are in an economy that is, and this is literally what the administration is most focused on. I'm not saying they're going to succeed, I'm not saying they're going to fail. But they are most focused on this, that if you look at economic indicators for the average human being who doesn't have a stock portfolio, it is dramatically different than the ones that do. And so it's really creating, making the wealth effect and the wealth disparity, it's being exacerbated in the data. And that's why there's so much of a call for cutting rates. Because the people who need the money who need to borrow as opposed to the ones who have wealth are the ones they're attacking. And the problem with averages is of course the rich people are the ones that show up the most in the averages. But I think that you can reconcile those two things very, very well. What does that mean? Well, it means politically the pressure for rate cuts is huge. It also means that cutting rates may not be as stimulative in the thing that you think because the people who have the wealth effect also own bonds and also are getting interest, you know, from, you know, holding that wealth. So it's, it's an interesting double edged sword. Speaking of jobs.
- [12:03]
C
Yeah, yeah. I brought up something Scott. So the pull way back, you know, a big picture. What we're, what we're staring, We've got the big, we got the Fed meeting next week and everybody's, we, we can show them Fed futures to Fed funds futures to, to see that we've got almost three cuts baked in now. So you've got one baked in, more than one. So it's like over 100 probability that we're going to have a cut next week. Which means translated some people think that we're going to have a 50 basis point cut, which I don't think we are. But here's the problem. This, we, you know, we're kind of stuck. We've got inflation that, that it, it ticked lower in the beginning of the year.
- [12:48]
B
Right.
- [12:49]
C
And now it's going back up again. Why Obviously tariffs. You know, we, we, it's, it's obvious that you've got an issue here that it's exacerbating. And then that was, this is the pce, this is core PCE and this is your core cpi. And we've got both these numbers coming out this week. You've got coming out Wednesday and Thursday. The P PCE is Wednesday, the CPI is Thursday and these are last big numbers that come out before the next Fed meeting.
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A
I think it's PPI. CPI is PCE too. I know we have PPI.
- [13:19]
B
Yeah, you're right.
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C
No, it's PPI.
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A
Yeah, the 10th CPI, the 11th. Yeah.
- [13:23]
C
So PPI, CPI. And so, and then you know that's, so that's happening, right? So you've got these two numbers coming out but at the same time you've got jobs numbers that are rolling over. And so this is literally the definition. This is, this is the jobs numbers rolling over and they're being revised down, revised down. And then you've got, this is the unemployment rate, it's ticking higher. It hasn't Jumped up higher. We, we haven't seen anything that shows that we're going to be in a recession yet. So the Fed is walking a tightrope here. They've got two mandates. They got to worry about these, which is the inflation rate, and they got to worry about these, which is the unemployment rate. And they're watching really closely and they say they're data dependent. We know that when they say that they're going to wait until something glaring happens to make a big move. And so they're walking this tightrope right now and they're stuck in between and they are terrified that this is going to turn into something called stagflation, where you've got this job, the, the unemployment rate spiking up at the same time that the, the inflation rate does. And so what do you go to when you, when you have that. Well, of course you want to buy gold. I mean, it's, I mean that's, that's something that you want to hold in some, in a period of uncertainty, you know, and so gold doesn't have earnings. You're not worried about, you know, it performing. You're not worrying about consumers buying enough of it to, to make profits. And it, it holds its value in, in the face of, of steep inflation. So it's, it's a really good, it's a smart thing to own right now. I think everybody on this call owns it and that's, that's, that's important to understand. But this is what's happening and the big picture of the US Economy. So the question is, you know, how much does it, how much does the economy roll over? How fast? And like Mike is talking about, he's been talking about for a long time. Can we walk this tightrope without having, without, you know, running into some sort of event? You know, now going back to what Dave is talking about and share this screen. And this is the issue, the issue that we're finding here. If you can put this up. This is the net worth of the bottom 50%. Okay. This is the net worth. This is what's happened since 1990. Okay. So, and then you've got the, the, the top 10%. And this is what they're, this is what they. Plus the, this is the top, the top nine. I'm sorry, the top one plus the next nine. This is a net worth over the last.
- [16:09]
A
I didn't, I literally didn't even see that blue line in the, in the bottom. I was like, wow, they're doing good.
