Rahm Maester (5:03)

Yeah, look, overall you've had market volatility, starting with when the Fed had the hawkish cut that was one and then two. You had Michael Berry shutters hedge on with a broadside critique of the data center theme and round trip trades. At where you are now though is that the market's now pricing in an 80% probability of rate cuts For December. That was due to comments from Fed Governor Wallow this Friday the markets have rallied. You also had elevated volatility in the vix which hit 26. That's usually the kind of lower bound when you start to see a rally. So I think you're in good shape. I think we rallied now through year end and feel, feel pretty good about that. I think on digital assets and Bitcoin specifically, I call this a Nick Carter rally. I think Nick Carter said I'm buying bitcoins is the Nick Carter rally. It's a KOL Nick Carter rally. So Nick, this is for you. You know, but I do think the rally is ultimately sold. I think maybe it's a multi week rally, you just kind of have to reassess. I don't think you get to new highs in the next one to two months per se, but I think it's a risk on, you know, we'll have retail sales report tomorrow expected that'll be strong. And you see a lot of conciliatory messaging from the White House on almost like every dimension. So it's really been a change of, of tone ever since the elections. So you know, overall this is constructive. I still view this as like a Goldilocks macro setup. You just had a negative sentiment from headlines that weren't reflected in, in earnings and earnings is strong, continues to be strong and there is roi, the data center spend. We'll talk more about that when we get to Nvidia and we all chime in.

Chris Perkins (6:54)

And I think one thing that, that I've noticed is that retail is exhausted. They got hammered on 10 10, they're still getting over that. And then they got this whammy last week, you know, a little bit before that. To your point Rom, where they're like, wait a second, the Fed might not cut in December and it seems like like rates have been in the driver's seat. It's kind of concerning as like you know, crypto natives where we're like gosh, you know, this really, really centralized thing controlled by a handful of governors is really driving all of our asset classes. We're trying to deliver this decentralized finance thing and that's all that matters. The good news for markets though is that look, Polymarket right Now is pricing 83% chance of a 25 basis point cut. You, you mentioned Austin. The futures volumes that we're seeing, that's great news if you're one of the four tokens that are covered by CME futures. The one thing I think that's still really hurting these markets, and I talk about it over and over again is the lack of alt futures beyond those four. We just don't have that comprehensive liquidity. It's been that liquidity is forced offshore where you're still subject to the adl, the counterparty risk challenges. And so that's bad. Last thing I'll say is that against this backdrop, you know, retail has been hurt, they're going to come back eventually. But there's this bigger flippening I continue to see and that's the institutions slowly methodically marching forward as retail does what retail does and goes for the next hot ball of money. I don't have major things to report, just things that I see in the market. I'll give you an example. We have a business that we launched this, the risk free rate of Ethereum, very much fixed income foundational product that that's very institutional in nature. And I'll tell you like the last day signed three major contracts of like major institutions as they methodically mark march forward. And that's just like an aside, an anecdote. But I guess my point is, is that institutions like every day they move more methodically forward. Retail comes, retail goes. Fed's in the driver's seat. One last thing that I'm concerned about, frankly we saw Nvidia earnings, they did pretty well. I'm kind of concerned what happens if they miss earnings in the future. And I think even Jensen mentioned that that could result in some challenges. The other risk out there is you hear this like this news here and again around Quantum, like it's coming, it's coming. It's almost like the Y2K thing that's out there that no one really knows it's going to happen, we know it's coming. And the last thing that I'm a little bit concerned about and Rob, I'd love your perspective is on JGB yields, right? Like they remain elevated and we saw a surprise rise in Japanese rates that really surprised markets a few months back, really hurt asset prices because there's this concern around deleveraging of the, of what's known as yen carry trade. You know, we're still seeing them elevated and then finally liquidity has been pretty tight. And what we're seeing now at least is that QT is coming to an end December 1st. So at the end of the day all those risks and benefits, I'm kind of in Rom's corner. I think long term I wouldn't be here if I wasn't super bullish. I think near term the setup is very constructive.

Austin Campbell (10:12)

Well, I'll hop in and then we can get to the GGP yield point one. I think, Chris, what you're saying about institutions coming in also has major implications for the crypto complex as to how we think about prices going forward. Right. If you rewind two years ago, four years ago, we didn't have to think about what are the differential opinions of the average crypto person versus like call it people in their 401k funds or pension funds so much when we were thinking about bitcoin versus alts or like rotation between tokens because everybody could buy everything. But realistically speaking, for a lot of the institutional buyers, like you said, if there's not CME futures or some sort of listed equity product, a lot of them are just not going to touch the thing. Right. Like, I don't think there's a lot of institutional buyers of like many of these project tokens, many of the smaller blockchains, many of the more like subscale projects of this space. And so as we're looking at price action, I mean I will remind everybody that bitcoin going down to the mid to high 80s is still up significantly from the election. But, but there are a lot of alts that have performed significantly worse over that same time frame. And I think that might have to do with the growing divergence between the buyer pools. Because if you go look at people who are the holders of bitcoin now and if they own any other crypto and would identify themselves as traditional financial investors versus say the holders of. Let's pick something not even too far off the beat, Pat, like say the SWE token. You probably have a very different investor profile just between those two pools, much more than we have in the past. Like Ron, what do you make of that? What would you expect?

