The Wolf Of All Streets - Bitcoin & Commodities: Understanding Macro To Make Smart Investments | Peter Tchir & Mike McGlone

Episode Date: February 13, 2023

Peter Tchir, Head of Macro Strategy at Academy Securities, and Mike McGlone, Senior Macro Strategist at Bloomberg Intelligence, join me to discuss the macroeconomic environment and its effect on investment decisions.  Peter Tchir: https://twitter.com/TFMkts Mike McGlone: https://twitter.com/mikemcglone11  ►► Sponsored by PRIME XBT! Sign up for a new trading account using the link below & receive up to a $7,000 deposit bonus with “wolfofallstreets” promo code.  👉 https://u.primexbt.com/WolfOfAllStreets  ►►NORD VPN  An essential crypto product to protect your privacy and keep your crypto safe!  Sign up on my link below & enjoy the benefits of NORD VPN from just $4 a month.  👉 https://nordvpn.com/WolfOfAllStreets  ►► JOIN THE FREE WOLF DEN NEWSLETTER https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker  Facebook: https://www.facebook.com/wolfofallstreets   Web: https://www.thewolfofallstreets.io  Spotify: https://spoti.fi/30N5FDe  Apple podcast: https://apple.co/3FASB2c  #MacroMonday #Bitcoin #economics  Timestamps: 0:00 Intro 1:50 Peter Tchir & Mike McGlone 2:20 Mystery balloons 3:50 China-US relationships 8:00 What’s going on in the economy 12:00 Deflationary forces 15:00 QE - what to expect 23:00 We are not getting a soft landing 28:46 Russia-Ukraine escalation 38:30 Paxos - BUSD 51:30 Bear market rally The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

There's been absolutely no break in the insane news cycle of late. Of course, we want to talk about markets, macro, Bitcoin, commodities, but we also probably have to talk about Chinese slash alien weather slash spy balloons. I don't know, the Chiefs winning the Super Bowl on a questionable call, an absolute ecological disaster in Ohio that seemingly no one's talking about. There's a lot happening in the world, and that's just the very brief summary. But today, I've got Mike McGlone, of course. Dave Weisberger is away, but we've got an incredible replacement. We've got Peter Cheer, who's been on the show before. We are going to talk everything happening in the world and markets right now. what is up everybody i'm scott melker also known as the wolf of all streets before we get started

please subscribe to the channel and hit that like button. Also, before we get started, of course, we are sponsored by PrimeXBT. I know that you guys have been following along with my conversations with Dirk from there on Wednesdays, which have been very popular. You guys should click down below and check it out. As I said, guys, a lot happening in the world right now. I apologize for my voice actually slowly recovering here from strep throat. You might have noticed it last week. Also, I was struggling to get through the streams on Thursday and Friday, but now here I am feeling a bit better.

As I said, we've got, of course, as every week, Mike McGlone and Peter from Macro Strategy, not Micro Strategy, Macro Strategy, right? Yes, sir. You go on a crypto show and everybody's gonna all of a sudden think you're Michael Saylor. Oh man, let's not go too crazy here.

Okay. I know that you guys don't exactly share the same crypto vision, so I don't think we'll get you confused if we start talking. Now, interesting, right before the stream, we were going to talk about a whole lot of market things, but you said you had some insight on the Chinese slash UFO slash spy slash weather balloons. What do you got for me? Yeah. So one thing at Academy Securities, we have 17 retired generals and admirals who serve as our geopolitical intelligence group, but also one retired astronaut. So it's kind of a neat perspective. I think the general consensus

was that we probably should have shot the first balloon down as it was approaching our territory. So it was probably a mistake. And to be honest, if you really think about it, we said it wasn't that important, yet by the time it was leaving our airspace, we felt we should shoot it down. So that was probably mistake number one. Since then, I think we've either identified more, and it's unclear. So whether it's a UFO, whether we're just looking for things that are more, or these were things that were already out there that we've kind of generally ignored. So I'm not particularly worried about that. My only cautionary thing here is we start running the risk of escalation with China.

And I think the whole FXI or KWeb, the Chinese ETF trades are over. I think we've got to be a little bit prepared for China to retaliate in some way. And this is going to up the rhetoric. I don't think it was good that Blinken came. So I'm not particularly worried about the balloons. I think these things have gone on,

off and on all the time. Our ability to handle them is there. I'm not worried about UFOs or aliens, but I do think the real world practical nature of this is that it decreases our relationship with China again and pulls this reopening trade off the table. Do you think the aliens will buy Bitcoin when they get to the rest of the related part of it? Yeah, hopefully they don't have quantum computers and just take all the Bitcoin.

That's true. So, Mike, does that echo sort of your macro concern regarding the United States and China? I mean, I think that's generally a narrative regardless of the balloons as well at the moment, correct? Absolutely. In the macro, it's just part of the, you know, we never predicted the balloons, but it's part of the noise of the relationship. And the key thing, it's not China anymore. It's one person, Mr. Xi. And it really started for me in 2015 when he banned Winnie the Pooh. People can check those memes of Winnie the Pooh, Tigger 2,

Putin, and I'm sorry, Mr. Z and Biden. I'm sorry, not Biden, but President Obama. But the tilt is still really much towards China treating us as an adversary rather than a customer. And there's a tilt in the US towards we're doing everything we can to offshore getaway and invest in Mexico. And it's just a slow moving process. But it's pretty significant until or unless there's a leadership change in China. I don't see why people expect this to get better. I mean, they did cozy up and they can say they didn't support the war, but there was an unlimited friendship agreement like two weeks before the invasion. And maybe Mr. Z's helped stop the

Russians going nuclear. But that's the macro. And it's part of the bigger picture that there's so many things in the world that have changed. I look at myself. I visited Hong Kong and Shanghai a couple of years ago. I felt very comfortable. And now I will not go there. I cannot go there. I feel like what might happen to me is my colleague who was in the Shanghai office in Bloomberg was in prison for a year for just writing something in favor for Mr. Z. So the world's changed. It's still tilting that way. But that's why I think Bitcoin's right in the middle. And we pointed out this years ago when Chinese banned it, it just pointed out to the rest of the civilized adult modern world that this has got some value.