- [16:14]
C
Yeah, they're doing Great. You know, some people, you'll hear economists, you'll hear, this is what drives me absolutely, utterly batshit crazy. You'll hear economists say, but look, since, you know, 2020, their assets have almost doubled. Yeah, they're up from 2, they're up from 2 trillion to 4 trillion. And they're sharing it amongst 50% of the demographic. Yet in the same period you've got the net worth of the top 10% go from 71 trillion to 107 trillion shared by only 10% of the demographic. It's an entirely different world that they're living in. So this is the issue. And so when you hear people say, oh, but average savings is up and you know, the average net worth is up, okay, well cut out the top 10% and then tell me, tell me how everybody's doing. Truly. And it's the point of what Dave makes, which is when you don't have a lot of money, when you don't have money put away, then you're living paycheck to paycheck. And when your paycheck is being swallowed by more and more inflation, the inflation doesn't go away. The prices are higher than they were last year, even if inflation is lower than it was. And this is where the politicians will get on their yap meter and start saying the inflation's great. Inflation, no, it's not great. The price is still going higher. It's structural. It's supposed to be like this. And so that's the issue that we're, that the Fed is watching this and what do you, do, you know, how do you manage this? So that's why they're turning their attention now. They're like, well, the pricing isn't really like that's, we're not as worried about that right now. Now we're really focused on unemployment. Like, we've turned our attention jobs. We've all but conquered inflation because it's, it's not raging out of control. It's in that 2 to 3, 3% range. Ish. Even though it's going to come in over higher, higher than 3%, you know, we're going to turn our attention to unemployment. And that's, that's really what's happening at the big level here. And so that's what the market is focused on. And so when you're seeing bad numbers come out, meaning unemployment is higher than expected, then you see the, the stock market rally because they're going to get rate cuts, which means it's more liquidity. It's, it's it's an easing of policy. Yeah. And this is what I wrote about this this weekend is that, and then you've got the, you know, the jobs number that came out last week was worse than it, than the headline number. Why is, was, why was it worse? Because if you strip out this, what's called the birth death model has nothing to do with people, has to do with the birth and death of companies. It's a model that is, it's created to estimate how many jobs were created or killed using something called an autoregressive integrated moving average, whatever the hell that is, an ARIMA model, and to estimate how many jobs are, you know, are actually created or killed over the last period. And, but they're using, the model uses inputs from years ago to, and things have changed since 19, 20, 19. And you've got surveys, you've got only 43% of the people or the businesses that they're surveying, surveying are even responding. I mean it's just an absolute message. But if you strip out that assumption from the model, then you actually get a negative number. So jobs contracted this past period, so who knows what's really going on. But if you just, if you pull way back and you just talk to people, it's clear that jobs, the job, you know, jobs are slowing down. It's, it's not, it's not a great, it's not a great.
- [19:52]
A
They revised June to actually negative. That was the first time we would have been added.
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C
And then they, and they revised June to negative. So when you take that plus the detail, 90,000 jobs that were, that were added for the birth death model, you would have had a negative 68, 000 this last period. So I mean it, it's kind of silly. You know, it's. But this is what we're looking at and this is what the Fed is making their, making their decisions on. So when you wonder why people are like, well, the Fed is always behind the eight ball. They're always late. Well, they're, they keep saying they're data dependent, they're data dependent, they're data dependent. And then, you know, they're, they're, they're making decisions on data that's not only lagging, but it's lagging the lag because then you've got the, the revisions and then the Fed makes their decision and it's already a month after often these, you know, the, the period they're making a decision on that start that hasn't even been revised yet. It's, it's almost Comical. So there could be things, I can think of a few things we could do to change these assumptions and, and change the, the way we gather data. But that wouldn't, that would require some sort of government change in operation, which, there's no incentive for that. So. Right, this is what we have.
- [21:06]
B
I mean the most important point here is all of this effectively tells you that there will continue that as long as there are fiscal deficits, liquidity is going to be pushed into the system. There is no way around it. They have no choice. It is simple and however you want to look at it, that's what gold is reacting to. And as a bitcoiner, the reason that I'm happy to see gold going up is because frankly that it's just shifting the goal posts. I mean every time gold goes from, you know, 2500 to 3600, well that 1100 dollar increase or you know, I don't want to do the math of what the market cap increase, that to me is the same percentage in where bitcoin can go. But because of the magnitude of the fact that bitcoin is a fraction of gold's monetary value still it's disproportionate. So when you start about a tenth.
- [21:58]
C
It'S about a tenth the size.
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B
Right. So you're effectively what, what we're saying is, is that the reason the bull case for bitcoin, now this is not the same for crypto and I'm going to continue to make that point every single time. But if you're buying bitcoin on the basis of monetary value, then the goal posts have moved. And the fact that bitcoin has been in this ridiculously low volatility range and when you look at five year bitcoin volatility, it feels like the spring is coiling. I mean, hold on, let me, let me present this. This is, this is the really simple reason. Let's see if I can get this one. Bitcoin volatility index. Here we go. Can you put that up?
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A
I think this is the first time we got all, everybody humming on the screen shares, right?
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B
So you know, you look at the way it is, it's like an awesome. And look at how compressed that is. Now if you go back over time and first of all, it's never happened before. And why is this happening? This is happening because of your title, because you're seeing the inexorable force meet the immovable object. But what, what, what do you, what, what does it actually mean?
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C
What's that time period? I Can't see the bottom.
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B
Five years.
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C
It's five years.
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A
Okay.