Rahm Maester (11:56)

Yeah, no, I agree with your observations. Digital assets like bitcoin have a bid. There's an emerging thesis around international money with the major institutions behind it, altcoins. I'm not sure you can trust their fair value. The depth of the order book is limited. You have to be highly selective. You know, a strategy that's long, top three and short the rest probably does well on average. I think I'd be very suspicious and skeptical of the vast majority. This is not a controversial statement, I think for us, but I don't think people appreciate that. You know, you stick to quality, stick to liquidity. Just on the JGBs. I put this in the. From a medium and longer term perspective, this doesn't really mean Much. It's just a nothing burger. This is like a phrase that you hear me say often. This, this is another one. This is just another nothing. But the good news is I'll talk like big picture then tactically, big picture. What matters is earnings. A pattern of disinflation, constructed regulatory policy, consumer spending, the government suspending. Oh, that's going in the right direction. You have record beats strong earnings growth. That's the big picture. Like every single cylinder is working here. The restaurant is just news and sentiment. Sam Altman says something stupid to Brad Gerstner about a trillion dollars in unfunded liabilities. Michael Burry comes out, shutters his fund, takes a broadside attack. That's just News. So on JGBs, tactically the good thing is that the US dollar has been through an extraordinary rally. If you look in the last three months, look so much with the dollar debasement trade, there's no $$ strengthening. The reason why that matters is that the yen carry trade is funded by borrowing in Japanese yen. So the risk is that if rates go up, you're funding, your carry costs go higher but your liabilities are actually dropping net due to the decline of the yen versus the US dollar. So it's nothing burger.

Chris Perkins (14:02)

There you go. But strong dollar oftentimes leads to weaker commodity prices. That's the other side. Right. So that has impacted I think price action in certain cases. On the alt point, I agree fundamentals matter. They're not always in the front seat as we've seen recently. Very constructive long term fundamentals for certain projects. But, and I think you'll see that differentiation. And then of course like I'll continue to say it, like institutions can't touch it. Even the debt like the DAT is an amazing wrapper because you know, it's just another, just go into your brokerage account or your institutional oms and you buy another one. But it's very hard if it's a super volatile asset, particularly going into year end where you don't want to see a drawdown because you've had a great year. You know that that's part of the issue.

Austin Campbell (14:51)

I, I will echo ROM on the dollar, I guess we can call it rebasement trade. I don't know how we want to name that one though. I, I do want to counter one point on the bright economic news. So banks are still sitting on 395 billion of unrealized losses and I think people don't understand what that will do to credit creation. Liquidity looks better than it is when that is going on because banks are going to be holding a lot of reserves. Everybody will say, oh, they've got a lot of dry powder for lending, but in many cases like a good one to look at that had large losses in the health of maturity bond book is bank of America, right? They're going to be sitting out a lot of cash not to go lend that out to people, but just so that they have a strong balance sheet so that people aren't going to come run the bank as happened to Silicon Valley Bank. And that sort of grind takes time. And the inability of the administration and like the Fed to get rates significantly lower, Tom, especially once you get outside the short end of the curve has an impact on that. So one thing I would say in addition to, I agree with the comments on QT and that coming to an end will be moderately helpful along with treasury starting to spend again. But I think there's more work to be done from the credit perspective. And the other thing we're seeing on that front is like very low mortgage origination. Right. Like you have a lot of people locked in compared to historical norms and like not a lot of activity on that front. So when we're thinking about retail, when we're thinking about the general market, sort of like Rahm, I guess this plays in with your nothing ever happens meme. Sort of like thinking here. I've been saying for a long time things are not nearly as good as the optimists would like and not nearly as bad as the pessimists would say. And we're sort of grinding along mediocre on a lot of these measures.

Rahm Maester (16:41)

I'm more on the optimist. I'm more optimistic than that. The only thing that is holding people back for recognizing just how things good are while acknowledging, yes, you have a K shaped economy. Yes, yes, of course that's legitimate. Been the case for decades. It's true. The only thing holding people back is the fact that asset prices aren't where they want them to be. But if they were, I wouldn't be as excited. So this is pretty, the going is pretty good. You're supposed to buy when Nvidia's got a 4P of like 26 times earnings with 66% year over year revenue growth and Meta's at 20 times earnings with 40% year over year earnings growth. That, that seems, that seems like a compelling investment backdrop.

Chris Perkins (17:28)

Let me jump, let me. Austin, let me jump on, let me jump on your bank point because we know a little bit about banks and I don't think it's a surprise that you're seeing the Basel Committee now lightening up a little bit, particularly when it comes to crypto. They don't just do that without pretty strong feedback from people like Governor Bowman and others. That's the other liquidity unlock that you could see is the US really starts having a more outsized role. And really like Secretary Bezos, a smart guy, he gets how this all works. And the other liquidity toggle they have is bank regulatory capital. And I do think that's trending very positive for the banks, which could help to facilitate, you know, some of that unlock that you're suggesting. You agree?

Austin Campbell (18:11)

So I agree. If they do it. My worry is that the Basel Committee is like a glacial entity, right? Like them starting to work on it means five years from now we'll have. But the interesting part, Chris, and I don't know how the coordination is going to work, is do the US Banking regulators just go rogue on that and impose some other treatment?

Chris Perkins (18:31)

That's my point. I think the bank. The US Regulators are starting to say, well, wait a second. I have a lot, especially Treasury, I have a lot more to say with the front end of the curve with these things called stablecoins. Now that's awesome. Why am I letting the European set Basel rules? I know what's best for my banks and for our economy, and it's an America first regime. So I don't know. I feel like that's something that they're much more attuned to in my recent discussions. And just seeing that data point where the Basel guys are walking back, some of the things that they're walking back, I thought that was super interesting.