So that's the macro. But I look at it also in the bigger picture is this is part of what I see is that pretty significant deflationary trend in things like commodities and eventually yields and will toward tilting towards recession. And I'll end with this in terms of bringing it down to the micro, the world's best leading indicator, most 24-7 fluid trading vehicle is Bitcoin. And it started to roll back down. It bottomed, it peaked at about its 200-week moving average, right about its 50-week moving average, same with the NASDAQ. And then we just had our conference with all our, like my BI colleagues this morning,

our morning call. And it's one thing I appreciate. Peter says it's got some great context there. And the tilt for my colleagues in economics and finance and I'm sorry, and interest rates and FX is all pretty much leaning back. Yeah, good luck and glad we had a good rally, but glad we had a good jobs report. But guess what? The Fed's still tightening and the most central banks in the planet are still tightening don't underestimate liquidity being the rug pull peter is that yeah do you share that sentiment that this was a bit of a classic bull bear market rally obviously a bull trap to some degree i mean mike you obviously talk about we've discussed this over and over again but below like 25 000 on bitcoin is noise to me because that's below the 50 ma on the weekly, the 200 MA on the weekly. There's still no higher high. And that's sort of shared across all markets. So Peter,

do you think we could be entering a new bull cycle or do you think that this is just one of those bounces? Yeah, I think this is very premature. The one thing I do want to add to the last conversation just quickly is DC. I think the one thing that DC actually agrees on is the anti-Chinese rhetoric. So I think there is bipartisan support for that. It's coming out of national security. It is filtering to the corporation. So I think, as you mentioned, Mike, this is a longer term play and there's a lot of support both at a corporate level who are trying to figure out strategies away from that. But it is the only thing I think that DC actually agrees on is that China has to be combated. So I think we're going to see more and more policy along that thing.

So again, that's a six month, two year sort of play. Back to today's markets. Yeah, I think we got a little bit ahead of ourselves. We broke through some of the moving averages on the S&P 500. We're going to have to watch those very closely. I do not see the economy in great shape. I still see inventory overhangs. That's probably my biggest fear is there's still a massive inventory hanging over. I think we got too excited about these services.

I'm starting to fly, you know, when I'm flying now, the planes don't look as full as they did last fall. So I think some of that's pulling back. We had this, you know, pent up demand that got satisfied. Spending, I guess, was decent, but it's more and more on credit cards, savings being diminished. So I don't like where we're headed in the economy. And how I've been explaining this is I think it's been a tech at five steps forward. And we're going to go through two steps back. And if my best analogy is, if you think about 2015, 16, anything and energy related got hammered and away from energy, it wasn't too bad. I think we're still seeing that same thing. It's tech semiconductors. There's this pullback as companies rethink about how much they want to spend on tech. And I sent a note that in some ways was the simplest thing, but actually got a lot of response is, you know, one person's expense is someone else's revenue stream.

And I don't think we're done expense management, which means revenues are going to continue to decline. Anecdotally, I can say that the price of flights has seemingly doubles every month. It is absolutely insane for what I was flying for. And I fly all the time, January, February. Now looking at March, April tickets, I really have from at least where I live in Florida, seemingly have 4x over the last five to six months. Wow. It's not as bad, I think, from New York. But again, I think it's very dependent. Everyone wants to get to Florida. Everyone wants to get to certain places. Probably. But I think you're right. And we have some key inflation numbers coming this week as well, right? So I mean, is that sort of going to be,

it's always noise, but is that going to be the narrative of this week now?, right? So I mean, is that sort of going to be, it's always noise, but is that going to be the narrative of this week now? We're going to see what happens with these numbers. Yeah, I think so. On Friday, they went back and readjusted the methodology for CPI calculations. So they changed some of the weightings. And basically now CPI hasn't dropped as much as we thought. It added about 0.1% per month for the last four months to core. And it's just how they fiddled with the weightings. But I think that's got people a little bit spooked. The one thing I think that we have in the bag that hasn't been pulled out of that bag yet is how they calculate rent is insane.

It is a six to 10 month lag. So September, October, and I believe December were the three biggest monthly increases in rent in the last 35 years. All you have to do is look at Zillow or any sort of real-time person that calculates rent. Rent was not increasing at a record pace. So that's going to drop off. I think we get a spook, we sell off a little bit, and then we can maybe stabilize from there. Mike, what do you think? Yeah, I got the same thing from our senior economist, Ana Wong, pointed out that he expects this number to probably be bad, a little bit higher than expectations.

But it's within the macro that the labor market is indeed softening, is a quote from my colleague. And I like to point out, I was pointing out that PPI is right now running 9%. PPI has bottomed at minus 5% three times in the last like decade and i fully expect that it's gonna go to minus five percent so this time next year scott yeah

and and here's indications for that did the price of the number one measure of heat and electricity in this country natural gas has dropped the same price since 1990. imagine if we said about the stock market so that's what happens in commodities. That's what happens with that rapidly advancing technology. And natural gas is the best example. We just have an ocean of it in this country. And if we keep harnessing it, and every time prices go up, it comes out, the supply comes back out, and the demand gets crushed.

So as far as inflation is concerned, my indications are expect significant deflationary forces. Remember, the Fed is still tightening. Most central banks are still tightening. The commodity market's in a bear market. It's down 25% in the last two, I guess, since the financial crisis. The Bloomberg Commodity Index has corrected 50% twice.

I think it's going to do it again. And so to me, this is all those tilting that way. And it's just a macro is one of those things. I've never seen this. Well, the Fed's still tightening. Okay, here's still tightening. Okay. Here's some facts I want to point out about that.