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B
Yeah. And I can do. This is the, the 60 day which you know, it, it looks more or less the same. I mean it's just a little bit smooth out. If you take out the 30 day, you see the 60 day is the same thing. But either way this, this period of time, this is the whole, this is from May you see how flat that is. I mean if you want to understand, I mean the last time that happened was in 23. We all know what happened after that. And I'm not saying it's going to be the same because history rhymes. It doesn't repeat. But the fact is that it's important to understand. This part explains a few things. First of all, all the histrionics and, and hair, you know, hair shirt wearing on Twitter or X. Excuse me between Josh Mann and, and, and others. I mean, you know, he's having a fight with a, to work with who I think is a numb nuts. Andy Constan. Andy is in addition to someone whose trading strategies. Well, you know what? I'm going to save all of my vitriol for Andy in the book that I'm writing because the fact is is he has one of the worst gut feel trading of any person I know and he allowed what happened to me at City to happen and so I will never forgive him. Not to mention the fact that he presided over this is public. He presided over the loss of over a billion dollars in the equity division by allowing traders to remove the hedge on a little company called Fannie Mae where they had this dividend arbitrage play that was hedged and allowed them to remove the hedge costing hundreds of people their jobs. And yet he's out on the Internet debating Lyn Alden as an expert in traditional finance. I find the whole thing laughable. And yes, Andy, if you are hearing this, I would happily debate you on your career. I don't think you want to though because you would not look very good.
- [24:51]
A
Because I know, hey producers get the clip.
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B
I just want that Andy, I, I, I'm, it just made me so angry to listen to his smug arrogance. And I know the guy and I worked for the guy, you know, he ran the equity derivative department at, when I was in the equity department.
- [25:11]
C
He's, I think he's, he's attacked I think everybody here.
- [25:14]
B
So yeah, so look, it's totally fine. I mean I'm the one person he would not go on a debate with or if he does, it would be really pay Per view entertainment style. Because I know where that. But anyway, let's not go there. The point being microstrategy, in a. When the volatility compresses for a long period of time, microstrategy needs to underperform. It is literally how it is set up. It is set up to monetize volatility and it's a m nav has to compress when volatility gets like this.
- [25:44]
C
Well, yeah, bring up, bring up my screen, Scott, while he's talking.
- [25:48]
A
Yeah, go ahead.
- [25:49]
C
Yeah, so this is not to mention.
- [25:51]
A
That this is the VIX itself.
- [25:53]
C
Yeah, this is the vix. And so this also plays into it because guess what MicroStrategy is, it's a stock. So this is also playing into it. This is the one year, this is the five year. Okay. And then this is the, this is the full maxed out period. You can see that we can go long periods of time. This was eight years of low volatility basically with just a couple of spikes. But from here to here, just two spikes that we've seen more than in, in, you know, higher than the last five years. This is where, this is how long it can go on for. And so people are looking at the VIX and saying, oh, the VIX is too low, it's too low. This can go on for a long period of time. And here we are.
- [26:35]
B
I want to make one other point.
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A
Yeah, Dave, I'm just quickly, as you go on, you keep talking about that. I just want to show so people know what I'm showing. This is MicroStrategy's premium to nav throughout the year, obviously to illustrate your point.
- [26:46]
B
Yeah, right. It's totally expected. You know, there's two points I want to go with. One is comparing bitcoin and volatility to VIX volatility and there understand VIX volatility, the correlation to market drops and fear. It's called the fear index for a reason. It's because put options tend to drive volatility. Bitcoin not as much. You know, bitcoin has a lot of upside volatility also, you know, it's much more bi directional because it itself is an option. And I talked about this for years now and I'm not trying to beat the dead horn, but just the data suggests that bitcoin volatility can go higher as bitcoin rallies. And we saw that in the chart that I had up there. So, you know, it's a little bit different because of the fear, the FOMO fear of missing out is just as powerful as fear of losing one's. One's assets. You know, Bitcoin is a bit different than the VIX volatility, but it still matters. You know, the. The. That point is extremely relevant. The other point I want to make about MicroStrategy is it just makes me me nuts. I mean, whatever you think of Michael Saylor, he is the largest shareholder of MicroStrategy. And if you think that he's running the ATM because he thinks he's. Because he wants to destroy shareholder value for some ego trip when he is the largest holder, I think you're just. You're just missing that. You're missing the point. But in any event, there's a lot of chatter about this. The truth is MicroStrategy will perform better than Bitcoin when volatility dramatically increases, and it will perform worse when volatility goes lower. Now, does that mean anything in particular? I mean, you know, it is what it is.
- [28:23]
A
It does. Because MicroStrategy is not the only treasury company. Well, but then a bunch of treasury companies, and if we get a period of another sustained six months of no volatility, it's going to get disgusting out there. I mean, that's. Here's an article about it. Crypto treasury set for bumpy rhyme ride as premiums narrow. I think I read that 25% of treasury companies are already trading at a discount to nav, which I'm old enough to remember two months ago when people said that could never happen if they owned Bitcoin. So this trend already, because of this lack of volatility. Dave seeing some. And they're just bumps in the road.
- [28:59]
C
Yeah, those. Those companies that are trading below MNAV are just sitting ducks for. For acquisition. So.
- [29:07]
A
But some of the bigger ones too, right? I mean, listen, Nakamoto and I. I love all these guys. Don't get me, you know, like 21. But like Nakamoto, I think is trading four bucks.
- [29:17]
D
Ish.
- [29:18]
A
I think their last round was five. So investors are even underwater. Their first round was one or two, I think. But, you know, I don't know if they're sitting on the money to buy the smaller ones.
- [29:30]
C
Yeah, well, I mean, it depends on who. Which company you talk about. But. But what do you think is going to happen when Bitcoin, when bitcoin does turn around and rally to 150 to 180, you know, and I know Mike is. Mike is over there laughing because he thinks it's going to go to 10. But we don't have to go. We don't have to discuss that. But, you know, of course these will. These will rally. But the question is when and how this all, how it all plays out. There's a long Runway ahead of us for, for all of this.