Rahm Maester (19:07)

Look, I. I think the banks were in good shape. Credit growth is 4.4% year over year. That's great. From a GDP perspective, access to credit's good, credit quality is good. Credit performance is good. Delinquencies are low across the major banks. There's no credit health issues. We're three to four years into digesting commercial real estate issues, which are more and more in the river mirror. The other part, fun fact. There's an ETF called. You guys will appreciate this. Gib gsib. Okay? These are all the systematically, the SIFI too big to fail banks. That ETF is outperforming bitcoin. This is funny because think about the origin story of bitcoin. Satoshi Nakamoto wrote in the Genesis block, you know, he made a comment referencing, you know, no, no bank ballots. Right? GSIB is up, not 10, not 20, not 30. 45% year over year. 45%. So banking sector is good. That matters because it's the bedrock of the economy.

Austin Campbell (20:10)

No, I agree with that one. And okay, so on the note of the bedrock of the economy, let's talk about the other thing for a moment. Ram, since you brought this one up. Nvidia. So Nvidia earnings were not bad to say the least. And yet after they beat the stock fell 3.2% after an initial pop. Valuation concerns seem to be dominating the news headlines in the timeline. I guess the optimistic take is that this is a healthy correction. The skeptical take is this is the start of an unwind. Ram, you mentioned Meta earlier. They're what, down 21%. Microsoft is down like low double digits as well. Core Weave is down nearly 50% in November. Semis in general are down about 11% in November, their worst month since 2022. What are you making of all of that? Like is that a buying opportunity for people or the start of something worse?

Rahm Maester (21:03)

Yes. No, it's a buying opportunity. This is what you should be buying on Black Friday. This is what you buy. We had a high beta, crowded positioning unwind. That's what happened. That's the simple variable to understand what happened. If it was a popular consensus name and a high beta and especially if it was in like the data center theme, then it sold off. Pick anything that met that category. It's not so much stock specific, it's just crowded positioning got unwound. A lot of retail investors were hitting sell. They ran for the exit and I think that's behind us like thing asset prices are responding as they should. If you have a the lows in place the the Nvidia earnings were were better than just strong. They were outstanding. They were shockingly good. I say this is a like a mild mannered individual. Like I, I'm rarely ever hyperbolic. They had an acceleration in their quarter over quarter growth versus last year same quarter over quarter. They, they continue to sell out every GPU that happens. They maintain pricing power. They can pick and choose their price points. They control their gross margin. They have visibility through most of 2026. When we get through 2026 they'll have visibility through most of 2027. They've had a beat, beat raise every quarter since ChatGPT. That's because they know how to manage Wall street expectations. There's 1200 data centers globally. If you look at just the hyperscalers and most of those are CPU old school data centers, there's a build out of New data centers that are GPU native and we're only in the early innings of this now. You've got the Trump admin enabling Saudi Arabia to go build out potentially up to 60 data centers that'll be full with Nvidia chips. So, yeah, I mean, the earnings were. And the revenue was like, it was strong and outstanding. That said, I'm actually only benchmark weight Nvidia. I'm not actually overweight it because, you know, positioning can get in the way when that's crowded around a good opportunity. I think it'll do fine now, but I'd rather own, you know, Meta. I'd rather own some cruise line stocks and other things.

Chris Perkins (23:26)

And then on top of that, Rahm, it looks like Trump just accepted a state visit to China and China will do the same. So I feel like that's probably a green shoot as well. But I guess here's my question for you. What are people going to be talking about at Thanksgiving? Nvidia or crypto?

Rahm Maester (23:41)

The Mandami White House visit? I mean, that's one.

Chris Perkins (23:44)

Yeah, maybe.

Rahm Maester (23:45)

I don't know what's up with that? I mean, that's what. Let's see, they're going to talk about. We're gonna have that meme about the guy in the attic who's talking about bitcoin. Right. That meme is gonna be back this year. Last year was the opposite. Last year was the opposite. That was a victory lap meme. Right. What else are they going to talk about, Dixie? But I'd put it back to you guys.

Chris Perkins (24:08)

Probably they're going to talk about the GSIB etf. Now that you mentioned it.

Rahm Maester (24:11)

Look, I think banks are just so well positioned almost any dimension you look at.

Chris Perkins (24:20)

So stablecoins aren't going to be their death. I mean, I spoke to my buddies who literally run the G sibs and they were like bank deposits. These stablecoin things are going to kill me. But that's really, gosh, just like money markets. Not the case. They're doing just fine, aren't they, Austin?

Austin Campbell (24:37)

Banks are doing just fine. I though I would say if banks have killed themselves in some way here, are going to get killed by stablecoins. I don't think. What's the right way to say this? I think that banks may have dramatically overplayed their hand on the policy frontier in a way that's going to have reverberations people don't expect, which is to say the gloves came off and it was like naked self interest with trying to ban yield on stable Coins. And people know that. And the reason for that is like this is the advantage. I'm a business school professor. I literally teach this stuff. In the 1933 Banking act there was a thing called REGQ and Chris probably knows what Reg Q was. But for people who do not, that was the ban on paying interest or yield by banks. And what happened is that in the 70s and 80s made them uncompetitive products and they had to get rid of that restriction because it was crippling their ability to gather deposits. And now banks who had that restriction taken off have gone and argued, well you should restrict somebody else with a thing that we just argued like two decades ago were things that made us uncompetitive and had you get rid of so that we could go do the exact thing that we're having you ban somebody else from doing. I have been hearing things coming out of D.C. that are totally different on banks than I have heard my entire lifetime. Like let me just throw something out there that I think may now be inside the Overton window. How about the repeal of Graham Leech Bliley?

