The Pomp Podcast - #1415 Anthony & Polina Pompliano | The Fed Will Make Bitcoin & Stocks Skyrocket!

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube,

Starting point is 00:00:21 and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's up, guys? We've got a great episode for you today with Polita Popliano. Today, we talk about Jerome Powell cutting interest rates and how he can't stop. He's going to only keep continuing. On top of that, we then get into why the number of U.S. citizens dependent on government aid has skyrocketed to a new all-time high.

Starting point is 00:00:46 Wait until you see the chart and the data we have is going to blow your mind. We then get into how dumb of an idea it is for you to pay Bitcoin for your taxes and why politicians keep suggesting this, but I wouldn't be so quick to believe what they're saying. and then lastly we finish up with cheap capital what's going to happen when all of this capital comes flying into the market asset prices interest rates etc we got lots of information for you and there's one little easter egg that i left in the episode for you which is i've got a clever idea as to how we can stop government spending the politicians won't like it but you sitting at home

Starting point is 00:01:18 i think you're going to like it and so once you find that easter egg you hear my idea on how we can cut down government spending leave a comment let me know what you think whether you agree with it or you don't. Here is my latest conversation with Polina Pompliano. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

Starting point is 00:01:53 Today's episode is brought to you by Gemini. Gemini is a fantastic platform. How do I know? Because I've used it for years. These guys get it. They right now have a special offer where they are offering all eligible new users the opportunity to earn $100 in Bitcoin. That's right, 100 big ones. They're going to get out in Bitcoin if you go and you trade $1,000 in crypto within the first 30 days of signing up. What is Gemini? Gemini builds crypto products that are simple, elegant, and secure. Tyler and Cameron Winklevoss, the billionaire Tyler and Cameron Winklevoss, founded Gemini in 2014 with a security-first mentality and ethos of asking for permission, not forgiveness. They've been pioneers for the crypto industry since day one.

Starting point is 00:02:39 And unlike many exchanges, they are available in all 50 US states. Gemini has tools for new and advanced traders. They've got an advanced trading platform called ActiveTrader, which is where crypto traders go for advanced charting tools, access to over 300 crypto trading pairs and multiple order types to trade the way you want. Head over to Gemini.com slash partners slash pump and start trading with Gemini today to earn $100 in Bitcoin. That's right. Gemini will give you $100 in Bitcoin. If you head over to Gemini.com slash partners slash pump and you trade a thousand dollars in crypto within the first 30 days. This episode is brought to you by BetOnline. Do you like making a profit from sports betting? Well, set yourself up to take

Starting point is 00:03:24 home the most profit possible using crypto to fund your sports betting, casino, and poker account at BetOnline.ag. You can avoid costly transaction fees, get your payouts lightning fast, and do it all securely and anonymously with the highest deposit and withdrawal limits in the industry. If you want to get in on the action, do it the smart way with crypto at BetOnline.ag. Head to the website, sign up with promo code POMP100 to get 100% bonus on your crypto deposit today. If you go and you deposit, they'll give you 100% bonus if you use promo code POMP100. BetOnline. The game starts here. BetOnline.ag. Go check them out today. Plina, what do we got today for the people?

Starting point is 00:04:06 All right. Fed Chair Jerome Powell indicated that if the economic data remains consistent, there are likely two more rate cuts coming this year, but in smaller quarter percentage point increments. That stands in contrast with market expectations for more aggressive easing. And he said that the recent half percentage point interest rate cut shouldn't be interpreted as a sign that future moves will be as aggressive. We have changed the monetary regime in this country and in this economy. We went from loose monetary policy to tight monetary policy. That's what happened in 2022. For two years, they held on for as long as they can. But now the market structure wins. It overpowered the central bank and they have to cut interest rates. They have to print money.

Starting point is 00:04:57 We know they're printing money because M2 Money Supply is continuing to expand. And now that they've done a 50 basis point rate cut, everyone realizes they are going to cut more. Now, Jerome Powell has a very interesting job because he's got to manage monetary policy, but even more importantly, he has to manage the expectations of people in the economy. Because what you don't want is a central bank that shows up and just makes random decisions and has a knee jerk, money gets more expensive, money gets cheaper, but no one can actually plan their life. And so what he's doing is he's trying to tell people what he's going to do in the future, but he has to caveat it with as long

Starting point is 00:05:32 as the data continues in the trend that it is going in. And so to go from at the beginning of the year, people thought there was going to be six or seven interest rate cuts. Then over the summer, people thought there was going to be zero to now. It looks like we're going to end up with three, a 50 point cut just previously last month in September, and then two more 25 basis point cuts. There'd be a total of 100 basis points cut in the interest rates,

Starting point is 00:05:56 which means that cheap capital is now available. Now, where does this show up in the economy? you get small businesses tend to borrow more than large businesses. And also you get real estate where lots of borrowing, whether it's mortgages for residential or even commercial. And then you start to see interest rates across many other consumer staple verticals, they start to come down as well. And so if cheaper capital is available, people will go and they will borrow it. This is why you've seen the Russell 2000 back in kind of late summer start to rip upwards because people realize, oh my God, they're going to cut rates. If they cut rates, then these small

Starting point is 00:06:35 businesses can be able to borrow money at cheaper rates. If they can borrow more money at cheaper rates, they're going to be able to invest. That should be accretive to the equity. Same thing as you're starting to see mortgage rates come down. And so this really is good over the short term for the US economy. The question is, what is the optimal rate? Where are they trying to get to? So if they cut 100 basis points now, they'll be somewhere in that 4.25 to 4.5 range on interest rates. Can they get us down to three, three and a half, two and a half, two? Where do we end up?