To me, the key trigger for deflationary forces will be the stock market going down. It's just signaled by Bitcoin. It's all getting started. So here's the, it needs to give you facts. You don't have to have an opinion. How about the facts of the stock market is corrected S&P 550% twice since the peak in 2000. And both times were during recessions and both times the recessions were signaled with pretty steep inverted yield curve. And the Cleveland Fed measure, which is the one I have going back the

longest since 1960, is the most inverted since 1980. Okay. So we're going to get a recession. If people say maybe it'll be mild, I think it's going to be severe. Things are going to go down, and we're going to have significant deflationary force. Now, you point out what's happening with airfares. That, to me, is classic knee-jerk reaction that goes back downward. We all know what's happening in housing. Maybe not so much in Miami, but it's becoming a buyer's market. And the key question is, I love how people say we're looking for stabilization in bottoms.

I'm like, what do you not understand about how eight cycles work? You fortunately never get stabilization in bottoms after the biggest pump in history in liquidity and asset prices until well below you get a period of very cheap prices. And I like to use natural gas as just one of them. Let's look at crude oil. On a 12-month basis down 15 remember that was the darling of the rally last year 78 bucks a rally got the barrel got to 130 i think it's going to 40.

40 is the cost of um cost of production so to me that's where we should expect all things now i go to commodities partly because that's what i know best but it's also there's some of the best leading indicators and what you see in happening commodities one of the st there's some of the best leading indicators. And what you see in Hampton Commodities is some of that technology trickling that you see from cryptos. It's that advancing technology that you don't want to underestimate how much it pressures prices. And eventually the Nasdaq and maybe Cathie Wood's ARK fund will be some of the best performers along with Bitcoin. But it typically takes some pretty severe um recessionary lows trials i would say uh clearing clearing prices uh before these things can get started here my to me my point is that trajectory is still downward and just

actually rolling over remember what are we february 13th right before valentine's day if now if this was like august and we're bottoming from a good level, it'd be great. But what's the Fed supposed to be peaking rates at 5.2% if I look on my WIRP, my thing on the terminal? And that was just a few months ago, that was like 4.9. And there's only one thing that really stops that. Market assets have to go down. Or people have to lose their jobs. Well, exactly. But that's just the key thing. If we're not losing a job, that's massively lagging.

We've got to look at leading. And that's so lagging. It's the leading. And the leading is markets. Yeah. And I would say on the jobs front, too, I think we have to do a better job separating which jobs are being lost, which ones are being hiring. So I think this is not going to be at all about total numbers of jobs lost. It's going to be jobs times average income. And this is going to be people who are making between 80

and 150, 200,000 that are losing their jobs. That I think is far more detrimental to the economy. So far, a lot have been able to find jobs relatively quickly. Some are getting hired back as consultants. But to me, this is not going to be about total jobs lost because I think there are plenty of relatively low wage jobs. And the other thing, Mike, you talk a lot about rates. I think the biggest thing that Paolo said this past week is we are going to have QT at least this year and through next year. And I think quantitative easing and tightening goes much more directly to asset prices, very quickly to asset prices. And I don't know if I think I talked about this maybe last time I was on your show. I was thinking in terms of mutant's

cradle. You know those things, you got like eight balls and you drop the one and it's the thing at the far end. So what happens to me when you do QE is it forces everyone out the risk spectrum and where you see the risk explosion is on the riskiest asset. So whether it was crypto, whether it was ARK, that's where people, okay, well, I'm not going to sell this because this is the most interesting thing unless you pay me a lot of money for it. That came all the way back in. And I think that's going to be a process. It's going to be hard to get these things to go up higher. The only thing that caught my eye, you mentioned is I'm finally seeing ARKK have outflows even on days TQQ is getting inflows. So we might be, I don't know, we're

quite near the bottom of whatever you want to call it, disruptive or not, but we're getting closer to that than I think we are on big tech. And I think that's still that next leg to fall. And that's what would drag the NASDAQ down much more. Mike, you made the interesting point in your report this morning, love it or hate it, Bitcoin could guide risk asset trajectory. That was the title. And you alluded to it when you were just speaking. Are we really at the point where Bitcoin can give us an indication of what the entire market is going to do? Oh, sure. It has. It did. I thought last week, because it was, was it Wednesday? I think I could look at it. I was just, sometimes it's part of being an ex-trader and I don't trade anymore, but it's so cool to observe

because i'm not and my finger's not on the trigger of making taking positions anymore which can really make you lose your hair and scott you've done that well so but being i'm addicted to watching markets and you just watch the nuances of flows and watch how things go and bitcoin i mean the number came as picking up around 24,000 and started ticking down. It was the first one, and it usually is. You could see it on the weekend. And then the stock market started trickling down and other things. Bond yields started going up.

It was just, okay, this might be it. And then you look at, okay, so those are shorter term, but is it coming from good, solid levels with good reasons? Yeah, like some of this regulation with um with what happened cracked and that makes sense and the other stuff we're seeing happening is just classic classic warren buffett the tide's gone out we see he's not wearing clothes and there's still a lot of so much adult supervision needed in cryptos yes i know people complain about regulation i get it i'm sorry but there is people like sam bangman free prove that you know young people people playing video games should not be running corporations and taking your money and giving it away to their parents to buy homes and things. It's just the politicians. That's just the lessons we're learning of when you put your money with a trusted producer or an exchange, you want to be able to trust that exchange or with an ETF.

That's where I push back in regulation they should be approving etfs and bitcoins so people wouldn't have to put their money in exchanges like ftx but to me that's what's happening i think it's and you see some of the headlines today binance coin having issues it's this is just classic tide's gone out and the kite hasn't really gone out much on the equities for normal indication of who's wearing clothes for For instance, credit spreads are still very narrow. I hear 20% of some small cat companies are just not making money. The quote from my colleague, Gina Martin Adams, who was our chief equity analyst this morning, was margins, earning margins, margins are unabashedly missing expectations. And that's early on. And then you focus in the fact that central bank policy operates with a definable lagging and uncertain lag with what happens to the economy.

And it's just a variable lag and it's just starting to turn over. So to me, this is part of that macro. And I try to just get away from the micro the little nuances that people say what was chairman powell hawkish or dove's mic it was very standard clear i'm raising rates next question and i'm going to keep raising weights why why make any more of that than there is so i look at it simplistically sell rallies of risk assets yeah i think the biggest mistake the market's making right now is i think this was like a pendulum. You started way up here and swinging down, right?

