The Wolf Of All Streets - Bitcoin To $140K? MicroStrategy's Bold Play & Crypto-Friendly Treasury Chief! | Macro Monday

Episode Date: November 25, 2024

Noelle Acheson is hosting Macro Monday! Join Dave Weisberger, Mike McGlone, and today’s special guest - Larry Lepard, as we break down what's happening in macro and crypto! Subscribe to Noelle's Crypto Is Macro newsletter now: https://www.cryptoismacro.com/ Noelle Acheson: https://x.com/NoelleInMadrid Dave Weisberger: https://twitter.com/daveweisberger1  Mike McGlone: https://twitter.com/mikemcglone11  Larry Lepard: https://x.com/LawrenceLepard ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► The Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://thearchpublic.com/  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code '10OFF' for a 10% discount. 👉https://tradingalpha.io/?via=scottmelker  Follow Scott Melker: Twitter: https://x.com/scottmelker Web: https://www.thewolfofallstreets.com/ 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.

Hello everyone and welcome to Wall Street's Macro Monday. The really awake among you will have noticed that I am not Scott Melker. He is stuck in Bahamas, the poor guy, but without internet. So I am stepping in. I have not prepared for this, but mercifully I'm joined by three very talented individuals who need no preparation. They'll be able to guide the conversation to very interesting places. You know the crowd already, but we are joined today by Lawrence Leppard. Lawrence, thank you so much for joining us. Thanks for having me on the show. I appreciate it. I'm really excited about this.

Hi, Dave. Hi, Mike. How are you doing? Hello. Anything interesting going on in the world? I mean, anything happening? It is fascinating how the flow of news regarding market activity has just taken off over the past few weeks. I was talking with someone earlier this morning

about how we kind of miss focusing on stablecoin growth and CBDC because Bitcoin did really not very much for a big chunk of this year. But now there's so much to talk about. The change is happening at whiplash speed. And I'm going to ask each of you what you think the really big deal driving prices today is. And Lawrence, you're new here. Let's start with you. Okay. Well, I think there's a growing awareness that we really are in a sovereign currency crisis, that the debt problem is unsolvable.

And you can see it in the charts. The two most important charts, I think, in the world are the comparison of gold to the long bond, U.S. long bond, and the comparison of Bitcoin to the U.S. long bond. I just did a presentation in New Orleans, which you can find on my Twitter feed. And I show that chart and basically gold and Bitcoin are crushing the long bond and are becoming the new long-term stores of value. And that's because fiscal dominance and the US federal government is just totally out of control.

And so to me, that's kind of the story. Um, you know, I just, I awakened to find that sailors bought another 55,000 Bitcoin. It's a, the guy's a maniac. And, uh, uh, you know, to me it's, it's pretty simple. Um, you know, obviously Trump coming along, uh, and the, the Doge committee, they will try to cut expenses. A point I also made in my presentation is 80% of the expenses are pretty well locked in. There's only a 20% piece they can go attack unless they want to attack Medicare, Social Security, interest, or defense. So, you know, the notion that we're going to take $2 trillion out of the budget and balance the budget,

that's a fantasy. Yeah, I totally agree. That's kind of the big picture as I see it. Yeah, I totally agree and very well put. But even 20% is something that would boost expectations of U.S. economic growth, perhaps, which would be not only good for investments in the emerging industries, but also the dollar. Dave, what's your take?

Well, I mean, I'm a little bit more optimistic, but not a lot. I think that they're doing it the right way insofar as Vivek has been studying this for two years, understanding how to go about it. I think that the world, most of the economists are dramatically underestimating how much productivity is being held back by excessive regulation. I really do. I think we in the crypto industry see this extremely well, because if you look at the way crypto has evolved without regulation, compare it to traditional markets, you see some extraordinary differences. So with crypto, you get immediate liquidity. When there are traditional markets, you see some extraordinary differences. So with crypto, you get immediate liquidity. When there are traditional markets, it's millions of dollars and probably benchmark

it over a year from the time someone wants to raise money before they can raise money from the public and get liquidity. Meanwhile, all of that excess frictional cost to the issuer is made by enormous amounts of money made from VCs to PE to investment banks, et cetera. That's a very big deal. Crypto is figuring out how to reward open source developers as well as users of networks and products. And that's another force multiplier. And we've seen it. And we saw exactly what you would expect, which is dramatic growth in industries throughout Asia and other places in the US languishing because US regulatory structure said you can't do that. Not you can't do that because we want to protect investors, because frankly, they didn't protect investors.

We saw FTX Voyager, etc. all happen onS. watch. What we saw was when you try to protect investors, you actually hurt them. And we now have very, very specific examples and an administration that's extremely biased towards understanding these facts. And we could go into that so i do think that i'm a little bit more optimistic because i think that hyper growth in the era of ai and what's going on in terms of of our industry is possible but i mean it there's an the likelihood of money printing stopping anytime soon is nil i mean literally so we're going to see uh more currency debasement. We have an administration that's want to see financial inflation and hopefully something to offset the consumer inflation that the tariffs and other things they want to do will cause. So it's a situation, it's almost a perfect storm for most of the value

