The Wolf Of All Streets - Bitcoin Halving Complete And Bitcoin Is Pumping - Will It Continue? | Macro Monday

Episode Date: April 22, 2024

Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto! Dave Weisberger: https://twitter.com/daveweisberger1  James Lavish: https://twitter.com/jameslavish  Mike McGlone: https://twitter.com/mikemcglone11  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $60,000!  👉 https://www.okx.com/join/SCOTTMELKER  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘25OFF’ FOR 25% OFF WHEN VISITING MY LINK.  👉 https://tradingalpha.io/?via=scottmelker ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd  ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #MacroMonday 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.

The much anticipated and discussed Bitcoin halving is finally behind us. And of course, because the universe is hilarious, it happened on 4-20. Since then, Bitcoin price has risen. Will it continue? Are we in for many more months of chop before the halving actually kicks in in the normal four-year cycle? And will it be affected by everything that's happening with macro? There is a lot to talk about. Luckily, I have the three best in the

business to talk about it with James Lavis, Mike McGlone, and Dave Weisberger, who I can see backstage is not actually in his Tesla, but is present and ready to chat. Guys, I'm excited to get the week going. It's Macro Monday. Let's go. What is up, everybody? I'm Scott Melker, also known as the Wolf of Wall Street. Before we get Let's go. and also for the fire fest that was that entire city as it was 10 feet underwater effectively for the entire week because they decided to seed the clouds with rain at a time when they were about to get historic rain anyways and had a 75-year storm that left the entire city underwater. Should say that it was token 2049 Atlantis

instead of token 2049 Dubai, but still an exceptional experience. But glad to be back, especially with these guys, Dave, James and Mike. Good morning, gentlemen. Dave, we were, you know, we were making Tesla jokes and you were going to be in your car and here you are. You did it. Yeah.

Well, you know, every once in a while I can get my ass up in time to make it. You know, it does happen. Well, we joke if James can get his ass up to make it. If he could come back from the Ark, I could make it in the office. That's right. But I did miss a couple of live streams in Dubai because getting even back to my hotel where I record was absolutely impossible. Can we just spend 10 seconds? What is this cloud seeding?

What's going on here? They effectively, I think, put they fly a plane or drone up there and they drop salt, I believe, into the clouds. And it attracts moisture and makes the clouds larger and causes more rain, which generally they need in the desert. But apparently there was a huge layer of sand already there which acts in the same way and so they seeded the sand which was seeding the clouds and caused effectively 10 years worth of rain in 10 hours it worked it worked yay yay science is amazing yay good job uh i can just say anecdotally that you do not want to own a Rolls Royce when there's a flood. I saw about 17 of them underwater and performing horribly as they attempted to enter water.

Definitely not a Lambo. Someone I know is speculating the insurance claims on luxury cars. Whoever is the auto, the dominant auto insurer of luxury cars in Dubai had a very bad week. Yeah, Dave, your mic. I don't know. There's something going on with your mic. Your water, your water is your mic is literally in the water of Dubai. He sounds like he's broadcasting from a Rolls Royce in Dubai.

Anyways, let's move on, guys, and actually talk about what's happening in the world. Mike, I want to start with you because every time I see an article like this, I get triggered and I laugh. What Fed's rate cut delay means for US and the world. But if you dig down in here, traders now see just one or two rate cuts happening this year. That's a big letdown from the roughly six they expected to start the year and the three that Fed officials penciled in as recently as March. Come on. Are we still doing this? Are we still listening to predictive markets? Are we still? I don't get it. Well, it's a good example that human nature will never change. I like to look at the year ahead futures and Fed funds. And right now they're priced for about 60 basis points. At

the end of last year, the price for about 170 basis points, which we all knew was silly. But the key thing that I think I want to take away and add to this morning is from my colleague, Anna Wong. She came out and admitted that she thinks Powell's December pivot was responsible for pushing up inflation by half a percent. And that was one of the things that most of us who are market guys, and certainly me, is I've always wished we can have a market person in the Fed. Because when he did that pivot back in December, I was like, oh, no, you're going to goose the bid.

Everything is going to go up. And everything has happened. Inflation's picked up. They had to take away the pivot. And I think it just proved that the wealth effect from the stock market is the most powerful it's ever been, ever in the history of mankind. And we're not going to get true deflation until the stock market goes down. The question is, has that started? We finally started correcting beta. So I just want to add a few things. Ana still thinks by the end of this year,

we're going to get to 4.5% unemployment. And she did make a point, unless we stay above 4%, there's virtually no chance the Fed's going to cut. Now you look at ECB, they're already in the UK, they're already starting looking at cutting in May or June. And it's going to be hard for them to do that without the Fed tilting that way. So to me, the bottom line is the problem I've had since that bottom in October, we've had this rally in the stock market, which one of the most suspicious I've ever seen is, can beta stay up? And my point is, I don't think the Fed's going to even bother the E's until we see more of the beta going down, which will push down inflation and everything else. So we're seeing a bid this morning. So I want to also tilt over and end with the key thing that I see that's really my space is, I think crude oil's peaked for the year.

There's no risk in saying things like that, but that's my job to do that. The 87 high was very similar to 95 last year. And managed money net positions are just starting to roll over from about the same level, which is about 15% of total open interest. And it's something I always like to remind people, opaque doesn't drive crude oil. Leveraged futures traders do. People like Dave and James and even you and me, used in my past, they drive and they're just starting to tilt over. And I don't see crude oil doing anything but going back down towards 50. Been early, been wrong, just like natural gas has. Stock market's got to go up and we have to have some major cut in supply. And we haven't had that. We just have fears of cutting in supply. Then I guess the next question is the Fed used to lead and everybody used to follow.