- [29:59]
A
Yeah.
- [30:01]
C
Because unless there is some sort of black swan event that happens very soon, we have a long Runway here. Meaning not days, but weeks, months, possibly years for all this to play out.
- [30:12]
A
Yeah. I guess on the treasury side. And Dave, I guess because it's what you were talking about, James, like, it feels like at least for a lot of these, it doesn't take a black swan to the downside. It would actually take boring for a really long time to be the black swan up.
- [30:26]
C
It could be. You know, I don't think that's gonna happen.
- [30:28]
A
I'm just saying.
- [30:29]
B
Depends on what.
- [30:30]
C
Look, they're not all bitcoin. Treasury companies are created equal. Like, we've got, like, people need to understand this. And as an investor of these, and I've got to be careful what I say here, there's some there, you know, but as an investor with my hedge fund, we do not invest in all these names. We have flipped a few of them because we saw momentum in them, but we do not not invest in all these names. We are careful to, to discern between which ones actually have some sort of plan, whether it's a, A, you know, discernible plan that they can actually accumulate more bitcoin with a balance sheet without just taking on super amounts of leverage, whether they actually have any revenues behind them, who is running the company and what kind of capital market arbitrage they're trying to perform form. You know, so these are all things that play into whether or not you're going to invest in these companies. So just remember, you can't just look at the, the matrix of companies and say, oh, let's just buy them all. That's. I think that's a mistake.
- [31:31]
A
I just want to quickly say that I. This came from the article, what I was saying. I don't want people to think I'm trying to like fud. This is specifically reported in cointelegraph that these two of the larger ones are trading below the recent fundraises. So didn't really sound like I was choosing selective data.
- [31:46]
C
Yeah, well, that's different.
- [31:49]
A
That's not below Nash. That's right. That haven't even. Most of them haven't even bought much bitcoin yet. I mean, obviously 21 famously seeded with a ton of bitcoin, but that's a transfer of tethers, bitcoin and softbanks or whoever to 21. There's no buying there. I'm not saying it's a problem, but that wasn't buying pressure for the market.
- [32:08]
B
Right. The single important point that all of our listeners care about is the, the biggest FUD that's out there in the bitcoin market is that a downturn in bitcoin to, you know, whatever, 70, 80,000, whatever will cause these bitcoin companies to go belly up and be forced to sell their bitcoin. And that creates a recursive loop. That's the same thing that happened when FTX blew up. You had a wave, of course, selling, you know, started with Luna, then the Voyager, blah, blah, blah, blah. We know the history well there, there.
- [32:36]
C
Are, that are that are leveraged that we'll need to. But that's, that's, that's. They're not big and they're, you know, it's not that it's.
- [32:44]
B
The size of those companies combined is less than was sold by the whale. That was just done over the last three.
- [32:49]
C
I agree.
- [32:50]
B
And so there are a handful.
- [32:52]
C
All of them are safe. You got to understand that.
- [32:55]
B
That's right. Not saying they are, but the wave of selling of that, that hat that crescendoed with the FTX collapse, which, which at that didn't even get to Mike's 10,000, that got to 16 6. That wave of selling was dramatically larger from a dramatically different base. So that's point one. Point two that I think is exceedingly important for people to understand is the investors in these treasury companies are people who would probably otherwise have bought Bitcoin ETFs or Bitcoin hoping for leverage. So what makes anybody think that if they sold those, if those things went down, that they wouldn't be reallocating it back into bitcoin as opposed to why do people think it leaves the ecosystem? It's illogical. The vast majority of the investors there are, are in that ecosystem. Now, last point, because this is the one that goes back to your, your, your, your, to the title. If you ask a question, what does it take for bitcoin to become mainstream and start eating into gold and its monetary value or start competing with gold. The answer is distribution from OGs to non OGs. That's what has to happen. We, we. This is the, this is not an argument, this is just simple fact. People don't like to hear it, but the vast majority of those bitcoin whale coins need to get Distributed to financial, you know, to the, the global, into the global financial system. What are we seeing over the last few months? We're seeing that exactly happening in the market. Staying with the volatility that I already showed you, what is the single healthiest thing that could happen? The single healthiest thing that can happen is low volatility as that distribution, that's what we call it in the stock market, that distribution of holders takes place. And that's what's happening. So the longer this happens, the more bullish I get for that reason. Right. This needs to happen now. I don't know whether it will be enough. One of the biggest problems with bitcoin has always been it was held by original whales. And a lot of the large financial players didn't think they could get enough for it to be meaningful. That is slowly but surely changing, and that's relevant. So if you ask, I, I saw this article from Cointelegraph, and, you know, I don't want to make fun of them. I don't know Martin Young, I've never met him, but his tone is exactly the opposite. I, I hear the same facts, and the same facts are, okay, so you're telling me that we've had 200 and some odd thousand bitcoins sold over the last two months from Wales, and the price, the first, the first then didn't move that much. And then, you know, we, we dropped 15 to 20% to digest the rest in the summer, some of it being sold on the weekend in order literally to try to push the market down. And we, we still are trading at the, in at that 112 level. Now that's not a bad thing. And, and that's really the point. You know, a lot of the technical chart analysts are ignoring these very massive supply demand shifts. And I think that matters. I mean, James, you're obviously seeing this, right?