propositions that are real throughout crypto. Note, I'm not saying that means anything for your favorite dog or cat meme. I'm talking about things that actually create value, but that's important. And as far as Bitcoin is concerned, look, I think we've reached escape velocity. I mean, Bitcoin's done what it's done with the Treasury Secretary, who borderline hates it, with the head of the Senate Finance Committee basically parading out Jamie Dimon saying, you know, ban it. And now we have a Treasury Secretary who says embrace it. And the SEC will embrace it. And a president who has basically said embrace it. And people are saying, well, why hasn't he done a strategic reserve? A, he's not president yet. And B, traders are smart. Traders, you know, Saylor just told us he bought 55,000 Bitcoin. Cool. We know his policy. We have no idea what the U.S. federal government's going to do. But I strongly suspect that you're going to hear very little, except for out of the Senate with the Lummis bill, maybe. But you're going to hear very little from the administration. And one day we're going to wake up and it the lummis bill maybe but you're going to hear very little for the administration and one day we're going to wake up and it's going to leak out

or they're going to say well you know we've established we bought two percent of the bitcoin in the market you'll only know the price has been gently going up you won't know who's buying it because why would they tell anyone to let them front be front run the traders aren't that dumb so you know everyone thinks that there's going to be this light switch moment in the next few weeks it's going to do that no that's not going to happen what you're going to see is in the first quarter my suspicion is by executive order you may very well see the u.s government buying it you won't know what's happening any more than we knew when the u.s government the quote plunge protection team was buying S&P futures, or which bonds were being bought as part of QE.

We really didn't know because they're not dumb. I mean, they may be reckless at times, but they're not dumb. I have a question. As a European, would they be under an obligation to tell us if they are using public funds to do so or converting the gold certificates? This is the original idea? No. Look, we've known since the crash of 87.

Mike is old enough, and Larry, I don't know if you were involved. I was around, yeah. I was short. We know from the crash of 87 that they established what has been colloquially called in the industry the plunge protection team. There's actually a fancier name for it. But the fact is, is they gave themselves emergency authorization to intervene in financial markets. Full stop.

There has been, and as a result, every time there's been a major issue in the market since then, including in the financial crisis, there were always conversations. This predated QE. Conversations about, oh about, oh, the US government is buying it, they're not going to let it go down any further. And so we had these two things going. We had the Fed put where the Fed was going to help people, and we had the plunge protection team. Nobody to this day, unless you've been part of it, knows exactly the scope and the dates and what was bought, other than there have been enough leaks to know that it's actually happening after the fact. So people who think that our government is transparent, I mean, maybe this government will be more transparent, but somehow I'd be surprised.

That's encouraging. Upside. Mike, is there anything in there you disagree with? Are we too confident here? Well, if I agree with it all, I have no value to the conversation. So let's play devil's advocate a little bit. First of all, I'll start with, yeah, I get it. What we just pointed out, no knowns, unstoppable deficit spending. Look at Japan, yields 1.1% in their 10-year note yield. China, actually worse. Their 10-year note yields 2.06%. Ours is 4.3%. So you can say a lot of that's priced in already. You take the top five average, the average 10-year note yields of the top five

countries in the world, which includes in India, outside the US, the average of their 10-year note yields are 100 basis points below the US. So yeah, unstoppable deficit spending. There's one key prerequisite here. We have to remember the last two years, the S&P 500 is up almost a 30 over a year. We just haven't had a normal 10% correction. To put that in context, if or when we do, that's $6 trillion. That's about the money we hear in, and that's in money markets, that's doubled. Market cap is double GDP now. So it's kind of silly for the Fed to think inflation to go down with stock market going up that fast. I think that's the key thing for everything is as long as the stock market keeps going up.

And I point out this morning in our morning meeting, my colleague, my colleague, Gina Martin-Adams, who's been spot on for years, has pointed out some major, major issues with the stock market and frothy and sentiment tilting downward. So overall, I'll point out, I'm a commodities guy. And overall, for commodities, we see severe global deflationary forces, which is normal after you get inflation like that. Like crude oil is down on a year-over-year basis, almost 10%. Iron ore is down about 20%. Gold's the only major commodity going up about 30%. And the number one that matters is copper. It's up about 7%. It looks like it's just starting to trickle down or trickle down. And let's look at for a month basis, since we had this paradigm shift of President Trump being reelected, which obviously is good for cryptos, the Hang Seng Index is down 5%. That has to go up.

Chinese are actually buying it through ETFs, like Japan's been doing for years. It has to go up, but it's not. Bond yields are declining. So on a global basis, commodities, I see deflation. And there's one simple little thing that will tilt that over to severe deflation is just a normal 10% correction in the US stock market, and it just doesn't go right back up. So I want to tilt over to, I've been saying for quite a while, there's an inordinate burden. US stock market has to go up to keep this whole world elevated. Yet we see China's already in deflation. Europe's tilting there. And now they're going to face major restraint from their major export source, the U.S. So they're going to

be tariffs, just a question of time. And then I have to tilt over the Bitcoin. And the Bitcoin has reached a pretty good threshold around 100 grand. The question is, how long is it going to last? Is it just going to blow through it? now that everybody is so bullish just those lessons you learned from benjamin disraeli what we anticipate seldom occurs let's just be careful at these levels the markets are so lofty and expectations are so bullish and i mean what dave said about oh the government's going to buy bitcoin that's just silly first of all where's the money going to come from and we're going to go into more deficit spending to buy Bitcoin. And then the risk reward of that is just kind of silly at the moment.

The first thing you do when you're sovereign wealth fund, you have revenue like most countries that have a lot of oil revenue. And we don't right now. We have to get that solved first. It looks like they're going to try to work on that, but we'll see how that plays out. There's so many threads I want to pull on there. I want to come back to tariffs. But before I dive into the strategic Bitcoin reserve, because there's some nuances there, what do you think, Mike, would trigger such a stock market correction? Oh, high prices. We're already there. It's what has always happened, the 87 crash. What happened? First of all, they crashed after options expired on Friday. And market was just up too much. It was just a normal version. That year, the S&P 500 was up 2%. It was a nothing year. It just went up too much.