But it seems like we have consensus, at least from Europe, that we are going to start to get at least a cut in June. But they're saying, obviously, they'll get a cut in June and no idea what will happen after. Why is the rest of the world already starting to cut when they're actually arguably in worse situation than the United States? That's the thing. That's the problem. That is the reason, I guess. That's the problem. So here's the history of the dollar. It almost never has problems with too much weakness in the rest of the world. We always have had to do things like the Plaza Accord because it gets too strong. And that's kind of what it's doing right now. Let's look at

2.24%. That's the 10-year note yield in China, the second largest economy in the world. That's over 140 basis points less than the US. And they're deflating rapidly. And then you look at the rest of Europe. Almost all those 10-year yields are either three or two handles. To me, that's indication where things are going. Severe deflationary forces. And typically, you don't get bottoms in economics and economies and things like that until a lag to easing. And only China's really started doing that.

Doing that. To me, that's where the whole world is tilting right now in this US stock market correction. If beta keeps going down, that's severe deflation kicking in for the rest of the world. Beta has to stay here or go up. I've never seen that much of a risk. And that's why I think one thing we have to admit is gold has been doing well and Bitcoin is hanging in there. James, if we have severe deflationary risk, why is inflation now seemingly so sticky and not getting down to the impossible, some would say 2% target? Pretty simple. We're running wartime or recessionary deficits at a time where

we're actually not in a recession. When you're spending $2 trillion more than you're taking in tax dollars, you're literally just pouring money into the economy. And so while we stay high, we're paying over a trillion dollars of interest on the debt that we have out there right now as the United States, not us, the United States government. And so that is mildly inflationary because it helps investors who are in those bonds just continue to just print cash for themselves and import into the market. Like Mike is saying that, you know, this risk between the two-year, five-year and seven-year notes. We've got two-year tomorrow and then five and seven on Wednesday, if I'm correct. And so what's important about that is everybody's watching that two-year yield and to see whether or not it bumps up against that 5% rate or yield because that would be pretty significant. It hasn't touched there in well over a year.

And so that's what people are looking at and seeing bond traders are looking at and investors are looking at to see just where that settles out. Because like Mike is saying, we're kind of on the precipice of, are we going to get any cuts at all this year? Or are we just going to hold higher for longer until there is that pain trade? So you've got part of the market saying that, oh, there's going to be the pain trade, and you're going to have another huge printing event. Or there's the no landing trade where people or investors are believing that we're just not going to land, we're not going to have a recession, we're not going to have a turnover, and we're just going to continue higher. So it's kind of a push and pull between those two still.

Dave, now you get to unpack your favorite job. I mean, I am constantly reminded of how the difference in you know, Keynesians and and monetarists, you know, when Mike talks and talks about severe deflation, we are printing as a globe more money than we have ever printed before. And I will remind people that the great Milton Friedman was correct. Inflation is and always will be a monetary phenomena. So F the notion of inflation is not happening. What does happen is we have different types of inflation. I've said this before, but I'm trying to be patient because people don't seem to remember this.

Assets are different than consumer prices. We have done everything we could to engineer it. You remember on this show how many weeks in a row I talked about the fact that the biggest regret of the aperitifs in the central planning offices was that they gave helicopter money because they changed decades of policy that created a wealth gap that they didn't mind. Both parties, this is not political, like the wealth gap. They like assets going up. They like, Mike said it before, and I thought he said it very well, the strongest wealth effect he's ever seen, the strongest wealth effect we've ever seen. Well, that's because the politicians want that. They want assets to go up. Now, the problem is when it comes to data is when assets are going up, when it is easy and cheap

to overinvest in fixed cost things that will decrease marginal costs and the two that are obvious are outsourcing and technology, people will do that. And so we had decades of disinflationary from a consumer perspective forces only, however, on importable goods. So services, if you look at the cost of services over the last 40 years, service inflation has been massive. That's why college tuition, which this weekend proved to be almost completely worthless in certain Ivy League institutions, going, you know, we could shake our head as much as we want, but you can't ignore what's going on. I mean, people, the fact that 34% of our children in schools believe the shit that they believe, it's not just inflated, it's also inflated and deflated in value, inflated in cost. But the service

inflation has been real. If on the other hand, you can outsource and manufacture elsewhere in a cheaper place, you can keep the cost of shirts way the hell down. And so we've seen that. Now, Mike is right, obviously right, that the authorities are stretching the wealth effect as far as possible. But the one thing that he talked about was unemployment. I think that unemployment is completely misunderstood. It's almost ironic how this administration has proposed a clamping down on the gig economy when the reality, you know, like California has done, when the reality is, is our employment situation is nowhere near the headline rate. The fact is,

take out part-time jobs and see what that rate looks like. And when you do that, you have about 3.8 million less of them. That rather dramatically increases things. And it's not that government jobs aren't real, but take those out too and see where we land for the private sector. That's right. So the simple fact is we may think that the people in our government are dumb. And in some respects, they make decisions that are baffling. But generally, they make decisions in their own self-interest. And their self-interest is to get reelected, elected, et cetera. And we are in an election year. The reason there is a cut, and I believe we still probably will get one

or two cuts, is because the underlying employment data for voters is nowhere near as good as the numbers they keep trumpeting. I mean, it really is that. Now, that said, we're going to have more money printing. I mean, there is nothing to restrain spending on the horizon. And every single thing that goes, every single piece of macro news, whether geopolitical or otherwise, is more spending. You know, 80, 90 billion more in foreign aid. Yeah, whatever.