They're pushing on this and everyone's misinterpreting the current data as being soft landing. And it looks very good. But the problem is this pendulum's not stopping there, right? They put things in motion that are continuing this in motion. So I think we have this brief window where everyone's, this data, yeah, without a doubt, today's data, recent data looks kind of soft land issue but that's because this pendulum is just the way through going and I think this is like they pushed inflation off the cliff and Three or four months ago with anything. They probably should have been running down to the bottom of the hill trying to figure out

Hey, how do we catch inflation instead? They're pounding on this they're beating on this. I think they missed a lot of the lag effects. I think they've set into motion a lot of things that are going to be problematic for the economy. I think we're going to see deflationary prints either later Q1 or Q2 on anything inflationary. And I haven't been following crypto quite as much as leading indicator, but I think it's probably part and parcel. My fixation has really been on these zero data expiration options. I feel that they are driving market behavior on any given day. And I don't think they're enough to turn the market, but I think they're enough to turn 1% moves into 3% moves.

And that's why we get these extremely large moves. And I just kind of watch. It's almost like a horse race. It's kind of like, okay, the Tesla 200 calls are in the lead. Ooh, Tesla 205 calls are in the lead. Spy 410 calls. And you watch this go and it feeds on itself. I think it triggers gamma. I've heard as much as 40% of day-to-day equity tradings are a direct result of the zero-day expiration options. So to me, that is another place where people are putting risk. And what's fascinating to me is I think

people are getting sucked in thinking this is like the gamma squeezes that we saw maybe a year or two years ago on Tesla or some individual stocks. This has the ability, I think, to drive the market up or down. And today, again, we're seeing a bunch of puts. So I'm sitting on a few short positions that I'll probably add to because I like what I'm seeing in that. And if you're a Bloomberg terminal user, MOSO is now my most favorite screen because it's the most active daily options. Can I follow up on that? Go ahead, please. Yeah.

Peter, I saw Jim Bianco last week at the ETF conference at the Fountain Blue. And he pointed out that same function. I work at Bloomberg. I didn't know about it. And I'm an ex-option trader. I used to live by options. You can do so much things you can discern about

by concentrated strikes and open interest and skews and everything. But to me, that's the key thing that's driving. It's all that short-term bias trading. A lot of it's hedging, like you mentioned, puts. The lesson I learned is when you're really, you're either underweight or you're overweight equities or you're hedging. And typically you need to squeeze these hedges out. I'm an ex-trader. I know a good way for markets to go the way I want it to is get me stopped out and then go that way. And to me, that's an example of the way these things work. You got to, if you're long puts

and you're bearish, okay, you buy your puts, you hold them, you get killed in decay and finally you expire. And then the market goes down. That's the way it works in these markets. Yeah. And I think last, the Thursday after the Fed spoke, the whole thing was just a slew of call options. That's all anyone was trading. And we rallied 500 some odd points in NASDAQ. And you could just see it. Call after call, which was destroying any put value. And again, the short dated nature, I think, does two other things. It allows, I think, people to switch from overly long to overly short much faster than

we used to. I think, you know, I love trying to catch positioning. I think positioning, because of this imbalance that's in the daily options, allows it to trade from over bought to oversold quicker. And the other important thing is VIX, I don't really pay any attention to because VIX only includes options, I think from 27 to 35 days of expiration. So as people aren't trading those anymore, so they're putting their hedges in dailies and weeklies, I don't think you get that kind of pop in VIX anymore as any sort of an early warning signal.

So you've got to focus on these things. I agree with you. I've been on the terminal for a long time. I've never seen that screen before. I find myself typing it about 25 times a day. Really interesting. It's interesting, Peter, that you also agree that we're going to see those deflationary forces starting to kick in, which obviously has been Mike's sort of base case for quite a while. I love the term disinflation. Is that just Powell refusing to admit that deflation is happening? Yeah, I think it's a great term for that. And I got to admit, Mike, since we were kind of on the same side, one of the things that really frustrates me is I wind up now having to fight a lot of people say we're going to have

inflation. My first question is, did any of them pick that inflation to get under control? The answer is usually no. And then did they actually think there was inflation coming a year and a half ago? And the answer is no. So I'm like, why do we have to listen to the people who've got it wrong at least twice? There should be some sort of Venn diagram that eliminates some of them. Because I find right now, everyone who's talking about inflation, not everyone, some have been right. But so many of these did not see the improvement in inflation.

They were all saying we were going to be super high all year, blah, blah, blah. They missed it. And yet they have this voice. They're just kind of changing their messaging. So I think the market wants to listen to that. They want to believe the soft landing. We're not going to get it. So that's a key thing to follow up on is that markets sometimes hear what it wants to. And then we have to listen to people who their job is to try to interpret it. And the lesson I learned sometimes is just a bunch of positions getting stopped and they're stopping out of positions. But first thing I need to point out is I was wrong and way too early on this disinflation

deflationary trend. So I completely believe in what Jeff Booth wrote in his The Price of Tomorrow. I clearly believe in books I'm reading right now called Super Abundance. And I've just seen it in my lifetime of commodities. You never want to be long commodities after they pump. It's like buying insurance on your home after it burns down. And they're doing what they normally do because they're indicative of what happens. So now I think this is the big one.

And I like to ask myself, I mean, this is the biggest, I think, reset of our lifetimes. I keep asking myself, what stops it? If you were saying to me right now, the Fed's going to be cutting 100 basis points and they said they're going to cut 100 basis points or 200 basis points in the next year or two, then I'd be, okay, well, that's a sign. Those were so far from that because it's classic example of human nature. Fed thought it was transitory. They were wrong.

Now they're hiking too much. They're going to be wrong. And the thing is, the question is, a year from now, when we're sitting down talking about this, I think it's going to be, what are they going to do to help us get out of this deflationary train? I didn't say disinflation, because I'm a commodity guy and look at this price of crude oil, the same price as first traded in 2006. I mean, if you're a producer, that's deflation. Yeah. The one thing I'm watching as a potential way out of this, and I think it's, I call it maybe a 15 to 20 percent probability of some sort of commodity boom led by India.