Rahm Maester (26:09)

I'm all for that by the way. I'm all for that. Bring it. Let's do this. Yeah, look, I think you can offer consumers more value if you have integrated offerings and services like One Stop Shop. Makes a lot of sense for banking, insurance, wealth management. I think that's a great idea. Now banks are under pressure from stable coins but it's community banks and some of the regional banks and it's going to take time for this all to play out. And the last point here, stablecoins, they created a bid for the US dollar too. So Bessant got a Besant nailed the stablecoin. Kudos to Scott Besant like did the right thing. I think the mortgage move through your mortgage right idea also I will, I.

Austin Campbell (26:51)

Will argue against you on the 50 year mortgage one, I actually think that's a bad move. The longer you extend duration right. For people and the longer we take the timeline like out to both buy houses and pay off mortgages one, the more duration risk you're putting into the economy in a way that's going to be hard for people to hedge. Like somebody's got to own that duration if to we want want to extend that. So that's problem number one. Problem number two, I'm like skeptical of many forms of credit creation from an affordability standpoint because the core problem is supply. If we don't build more houses but we continue to subsidize demand, subsidized demand, Subsidized demand, Subsidized demand. All you're doing is causing inflation. Like that's not to anybody's benefit. We're just inflating house prices for boomers. And the reality is young people still can't buy anything. Prices will still be going up. We need to build more stuff if you want to solve the affordability problem.

Rahm Maester (27:48)

Just a brief response to that, focusing on the US consumer. If you've got a 50 year mortgage and your average mortgage holding period is seven years, that creates value. So the duration risk is really. And what you were getting at is someone in the capital markets, it's not on the. That consumer is going to be able to have more disposable income from that 50 year duration. And it's one of the few times that the consumer can borrow as low as and sometimes lower depending on how you time it, than the US government. It's one of the few times. So if you can let them take advantage of that opportunity and the ability to refi, it's a good opportunity.

Austin Campbell (28:33)

So yeah, my, my trade off though ROM is I worry about it breaking the mortgage complex. Right. Like as somebody who's been on the other side of that trade, it's seen people owning MBS or like owned many billions of MBS in one portfolio. I'm gonna ask a hell of a lot more for a 50 year. Right. Because the problem with that seven year holding period is I get delivered the worst of. Right. The stuff that stays is the stuff I, I don't want because rates went up and people are not refiing and when rates go down, people refi on me. And the impact of that is even greater with a 50 year like I, I actually think counterintuitive, but I think there's a very good chance that 50 year mortgages raise mortgage rates, not lower them.

Rahm Maester (29:13)

It's a great point. It's a, it's a great point. Yeah. You have the term spread. I mean it's a markets risk management function to resolve that issue and see where prices land. Having an additional option to borrow expands the opportunity set for a borrower though.

Austin Campbell (29:29)

We should not, we should not give that without forcing people to build more houses. Like the real trick would be to have the federal government like make the Fannie Freddie Ginny guarantees on 50 year mortgages contingent on building housing so that if California wants to continue not to build anything forever, they just can't participate.

Chris Perkins (29:49)

Yeah, we got a problem with Brian Johnson too, right. Mortgage comes from the word, the Latin word Mort, which means death. Right. So it's supposed to be the, the debt that stays with you your entire life. People are living longer. Just wanted to throw that into the mix as well.

Austin Campbell (30:04)

All right, so before we get too further off track on turning this into a housing podcast, let me talk about some other forms of financial management. Let's talk micro strategy and DATs. So MSCI might remove MicroStrategy on January 15th because its BTC holdings are something around 75 to 80% of its assets, certainly above the 50% threshold that they're now saying would reclassify things as a fund, not an operating company. This is going to trigger many billions of forced selling from passive index funds. And to remind everybody, passive index funds just look at the list of things that IT index and buy them. Right. This is not a discretionary thing. They just follow the list. So that breaks this reflexivity route. MSTR's M Nav Premium is now down to like barely positive, if positive from like literally 3x at some points. And so this thing just kind of trades like a closed end bitcoin fund after that. Saylor obviously disagrees with this. He said we're an operating company, not a fund. Citing the 500 million software business. He says they have 7.7 billion in digital credit deals as proof of quote, active structuring and argues that they're a unique bitcoin backed finance company, not a passive bitcoin holder. I'm going to pause there before we talk about DATs further. What do you guys specifically think about the MicroStrategy thing and the from a.

Rahm Maester (31:29)

Price perspective or one, I guess price.

Austin Campbell (31:32)

And two, like, do you think MSCI is doing the right thing excluding them?

Rahm Maester (31:37)

Yeah, that second one, I don't know how to answer that one. But yeah. And the first one, I think it's probably old news and it's probably history. And usually when you see these announcements, the worst has already impacted the asset. So everyone knows this now. It's a highly covered asset. The news is socialized.