Just write a check. I mean, it's like, you know, I feel like old episodes of the Roseanne show, you know, it's like you get a bill and Roseanne would ask, you know, the husband, is it red? He goes, no, it's yellow. Put it in the forget it pile.

Right. You know, print, print, print, print, print. And that is what's going on. And there's no political will to do anything other than that. So we'll see that. Now, that said, the last piece that Mike talked about is oil. I mean, the amount of production that the United States is capable of and the world is capable of is huge. And there's no doubt that energy demand in China is down.

Yet I saw something over the weekend that I wanted Mike to comment on. What I saw, I found interesting, which is China is drawing down their emergency stocks of oil. There was something going on in Chinese oil stocks. And I only saw it as a headline right before I decided to get in the car, so I'd be in the office. I'm curious if there's something going on in terms of the Chinese petroleum reserve that is meaningful. I don't know whether there's a story there, but it was a headline I saw, and then I had to jump in the car. So I'm curious. I'm sure it would be something on Bloomberg. Mike, do you see anything there?

I'm looking for it right now. The first headline I see is China's imports of Russian crude surged to record high in March. So I'll check that. One thing that was notable is they did build up their SPR, Strategic Petroleum Reserve, in the last few years, most notably when prices dropped. And with COVID, that was part of the big bid for Chinese crude oil last year. The key thing I want to point out is, as Dave said, I was updating some of my research this week. And in Bloomberg New Energy Finance, there's a great podcast that everybody can see.

But the headline was, Chinese clean tech glut underscores US unshoring hopes. The key thing to think about here is, Huawei is doing to Apple what BYD is doing to Tesla. This is just what Jeff Booth predicted in his book, The Price of Tomorrow, how rapidly to Apple, what BYD is doing to Tesla. This is just what Jeff Booth predicted in his book, The Price of Tomorrow, how rapidly advancing technology, squashing all types of traditional inflation. I completely agree with Dave, what Milton Friedman said about inflation is a monetary phenomenon always. But here's the key thing about what's happening out of China. China is churning out clean energy technology at a breakneck pace, driving down prices on everything from solar

panels to lithium-ion batteries. That's from BNF. And that's an economy that has nothing left. They completely pissed off their best export customers. The US and Europe are getting out at breakneck paces. And their housing market's markets collapsing so this economy is imploding you can't see the data yet but you can see well you can in 10 year old yields 2.24 percent but the data they lie about you can't see it yet it's just a matter of time so i think that's the key thing to think about is i also published today's if you look like um any type of demand for crude oil and liquid fuels from all the major developing countries u., Europe, Japan, they've been downward for years. And China's the only hope for crude oil to go up here

for imports. And so my point is, that's why I still want to, yeah, I've been wrong, but I keep trying to hit, think crude oil is going to just follow natural gas, but that's that deflationary bent kicking in. And here's what I'll end with is, I do enjoy when people push back in CPI and PPN. I do completely understand the services standpoint.

But from a commodity standpoint, you look at unleaded gas in this country, 365. That's the average price. That was first traded in 2008. Look at natural gas right now on the screen. First traded in futures in 1990. Crude oil on the screen around 82. It was first traded in 2006. From a commodity standpoint, it's severe deflation. The only reason they go up is because of the base in the currency.

And that's why gold is really the only main commodity that goes up over time. And now it has a little bit of competition from digital gold. James, any thoughts there? Yeah. I mean, look, as much as I want Bitcoin to be recognized as a risk off asset, we've seen over the last number of weeks how it's still not treated that way. I would like to see, like Mike is saying, Bitcoin take some of that mantle away. And is it likely in the ETF space you can see ETF divergence there? And that's a pretty significant move. It's not insignificant. So even while you have central banks who are clearly buying gold and have announced they're buying gold, you've got the gold ETFs fading at the same time that

the Bitcoin ETFs are really coming online into their own. And so you've got these Bitcoin ETFs have been trading right up until the halving. It was a big event. There was a lot of confusion around it with new investors. They weren't sure exactly what was going on there. But I would expect that that trade continues as some investors take a little bit of their gold, just a little bit of their exposure in gold out and put it into Bitcoin. And so into the Bitcoin ETFs, it's an easy thing to do in your IRA. It's an easy thing to do if you're at a fidelity or if you're an E-Trade or something. And so that I do expect that to continue. But this is a big, this is a big pivot point for,

for Bitcoin. And it's not going to happen overnight. I think it's going to take years for it to settle into that risk-off asset category. It's going to take a while. And what it's going to take is it's really going to take not money from gold, but money from bonds. And that is not happening right now. I mean, let's just make it clear. When there is fear in the investment community, the first thing that people are running through the 10-year treasury, they're not running to Bitcoin. They may put some money in gold, but again, the international risk off trade is going to u.s treasuries and that's just reality

right now as much as we we know the reality will be different in the future that's where we sit now so and that's the that is the uh you know that's that's the view and the and the sentiment that i'd like to see change yeah well that well, that's true, although not today. I mean, the 10-year is now past 4, 6, 5. Yeah, but think about why that is, though. It's because the risk of geopolitical disaster kind of fell over the weekend, right? So even though we're seeing pockets of disaster here in the United States, the risk of geopolitical all-out war fell.