Now we're at the stage now, which is usually how it happens. We're such excessive animal spirits. We're two times GDP. We're the highest ever versus the rest of the world, the US. There's so many different things we can point to. I like to point out just a simple measure versus 100-week moving average. It's 25 percent above that level. It always goes back there. It's just a question of when and how you manage your money in between. And when it gets this expensive, you're supposed to look for alternatives. Bitcoin's been a tremendous alternative, certainly since Trump flipped in July at the Bitcoin thing in, I think it was Nashville. That's been significant. But now it's about, typically it just takes, first of all, now we also had a point, we have a point where we're up so much,

we have to expect some normal asset rebalancing back towards bonds a little, because bonds are, on many scales, relatively globally, US bonds are very underpriced, as Lawrence mentioned, certainly versus gold bonds are very much underpriced. But then it's a question where we go from there. So the key thing is we have so much lofty expectations from this new president. Firstly, he's going to end the war in Ukraine in a day.

We're going to have a strategic bulge from Bitcoin Reserve. Great economy, animal spirits, released regulation. I get all that, but to some extent, a lot of it's priced in. Interesting. And I totally get, I was doing some research the other day on the valuations, on price book, price sales, and on the CAPE ratio, we are back at 2,000 levels, which has got to be sending some kind of signal. Of course, this time could be different. And now let's go over to some of the policies that the incoming administration have been talking about, such as the strategic Bitcoin reserve. Lawrence, what is your take on that? I think we know what Dave's and Mike's takes are. What's your take? Yeah. So I don't know if he'll be able to get it through. As you know, Senator Lummis has introduced a bill and, you know, they have the Republican House,

Republican Senate. So, but, you know, the other side has a filibuster and, you know, it's a little unclear where the authority lies, whether it actually is a legislative matter or it's just a treasury matter. I mean, if you'll recall in the 30s, Roosevelt just kind of unilaterally grabbed the gold and repriced it. So one could argue that it's, you know, that you don't even need legislation to do it. Although it'd be a pretty ballsy move to do it without, without getting the legislation through. And I don't know how to handicap, but I think Polymarket has a, you know, 40% chance of it happening. You know, to your point, Mike,

where would the money come from? I mean, that's no problem. You just print it. They're already printing plenty anyway. Okay. You know, I mean, why not turn the U.S. government into, you know, into micro strategy, right? We print money, we buy Bitcoin. You know, obviously that will hast who will recognize that and therefore probably at a congressional Senate level, the odds of it being, I don't rate it as super high odds of getting through. I guess that's my take. I'd be less than polymarket in terms of percentage chance that they do it. It would be a very intelligent thing to do, although arguably in the Bitcoin community, I will mention there's kind of a split. There are the people who, you know, actually want to see the currency fail so that the government fails,

so that we go to a more decentralized system. And I was accused by Peter Schiff this weekend of being a statist for wanting the U.S. government to buy Bitcoin and strengthen the government. So there are two sides of that Bitcoin thing. I see Dave raising his finger. So Dave, why don't you weigh in on that? I mean, Peter reminds me of Abe Simpson from The Simpsons, you know, old man, cloud. You know, I've been reading his missives for over a decade. And most of what he talks about in terms of with respect to gold and with respect to

government deficits and inflation, I actually am very sympathetic to him. I agree with him. He literally got a bug up his ass that something virtual can't have value. And everything he says about Bitcoin has to do with the bug that's up his ass. And it makes no sense. He actually posted something this morning that was so unbelievably dumb that if he were a high school economics class, you would say, what the hell are you doing? He literally wrote the U.S. government shouldn't pick winners and losers. So since they're now picking Bitcoin, that means it's guaranteed to be a loser, ignoring the fact that they picked Bitcoin to be a loser for the last four years by effectively being openly hostile to Bitcoin and crypto, which means if he were right, that the reversion alone would be the next big leg of the rally. But take Peter's stupidity and push it off to the side. And by the way, you could tell him

I would happily debate him anytime, anywhere and have actually tried to get him engaged. It's pointless. I've done it. It's a brick wall. I mean, I was on a panel with him. It all boils down to, in debate, we used to have an expression. It's a Latin word called stasis. The actual core of Peter's reasoning is that Bitcoin can't have value because it's not real. That's it. And once you get- Well, he has two arguments, really, as I understand it. One, if it's not physical, it can't be money, which is wrong. Money has always been a ledger.

The second argument is that Bitcoin is infinitely repeatable because anyone can create a cryptocurrency. Right. Which is important. That's like saying Google is infinitely repeatable because anyone can create a start engine. Google is more repeatable. Open AI may eat google's lunch you know are you going to get a decentralized protocol that gains critical mass without a control from a vc or this or that or you know it's like the problem the thing about bitcoin i often make the joke that that for those

you know that that you know satoshi nakamoto is the modern age is harry selden for those who have read foundation yeah you know predicting the hordes of what's going to happen look we don't Nakamoto is the modern age's Harry Seldon, for those who have read Foundation, predicting the hordes of what's going to happen. Look, we don't know who or it is, if in fact it is a single person. I tend to think it's more of a group of people, but whatever. We'll see. In any case, to get back to the argument, the thing about a Bitcoin reserve is there's two things. There's an official reserve and there's unofficial reserves. If you buy an asset that goes up in value, that strengthens your balance sheet, that is supportive of the currency that your balance sheet is denominated in.