Chris Perkins (31:57)

I think on the latter, one of the challenges that you have is that the, this is not an ria. An RIA is a registered investment advisor. You know why it's not an ria? Because Bitcoin's a commodity. And so I think that they're kind of ignoring the law. And we dealt with this with the rest of the dats. If, if they were stacking a bunch of securities, they would be an investment advisor. They're not. And that's, that's the law of the land. And So I have a. I have an issue with it. Look, they're a commercial entity, they can do what they feel like doing. Being in passive indexes should be not the end all, be all. But it's really nice for price action if you can get your data in there. Look, I think the entire DAT complex we should talk about a little bit as well. We're seeing a lot of pressure, negatives, stock prices have been hit and I think there's been some really good dialogue around why and what's the natural stasis of Datsun. The fact is, it's expensive to be a public company, especially post Sarbanes Oxley. You got quarterly reporting, you have an entire set of compliance apparatus that you have to have in place so you can stay compliant with the law. And, you know, a lot of history we have to blame for some of the things that have happened and why we need that type of compliance. I think in time you're going to see, you know, Trump's even talked about moving from quarterly to semiannual reporting, things like that, to take some of the regulatory burden off. But tldr, it's expensive to be public. That said, you know, if a DAT is run efficiently, if they have control over their expenses, it's pretty simple math. You know, what does it cost to run and what is my yield? How and what is my risk adjusted yield? Am I able to have profit from an operating company perspective? And I think as you get into, like DATs, like the eth DATs, you know, they're generating that 3% and then some yield. And if they can keep those earnings underneath the expenses, I think the natural stasis should be a positive M Nav. But the market's going to do what the market's going to do. And then, of course, if someone were to take over one of these bad boys and liquidate them, your M Nav should return pretty close to one.

Rahm Maester (34:09)

I'm very bearish on DATs. I think these are mostly in a death spiral. I think you should stay away. I think the market's going to force the holders to puke them out at terrible prices. The dats have way too much structure on them to enable M and A, which is one way to unlock value. And the second way to unlock value is to sell the native token and buy back the stock, which also undermines their narrative. Markets know all of this too, so this is a, a terrible position to be in. I think if you own debts, certainly stick to the highest quality debts you can find, stick to the highest Quality debts. The vast majority of debts are altcoins and I don't think you've seen the bottom yet.

Chris Perkins (34:57)

Oh look, I'm not going to push back and say that a lot of DATs have some serious issues. We even talked about the lack of futures for some of these alt dats. It's very hard to if you don't have all the tools at your disposal. It's very difficult. I do think that there is value but again it requires that fundamental underwrite and you have to look at there's going to be. There will be some phoenixes that rise out of the ashes but there'll be plenty of ashes is how I look at it.

Rahm Maester (35:25)

Yes, wait for the ashes, wait for Rome to burn down and then wait another two months because you're still probably too early. Then poke around and then you might find something there.

Austin Campbell (35:38)

I will remind everybody phoenixes are not guaranteed. Sometimes it's. It's just ashes. But I guess I would say everyone hates well let's. Okay, so let's zoom out on them for a minute. Like Matt Haugen had a very good thread on this but I'm going to paraphrase it and say it relates to some of the things I have complained about with DATs. And I think Rahm, you've said before as well, which is let's think about DATs and valuation. One if you had a DAP that you knew with certainty was liquidating basically tomorrow it should trade exactly at the value of its underpinning lying assets. Right. Plus or minus some wiggle for selling that thing. But that's an execution question at that point they don't why on the bad side of the ledger Matt says expenses illiquidity and what I'm going to file under corporate risk AKA idiosyncratic risk AKA Chris is the director and he turns out to be a North Korean and he stole half the money type stuff back to why do we have Sarbanes Oxley in the first place? Right. So all of those are completely valid reasons for a DAT to trade below par. Expenses in particular for many of these DATs as Rom said are very high. There are some that have promised quite frankly some egregious compensation packages to people and so as a result should be trading at a large discount. So Matt's reasons for trading above par and here's where I'm really going to lean into the ROM bit where debt issuance so that they could have cheap funding, the ability to lend assets and income generating strategies with derivatives and let me Tell people this. All three of those are reasons for them to also trade negative. If you look at the leaders of most stats, you do not have like experienced bank and hedge fund executives doing this 80 hours a week with the kind of track record where you think they know what the hell they're doing in that space. It is quite. Chris, myself and Rahm can all tell you banks are like a combat sport. Like you are playing against other people. This is a competitive field. If you think you could just get into lending and magically make a profit or get into derivatives trading and magically make a profit without paying a lot to hire good people and building a whole bunch of stuff that itself is really expensive, you are like on another plane of existence. So I actually look at most dads trying to do that be like, no, they're going to blow themselves up.

Chris Perkins (37:59)

Amen. Like I think you, you made a great point at the end. Operating company matters, right? And at some point everyone's going to be some kind of a debt in the future if this thing that I think is going to happen called decentralized finance wins, like people are going to hold assets on their balance sheet. Maybe not. That's not going to be their primary objective. But you're going to see this convergence happening. And operating companies matter. Profitability matters. I've talked to many dads in the last week, some really good ones. Their entire focus, operating company. Hey, I see this gap in my ecosystem. I'm going to close it. I'm going to go out and I'm going to lead enterprise sales. I'm going to leverage the power of US capital markets to really build out an incredible team. Maybe I'll make an acquisition in this space. I'm going to own the operating company on debt. I'm so glad you brought this up. I've been thinking about it forever. I think structured correctly, you could have a new type of debt in kind debt where you actually offer total return products and you could actually make that part of your operating company. Because if you know what you're doing in the defi space, you can probably earn more and take a spread on the coupon that you have to pay. Take Ethereum for example. It's almost impossible for a sovereign wealth fund or anybody else to buy a security that pays you total return. Ethereum, pure, total returnees. You can buy the etf. It's really hard to stake because you have to hold contingent liquidity because of the unbonding issue which has got out of control because we had an issue. But what if you were to issue, take in kind, eat, stake it, make a spread, pay back a competitive rate. If that math works, you can actually make money and you can offer the world something that they're, that they want, a total return security. Am I wrong?