- [35:56]
C
Yeah, of course. I mean, the OGs are selling. That's fine. But what's interesting is that, you know, and I think we might have talked about this last week, or maybe I talked about it on podcast, I can't remember. But the point is that you've got these OGs, the, you know, whether you want to call them the old guys, the original gangsters, you know, these guys are selling the, into this, into this run up of over a hundred thousand dollars. They've been holding these things for years and years and years from, who knows, a couple hundred bucks to a couple thousand dollars maybe. And they've made so much money on this that they're just they're monetizing. They're going and getting, they're getting their land, they're getting their castles, they're getting their yachts, whatever. Who cares? I don't care. Good. Bravo. Good for them. Awesome. Well done. You know, but that doesn't mean that they, that they don't believe in it. They probably still hold some, you know, and likely still hold some, whether it's in other wallets or whatever. But the point is that, yeah, the redistribution is clear and it's not destroying the price. The price is still well above a hundred thousand years ten, above one hundred twelve, above a hundred thousand here, you know, and so. And it's held here year. It. It's held for. It was held between 100 and 110,000 for months during the spring, and it's held between 110 and 120,000 for months during the summer. And here we are in the fall. And is it officially fall yet? I think it is, right?
- [37:22]
B
No.
- [37:26]
A
It'S Hampton's fall.
- [37:29]
C
So, you know, but here we are going into. What's important about that comment about, about the fall is we're going into. Mark your book period. You know, this is where you're, you've got your investment managers and your portfolio managers and the CIOs are out there marking books to go into the last quarter. And which means they're going to be shuffling stuff around September, October. That's why you, you see the movement in the markets pick up. There's been debt. It's, it has been dead this summer. It has been so quiet. It, you know, people are, have not been at their desks and they've not been paying attention. And now they are. They're back, the Fed's back. Everybody's watching. Let's go. And so September, October, we're going to see movement, in my opinion. So.
- [38:15]
B
Right. Okay, Mike, we've given you plenty of, we've thrown plenty of chop on the water for you.
- [38:20]
D
Well, it's, I think we need to fire up Dave, so let's start with if you, if you can feature.
- [38:25]
A
This one's going to a hundred dollars. No.
- [38:29]
D
So I did make the call in 2018, so I have to learn to.
- [38:34]
B
Say, would you like fries with that?
- [38:37]
D
It was gonna just lose a zero. And yes, I was wrong. It went from 10,000 to 3,000. Okay, so I didn't get the whole thing. Very similar situation right now. And I. This is. I know Dave doesn't appreciate this chart, but I just want to point out it's From a commodity standpoint to me, bitcoins, as you point out about today's decline and it's become from a highly speculative digital asset that when nothing but diminishing supply, increasing demand and adoption to a commod now. And that's why I view it and all those. My next headline will probably be those 21 million cryptos. Now listen, coin market cap is indicative of what it faces. So I just want to point out one key thing. It's a bitcoin to gold ratio. It's been a great range trade and that's one thing I remember trading myself and being with clients is when you can define a, define a range. When people get really bullish near the peaks, which they did just about a month ago, you sell the bitcoin to go. Now we're just heading towards the bottom in the range which we're in the middle around 30, 30 ounces of gold to one bitcoin maybe it goes, not a big deal. We get a normal pickup involved. The key thing that's notable from this chart, it's same chart syndrome with the S&P 500 divided by GDP. Now we're getting a little bit of crocodile jaws. So bitcoin's got to go up. This is why I look at it now. And I just want to point out the thing I'm also mentioned, gold. Scott, you featured this for a little bit earlier. Just the key thing that's happening in gold. These are managed money net positions and hedge funds and ETFs and gold. They're way under, way below the actual trade. So they're not, not on board of that board that trade. So I'm looking at this is, this is what I think is going to accelerate since bitcoin first reach a hundred thousand, which you know, I fell off the horse for a while, but initially a call I made in 2020, it marked the peak. And it's so much now the hubris is so important. There's so many people jumping on board. It just might as. I like that quote from Scott. That's my spidey senses. Yeah, you don't want to join that party. So gold's up 40% since that's happened. Bitcoin's hovering around 10% with S&P 500 and the broad Cryp market's down 2%. What happens towards the end there, that's my point is the stock market has to go up. Now if the Fed only cuts 25 and the stock market goes down, that's the problem. So to me this is we're heading towards in the year. Everything might, McGlone might get stopped out in that call for bitcoin to drop another zero by the end of the year if it keeps marching on. But if we just get a normal, let's say S&P 500 ends up 5% in here, everything starts trickling down. That wealth effect we talked about earlier, which is almost always just, you know, it's the top 10% of wage earner or sorry of incomes in this country own 80% of stocks. But we are the most exposed to the stock market ever. As you see here. Stock market cap the gdp. It's just.