Think about that for a second. So if you're a good trader, if you go in and you, you know, force, you telegraph that you're going to buy Bitcoin in a strategic reserve. And before you buy it, the price ends up at $250,000. You buy it and you push it from 250 to 260. And then you get inevitable correction down to 150 or 120 or whatever the hell it's going to correct to. Now, all of a sudden, the US government looks like their balance sheet looks like absolute ass. And that would just be a dumb thing to do. So, yes, I agree with you. They're not going to do it that stupidly. If, on the other hand, you quietly accumulated as a treasury asset as part of your normal operations, you don't let people know,

you buy your first year or two's worth, you have it sitting on the balance sheet slowly as the market hasn't gotten any news. And then you announce it and the market says, oh, my God. And every other sovereign fund and all the other people in the world decide to play catch up. And so your average purchase price is somewhere around 120 and it goes to 250 at that point. Well, that's a totally different method. Now you've made a ton of money on your balance sheet. You know, U.S. government has the priority position. They are, for those, I'm going to

mention a name that you guys are going to both laugh at. Remember Dan Dorfman? He was our introduction to legal front running, and then they decided it was illegal. Dan, for those who don't know, in the 80s, used to tout stocks on what was the precursor to CNBC and was fairly famous and then got in deep doo-doo for buying some of those stocks before he touted them and they went up. Of course, he made money doing it. Imagine if Kramer these days said what he was going to buy before he bought it, but it actually sold before he bought the inverse Kramer effect, et cetera. Imagine how much money you can make. I mean, I'm joking about that, but the US government could do that. And I strongly suspect they will do that because it is a logical

thing to do, given the fact that they do buy assets in the treasury. They do buy assets in the Federal Reserve and we'll see where it comes from. But anyway, that's just my conspiracy theory. Honestly, my Bitcoin bull case has nothing to do with the US government necessarily announcing a strategic reserve. I believe that people are going to see Bitcoin for what it is. And game theory says you don't need a whole lot, whether it's state governments putting on their balance sheet, whether it's other sovereigns, whether it's corporates, basically any major, any large one. We talk about Saylor. Relative to the global economy, MicroStrategy is tiny, relatively speaking. Well, there's a great chart also in my presentation. Bitcoin right now at $2 trillion market value, it's 0.2% of global financial assets, if you include real

estate. Take real estate out and it's 0.4, because real estate's about half. But if you consider the wealth, investing wealth, which is defined as cash, stocks, bonds, and real estate, and gold. And gold's only $16 trillion. So Bitcoin's two. So bitcoin could go up 8x from where it is right now just to equal the size of gold which doesn't seem incredible or impossible to me especially given the financial engineering that we're seeing from the likes of sailor and others are also experimenting it's really what he's what he's doing and what he's developed is really kind of amazing. He's got a flywheel. Here for the innovation. But speaking of the government being intelligent, as Dave likes to say, let's move on to some of their picks,

especially, most notably, the recent one of choosing Scott Besant as Treasury Secretary. Mike, I'd like to get your take on that. Is that bullish for the economy? And what's your take on the potential impact on Bitcoin? Well, I will just mention, just look at today for now. It's number one, a relief. We're seeing the relief rally. Most notable, this drop in 10 year note yields, almost 15 base points down to 4.29. Plunging gold because it's less safe. But what happened this weekend about the announcement, I want to hear what Dave has to say.

Look, I love the pick for so many reasons. I love the pick because of demonstrated competence. I love the pick because of what he talks about, a Treasury Secretary that's actually aligned with the philosophy of limited government, getting regulations out of the way, understanding the interplay between export and import economies, understanding what it means. I mean, you just listen to the man and he makes a lot of sense. And he understands there's tradeoffs involved, right? We can talk about tariff trade-offs and other things, but at his core, he also understands the value proposition of where, of Bitcoin. He understands how supporting US dollar-based stable coins is

incredibly supportive of the economy. You know, while he's not a dollar hawk per se, I mean, you know, people are saying, oh, he wants wants dollar weakness that's actually not what he said what he's talking about is overall equalizing the competitive you know competitive production in the world which is not the same thing right and so i'm very happy about that i also could be to be blunt uh i'm happy because I hate identity politics. We all know that. But I'm so tired of listening to certain people calling Trump a fascist and a bigot. So when you look at his picks, which have the highest percentage of women, the first openly gay senior cabinet position, you know, being filled, I personally think that's a very good thing to at least shut up some of the absolute stupidity that's been leveled against him. So I do like it for that reason. But to be

blunt, it's because of his confidence of what he's saying. That's the way I look at it. Any potential impact on tariff policy? Well, of course, the whole, Mike had said this many times. I mean, the entire administration is aligned to fix what they consider to be the hollowing out of the American middle class, the American ability to produce. And I personally think that what they're actually trying to do and what the bluster is going to be, it'll be something different. But I think that a large part of it is about equalizing policies. And what I mean by that is it is much more expensive to produce in the United States because we do things like don't allow child labor. We do things like protecting workers.

We do things like saying you can't dump your toxic waste next door. You know, some people do it and get in trouble for it, but you can't do it. None of those things exist in a lot of other countries and countries who do allow those things to exist. The only way we can influence that policy is by placing tariffs on them. And it's impossible for me to look at the world and say that if we have those standards, we shouldn't want them to be global and we shouldn't try to equalize. A large part of what's going on with tariffs, it's not what the bluster is, but it is a large part of what's actually happening. Lawrence, what do you think this could do to rate expectations in the U.S.? Well, it's unclear. Like Dave, I applaud the choice.