Austin Campbell (39:38)

No, I think that one makes sense. And the other thing that I would say is, Chris, I think you've hit on something important about the debt conversation too, which is the type of debt that you take on really, really matters. So if you look at microstrategy, the mistake that they've potentially made is like term debt with fixed coupons as things are like flopping around like dead fish. And then went and acquired more bitcoin denominated assets on the back of dollar denominated debt. Meaning that you've got essentially an FX trade going on inside of that thing. Right. Of course you're familiar with fx, it's more volatile than people think. When you put bitcoin on the other side, boy, are things going to get spicy. And that's just bitcoin like alts. Even worse. On the other hand, if the data DAT used was something like say repo, right, where you're just essentially, you know, using your bitcoin or something, lending it out and collecting something in return or doing the reverse, like borrowing dollars against it. And then Chris, as you said, deploying into defi and earning higher spreads than like the regulated financial entities, because there might be something there. But the important part of all of that is that your currency and like term matched on both sides.

Chris Perkins (40:47)

Yeah, like there's more to it, right, Austin? Because many times you're going to have dollar liabilities. Yes, right. You're going to have to pay people in many cases, you know, yeah, you can buy NFTs with ETH, but you know, you still have those dollar liabilities. You need stable coins like you people want dollars. They're not going to many cases. They're not going to take your bitcoin or ETH or not yet. And so that mismatch has to be really carefully managed. You know, personally, I, I don't think it's going to be the end of the world for some DATs to sell in kind because like if you're a monster ETH dat and you're making nearly 100 of your revenue, and again, I'm over generalizing and staking, let's just say, and I don't think that's going to be a successful formula. I think they're going to have other operating companies. But if all of your revenue is in ETH and your. And your liabilities are in dollars, maybe you can lend it out. But look at the other day, that's. That mismatch that's going to. One of the tricks in managing a dad is that mismatch.

Rahm Maester (41:40)

Yeah, I mean, concur with everything. Look, dad is just adding to the beta. The beta is going in the wrong direction. That's it. These are attention momentum assets. The attention's moving to Nvidia, Tesla, FSD, Google, Gemini 3, everywhere else. And I think that'll continue to outrun for now.

Chris Perkins (42:01)

And like, but the fundamentals are like, but Rom, look, if, if you can build fundamentals and you have an operating company that's profitable, that's the solution here, isn't it? You got to earn your way out.

Austin Campbell (42:13)

I agree.

Rahm Maester (42:14)

3 to 5, like, your eth point is right on the mark. I think it's accurate. However, you got to generate so much earning. We got 40% EPS growth at Meta, we got 60% revenue growth at Nvidia. Like the core generating power isn't there to, you know, at the current prices.

Chris Perkins (42:39)

Right, and. Exactly. Until eth rocks back to 60k like Tom Lee's telling us it's going to do and then it's going to be just fine because we're stacking crypto to share.

Rahm Maester (42:49)

Every cycle someone gets carried out in a stretcher. Is this, is this Tom release time? Right? I don't know.

Chris Perkins (42:56)

This morning. He's gonna be fine.

Austin Campbell (42:57)

Is it Michael Saylor's time? Oh, I, I would tell you, I'm more worried about. I'm more worried about them, given the debt structure. That's not a statement on Saylor, that is a statement on when you take on fixed debt against a highly volatile asset, historically that ends pretty badly.

Rahm Maester (43:15)

Yeah, yeah. You know, the thing about the debt is that like, even if you did overnight funding, if you can't roll over your debt due to some kind of seizing in markets, you have an issue there. Which is another issue we saw in the 2008 crisis. Right.

Austin Campbell (43:28)

Well, we saw. Hold on, we saw that when it was matched against longer dated stuff. So like, let me propose a theoretical DAT structure that I actually think would stand the test of the current moment, which is, let's say I have a DAP that has a huge pile of Bitcoin or eth. I go borrow against that and just deploy it into the basis trade. Right. I'm earning a spread on that thing. So I'm generating positive cash flows into my vehicle and because I can unwind the basis trade Spot. And my borrowing is spot. I'm term matched on those things that. Exactly as Chris said. You got to take those and start buying more things that generate cash flow. That's kind of like. Call it like dat. Burkshire. That I think could work. But like anybody doing term here, like, guys, look out. You don't do term.

Rahm Maester (44:09)

That's a great point.

Austin Campbell (44:10)

Fall asset.

Rahm Maester (44:11)

It's a great. But look, I. I think this. Go ahead, go ahead.

Chris Perkins (44:13)

Sorry, no, the alts can't. Can't do that. Basis trade, a regulated basis trade with futures. Right. Because they don't exist.

Austin Campbell (44:19)

Except for the dash solutions.

Chris Perkins (44:22)

No, they can't. There's. There are none. That's my point. It's like there are no. Like, we're just really hamstrung right now. We don't. I think they're coming online, but we don't.

Austin Campbell (44:30)

No, no. Your dad should do this, like offshore. Just like do it with Athena or something like that. Like, there are ways to go. Basis traders.

Chris Perkins (44:39)

Keep it regulated, man.

Austin Campbell (44:40)

I was gonna say. I'm making you angry now. I'm just saying if you want to take that risk, you totally could.