- [41:11]
B
Yeah, I, I agree on the stock market point, but could you put the, the bitcoin gold rate. Look, I look at this chart and I know that 21 was a massive hype cycle. I look at it from the bottom and this looks a lot like what the stock market, the S P chart looked like from 2009 to around 2015. I just want to point that out. You know the, the bottom. Very, very, very. If you look, if you erase the left side. Now the other question is, can you make this go back to 17?
- [41:40]
D
Sure. It's going to be definitely. Well, what happened 20002017 futures were launched which for both of us knew that was going to mark a peak in volatility. Peak in bitcoin volatility. And now we have ETFs, which means volatility back.
- [41:55]
B
And then if you look at this, we had in 2021 was insane leverage and we now know why. And it all, it got way ahead of itself. If you look, if you overlaid the bitcoin hash rate on top of this chart, you would see something and, and effectively this was an aberration in the middle of the chart. And it was an aberration. It got to six times, six or seven times. You know what a fundamental value, what pretty much any fundamental bitcoin valuation was at. And so now, now you draw a dot plot through this and it's an upward sloping line with volatility. And that's what it looks like. And, and, and that's makes sense because that's what the, that's what the network is doing. That's what the adoption is doing. So you and I are looking at. This is like a Rorschach test. You know, the doctor holds up, you know, holds up some things and I, and, and you see fluffy bunnies or actually I see fluffy bunnies and you see, you know, a dog eating a cat or something. I don't know, but you know, whatever. But you know, we look at the same chart and we see two different things and the grim reaper technical analysis. But that, but that is, that's important. It ignores, there is an upward sloping thing here. Now when you talk about crypto and you talk about a lot of which I believe are effectively like tech assets, I don't see that most crypto assets, the ones that are going to do well, should be valued or looked at any differently than looking at stocks, which would be the nasdaq, not the S and P. And the question there, is the earnings multiple expansion in the stock market justified? And your answer is no? My answer is oh, I think in some cases yes, in some cases no. But the markets don't tend to be nearly as selective as they should be. And that's really what the job of an analyst needs to be. So look, I, I am notably much more lukewarm on Ethereum. I think that, I wonder if, if the, the, the riches that, that, the, you know, that, that Bitmain, you know, gave Tom Lee is his Icarus moment. Because I think that he's hitched his, his star to the wrong horse for the wrong reasons. I, I am, I'm not bearish particularly, but I'm certainly not nearly as hyper bullish. I'm much more on Solana and others. But you know, that's just because I, I, you know, I, I look at this as you have to look at what's going to actually drive value. And that's the same reason why I get in trouble with the XRP army and I get in trouble with a lot of other people who look at me and say, oh my God, you know, how could you say these things? And the answer is, this is just.
- [44:28]
A
For Solana, just in case people missed it. Keep going. But that's a $1.65 billion.
- [44:33]
B
Yeah. And Solana is breaking out again. You know what mean I, what are we at? 214 today? You know, look, the fact is that these companies and these tokens are people are buying them thinking that there's going to be the next big thing and that the owners of these assets will, will participate. And in some cases the answer will be yes. In some cases the answer will be no. In the stock market. That's literally has been true with tech stocks forever. I mean there's no, there's no other era in history before the last 25 years that tech stocks commanded these sorts of, you know, PE valuations.
- [45:13]
C
You know, but think about how, think about how consolidated it is at the top. Think about the, the seven companies there at the top that are driving all of this. That, that's the, that might be the most insane part of all of it.
- [45:27]
B
That's right. And so when you look at the macro of, of markets and Mike talks about 2.2, 2.2 times GDP, that should give everybody pause. Well, the same is true with every other risk asset. Right. The issue is, it's called financialization. And that is what happens in a fiat world where you're continually printing money and the money has to go someplace. That trend can only accelerate from here, believe it or not, if rates are lower so that there's less competition. Right. As long as you can get 5% or 6%, you know, and you think that inflation is 2 or 3% if it is for you, because you're not paying for medical care and you're not paying for education and you're not paying for other services and you don't need to fix, you know, have plumbers or electricians come out to your house. You know, in that particular case. That's what you do. Right. And that's what Mike's been saying that for two and a half years. Well, there are a lot of people who doing that. And that's one of the reasons that when you cut rates, rates, it forces money out of money market funds because people are getting less into out along the risk curve. That's the real reason they want to cut rates. They want to force money out along the risk curve full stop. You know, and, and that, that's the, that's the goal here. Right? Because that is you force money along the risk curve and some of that bleeds into the real economy. And you had to put better jobs. That's what they're trying to do. Are they going to succeed? Good question. Don't know.
- [46:52]
A
Mike, I have a question for you. Going back to your points about gold and maybe historical context that I don't have. Interestingly, we talk about gold as being this sign that everything else should be collapsing, but everything has still gone up with gold. So what if gold peaks at four and nothing's really crashed? I don't understand how to read it. If gold has gone up this high, shouldn't we have seen the stock market and all of these risk assets? Assets already have dumped on this historic move.