And so people are not pouring into U.S. Treasuries today. Oh, yeah. There's no doubt you're right about in terms of what is a risk-off asset. It's just amusing to me. I mean, I was thinking when I looked at the first check of market data this morning, I was like, take Peter Schiff's shoelaces away from himself. You know, gold down two and a half'm expecting to see a tweet from Max Kaiser with that, that puppet, you know, throwing up all over himself. I mean, look,

virtually every Bitcoiner that is, that has as much gray hair as I have in this beard started off as gold buck, right? Because it's a monetary asset. And the issue is that the smart ones, at least I like to believe the smart ones, realize that in a digital world, Bitcoin is going to be significantly more usable. My vote for the funniest tweet of the weekend, I actually laughed out loud and almost spit something up as I was driving, driving as I was uh you know reading

it was mike alfred in response to peter schiff peter had made some idiotic comment about oh the bitcoin network congestion is so bad it's and i do want to talk about runes and the effect of originals the effect on the miners that actually matters from a bitcoin perspective so let's get to that but he tweeted, I understand gold is really so much better. The UI of gold is so much better than Bitcoin. I had to buy a coffee and I spent 45 minutes chiseling off my gold bar a few flecks of gold that I could pay for my cup of coffee with. And that's kind of the point. I mean, you know, it's like people need to understand that Bitcoin as a native asset, no more than Fedwire, needs to be cheap enough for people to use it to

buy a cup of coffee. The fact that you can move a billion dollars in, you know, in minutes, not days, and you can do so dramatically cheaper, well, relative to that is true. That all said, I mean, people always get to these ridiculous kind of double bind arguments. Bitcoin bulls say, look, miners are doing fine. There are other uses for the Bitcoin blockchain that economics will dictate and things will work out. And there's layer twos. There's all sorts of stuff. And Bitcoin bears will say, look, you see, you see, we said the miners are going to have trouble after the halving. And look at this, a transaction, you know, fees are going up relatively. So that's bad. And it's sort of like, you know, you get these sort of things, all cut the crap and basically

ask yourself the question, did the Bitcoin network implode when we have our miners? Are we going to see a death spiral of mining? The answer, of course, was no, but they're all people predicting it. And so when you look at all this stuff, you have to ask yourself the question today, here we are, April 22nd, 2024. Has there been a time in history when it is more likely that Bitcoin will become a monetary asset that effectively becomes a denominator. And which, of course, would imply a price dramatically higher than today's level. Has there ever been a period of time where it's more likely?

And the answer is no. The answer is this is probably right now until tomorrow. Today is the most likely that Bitcoin will get there because of all the various forces going on in the world. It's, you know, last week, you know, I was at a concert, you know, when the Israel's retaliation strike, which, by the way, was geopolitical brilliant. You can say whatever you want. You can hate Netanyahu. You can not be a fan. I'm not particularly a fan. So, you know, whatever. But the idea of proving to Iran that they could hit their nuclear power facility by hitting something just next door to it that was specifically designed to prove that they could, but actually not do any damage, was geopolitically brilliant.

And that's why the whole world backed down. To me, the fact that Israel responded and did that, and I saw Bitcoin drop below, you know, down to 59, I was like, damn, I'm nowhere near a keyboard. Because that was about as tradable a bottom as I have literally, it was an incredibly tradable bottom. And that gives us that gives the excuse to talk about the title Bitcoin having complete Bitcoin pumping will continue. I pull up a chart. This is exactly what you're talking about here, by way right kind of swept this range low you look at this we're ranging right yes we're up you know a few percent certainly since the having i would say that that's a good thing in general but any look at a chart or just rational thought says hey man we're just kind of hanging out between 74 and

60 right and if you look at previous if you look at previous cycles you kind of now expect that for six months and and that's okay the long if it does then the resulting break of that range will be more violent assuming it in either direction well that's true it will be more violent in either direction. Obviously, I lean upside because the- Yeah, as a- Yeah, barring any changes in the federal or the monetary or the geopolitical landscape, which we know there will be changes, but barring any changes, you're right here. Right. The point that people need to understand is that when you get to these ranges, I mean, the things that I look for, what I think is one of the most important points is the fact that we've had we're now going on weeks of what funding rates below normal and a discount on perpetual swaps compared to spot is arguably the most bullish sign in the market in this range.

Because it means whatever buying, whatever bounces are coming from real demand, and the speculators are starting to lean short. And the more that we stay in a range, the more more they pile up leverage on the short side and the more that you get that fuel. Just like the fuel for a collapse know, a month or two ago. And the last time it was on the rally up into this mid-range, you started to see premiums on the perpetual swaps and you started to see people speculating on the long side, which means a liquidity flush is a lot easier. You can't create a liquidity flush when the market, the speculators are leaning short. And it is exceedingly important to understand that. Now, obviously, it's not a perfect indicator because macro trends will change. I mean, the market was leaning long in the 40s too, and it went all the way to 70 leaning long.

So it's not like it can't do that. But it is certainly easier to build a base for a sustainable run to the upside when speculators are leaning short. And it is equally true that it is easier to get a liquidity flush and make it a more severe one when speculators are leaning long. And speculators have been leaning short now for a few weeks. And that's despite the market, the price movement.