If Indian can kind of get their act correct where they are benefiting from people moving out of China. So they're seeing production. They're about to surpass China in terms of total population. They have a much better demographic. And if they can just pull people out of like abject poverty into mere poverty, I think you could see massive demand for materials, raw resources. China, India itself is clearly preparing for this, right? They're involved in Venezuela, trying to make sure they secure resources. They immediately post-sanction said, no, we'll trade with Russia. I think one of the Indian senior ministers last week said they expect to be the biggest increased user of natural gas in the world for the next three to five years. So I see all that. I think there's a lot of things standing their own way.

I think Modi and their political system is the issue. What's going on with Adani probably slows that down. So I don't think it's a likely scenario, but it is something that I'm watching. If we're going to get another 2003 to 2007 sort of commodity boom where corn's out of control and pricing and everyone's talking we shouldn't turn corn into ethanol i think it would come out of india so i've kind of got one eye on india all the time and i also think people don't talk enough about india as a whole when we're talking macro do you think that would take some time I mean, that seems like it would be quite a while before people leave abject poverty into just poverty. As you said, that's not going to save the market in the next three to six months, right? No, right. I think that's a next year's, two years from now sort of trade.

But it's something we'll start. We'll either start seeing develop or not, I think. And they were making great improvements. The Sedani thing, I think, is a setback for them. So that's a good point. That's exactly what the Chinese did after Mao. The sternness of the Mao Chinese Communist Party turned a little with Deng coming in and taking a billion people out of object poverty, which is India's close to now, and bringing them up to a level that's still half of what Taiwan is. Maybe it's 20-something, 25,000 per capita income in China. India, I'm trying to find the data now. I see something closer to 3000.

I don't know if that's right, but that's what's going to happen. It's just a big macro trade. Maybe it's something get going. But it's also happening at a time with the biggest transformation of our lives towards moving away from fossil fuels, electric EVs, the biggest retooling of electric cars on the planet. Man, I can have an electric car, drive electric bikes. India, all those little electric bikes, I'm sorry, gasoline motorcycles driving around, they're going electric. It's so much easier.

I mean, you've done it. It's easier. You can ride in the bike lanes. Those things are family cars over there. It's incredible when you go to India and see six people on a scooter. It's absolutely. Peter, you mentioned before, obviously, India's then relationship with Russia. So pivoting to Russia, Mike and I have talked this somewhat to death, obviously, the Russian-Ukraine conflict. But it seems like a very quiet escalation, at least in terms of foreign policy for the United States. For the first time, I think we heard today that they're recommending that all Americans leave Russia.

Yeah, I you know, I think we continue to give Ukraine just enough weapons to keep this thing going on. And we're ultimately, again, our generals who spend a lot of time on this. The longer this goes on it favors Russia Russia just has that many more people that they can throw at this that many things going on and it becomes more and more problematic too for Europe it's what we haven't been talking about is the forced migration or the refugees out of Ukraine I believe Poland has accepted six some odd million Ukrainians the longer this goes on it's going to be more and more difficult for those people to go back there's almost nothing to go back to depending what region of the country they've come through.

So the stalemate's not good. I think there's a will within D.C. to kind of give Ukraine just enough to keep going. But yeah, it's problematic. We haven't talked about Russian nukes. We don't think it's a likely possibility. But all these things, I think the saber-rattling comes, we'll see how effective his, you effective his spring offensive is. But if this keeps going through the summer, it gets worse and worse for Ukraine. And we keep getting ourselves, I think, closer and closer to the line, right? It's better tanks, equipment, training. At what point do we put repair?

It's becoming, I think, what everyone was hoping to avoid, unfortunately. At what point do we put troops? There's a non-zero chance of that, just like there's a non-zero chance of nukes, as you mentioned. But to me, it was a bit of a wake-up call that they're telling Americans to get out. And even Americans could be forced into conscription into the Russian army. Many Americans who are still there should know better. I mean, like I said, I'm afraid to go to China and I've never, I've traveled all over the world, never hadn't had that problem. But I, one thing that's really helped me have a good view on Russia and helped me have some good views on how to trade commodities since they started massing troops back

in December of 2021 was the New York times. And I mean, I just read it every weekend and anything they write about Russia and just fully what you expect. The conundrum now is I look at it as, okay, they're going into this scorcher's policy and there's like, it's one person again, just like what's happened in China. It's not Russia. It's Mr. Putin. It's one person. And yes, he has his cronies, but what's your choice there? You either go with the leader or you're dead. I mean, or you fall off a balcony. I mean, you kind of have to, it's just the way life works. So the situation, obviously, Nuker thinks it could go Nuker. Thank God Z pushed back on that. But you're right, the spring offensive, but it's the key thing is,

yeah, the US is doing all they can to help Europe not implode again. I mean, I look at all my relatives. Why are we here? Lithuania's relatives fled to Bolshevik. Just, you know, the Americans at some point, the Russians, Europeans have said, yeah, we probably have to defend ourselves from actually coming down and look what's next, Poland. And I mean, this is not new. So to me, it's a global problem, but it's also a key thing I point out from the very beginning. This is just showing the complete value of the United States. I mean, I'm from the heartland. I own the farm. This is just the farmers, the Midwest, the Corn Belt, the Rust Belt is crushing it in this environment. Finally, for the first time, they're making a lot of money in corn and things are doing there. So it's sad what's happening there in Russia and

what's happening with the recession, but it's really a boom. It shows the value of the security and the system in the US. So if there's anything that come out of that, it's part of the reason I was very bullish on energy producers last year, not the commodities, the producers, agriculture producers. And the key thing you still see is I'll just end with this. Well, the key in the middle commodity is corn and wheat, but wheat's already dropped. Wheat's down in a 12 month basis. Corn's still up. And it's just that fear that they're going to wipe out some of that more of that production. But what's happened in the cycle now is the world's largest export of corn now has become Brazil. Why? Because prices have gone up. Thank you very much because of

Russia. It's that elasticity in supply demand that you have to remember. The thing is, just a year ago, right before the invasion started, if you had told us now, they would push them back. And I just thought that Ukraine should just give up rather than all of them getting killed. It was wrong, but it's amazing that they were able to push them back. Yeah. And a couple of themes that we've been talking about a lot here at Academy, and I think fits in some of what you've been saying is, I do think this world is starting to separate a little bit into the autocratic resource rich nations of the world are gravitating towards China. And we're going to have to do a better job with Western Europe, South America. I think South America is naturally Brazil. We do sell a lot.