- [47:22]
D
Exactly. I think that's part of my base case for the risk for gold. If we get through this year, stock market stays here or higher, gold's gonna look stretched. That's kind of my key Point is that's why I have to check whether positions showing well, they're not overweight. So that's not the issue. So that's my, I'm looking at is what are the leading indicators, what's the risk here? Well that 30 year yield peaking up 5% and a 10 year note yield right now 4.05. That's showing that potential deflationary force that gold's peeking on to. And that's why I think the next three and a half months are so telling. If we just get that little tick down in the equity markets from 2.2 times GDP, it's just getting started. That means we'll be in that phase that I think towards the end game that we're seeing with some of these major indications with gold is that this thing that's been riding since 1987 crash and the Fed started cutting rates just to help the stock market has reached the end game. To me that's what gold's picking up on. That's what I'm sensing to be stopped out on that. Like you said, by the end of the year stocks market keeps going well. Cryptos keep doing well. Gold maybe pulls back. Yeah, that's a problem. But that to me is my base case is I think cryptos are going to go down, lead the way down. Kind of like they have been showing lagging, they've been showing that, that tilt that way and everything depends on that stock market going up at this stage we just dropped a little bit. Cryptos are going to go down, down 2, 3, 4 times the velocity. Bitcoin will lead the way, maybe some of the alts will too. And that's why maybe McGlone will be stopped out and be wrong. And I just, I mean the Spidey senses are very similar to what we saw in 2017. Now that's a whole different ballgame. The difference now is we're so completely dependent on the Fed to ease. They better go 50 at the next meeting or it might be disappointing.
- [49:07]
C
No, I don't think it's, I don't think the market's gonna be disappointed by, by 25 basis points. Points. I think that, I think the market be disappointed if he comes out and says 25 basis points. Now we're going to hold, we're going to stay steady that we, there's no guarantee of any more cuts for the rest of the year. But just look at the structure of now the board, right. So there's, it's, it's likely that we'll, that you'll have three dissents if, if he doesn't cut. Okay, so meaning if he, if he cuts now and then he says they want to pause for the rest of the year. Year, you'll have three descents for the rest of the year. That's historic. You know, that's just like, that would be embarrassing for the Fed to have three dissents and still, and still hold rates. He would make himself look political at that point. So I just don't think that that would happen. Yeah, like just drill down just a little bit deeper is. Is my point.
- [50:00]
B
Yeah, I think that, that, that's right. I think 25 is, is, is highly, highly, highly likely. And I don't think that, that, that the market does boo at that. I mean, yeah, you'll get, you'll get them.
- [50:13]
C
You know what, you know what, Dave? Hold that thought for a second. Mike, what might happen if they cut 50 basis points in, in a hurry and, and he's, and he sounds harried. That might make the market sell off because people might panic and say, oh my God, what are they seeing that they're not showing us?
- [50:28]
B
Right. So the other thing is that it'll be bad for the bond market and that's what that. Right. You know, look at 4 with a 87 probability of a, a rate cut next week and the long bond having moved down from four and a half at the top to 4.1 on the 10 year. They're perfectly happy. You know, if you did 50 and the bond, the long bond started going in the opposite direction, that would be a problematic. People have asked me what do I think. I think that the, the, I hate this probability. I hate what I'm about to say because it's just so absurd in the, in the actual, actual global scheme of things. But parsing the press conference is going to determine the direction of the market for the following week.
- [51:09]
C
Right, here's here. You pull up the, Scott, pull up the, the probabilities I've got on the screen. So here you've got over 100 probability of one cut next week. It's not enough, Mike. If this was closer to, if this was closer to this number for the October meeting, then people be disappointed with the 25 basis point cut cut, in my opinion. So they're, they're expecting a full 25 basis point cut. Some people are expecting 50 basis points. It's not going to happen, I don't think. And then you've got almost three cuts for the end of the year. So the, the disappointment would be to Point to, to Dave's point would be in the press conference.
- [51:45]
B
Yeah.
- [51:45]
D
So that's all priced in. If you go out to next year we're down to 3% and that's my point. My I'll make a prediction here next week is insignificant. It's what's happening in the macro big picture that I suspect we're going to see elongated pair of equity markets going down as the FedEase is just normalizing this over overvaluation. That's your normal deflationary recession. It's happened in Japan, it's happened happened in China recently. I mean they're running massive fiscal monetary stimulus just to keep the market from deflating less. To me it's starting the end game and my key signal for that is gold.
- [52:22]
C
The market is telling you right here that the neutral rate is 2.8.
- [52:26]
A
Yeah. Not 2. Right.
- [52:28]
C
So you know that's where you're getting up to 2027 as we get to 2.8.
- [52:34]
B
Right.
- [52:34]
C
So two points we're way over.
- [52:38]
B
And and I will continue to replay to put one statistic out there of the last 25 years. There have been 20 years where we have been their interest. The Fed has been below that 2.8 level whichever it has been at those times but been below inflation. We've had negative rates for 20 of 25 years. The five years we didn't are the last two years. The two years before the great financial crisis and the year before the Internet bubble pop. That's it folks. So if, if we're going to try to navigate out of it. This is like the Bugs Bunny cartoon where the plane is going down and the question is are they going to pull it up or are they going to let it run out of gas? And they're going to be well you know we didn't crash. I mean that's really what people are thinking about. I mean it is, it's just the way it's been. And the point about China and Japan are very true. I mean very true. I mean Japanese stock market valuations got insane and a large part of that was Koretsu which is the cross hold ownership. The float of the Japanese market was so small by comparison to the available stock and everyone's buying into the Japanese miracle. It's more or less we've seen that before. I mean that's the sort of thing you look at General Electric value relative to the economy as it got too big for its britches and conglomerate. Well that's what happened with the Japanese economy. The Chinese economy is different They've built all sorts of stuff that was unproductive, productive ghost cities, ghost this, ghost that. But they've also built a lot of really productive stuff. And the question there is their economy is uneven and, and you're right, but all of that is more signaling, more liquidity. Right. You know, in a global world there's still assets and there's still liquidity being pumped and some of that ends up in, in some of these assets we're talking about, particularly bitcoin.