It has been irrespective of price movement over the last few weeks. And that matters. I mean, you see this all the time, Scott, right? I mean, it's the same. It's a tale as old as time. Well, I think part of that conversation is you just confirmed that a lot of people who didn't agree four or five, two years ago, that Bitcoin is the world's most significant risk on trading vehicle that trades 24-7. And maybe it's shifting the risk off, but on weekends, if something bad happens and you got profits in Bitcoin, you're going to sell what you can. We've seen that. But the key thing I want to point out is on a one-year basis, S&P 500 and gold are both

up about 20% total returns. That ain't good. And at the same time, Bitcoin's up 140%. That's awesome. We'll see how long that lasts. But I also like to point out as people say, oh, we're getting this little reflation thing, the spot commodity market, spot commodity prices are flat. My like to say is if commodities can't go up in that environment, yeah, they've bounced recently. Everything's bounced with beta. What's it going to take when beta does go down? So I think what you're pointing out in terms of trading Bitcoin is great for the traders,

but the overwhelming force when anybody's putting leverage money in trading Bitcoin, in and out, the day trades, the bots, everything matter. But the big picture, I mean, the next 10%, it's going to come from beta, I think. And we all know that beta just needs to back up for a while before the Fed's not going to ease, which is what's driving everything. So to me, that's the bigger picture. Hopefully, Bitcoin can hold that 60,000, but we have to point out is we had a perfect storm for Bitcoin to rise. You guys nailed it better than I did,

but perfect storm with the ETFs and the halving, poof, both are gone. Well, no, that's not true. Let's get back to the halving in a heartbeat, but I do want to address- The halving narrative is gone. The dangling carrots are gone. I want to shelve that for a heartbeat i want to focus in on the s&p and gold both being up 20 in a world where uh we are investing and continually

getting more efficient in our production of commodities where the real economy isn't moving but it's monetary printing and debasement, what do you expect to go up? You expect gold to go up and you expect people's belief in the value of narratives to go up. A lot of the S&P is driven by narratives, AI, et cetera, et cetera. Whereas commodities, there's no narrative to do that. It's just simple supply and demand. And as you point out, we have lowering demand and increasing supply. So not horribly surprising that that happens. I think that indexes tend to conceal a lot of what's going on because we tend to look at a lot, tend to look at it in a very broad term. Gold up 20% when we printed, you know, I don't know what percentage of the money supply had come

online, probably not 20% in a year, although it's accelerating at a pretty fast rate. So I don't have those fingertips. I just do think you need to do that. Now, as far as the halving narrative goes, Scott's been screaming this from the rooftops. Well, Scott doesn't scream. But he's been saying it extremely forcefully, that the halving narrative exists for a reason. It is not statistically significant. So forget the fact that it's happened in previous cycles, but it does make sense. The intuition is that the halving happens and every halving, like clockwork, before it happens, the naysayers in Bitcoin, the one who says it can't actually work, say things like, if the price drops, the miners will have to pull capacity offline. The hash rate will dry up.

People will see the market not doing well and the price will drop and you get a vicious circle. Every having, that's the narrative that people say on the bear case. And so what happens? Well, old computers, old, you know, basically the old cards are actually not full computers. The old cards come offline. The marginally more expensive power producers come offline. And the newer technology and the people with lower overall costs do just fine. It just forces it to become more efficient. That's right.

This particular cycle, we're seeing something new with the advent of runes and ordinals gaining popularity, which is other use cases of the Bitcoin network. Now, he has not been talking because he says the's been what the speculation's been muzzled and and there are flaws in jason lowry's uh thesis uh his software thesis for bitcoin but the one point that he makes really really well uh in his book or on listen to him in the podcast is that the bitcoin network is one of the most secure ways of creating verifiable transactions, full stop. And so it shouldn't surprise anybody that supply and demand will need to equalize post-halving. But the reason that I'm talking about this is because why the market goes up and rallies three to six months after the

halving or some period of time is because it becomes obvious that the network isn't collapsing. It becomes obvious that the monetary policy is working and more and more people say, okay, well, if it's working, I guess I should be in it. And so that narrative, the halving narrative isn't a, okay, let's spark up a doobie because it's 420 and we have the halving. It's not really a narrative of that,

people watching a clock. I mean, I guess you could do that, but it doesn't make any sense. The narrative is by the end of the summer, what does the network look like? And people starting to gain it. It's like the ETFs. It's a trickle first, and then it goes. Will it take as long this time?

I don't know. But what I do know is the narrative of the halving plays out in the six months after the actual event, not the actual event itself. I agree with that. Let me just add one thing to it. The findable diminishing supply is what I get from the halving. The bottom line is if you take any four-year period or any one-year period in Bitcoin, it doesn't really matter for halving. It typically goes up. Let's remember that part. It's a nascent market that's becoming an an adult we also have to we also have to just recognize the fact that this is a really small data set i mean you've got you've got three

three examples you can you can look back to i mean and the first having is like people didn't know what's going on so arguably the second either so you, you know, it's that it's difficult to go back. We all know as investors, the challenges and the dangers in looking at past cycles of something and attaching, you know, your future probabilities to that. Okay. Can I talk about what I think was the largest macro event that I've seen almost no commentary on. I've seen some, but I think it's been overwhelmed. The fact that the U.S. Congress voted to effectively steal assets, legitimate assets of Russia is a massively important macro event for Bitcoin. Massive. Because it is people ignoring that, that the fact that it effectively, it was threatened before, threatened, threatened, threatened, that they're actually going forward with it. Now it's not signed yet, but I'm assuming.