Rahm Maester (44:45)

The consequence of all of this, I would say, is, number one, that's will be sold on rallies, people, they're in quicksand. They're trying to keep their head above water or above the sand, I suppose. The second thing is you will see puking. You will see the market will wait, and you're going to see bodies floating in the water that are recognized names that had to puke at the worst possible price. And that's when I would start to say, gee, is there something for me to do here?

Austin Campbell (45:17)

Hold on.

Chris Perkins (45:18)

He's actually. Go ahead.

Austin Campbell (45:20)

Is there going to be anything left to do, though? Because here's my other question. Are the DATs prepared for making contact with activist hedge fund investors? Because those guys do not play nice. And you're going to get into situations where I don't think there's a body that ever floats to the surface. I think they chop up the corpse and sell it for parts.

Rahm Maester (45:38)

I think that's the same thing though, right? Because you're going to see significant equity impairments somewhere. You're going to see write downs and losses, and you're going to see maybe, I don't know, a fund that got into this in a big way. See redemptions of capital, maybe a shuttering. I think it's a bad situation. Everyone knows it's a bad situation too, is the problem. That's why you get the Sell on, rally. So it's a circular gunfight and your incentive is to defect and shoot. That's what I see. I hate to be kind of bearish here, but that's just how I see it.

Chris Perkins (46:20)

Now you made a point about dead bodies and there's still a lot of discussion running around crypto markets. And one of the challenges we've had with liquidity is that the dead bodies haven't quite risen yet. They're still, they're still trying to, they haven't surfaced since 1010. That's also impact impacting the overall crypto markets. I don't want to get away from dads, but like it takes time for these dead bodies to come up, right?

Rahm Maester (46:43)

Look, you do have a nice little counter trend rally now, right? Like you're seeing things like BMNR went up like 20% today. Like it's going to should rally with risk assets for a bit. I would just say my view would be don't kid yourself and say, okay, we're so back. I think a lot of people are going to say how far can this run before I hit the bid? That's what they're looking for.

Austin Campbell (47:05)

All right, so speaking of things that we've got to ask how far they're going to run on, let's talk about the monad ICO. So mainnet is now live. Total supply of 100 billion tokens, 7.5% were sold via Coinbase's token sale at a 2.5 billion valuation. A lot of the rest was airdropped to early users. The remaining breakdown is 27% team, about 20% investors, 38% ecosystem a little bit for the treasury today, the fall on that has been high. It traded below the ICO price. It's now above the ICO price. Last I checked it was about 3.5 billion FDV. I'm also going to take a moment to remind everybody here a properly priced IPO or ICO should trade above or below the cost and of course about a 50:50 ratio if you've like hit the target squarely with the market. So I'm curious, what do you guys make of this ico? And I want to throw in a specific angle for you, Chris, because we're talking about regulation, which is that this was on Coinbase's ICO platform. They are directly challenging the offshore exchanges like Binance. They found a way to offer this to most of us retail, I think not New York and maybe not Hawaii, but most of us retail retail. And I'm curious what you think is going on both with the token launch of capital formation, but also what it means for a US Company to have done this and given it to us retail.

Chris Perkins (48:25)

Totally fascinating. A year ago, this would have never happened. Like, somebody would have gone, you know, would have been in Gary Gensler's crosshairs in a major way.

Austin Campbell (48:34)

I mean, straight to jail.

Chris Perkins (48:35)

If you even. If you even thought about it, they would get you. I mean, but now it's just. It's incredible how far we've come in so short a time where we're using, where public markets are now able to leverage public markets, you know, they say in a compliant way. And I don't think it's been challenged yet. It's kyc. I think many of us having survived some of the shenanigans we've seen with, with different air jobs and other types of solutions, I think people kind of welcome this kind of anything that will make things better and solve for the more democratization of access. I think this was offered at like, what, 2.5? Yeah, yeah. And so now it's trading up a little bit. So if you got in early, maybe, who knows where the market's going to go, but at least, you know, you weren't boxed out in favor of some large institution like we typically see. So I think generally favorable for the direction of travel. And if you talk, if you listen to Secretary, I'm sorry, Chairman Atkinson, you know, he wants to make public markets great again. And, yeah, I think there's plenty to do on the equity side. I think this is really exciting on the. On the crypto side. And then let's not forget Internet capital markets. You know, there's an entire defi way to do this as well, which makes me even more excited. I think that maybe ruffles some more feathers, but at the same time, the opportunity set is even more profound. Imagine anyone in the world with access to the Internet can buy a token when it's first launched. That is very cool. So I think a lot's going on in public markets. I love the direction of travel. There's going to be some tweaking. It wasn't a home run for Monad. Right. It kind of got off to a good start. It fizzled a little bit and then they were oversubscribed in the end, which is great. But I kind of want to see more of it.

Austin Campbell (50:30)

Yeah. I mean, I'll say this is sort of getting to the heart of some of the criticism I've had for the SEC under Gensler. Right. Which is if you create a regime that's so broken that the only people who can get in as early investors are essentially qualified institutional, buyer level or other really high end people. You're creating a bifurcated market and pushing everything offshore. And when you push things offshore in a highly, call it, opaque platform, you end up with problems like, you know, at the medium end of problems, the listing process at Binance where there's a lot of allegations of like pay to play type things, Binance taking huge cuts of tokens because there's not much competition, or at the very bad end of the scale, literally FTX. Look, I'm not saying that I'm 100% certain all of this works under current US law, but I am saying this is exactly the kind of thing the SEC should be finding a pathway for because it's way more fair to retail to get their hands on things early on at the same terms as everybody else in a relatively transparent way through a U.S. entity. Right. And so, Chris, I think the point that I want to hammer on here for a little bit is again, this is kind of how these things should work if you're going to do them properly. Right? Which is to say I don't want a lot of offshore nonsense, I don't want undisclosed terms. I want to just like shotgun this thing into the world, right, at equal terms and let everybody play markets. People are going to win and people are going to lose, but they need to be about fairness.