You know, John Deere has big facilities down there. That's got to be where we focus our attention, right? It's like, okay, if China is doing a good job from a Chinese perspective of securing resources from the autocratic nations, you know, especially in Africa, we can address South America. That's where we've got to, you know, there's going to be this huge opportunity. And I know you guys spend a lot of time on Bitcoin. We get asked a lot about reserve currency. And weirdly enough, how we're starting to describe this, this is going to sound

a little bit weird. We're not all the way there yet, but it's almost going to be a dark web type situation where good open conducted business will be done in dollars, euros, yen, et cetera. But there'll be a deeper underbelly that gets more and more driven towards the yuan. So it doesn't mean China won't trade in dollars. It doesn't mean various countries across the world will trade in dollars, but they will do more of their kind of sketchy activity directly in yuan. And we did push them a little bit that direction. I think it was a big mistake when we froze Russia's dollar reserves, because China immediately went to everyone, including the Saudis saying, hey, this country will mess with your reserves if they don't like your behavior. Now, Russia invading is

extreme, but we're calling the Saudis. We want them to be a pariah country, right? We've titled MBS a murderer. So I think that's one thing that's trending out. I'm not sure where crypto and things are going to fill in on that, but that I see is how this is changing. It's not going to be China as a reserve currency. It's almost going to be China as the, quote unquote, dark web currency out there. Interestingly, doesn't that sort of make the case for their central bank digital currency, which a lot we talk about quite a bit, obviously, in the crypto space. But to be able to do that digitally, exactly what you described, probably happen with much less friction than the current system. Yeah. And to me, their digital currency is kind of being done for all the wrong reasons, right? They want to be able to completely just monitor behavior. And we talked to some corporations who

do business there who have to accept it because they have clients there. And they're all nervous about, well, when do they have to start putting their supply purchases? Like, how much information does the Chinese government want? And I would say the one thing I think Mike and I are almost on the same page, maybe not quite, is I think Russia really is just Putin. It's Putin, though God knows which dictator would take over after him. I think in China, Xi, but the Chinese Communist Party is still a pretty formidable entity in its own right. But we do forget most of the Chinese people are not members of the CCP. Many probably don't like what the CCP does. Unfortunately, they are the ones in charge. And Xi has solidified it and set up the base, I think, that they'll be like them. But we have just seen over the past few years,

they are reaffirming that it is the CCP thatp that's in control and they are asserting their power their ability to get information and their control so yeah i think they would use that digital currency to expand that and make it even easier for their you know we call them vassal states i think uh sorry client states the hustle states is a bit hard but china has no allies so at best you're a client state of china so just a little follow-up on that. It is becoming, we are in the middle of a third world war. It's become hot. Thank God it's not nuclear. I mean, just looking at my screens, I can see the, you know, hitting the balloons that have surveillance cameras on them. But the key thing I think to remember here is the world is divided

into two separate areas. You want to be under the umbrella of the protection of the U.S. And by the way, we love to buy stuff and do business with you. And you want to be in the umbrella and protection of China and Russia. And it's really tilting that way. Cryptos are a great indication. I like to point this out. I was in Hong Kong in 2018. I won't go back there in a conference. And I remember people pushing back and I just pointed out how it's a bear market. But there was only thing that wasn't the bear market that was the market cap of dollars it's still not a bear market yes it's come back the market cap of tokens tracking the dollar so just as we speak i always do it i go on some of the coin market caps and coin geckos and what's trading

the most tether okay but it's then there's a dozen tether wannabes it's the this whole space which is completely organic which china has banned has gone gone for the dollar as its base layer. That, to me, is part of how significant crypto is. And I say this also, and I write about it, making sure our legislators and our leaders see that and say, OK, well, just let's regulate it properly. I think part of the world is this is a century, the decade of the U.S. just kicking in because realize our system by not messing it up is just doing fine. And look what what's happened to Russia. Failure, massive failure. It doesn't work. Who wants to immigrate to Russia and China? I'll end with that. Key lessons of the book, 21 Lessons of the 21st Century by UL Noah Herrera. Herrera, if you don't want to, you know, countries you don't want to immigrate to, ask the question.

Do you know anybody who will immigrate or is immigrating to Russia or China at the moment? I just know tons of people trying to get out. Agree. And you sort of talked about stable coins there, which gives us a good pivot. Obviously, you quoted Buffett. When the tide goes out, you can see who's swimming naked. Well, it appears that regulators think that everyone in crypto is swimming naked, right? Including Paxos, who is

registered and regulated and have been behind, obviously, minting Binance USD, the BUSD coin. So that's one huge piece of news that they're going to stop minting those now. We also obviously have the crackdown on staking at Kraken, right? It seems like they're revving up not only the rhetoric, but the action now. Yeah, it's unfortunate. I think it's what we should expect after FTX. The pendulum in the discourse we're seeing is swinging a little too far. It should swing back, but it's only been a few months since

this you know psycon is this icon of the business just went under so i think that makes sense but to me the bottom line to get the proper regulation is to prove an etf that tracks an index of cryptos and peter i think you had some thoughts on that on this regulation space yeah no i think you know we've said this before that this is inevitable, it's gotta come. I think the other thing I've seen is investors seem to be doing better jobs themselves. They're actually spending a little bit more time trying to understand the various entities, right? Because I think, we threw out names, FTX,

and not everyone's paying close attention to which exact entity they were working with, where those entities were domiciled. And I think that's the important part. And people are, I think, being a little bit more careful. People are asking some of these questions and sometimes they're getting surly responses from whoever's, you know, trying to respond. But it's that sort of thought process that will develop into this, right? Where people are just a lot more careful about these conglomerates and figure out what entity does what and what are their risks. And, you know, one thing that does sound encouraging, it seems like they're getting a lot of money back for the FTX, right?