Starting point is 00:07:07 When they continue to slash into 2025, what is the resting interest rate? And I think there's a lot of people who make the argument we can't survive over the long run with interest rates at two and a half or 3%. We are a economy that is addicted to cheap money. We need interest rates closer to 0%. I don't know if I'd go that far, but I know that interest rates aren't going to stop at 4%. We are going to have to push down into the twos, maybe the low threes, and that's where I would expect interest rates to end up. If that cheap capital is available to people, they're going to

Starting point is 00:07:40 pull on it, they're going to borrow, and they're going to put it into the economy. All of those people who continue to say, oh, I think that stocks are overvalued. Oh, I think we're headed into a recession. The central banker is telling you he's going to stimulate the economy. He's pulling one of the levers and he's saying cheap capital is going to now be available. Of course, the economy is going to be stimulated. And so I think that the people predicting some massive crash or the next Great Depression or whatever crazy thing they're saying today, they are going to be on the wrong side of history. Interesting. Yeah. So he said that the two cuts that would come this year would be a total of 50 basis points more than yes they did 50 now they're

Starting point is 00:08:24 going to do 50 more it'd be a total of 100 basis point cuts and i think that that's prudent right if we were in an emergency situation you know if you go back to march of 2020 he did two emergency rate cuts and got us down to zero percent very quickly i don't think the central bank based on what they're doing feels like we are in an emergency situation and so they kind of do a one big jumbo cut in a 50 basis points back in September, that kind of told the market, hey, we're serious. We're paying attention. We're here. We are going to stimulate this economy. Now they can ease off a little bit and only do 25 basis point cuts, which tells people, but we're also going to be prudent. We're not going to just slash this hundreds of basis points

Starting point is 00:09:04 all at once. We are going to slowly start to wean the economy off of these higher interest rates. And ultimately, what they are trying to do is they're trying to achieve the kind of ever elusive soft landing. And right now it looks pretty good for them. Unemployment is still relatively low. They are seeing that rates are coming down. Money is expanding. There hasn't been an official recession in the last six to 12 months. And so it doesn't mean that they are guaranteed to get there. But if you were to engineer a soft landing, what they are doing would be a high probability way to achieve that what to me is most interesting all this is happening right before an election so we had the september cut are we really going to cut right

Starting point is 00:09:52 into the election and so stocks are up since they cut bitcoin is up right do you remember in 2020 when they cut was it before or after the election in 2020 yeah no they cut in march of 2020 that That was. Yeah, they did the two emergency rate cuts. They put things down and that was before the before the election. But they cut, you know, eight months before the election, nine months before the election, whatever it was, probably eight months. And so if you cut eight months before the election, then it doesn't have the perception that you are interfering in the election. Right. Because it's eight months away. It's almost a full year before the election. the problem with cutting rates two months before the election right is everyone says you're doing it for political purposes even if you're not even if you're not and so a lot of a central banker's

Starting point is 00:10:46 job technically is to manage the monetary policy to manage the economy to try to get a safe secure stable economy the problem is we're all humans they're human and so are the market participants And so a part of their job that is unwritten is to manage expectations, to avoid the perception of some sort of nefarious activity, to avoid the perception of kind of meddling in elections. But if you cut rates after having them at, you know, five plus percent for two years, 60 days out from an election, of course, one side of the aisle is going to yell and scream and say, hey, you are influencing this election, whether you mean to or not. And it's unfair. But in right. So they're meant to be apolitical, but it doesn't prevent politicians from writing letters to Jerome Powell trying to influence his decision. Correct. I have long said that I don't think that the Federal Reserve is actually acting in a political manner. I don't think they're looking at when's the election. Should we cut? Should we not? Because of the election. I don't think that that's what goes on. On top of that, the political class loves to yell and scream that the other side is trying to manipulate the Federal Reserve or the central bank.

Starting point is 00:12:02 And so I don't agree with that either. I can give you example after example. Donald Trump, when he was president, would get on Twitter and he would tweet at Jerome Powell and he would say all kinds of stuff about weakening the dollar and the strength of America, what he should do with monetary policy. Right. That is whether it actually influenced decisions or not. It was an attempt to influence monetary policy. Joe Biden has called Jerome Powell into his office. Yes, he recently said he never met Jerome Powell.

Starting point is 00:12:31 He literally called him into his office and they had a meeting. And when Joe Biden did that, it was after there was a lot of debate. Is monetary policy being correctly overseen? I don't know what was said in that meeting. Then if you go a step further,

The Pomp Podcast - #1415 Anthony & Polina Pompliano | The Fed Will Make Bitcoin & Stocks Skyrocket!

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.