You know, he's an intelligent adult in the room. And, you know, one of the other choices was a former bond salesman. And even though that guy was a big supporter of Bitcoin, you know, this is I mean, this is brain surgery. I mean, the U.S. I mean, the US financial condition is really in deep shit. And so it's going to take somebody who's really smart to figure out how to play these cards correctly. And therefore, I'm in favor of this guy doing it. I, you know, I don't know where he stands on the dollar. I know he's a gold bull. And I think he fully understands the fiscal dominance problem that we have. And I think he's very aware of Triffin's dilemma. So all of those, you know, that level of knowledge, I mean, think

about, compare that to Yellen as an example, our existing treasury secretary. I mean, you're just talking a different order of magnitude of skill here. Now, how to play these cards, it's going to be tricky. You know, Luke Groman has said they should devalue the dollar and do a reset very, very early on, take the pain kind of the way a company would take the pain, you know, have the bad quarter right up front because the voters are going to weigh in again in two years, and then they're going to weigh in on J.D. Vance in four years. And so if there's pain that's coming, you might as well take it sooner so that things start getting better by the time the voters weigh in again. Like Mike mentioned earlier, I think the big elephant in the room, I think the stock market

is an unbelievable bubble. And I think it's right on the cusp of breaking. And it wouldn't surprise me at all if actually some of the parties involved have incentive to make it break, to make Trump look bad. And so I think one of the things Trump's incentive to make it break, to make Trump look bad. And so I think one of the things Trump's going to have to do is he's going to have to very specifically message that whatever happens in the first six months, that's all on the prior administration, not him. Because couldn't you see, you know, we get these hotter inflation prints. Couldn't you see Powell starting to increase rates or stop decreasing them and talking tough and maybe go back to a rate increase? I mean, what would that do to the stock market right now? I mean, right? Think about it. It would be devastating. I got to piggyback on that a little bit because I think you're spot on, Larry, with

with think of history, looking at this from the future, human nature, you're Trump, it's a historic re-election, you have a pretty much a mandate, significant mandate, and we all know things, I remember complaining with clients and being on a trading hedge fund decades ago, and it's like, you know, this trade deficit thing, but the rest of the world wants free trade as long as they can have a surplus of the U.S., it's got to stop at some point. We just hit the kibosh on it. And I think having read that book, No Free Trade by Robert Lighthizer, if I'm this group, get the pain over right away. Think worry about it two years from now. But I would say right away, start out 10 percent tariffs across the board, 60 percent in China. Oh, by the way, then we'll start negotiating. That's a key point that Robert

Lighthizer made. And every time they went to these meetings, the other people who had all, countries had all these surpluses with stuff they had the upper hand. I think start out with, here's what it's going to be. Come up with your solution. And I think, exactly. So it's about $1 trillion a year, which on a global GDP basis is not a lot. It's like 1%. But for the US, it's basically 10% of our economy that we're transferring wealth to the rest of the country. But look at China and Europe. It's almost 20% of their economies that they need to export, most notably to the US. And he said it, get it over with, and why wait? Yeah. And then the weaker dollar certainly would help exports from Europe and many other economies.

But Mike, let's say they're thinking along the same lines that you are, well, that we all are really here. And we do get the pain brought forward and we do have an almighty correction in the stock market before the inauguration even.

What does that do to crypto? Well, that's a big test. I've been talking about it forever. Dave loves messing with me for that, rightly so. I just, we haven't seen that big test. Now, we've had one almost 10% correction this year. I think Bitcoin dropped 30%. Now, obviously, that was before we had the paradigm shift of the crypto president. And credit to Mr. Trump. Remember five, six years ago, cryptos were a scam,

and now he's completely flipped. I got to give him credit for becoming the nose out like a convert. He's converted, and it's taken a lot of other people, but that's, to me, it's the number one thing is we can only ride this bubble for so long and everybody knows it always is different this time, but there's alternatives. And that's why let's just get that 10% out of the way. And then 10% used to happen, which again, I point out is a massive part of the global economy because we're two times GDP, the most in 100 years, and see what happens. And then you reassess. But until then, I'm still thinking the next big trade, I've been wrong, still might be U.S. Treasury long bonds. Because if we get that correction in stock market and it just stays down for a couple of years, that's severe deflation.

Just because of that wealth effect now is the most ever. I mean, there's no comparison even to 1929. It's the most ever the wealth effect from equities and housing and the wealth that we have and just the boomers, but the stock market alone. So to me, that's the big sore thumb. I think initially, obviously, we all know that probably be a pressure factor on Bitcoin, but it might give it be what would be the more likely asset to buy in the dip. Probably Bitcoin. Especially given the broadening awareness that we've seen. Let me respond to that. I agree with you. There's probably a long bond trade here, but it's nickels in front of a steamroller. You can't overstay that trade. I think that what happens under a lot of different scenarios is things get messy fast. The bond market has trouble.

The stock market has trouble. The economy has trouble. And then we get into, quote unquote, the big print. And that's where the Fed balance sheet, they change all the policies. I mean, in a way, arguably, this is why I think Powell could theoretically increase rates to trigger a bursting bubble, which would then allow him to do what he really knows he needs to do and wants to do, which is go back to Zerp and QE. And so my model for what happens this year, and it's just a model, is the market breaks, then the bond market breaks, and everything starts going down. We get widespread panic. The big print arrives

and everything goes the other way. But in the interim, as you were asking, Noel, Bitcoin gets hit hard because it's still not a safe haven asset. It's still a risk on liquidity driven NASDAQ proxy asset. And not as hard as it would have in the past, but I mean, hard as in maybe down 20%. And gold gets hit too. Everything gets hit. I mean, let's face it. If we go into a risk-off environment, you know, everyone's going to be scrambling.