It sounds like the recovery is going to be potentially way better than people thought initially. So those are good things, right? Their system is working. You're able to parse through some of this and get to the actual data and the money, sorry, I guess data or money, however you want to view it. And I think that's going to occur. And this'll be where we come up with some system

that more and more people can adopt to. I would say even with crypto's recent rally, I'm getting far fewer questions than I would have, you know, when we went from 16,000 to 25,000 the first time. So I'm sure some people are coming in, but this feels to me, it's still a lot of wait and see. A lot of people like, okay, maybe they're dabbling. They'll buy a few GBTC, hoping this feels to me, it's still a lot of wait and see a lot of people like,

okay, maybe they're dabbling. They'll buy a few GBTC hoping somehow, you know, the discount to NAV goes away or something, but I'm not seeing a full new set of people really buying into it. But I think all this regulation will help that then people can go into their offices again and go to their senior management and say, yes, but yes, but these things are being addressed. And I think that's going to be crucial if this is going to be successful long term. I think the GBTC trade is so last month, right? From 50 to 35, that's where it was, right? And I know a lot of people who are actually trading around that, right? Sort of buying at the 45 to 50 and selling at the 30 to 35 and just using that as its own trade. And I'd like to point out, though, that GBTC has been one of the best trades of the year thus far,

which because you obviously have the rip in Bitcoin and the discount minimizing. Yeah, I'll be honest. I got lucky. I did something. You might get something over the weekend. I got lucky. Bitcoin went up. So GBTC, the discount didn't change much, but it went up. So, you know, take the money off the table, move on. Could be worse. But you made the point that people are starting to ask questions, obviously, and that that's appropriate, obviously, in the regulatory space.

My fear, though, is that we're getting zero clarity and just enforcement, right? Kraken didn't really know that was coming. They were forced to do it. The SEC gets to collect their hefty fine. I mean, you could argue that the most profitable organization in crypto right now is the SEC. So you just go after everybody and take their money and then move on and still offer no clarity. And Hester Peirce, who I'm actually talking with in 45 minutes, I'm recording with Hester Peirce, the SEC commissioner, who's given quite a bit of pushback against Gensler and dissent, and has always been somewhat pro-crypto. She makes that point. She doesn't

have a problem with enforcement. The problem is that you can't go register and get ahead of it. There's no way to actually be compliant. Right. I think that's an issue. I think I give this advice, I give it to some esg clients as well my biggest frustration sometimes with dealing with the crypto experts is they go down a rabbit hole so quickly and they lose people they don't spend enough time something that they live with every single day they take for granted and i find they explain stuff and they skip over and move to a level that's very nuanced but the questions that the regulator someone else was trying to answer were two levels above and they they refused to answer those questions, and they're in the weeds. I think they've got to do a better job of either working with people or having someone help them explain their cause. Like, hey, yes, this stuff might all work, but we're examining this issue, and you're

not explaining it. You're explaining it in a lot of mumbo-jumbo terminology that is difficult, and they're going to have to understand that the regulators, you know, and I think banks have always faced this, right? The regulators generally don't hire the person who could be a managing director at Goldman Sachs because it's much more profitable to be a managing director at Goldman Sachs than it is to be at a regulator. So the crypto people within the industry are probably need more explanation, more coaching. And I think the crypto industry is going to have probably need more explanation, more coaching. And I think the crypto industry is going to have to do a little bit better job of maybe being humble, maybe understanding.

Not everyone understands it because they haven't lived and breathed this for the last seven years. How do we get here and explain it at high level, make it basic so we can move on? And I think that's something that will happen through this. But when I read some of these things and you read some of the comments, I see that mistake occurring over and over. Yeah. The assumption that people outside of our echo chamber understand what the hell we're talking about at any given moment. Yeah, I think that's fair. I think that's fair. I think that's actually speaks to a larger problem with crypto, which is there's just no simple messaging even for retail, right? Or that's always sort of been the problem.

But as you said, that sort of, I think we had arbed away with time to some degree. I mean, Mike, what do you think? Do you think that this is reasonable at this point? I know you said it's sort of the pendulum swinging. I mean, do you think we're seeing a wholesale destruction of this industry in the United States and it's just going to go offshore?

No, I, um, no. And U S has never been that stupid in the longterm and short term. Sure. We do stupid things like prohibition and stuff. And Churchill pointed it out. We'll come to the right conclusions. And that's why I always go back to the dollar and make it clear. Now we call them stable coins.

I'll call them crypto dollars. The number one traded, um, assets, tokens of dollars in this space are crypto dollars. Now, yes, there may be 10,000 coins that really shouldn't be trading. And there's purely speculative. I've always had a problem with that. I get it. And an ex-trader gets speculation very well. You buy low or buy high, sell higher. But to me, that's the bottom line is this is the kind of stuff you hear that hashes out proper rules and regulations. It's just not going to be easy. It's going to take a while.

And that's part of, to me, what happens. This is still a bear market. We've had a bounce in that bear market. But to get the institutions in, bottom line is you need to have things like proper regulation. They don't have to worry about this anymore. And to me, what's going to just solve the whole thing is when you can push a button in an ETF and be able to buy an index that's not happening with gensler we're not getting it it's not against there's two years

in he's got two years left and he's getting hit out but he's making some good points people if you really listen to his ration rationality i mean when you put your money with someone and they give you a return you have to that's based on them doing something to give you that return it's not like bitcoin is free but the key thing i i and it's i know it's not proper i won't defend him but i've worked with him a lot more than people i'm working with commodities a long time ago was he at cftc and the people at goldman sachs hated him he was ex-goldman sachs guess what it worked out they worked out fine the commodity index worked out fine it'll do the same thing i can dig in those

details but i remember that the bottom line is he did approve the first Bitcoin ETF, which is outperforming Bitcoin on maybe a one-year, six-month basis because of rolling into backwardation. It's a baby step. He's got to fight that. He's fighting that battle up there with all the incumbents and regulation, but work with him. Let's work with him as much as possible. He can't fight the SEC. You got's work with them as much as possible you can't fight the

sec you got to work with them as much as possible but how do you work with them if there's no if they say come in and then they give you no answer and say but we're going to sue you because that's what happened when coinbase attempted to quote unquote work with them and jesse powell from kraken made the point he said kind of laughingly oh so i'm supposed to just come in and push a button in your website and this would have been no problem. There just really seemingly is no path to go work with them. I think that was Hester Peirce's point and from all those CEOs. Well, that's the thing. We have Hester Peirce. Remember going through that discourse. We'll work it out. I think you guys just have to be prepared for this the last years. It's not months, it's years.