It's not just US, it's Europe too. And we did the same thing to Iraq. When the US and the Western world says dollar assets are not safe to everybody who is our enemy, it is effectively telling China and Russia, who are among the larger holders of U.S. assets, don't hold them. And, you know, while I agree with Mike, because I'm sure you're going to say, yep, you know, where else are they going to go? Na, na, na, na, na, the dollar. I'm a patriot and I agree with you. That's true. But you will see gold getting propelled. I mean, it's actually amazing. I mean, watch gold dropping two and a half percent on days like this. You will see the bid on Bitcoin.

It is the kind of thing that doesn't happen overnight. Nobody responds to something like that in a knee-jerk fashion, but it is a big story. And it's a big story that is a macro story that won't play out in a day or a week. It will play out over years, but it is one that deserves mention. Because just like, you know, I wrote an article when Trudeau did his nonsense with the Canadian truckers, that he rang a bell for people on the importance of censorship resistance. There is a growing undercurrent of discontent among people all around the world of how having a connected financial system gives the government much more power than you want them to

have. And so you're going to see this play out as a political issue. I think it's a little early for this election for it to be a big one, but whether it's CBDCs, whether it's what is likely to be fake report of Elizabeth Warren asking for a wealth tax on Bitcoin, whatever the hell it is, but it's certainly not fake that the IRS idiotically said, and it is idiotic, that you have to declare all hosted wallets when a wallet is basically a seed phrase. They don't even know what it means. I love the notion that a blank sheet of paper is a seed phrase that you want to declare it. And so you could print up, you know, it's just, this is this lack of understanding. But these macro forces are a

big deal. You know, if you want to know what will be the match that will light the bonfire for Bitcoin to go on its next big bull run, I have no idea what it is. If you want to know where the fuel is coming from, these are the stories that are the fuel. And that's why, you know, from a perspective of a trader, I can't lean long. I mean, I can't lean short. I lean long, but it's a long-term view. It's not something that's immediately tradable, but it is a very big deal.

One year ago, we had this story, which your chat just made me think of. Russia plans to mine crypto for cross-border deals, says Central Bank. It was literally a year ago, April 19th, 2023. I haven't heard a single thing about this since. Any of you? Not a word.

And if you think that they're not doing it. Yeah. Why would they publicize it? Right. size it right right it seems like uh that that that seemed and that seemed like a response to exactly the phenomenon that dave is talking about to some degree and they even mentioned that and dave what you're talking about now is not new because when this war started what was it 700 billion or something of assets were frozen continuation of an existing policy go ahead mike so it's definitely the world order shift. How did that war get accelerated and really started as the unlimited friendship from President Xi? It really trickles down to major. I think people are going to look back at him and use an American

vernacular. They do. What are you thinking? So we've seen the largest buyers of gold on the planet is Chinese and Chinese citizens and the central bank who can print yuan currency and buy gold. But I would think from a rational and running your country standpoint to not be mining some Bitcoin would be very irresponsible, be very strange, but he's done something really stupid, I think, historically. But what we're describing is really World War III. It's getting started so much financially. And when people push back on the U.S. weaponizing the dollar, I'm like, what do you think we should do?

Nothing. I don't want my son to be the captain of the army. I don't want him to go over and die in Europe or in the Middle East. And most Americans are done with that. So to me, the only thing we can do is fight it financially. And that starts with the dollar and wherever else. And now it's us against them. And it all started with Chinese pivots.

So unless we get a daytime pivot from Xi, this is going to continue. And that, to me, is the key detriment for potentially gold for go down. If Xi wakes up one morning and says, no, I probably want an unlimited friendship with Biden rather than Putin, that's not going to happen. But that could. That, to me, is where everything tilted. And it started an epic example with the COVID, biggest money pump in history, and now this unlimited friendship. I mean, the textbooks are going to point to this as being a major paradigm shift in history. Bitcoin's in the middle, gold's in the middle, and the most striking thing I see that's really expensive is the U.S. stock market.

So one point that I will lay out the bull case, whether or not you agree with them or not, I mean, people like the Mooch are out there talking about, OK, now that the U.S. has gotten their shit together to fund Ukraine. Now, I'm not going to say whether I agree with that or not, although you could probably gather that I kind of think that we're pouring money down a sinkhole. The simple question is, does that bring Putin to the negotiating table and do we have leverage on Zelensky to make them negotiate? Because at this point, you know, if you're the Biden administration and you want to come up with issues that show that you're a statesman on the world stage when the whole world seems like it's on fire, I think that there's huge motivation on behalf of the administration to try to work at some deal, which is the opposite of maybe where they were, that think about what the macroeconomic case there is. So let's say there's peace, and Ukraine and Russia sign a peace agreement, and Putin is no longer, I mean, we'll call him evil,

but he's no longer killing people. Now, all of a sudden, what do you do? Do we give them the money back? What actually happens, et cetera, et cetera. But thinking through the games of the chess game, it becomes extremely interesting. That's a good problem to have though. There's too many. I actually think that's my base case. I think that Putin will go to the negotiating table. He will say, if you're productive, he will want to, you know, have the annexation of the territories that are and they'll they'll try to make it. They'll try to have them to be here to be elections, whatever. But, you know, between Ukraine and Russia, I mean, look, this is an ongoing thing. This has been an ongoing thing for a long time and people don't understand it.