And so people sell what they can, not what they always want to. Having said that, I remember March of 20 very clearly. And, you know, when Powell comes back with the Mario Draghi imitation of whatever it takes, this shit's going to the moon. I mean, you know, we're going to on the other side of the big print, you know, Bitcoin is going to a million and gold's going to 10,000, in my opinion, over a few year period. So can I just add one thing to that? One thing that's changed from 20 and certainly the last 30 years we've all traded is we have the lessons of too much liquidity and inflation in the past tense. Now, we saw what happened. We created too much liquidity, created inflation. And I'm worried that I was at a conference crossroads conference last week.

I was on a panel and both my fellow panelists kept saying the same thing. Oh, inflation is a problem. Inflation is a problem. We have to be concerned, careful about what humans do. And that's recent's recently biased. I mean, we're all biased to what happened just the last time they pumped. And they pumped only after markets went down a lot. It was a great opportunity. What happens at some point is, number one thing, what has to be requisite.

You have to have that deflation and risk assets first before you get the pump. Now, obviously, we're creating too much 7% deficit spending. It's a great reason for markets to go up. It's unstoppable. At some point, maybe that might be curtailed with austerity. I doubt it. But typically, what's first is you usually have to have risk assets go down and people complaining, oh, I can't just buy my G.I. Joe with control grip. I love that. that could have an impact, Dave, on the evolution of crypto going forward? Well, I mean, every time you allow people to do what they want to do easier, it's like water. It will seek its own level. In the rest of the world, there have been crypto options on Darabit and OTC and these things called inverse perpetual swaps, which we all kind of understand

that outside the U.S. is 5x the volume of spot. So people like to play on leverage. In the United States, the futures are really an institutional product. Futures are much more expensive to trade than the perpetual swap products. But in the US, what you've seen is even in the S&P, you've seen enormous growth in options volume. And options are a multivariate use cases. There are lots of very interesting things that financially you can do with options that you can't do. That's not just pure, I want to get long on leverage. But a huge percentage of options volume is driven by punters who are just looking to get long or short on leverage. The net result of it is, and you see this with the popularity of something

called zero-day options, which has no use other than speculation, right? So yes, it is likely to attract more leverage to both, which will likely increase volatility. Now, there is a piece of options that will decrease volatility, which are people who are writing calls to get yield and people who are selling puts to time their entry. And yet that becomes a volatility decrease. But the overwhelming pressure that options can create means that when we get FOMO, and we have seen nothing resembling FOMO in this bull run, this is the internal structure of this bull run from, you know, that where we broke the 50 to 70 trading range we had for eight months is incredibly orderly and feels more like climbing a wall of worry to me than FOMO. FOMO, you'll know it when you see it. And when you see it, it will look very different. It will be outside the US. You will see dramatic spikes of in funding rates.

You'll see lots of air pockets, et cetera. And you've seen bits and starts of it but right now despite the fact that bitcoin's rallied you know what you know how you depending on where you pick the time from from 50 000 to 90 000 from 70 whatever whatever you pick you've seen more liquidations as much on the long side during this rally as you have on the short side. That is not what FOMO looks like. FOMO looks like short side liquidations and vertical parabolic blows. We've not seen anything like that. Options allows that to happen in the United States. If you look at the GameStop meme, just remember that. Now, GameStop is obviously smaller than Bitcoin, but it was triggered by lots and lots of retail call buying, which caused the gamma squeeze in GameStop. And we all saw what that did. And in percentage terms, we're talking about what was that 20 times, you know, from the you know, from the where it started gaining critical mass toward the toward where the blow off top was.

We haven't seen anything like that. So the one thing that derivatives can do is when FOMO gets moving, it can cause a low on top. On the other hand, when FOMO stops and you start going the other direction, you're going to see more volatility in that direction too. And so it is definitely a volatility increase as it gets rolled out. Now, remember, it's not fully rolled out right now right now there are limits in terms of how many options people can buy and sell which is limiting its institutional use so be very careful this is just the the the tip of the iceberg what we've seen so far can i just push back on that a little bit david's i think we have to be careful comparing

fomo and bitcoin from two three five years ago to fomo now think we have to be careful comparing FOMO and Bitcoin from two, three, five years ago to FOMO now. Remember, we have massive participation. You talk about options. Options don't get listed until there's different, decent liquidity in the underlying. The futures started listing in 2017. There's so much ARB now in this most widely traded 24-7 asset on the planet that I think we're seeing what's happening and should be happening in Bitcoin is the migration towards volatility that's more similar and more akin to what you see in gold and the S&P 500. Right now, it's still three times the volatility typically. So to me, this was pretty extreme for them. Well, it's certainly in my space, it's the questions,

particularly from the media. I mean, every other was just all the questions. Now, I remember like 2017, man, no one really cared. Most people are in the space. And I remember listening to podcasts and you're talking about islands in the Bahamas. I'm buying islands. I'm like, OK, that's extreme. To me, that's the key thing, though. This is anytime we talk about listed options as an X option trader and you all been to,

this is just adding more liquidity adding more anticipations and it's going to be squashing their value making more difficult for those 10 x's in five years at least allowing more sophistication of price expectations and uh the expression of your of where you think this is going i did uh i was thinking of some numbers this morning turns out that today 70 over 70 of bitcoin addresses hold bitcoin have held bitcoin for at least a year and this could have some kind of impact i don't know about the number of btc in these addresses but this could have some kind of impact and to the downside should or slash when the markets turn as you were saying like now i do want to bring up t. We can't not talk about Tether and the relationship with Cantor Fitzgerald, who is led by the United States New Commerce Secretary, should that get approved. Dave, I know you like your conspiracy theories here. What do you think this means for the outlook for stablecoin use in the US and Tether more specifically. I did notice that since the election, the Tether market cap has gone up by something like $9 trillion. Obviously, this is for crypto trading