- [54:28]
C
Mike, do you think, do you think we get back. This is zero, this is zerp, right. For all these years you get a little bit of creep up before the, you know, before 2020. But this is. You think that we can't get back to this?
- [54:43]
D
No, I think that's where we're going. That's partly because consensus tells me no. And from if, from a commodity standpoint, I see nothing but pretty severe deflationary forces, particularly from the rest of the world, particularly from the second largest economy, China. Right now China's 10 year yields at 1.79%. I see we go that way. And the key trigger is just a little bit of back and fill in the US stock market versus GDP at two highs since, you know, 1929.
- [55:07]
B
Well in that case the, the, the trade of long bitcoin short S P or long gold short S P is that are the trades that you want. You don't believe.
- [55:16]
D
Exactly.
- [55:16]
B
More like the S P but. And that's fine. But, but that's the, that's the, the macro trade that you care about is. Let's just use gold. In your case you're saying gold outperforming.
- [55:27]
D
Stocks because so gold has been. If you take The S&P 500 total return divided by gold, it's flatlined for a eight years. You take the Bloomberg Galaxy crypto index divided by gold, it's flatlined for seven years and now they're starting to roll over versus gold. And I'm told that it's. To me this is the beginning of that end game and I do think that goals continue outperform. But if I'm right on this trade, the thing I've been mostly wrong on for last few years is that long bond is going to start catching up and take a little bit from gold. Because right now on most measures I've ever watched, the gold versus T bond ratio is the highest ever. I mean T bonds are that cheap versus Go. Okay, so that's the key thing. What's the number one trigger for that is just silliness of 21 million cryptocurrencies just lop off of zero. Same thing we saw in 1999.
- [56:12]
B
I was hoping we'd go the show without hearing the competitor argument.
- [56:16]
D
Okay, so there. Okay, let's just point out there's a lot of excess. It just why I think to me bitcoin trades much more now like commodity. A commodity with massive excess supply and different alternatives, as we point out. And it's showing that in the markets. And that's why I think it's what commodities do is they go down because it went up, Bitcoin went up and I think it's going to go down. I said the same things in 2018. Just right now people are much more involved, which means there's. It's a systematic risk of. This space is extraordinary. When I hear those two words, Bitcoin and Treasury or any crypto and treasury in the same sentence, I just like, oh my gosh, that's a complete oxymoron to me. Treasuries are treasuries and I can still lock in 4.72 for the next 30 years in that long bond. As we head towards a normal deflationary cycle, which is a normal cycle.
- [57:00]
C
Wait until 2040 when you hear the term US treasury backed by bitcoin.
- [57:05]
D
So that would be wonderful. I hope to live that long. Right now I'm just wanting to get through this next few years. And I mean these are signals that I remember very clearly seen in 2009 and 2007. And that's why this next few months are also important again. Remember we have the Vix running 15.3 this year. It's the 200 day movers boom. And right now has been heading higher. It's got it. I still think it's gonna at least get to 20. Let's talk about the trade. I think it's gonna at least get to 20, which is about the year's average. I think bitcoin is gonna least get to a thousand, which is the year's average and then it's what happens from there. Right now that's a little tiny trade in the macro. Big picture is my what I'm looking at. But those are little trades. First let's get that big stone there. 20 might give you a chance to buy bitcoin around on there.
- [57:48]
A
Did we do it 1001? Sure. We could talk about a hundred other things. I had a lot of stablecoin news queued up and other things. But hey, you know, there's always next.
- [57:57]
B
Week always next week.
- [57:58]
A
The beauty of Macro Monday, guys. It was great. As always, thank you very much for all the insight and for joining every single week. I know that the audience absolutely loves it. I don't know if you guys saw the one we did with Larry out of nowhere. Just had like. Like 60,000 views on YouTube or something. It was crazy.
- [58:17]
C
We're all on notice.
- [58:20]
A
So that was me saying that Larry will be replacing me as the host next week, and I will be riding into the sunset.
- [58:25]
D
Thank you.
- [58:26]
A
Yeah, that was good. And I. I also invited Jack Mers because he told me that Macro Monday is his favorite show, and he said he wants to join us one day at 9am so room for a fifth for that. Would love it.
- [58:38]
C
He's told me. He's told me the same.
- [58:40]
A
Yeah. Trying to coordinate that. So that would be amazing. All right, guys, that's all we got. We will, of course, be back next week with another Macro Monday. Thank you, guys. See you soon.
- [58:48]
D
Bye.
- [58:50]
B
Let's dope. That's dope.