Rahm Maester (51:59)

Yeah, no, I agree. I'm nodding my head. It's, it's leading by example, showing how to do it the right way. It's a big win for Coinbase too. And Coinbase has a new business model here they can curate. You know, I think on the asset itself there's a lot of float out there now. I think half of it is, is unlocked and then in a year another component becomes unlocked.

Austin Campbell (52:26)

Also.

Rahm Maester (52:28)

I think it's just a difficult market for digital assets right now overall. So monad, they've accomplished quite a bit. It's just a difficult market that the category is in. I think where we tactically are today, things could be interesting. But you know, can people zig and zag correctly? It's hard. That's hard, right? Like they're easier games to play, right? If you try to do the zig, you're going to pay taxes, get short term capital gains taxes. That's, that's how I'm, my vantage point is like, all right, where can I allocate at least get long term capital gains?

Austin Campbell (53:05)

All right, so Speaking of it being a hard market for crypto, let's return to one of Chris and my favorite topics to close this one out, which is what I'm going to call Operation Choke, which is to say JPM allegedly closed the personal account of the founder of Strike and refused to give an answer as to why this was going on. So Jack Maller, Strike's founder, claimed that Chase had previously closed Strike's business account during the Biden administration and said on Monday that the bank had also been rejecting some user deposits to Strike, telling customers that the business, quote, participates in fraudulent activities. There's a rumor out on the street that Morgan Stanley has also been reducing the willingness to accept collateral in the crypto space, I think as a result of the dappling, but including also maybe hilariously here, Coinbase stock. Chris, what do you make of a replay of these kinds of things going on yet again?

Chris Perkins (54:03)

Yeah, look, I, I, I, I can't speak to the, the case, but having worked in banks, this is how it works. There's like a conveyor belt, right? And you go on that conveyor belt and off you go. If something is off, something is flagged, you fall off that conveyor belt and it's really hard to get back on. I think under the previous administration, under Operation Choke Point, there was definitely a filter that didn't even let you get on that conveyor belt. It was like, no, we're going to find you, we're going to kick you off. I think this was probably, I'm speculating, I've got no, no, no idea if this is true or not. But my sense is, is that something in the algo flagged something, it came off the conveyor belt and I don't know, sometimes they don't respond very, it's hard to get it back on the conveyor belt once it's off. And so that, that could have been what happened. I don't know. It's a fine line. Like when, you know, when you talk about the whole collateral thing as well, you know, banks should be allowed to manage risk and they should, but, but what kind of risk are we talking about? Market risk is fine. You've got 10 years of history and you can make informed things. That's risk management and discrimination are two different things. And I think that's where you got to kind of figure out and draw the line.

Austin Campbell (55:17)

I would say for me what I consistently run into. And by the way, if you're an executive at any of the big four banks and you're listening to this Please listen on this point, which is I think a lot of the problem banks are now having address in crypto is not deliberate. It's that they don't have people who know how to do this or evaluate these things internally. And so the natural risk aversion of people of. I don't understand, therefore no takes over. Right. Put differently, there's no good reason not to include Coinbase stock as collateral. That is a well understood public company other than you just feel bad about crypto and think the whole thing is going away. And I will tell you this, I have met, not an insult, zero risk managers who still work at the big banks who are genuinely qualified to manage crypto risk. Right. Like anybody who's good is left and gone into the industry is doing the thing there. So my gut reading this honestly is that it's actually revealing a bigger problem many of the banks have trying to get into this space, which is that it's the blind leading the blind in a lot of these places.

Chris Perkins (56:17)

Yeah, same with the government. Right. They can't even trade the asset. So, yeah, that, that's going to take time.

Austin Campbell (56:23)

Yeah. For, for those who don't know, Chris's reference there is that if you're at one of the regulatory agencies in the United States, you are literally not allowed to own digital assets. I have a personal friend who is at one of the big banks who went into government who literally calls me on the phone and is like, hey, I've got some odd lots of crypto left over in a wallet. Can I just send it to you? Because they have to like dispose of all of this stuff before going into government, its service. And it's just like, how do you. It's a little bit like we expect you to regulate like traffic and automobiles, but you're not allowed to drive and you can never have owned a car.

Chris Perkins (56:56)

Rob's just shaking his head.

Austin Campbell (56:57)

Yep.

Chris Perkins (57:00)

It'S not a nothing burger.

Austin Campbell (57:01)

Yeah, well that one. The problem is they're regulating burgers and all they have is a nothing burger. All right, so there's our final financial advice for the US Government for this episode, which is Lecher people trades burger crypto so they know what they're doing. All right, so on that note, thank you for joining us everybody today for this episode of Bits and Biffs. We had no advertisers because our consistent campaign of teasing XRP caused them to fire us. Nope, that is also a joke. But we will be back in one week to discuss more about how the world's crypto and macro are colliding. Until then, everyone take care.

Chris Perkins (57:35)

Happy Thanksgiving.

Austin Campbell (57:36)

Happy Thanksgiving. Sa.