You know, we've been watching the gentleman, you know, the distinguished gentleman in Moscow or whatever, the Weizmann, having to watch this show that Ewan McGregor is the star of. And the core angst in that show is, and they don't talk about it as such, but it's Stalin and the famine that he created, according to historians, to choke off a rebellion in Ukraine. I mean, this is not a new story, right? This has been going on a long time. And people, you know, unfortunately, the world is flooded with these old stories that have war trigger points. But I just prefer to follow the money. And I think that following the money and power in the United States is this administration now has very strong incentives to try to prove that it could create peace.

And I suspect that that's a large part of what's going on. And we'll see. But you don't want to be caught if that matters to you. So I'll ask you this, Mike. Let's say, for the sake of argument, a peace deal happens. What does that do macroeconomically? You consider that very deflationary. I suspect that that- It's good for equities. First of all, it's the dream. It's one of the problems I always like to say is like losing a bet to you and things sometimes that's the kind of want to do. I'd love to have that problem. I think all money managers want to have that problem as far as assets and how they should respond. The first thing I think would do well is the U.S. equity market would do well. European equities would do fine um but it has to start that's let's see what's going to take is it is it going to happen

without a little tip-off from z to say hey you know the uh glad call up the unlimited friendship's not happening so to me that's the iterations that have to happen but it's the kind of problem i'd love to have but in that space i still think um still think it's just, it's also a probability of that happening. I think it's quite low. It's, but it's also interesting because we've got the expectation of future, which is what we're talking about. That purely the expectation of the future, and that's what the stock market is.

But as we enter earning season and we get a, you know, some indication of what is actually going on in the U.S. economy for real in the underlying companies that we're talking about investing in. So that, to me, is going to be – we may have been or we may continue to be a little bit too optimistic on corporate earnings in America. We'll see pretty soon. We will see. And maybe some of them will get ratcheted up. I mean, the Magnificent Seven or the Big Six, whatever they're calling them now,

they've been printing money in the last year and a half, but we'll see what happens in these next quarters because you can't take that in isolation. Of course, you've got the expectations of the market because of geopolitical concerns because of uh you know outside factors but the reality is we're still talking about investing in these companies themselves so yeah and in the coming weeks we're going to get some we're going to get a little bit better indication what's really going on in the u.S. economy. Yeah, the last point is something I was just glancing. There was one other comment that people talked about on the macro side when it comes to rate cuts. The other part of this thesis

is a very interesting narrative shift. I'm calling it a narrative shift because it's, I mean, in my mind, it's it's fascinating to watch. I was in New York in Washington. Over the last couple of weeks, I've had a bunch of meetings that saw a bunch of chief economists, three of them actually talk and I heard the same thing out of all three, which is interest rates being higher, are causing the housing component of inflation to print higher. And therefore, this is the logic, cutting rates will actually cut inflation. So therefore,

we need to cut rates to stabilize inflation. Mike is laughing. No lie. I don't want to name them, but I've heard three economists say it. And then there were also a news story which was talking about one Federal Reserve member made some point about that. You know, if you believe, as I do, that the government will come up with any excuse to do what is politically expedient, this sort of fits in that camp. And I'm curious, Mike, what do you make of that? Or what do your economists say about the notion that cutting interest rates means that owners don't have to charge as much rent? Well, I enjoyed hearing that lately, particularly from Alfonso Piccatelli and his macro podcast. He's a big Bitcoiner too, I think. But it's just one of those things I remember hearing from my Japanese colleagues 20 years ago about, oh, they should hike rates. I'm like, yeah, go ahead. Try it.

Short term, yes, maybe. But long term, all the lessons economics say, yeah, good luck with that one. But that's just how we're in such a unique phase right now. And that's where, to me, this pivot from Powell is going to go down in history as creating this big pump up in risk assets and inflation. And it's going to turn out to be a longer term peak. I hope I'm wrong on that, but to me, that's the way it's all setting up because all the lessons of history, when you have these massive pumps and then dumps that you have to get that reversion towards where you begin. If you don't, it's just a matter of time it happens. So to me, this is what's happening with inflation, with that risk assets. And, um, I go to your point, to your point, Scott,

did you see that chart? Uh, it's gone around, um, Twitter a few times here about, uh, the, just the, the length of the, uh, yield curve inversion and what happens, uh, when, when it's been inverted for this long. Yeah. I thought we'd never had it inverted this long. I haven't seen the charts. I saw that this morning. Yeah.

Did you see it? So I think it's the last four times. Dave, did you see it? The last four times the market has corrected. We're talking massive corrections here. Yeah. I mean, I find that fascinating i mean the fact that the yield curve is inverted in my opinion has is just proof of in this particular case is because of the way that it's inverted it's just shows the how manipulated uh one in a post qe world how manipulated the

long end is uh and to the extent that you the extent that people don't have enough firepower to fight it. And so I look at it that way. This chart goes back to 88 really quick, Dave, just to give people context of what he's saying. So I don't know whatever happened before. But there's a fourth time the yield curve, that's the blue line, has effectively been inverted. I mean, barely touched it here, but none of these are even close if you're talking about time. Let's add some historical content to that. The U.S. 10-year yield is about 70 basis points below Fed funds, and the average of the top four next countries in the world, China, Japan, Germany, and India, the average of their yields is about 140 base points less than their 10-year. You see the global tilt there? It is severe deflation and recession.