purposes, but still significant. Well, Tether's market cap and the best academic studies in this show it lags. It's not the cause of crypto going up. It's the lag. Basically, when Tether's been in a premium like it is right now, it's at a three basis point premium to the dollar. It's basically indicative of people who are using Tether to buy coins, whether it's Bitcoin or altcoins. It's just general buying pressure because it's dramatically easier. Many more pairs trade against Tether worldwide than they trade against the dollar. And the crypto market is fully global. So it's just Tether is a proxy for demand for trading, typically on the buy side, but not exclusively because you use Tether as collateral to trade derivatives, perpetual swaps on a lot of exchanges as well. So that's why you see that. So people talk about, oh, the Coinbase premium. It's not true. The fact that that Bitcoin dollar and versus Bitcoin

tether when the Bitcoin dollar is at a premium, it's because generally when tether is at a premium. And in fact, that's what you're seeing right now. But what this does do for me, my libertarian hat. I think that what you're seeing is a quick race to get policy that will allow for stablecoins not necessarily required to be run by the banking industry and not a CBDC. I think that this move is very constructive for that. And having private competing stable coins that are defined as fully asset-backed is important. And I've always hated the idea that people could call something a stable coin and not be fully backed at the same time as ones that are.

And I think that what you're seeing with Tether is, look, it's the 800-pound gorilla. It's one of the larger trades. As a private company, I think it may be the largest private holder of U.S. treasuries. And I think that it's going to be more legitimized. I mean, if I remember the rules, I think that Howard either has to put all of his assets in trust or sell them. But I don't know what the exact rule is for someone who has that much value. But Cantor Fitzgerald is a partner to Tether. And I think that having him there legitimizes it. And that's to me, that's a good thing. Whether or not, you know, the individual, which individual stable coins will win, it doesn't matter. Mike on this show has been saying it's

something that he and I agree with completely for years, which is if you want the US dollar to be dominant in the emerging digital economy, then we want to encourage what Michael's crypto dollars, whether it's Tether or something else. And I think that that's absolutely true. And I think that this leadership team gets that. So what stops? We've seen the Eurodollar. I remember I was in the trading pits in Chicago.

I started in the 80s. And the number one trading pit was the bond futures, the Chicago Board of Trading. And then the euro dollars stole our thunder. What's going to stop from crypto dollars being traded in futures and dribs? And I see the volume on Tether right now is $154 billion versus Bitcoin, $55 billion. It's mad. Bitcoin's only a third of them. It's not even near the most widely traded.

So this is a key thing. I'm finally delighted to see Mr. Trump figure out. And the Biden administration was way far behind. And this technology is overwhelming. It's overwhelmingly adopted the dollar. And if you're American, probably not smart to push back on it. But the key thing is, what's next? It's tokenization of the dollars, gives us crypto dollars.

How about tokenization, I heard from other other people, treasuries and other assets? Which we're already seeing a lot of and is occasionally being used as something that looks suspiciously like money. So there's the chance that this is going to change the definition of money. And Lawrence, what's your take? Do you think we will have Tether legally trading in the United States within the next year or so? Or do you think it is going to be dominated by the banks? You're muted. Sorry about that. Yes, I do. They want Tether to succeed. I mean, Tether buys a boatload of

the treasury securities, and they've got a lot of securities to sell. So, you know, I think it's as simple as that. They're going to find a way. You know, USDT, I think they probably prefer, there was a time when Caitlin was saying that they were trying to, you know, they had some things that were kind of the kill tether move and so forth. I mean, you know, it is, I mean, tether is still a little difficult to deal with the fact that they're offshore and not as transparent as we would like. But in general, I agree with both these guys. We need these stable coins to to make to make the crypto universe more universally applicable in lots of industries. So and it turns out these guys actually buy a lot of treasury bills.

The numbers now are small in the total scheme of things, but flex the Bitcoin price up a lot and the numbers aren't going to be so small anymore. And that doesn't even take into account all the other prices that can also push demand for stable coins. Well, that's right. That's right. I mean, I'm a maxi, so I don't tend to put much credit or value on all the other coins. I really think Bitcoin is really kind of the only one that matters, but that's just me. So come on, Larry, what do you think, a couple of years, how the future going to view things like Dogecoin and Shiba Inu? It'll be like pets.com, right? I mean, that's really what we got going on here. I mean, this is the everything bubble and, you know, the remnants of it in many, many places.

I mean, you've got it in the PE world. I mean, some of these PE guys are starting to take huge markdowns. You've got it in the commercial real estate world. I mean, there's been so much capital misallocated as a result of Zerp and QE and the crazy world we live in. I mean, the three of us are old enough to remember what a bear market is. Yeah. Right.

I mean, I guess that probably half of your listeners, yeah, I should say the four of us, although, Noelle, you look younger than the rest of us. Oh, thank you, sweetheart. I would say that half your listeners probably have never seen a bear market. I mean, if you weren't here before 08, you haven't seen one.

So, you know, and I'm here to say that they occur. And, you know, go look at Hussman's work. I mean, the overvaluation in the stock market and the sentiment, the positive sentiment in the stock market is just off the charts. Bob Prechter had some great charts down at the New Orleans Investment Conference on this, and it's just stunning. I mean, and so, you know, there's a reason why Warren Buffett has as much cash as he has. I mean, this ends badly in my view. Can I piggyback on that a little, Larry? Some of the misnomers you hear in the business, how high cash rates are.