One of my favorite things, and this maybe resonates with you, remember when Bear Stearns was going under and JP Morgan had to buy them. JP Morgan on that day irrevocably guaranteed the derivatives books of Bear Stearns, even if the deal didn't go through. So everyone knew the swaps books were a problem. The fact that swaps aren't clear, that swaps were bilateral, they knew it was such a problem that JP Morgan had to guarantee that it was irrevocable. Even if they didn't go through the deal, they own the derivative books. Clearing is still haphazard on some of these credit derivative products and stuff like that, you know, 14 years after the financial crisis. So these things do take long incumbents on both

sides, dig in their heels, people fight it all over the place. So it'd be nice if this was something that, oh, six months we're moving on. We have a clear playing field. I expect we're still going to be, unfortunately, having some of these arguments in three or four years. I don't think they're actually actively trying to regulate it. That's my point. I think they're just going to use whatever's on the books to make whatever sort of PR moves and enforcement that they can, collect some money, and move on. I don't really see pressure for them to actually give clarity.

I think this path they're taking right now for them is much easier. I like to use the bottom line for any person of Gensler's value and level of history. You have to look at, they do get to that point. You want to be remembered in history as Aaron Burr or Alexander Hamilton? We're getting to the point where, yes, he's leaning towards Aaron Burr. But I guess I'm too much of an optimist in that case. But like I said, he didn't prove the first Bitcoin ETF. It's been a baby step.

I'm not going to defend them, but we've got to work with them. And I just don't, you know, FTX gave them the upper hand. We will get a Bitcoin ETF. Well, I don't want it. To me, that's not so much that. That's just picking a winner. How about an ETF that tracks a broad index like the S&P 500? That's where, that's what brings in the big money, the pension funds, endowments, the

sovereign wealth funds, the family offices. When you can, and not particularly to that ETF, but when you show, okay, I can save custody, I can access this space, I can you show, okay, I can save custody, I can access this space, I can help mitigate my risk, I can show my distributions, I can show my value at risk and get exposure to this asset class that's very nascent, like the internet stocks were 30 years ago. Even a simple Bitcoin and Ethereum index, eliminating everything else for now would be probably effective. Peter, I mean, is that a product that you think people would actually be interested in? Not necessarily the Bitcoin, Ethereum, but just speaking about the ETF in general, do you think

that there is sidelined money that's waiting for something regulatory that's approved to come in? Or do you think that that's also a dream at our point that they're not really no i i think there are people again people are going to dabble this people are going to take you know again i view it as and you know have for a long time that this is part of your speculative portfolio if you want to have whatever part of your portfolio is speculative whether it's two percent five percent twenty five percent this i consider it a speculative i don't consider it we never considered a currency it's a potentially a long-term play short-term play you can trade it i think an etf one where there's

really an effort made yes we have custodian of these coins or all the right things that you kind of see in a regular etf i think that would get people the experience and you can get that growth from there and i think that's almost what you, something where you don't have this lingering. Why do you have this huge discount on GBDC? It's turning people off. It's making people afraid. And no one wants to be the person to own something. They find out somehow the coins they thought they had weren't there.

So they need to do steps like that. I think an ETF would definitely attract attention. People could go and take a look at that and build on it. Any final thoughts before we go that I might have missed here? Anything that's on your radar, besides balloons flying around, obviously? You know, what's the story going to be after CPI? We do CPI on Tuesday, and then the market's going to have to find something new to fret about or, you know, rally on or sell off on but i i think we're almost done with earning seasons it's not been a particularly good earning season i think

fewer than 70 percent of beat and almost all of us get the 70 we've got qt we've had a bunch of the share buybacks that have always helped markets they've been announced i think we kind of slide february march um and i expect to see some weak data. I have to agree with Peter. And simple thing I've been saying for too long is don't fight the Fed and the most central banks in the world. They're still tightening as the world tilts towards recession. Expect risk assets to do what they normally do and go down. I think most people are in agreement there. Bear market rally. I don't want to say it, but probably the case. Well, that's bullshit. If we all agree it's a

bear market rally, maybe that'll work. I shared that survey recently, right? Two weeks ago, we were like, oh, wow, that actually is really bullish. It can't be easy. If it's easy, something's wrong, right? Yeah, it was a very bearish Bloomberg survey, which made us all say, maybe things will go up.

I always view, though, kind of have the rule of three or even consent. If consensus is always wrong as consensus, that means sometimes consensus has to be right. So yeah. Well, consensus is always wrong as a consensus view. So who knows? That's going to be interesting. Well guys, you can find both Mike and Peter's information down in the description. I encourage you to follow both of them on Twitter. Mike, I'm assuming I'll see you probably again on Monday and Peter's information down in the description. I encourage you to follow both of them on Twitter.

Mike, I'm assuming I'll see you probably again on Monday. And Peter, you're welcome back anytime. I can tell in the comments that people absolutely loved your insights. It's always good to get some fresh views and takes, especially from people who know what they're talking about. Thank you very much for joining. Everybody, of course, I will be back tomorrow.

And like I said, I'm actually going to interview Hester Pierce right now, which I'm pretty excited about because I think we'll get a lot more insight on some of the topics we discussed here. I'll see you guys tomorrow. Thank you, gentlemen. Awesome. Thanks. Let's go.