It's tilting that way. And then you look at things like the VIX volatility index. You take that 52 week moving average minus the T-bill, it's the lowest since 2007. That was a key thing that got me really bearish. I was way too early. So extremely low bond yields in the rest of the world, particularly China, the lowest volatility in a while. And you see beta just starting to back up. I think the prudent managers who watched the long-term, the big macro guys are saying, okay, I'm not going to be able to buy dips and let all the other people buy dips because at some point the dip buying has to not work for a while. And we haven't had that since 2009. We haven't had the dip buying not work for a while. We're overdue

for a period of a couple of years where dip buying just doesn't work. Those indications, very low volatility, very high rates and much lower rates in the rest of the world are just things you should watch over time. And they're pretty enduring for indications. The only two points I'll make to that, and because I tend to see what's going on and tend to understand. Look, first, is the Fed put back in play now that rates are here post Powell speech in December? The answer is clearly yes. The question is, if it's not real and they don't really care, then people are going to get burned. And so a 20, 25 percent massive panic correction.

I mean, I don't think the Fed will stop that. I don't think that's a V bottom. I think that's a drop and then sit there at that level if, in fact, it happens. But we'll see. Just leave yourself there. But there are a lot of money managers who at this point just think the Fed has their back, which I think is, I think in your case, you're saying it's foolish. I think maybe it is foolish. I don't know that they care. But arguably more important is this is an era of peacetime fiscal deficits that are unprecedented. And so why does that matter? Well, it matters because the government can't afford to allow interest rates to go higher. If the long end was

at a natural tilt above the short end right now, we would be passed within, I don't know when we go past the magic 150% debt to GDP, but it would be in the, you'd be able to see it out of the front window of the car the economy is driving. We can't afford long rates at 7% or 8%. We just can't. Now, if you go back and use what you like to talk about going back, what is the average short rate and the average long rate over the last hundred years? I think the average long rate is somewhere around seven and a half. Last I checked, but I could be wrong. You can pick up your time period, do whatever you'd like, and then impute what is our, with our $34 trillion deficit, how much are we spending at seven and a half percent? Start doing that math and saying, can we afford it by by what i saw i can't remember who it was so i can't give

attribution i'm sorry if i'm plagiarizing but effectively there is a point in that of bond yields going up to a certain amount doesn't have to be that much where the entire u.S. tax receipts at current budget is paid in interest payments. And certainly, we're already there where entitlements and interest payments make up 100%. So we literally, defense and discretionary spending- More than 100%. Yeah, way more than 100%. Way more than 100%. Right. Yeah. So that is a dynamic that has never existed in the historical series that you're looking at, Mike. Now, I'm not saying that you're wrong. I'm saying that dynamic has to be factored in because we haven't been there. Now, Japan, that's exactly what happened.

Literally exactly. The difference is with an aging population that has had a much higher savings rate than the U.S. population for years and years and years. The issue in Japan was how do you stop them from taking their money and pushing it overseas? How do you keep it in their postal savings accounts, et cetera? And I'm still not sure how they managed to do it. But what they did, they made sure that their stock markets all time high didn't get reached again for what was it? 35 years, 34 years. I remember trading it. Just a key thing right now, you mentioned, so the average 10 year note yield since 1962 is 5.86%. And I just have it starting in 1960s is right around 4%, just about where we started now. But I asked to point out is

China is clearly on the path to turning Japanese. There was an article recently, but you mentioned postal savings. The average savings now you can get in a bank in China is less than 3%. It's below that demarcation line. They think it's a major thing. And what stops that? What stops that trajectory lower? Yeah. Well, Mike, if you look at that you look at the, that average and you, and you look at that chart, we've broken back to the upside from that gravitation to zero from zero interest rate policy for the last, you know, 15 years. And so, um, you know, prior to, to, uh, COVID. So why are rates structurally moving higher? It's not because the economy is doing great. It's because

we're spending so much money out of Washington. And so the, the, we are, we are entering a new structural era and yeah, here's the yeah, you're right. Mike gets it. It is the, it is the record. And, you know, we have 542 days. I mean, so eventually this will break. And eventually, you know, what Dave is talking about is it will happen where we go into a recession. And what happens in a recession, you know, your entitlement spending goes up to 8 to 12 percent and your revenues go down, your tax revenues go down 8% to 12%. So add another 20% to those deficits. And that only exacerbates the issue. And so those rates at the long end go higher, not because the economy is doing well and we expect rates to go up from the Fed to fight that. It's just because there's more risk premium that is attached to owning a longer duration U.S. Treasury.

And that is where we just keep talking about the spiral that we're in. There's no way out of that. This is where we are. I mean, it's just a matter of fact of where we are. I mean, this is just, it's just a matter of fact of where we are and that, you know, to end your show in a nice little bow here, Scott is exactly why I believe that Bitcoin will eventually sooner rather than later become the ultimate risk off asset. And people will recognize that because where else are you going to hide for real? From your lips to Sat satoshi's ears my friend let's hope all right guys that was absolutely awesome show it's amazing the directions these conversations take i did i thought we would talk more about minors and the having and such but you know there's always next week uh so uh i think we can all uh agree that the having is now passed

to mike's point uh the carrot is not being dangled. So we're going to see if we go into the normal, although statistically unimportant, halving cycle where we kind of have that boring few months and then rise. Or if this time it's different because we've already made an all-time high in advance of seeing that halving. Crystal balls are broken. broken so guys we're just gonna have to sit around and talk about it every monday as it happens so amazing for me to be back full schedule of shows i will have my chart charting show this afternoon at 3 30 p.m eastern standard time otherwise from this crew we'll see you all next monday 9 a.m eastern standard time dave mike james as always thank you guys. Thank you. Bye, everyone.