They sell almost $7 trillion in money markets. That's very low, actually. If you compare that number, people point this number all the time, compared to market cap of the s&p 500 or market cap of the u.s stock market which was 65 trillion for a little while it's coming back it's what 11 percent or so before the financial crisis was closer to 15 so on a market cap basis when people talk about like high cash rates they're near the lowest level ever it just that's how high market capitalization stock market is exactly and liquidity is not exactly a problem. Financial conditions are looser than before the hiking cycle started. Well, let's get this point out that we know we've seen what's happened.

We all you know, we've seen the Fed cut 75 base points. Great. But bond yields have gone up 75 base points. Mortgage rates have gone up about 70 points. I mean, some of us old treasure guys know that is not a good sign. It's basically telling the Fed. I mean, obviously, we had Treasurer guys know that is not a good sign. It's basically telling the Fed. I mean, obviously, we had an election, but it doesn't matter. The market's telling the Fed, stop now. It's not working. So what does that mean?

What's going to take them to cut rates? Typically, it means risk assets to go down and reduce that inflation and give them a reason, okay, now we have to start cutting, really cutting. Yeah. Now, we've only got a few minutes left. Unfortunately, I could talk to you guys all day. Let's start wrapping up with what we think the market just might be overlooking

either on the downside or the upside. Dave, you want to take this first? Yeah. I'm watching today and I'm kind of laughing because you're watching the stock market up a little bit. The Dow's up a little bit more but it's up about half a percent at the same time, gold getting absolutely hammered, you know, down 2.7% today and Bitcoin down about 1.7% today. So everyone talks about correlations.

Here's yet another day. Dave, just, Bitcoin's down about 3% if you mark gold on Friday. From gold on, Bitcoin. Yeah. So we can't say Bitcoin on one day. It's from Friday. So Bitcoin, the gold measure is from Friday. It's 2.8%. The Bitcoin measurement from Friday is 3.3%. Well, my point is yet another day where Bitcoin is correlated to gold and not to quote risk assets. And the proximate cause people will say it has something to do with Israel and Lebanon and Hezbollah, you know, kind of, you know, whispering about a peace deal. And maybe that's true and that's good. None of that has a damn thing to do with the meta trend that Larry pointed out or Lawrence.

Lawrence, do you like Larry or Lawrence? Larry's fine. Whichever. And so, look, I think that we're going to hang out here. You also over the over the weekend, we see Ethereum outperforming Bitcoin for the first time in a while. Does that mean anything? Honestly, no. When Bitcoin markets get to a place and they kind of swing around, you know, I always thought this week was going to be dangerous from the crypto perspective.

You know, Thanksgivings have had a rather checkered history with Bitcoin. I can remember having more than one holiday interrupted because the company that at the time I was running and very, very involved in the operations is 24-7, 365. And we've had some really interesting Thanksgivings. And you don't have institutional buying. So it's going to be much easier to push markets around this week. I think then we come back from Thanksgiving and the real fun starts. So I don't know what will happen between now and next Monday,

but I wouldn't be surprised to see a fair amount of volatility over the next week. It certainly is astonishing the difference in the mood now to Thanksgiving two years ago, which was in the aftermath of the FTX collapse, and things were pretty bleak. Mike, what do you think we're overlooking? This is a little contrarian, and I have to point out, I do think the next big trade will be U.S. Treasury long bonds, just kind of catching up the rest of the world. It might be just a trade. It might be more of a position. We'll see.

And it's going to be all predicated on just a little bit of normal reversion in the very stretched U.S. equity market. Now, the reason I have that view is because it's already happened in commodities, severe deflationary forces, which is normal after big spikes. And the next key commodity to really watch to see if I'm right or not is see if copper can break below $4 or if it can sustain above $5. The real risk is it breaks below $4. The macro undercurrents. Lawrence, our special guest, let's wrap up with you. What stories do you think we're looking? Daniel DiMartino Booth. I would say, guys, watch the employment market. There was a very obscure employment report that came out last week that

she identified that will be more fully amplified this week that shows that they're going to revise the employment numbers down like 1,050,000.'s gonna it's gonna shock the world she said from what she's hearing she used to be at the fed that she thinks there are people down at the fed with their hair on fire because because that's just to them you know a real the economy is slowing down i asked her i said is there any chance powell does not cut in december and she said absolutely no way you know there's a chance to go 50 basis points, which shocked me. I mean, we all know they should be raising rates given the way the markets are performing. But take a look at, keep your eyes on this employment number coming

out this week. There might be a surprise there. Interesting and disconcerting as well. With that, we have to wrap up. It's been absolutely amazing talking to the three of you. Thank you very much. We've done a pretty good macro walkthrough. We've had a sprinkling of conspiracy theories, as we know you all expect. And we've also had just some disagreement, perhaps not as much as on other shows, because things do seem to be heading

in the same direction, but looking a bit further ahead, there's a difference of opinion of where both markets and the reaction of crypto could, and the reaction of crypto to that could go. Thank you, the three of you, so much for being here. My attempt to fill Scott's shoes, there are huge shoes to fill.

I hope it hasn't been too disappointing for all of you. I do regret not having Scott's DJ talent with switching screens around to illustrate the points that we're making. His talent is special on that. It's been fun. I hope to talk to you all again soon. Thanks so much, everyone, for watching. Thank you, Noelle. Thanks, Noelle. Thanks, Noelle.