The Wolf Of All Streets - How To Protect Your Funds During Wars & Conflicts

Episode Date: October 19, 2023

Bob Elliott, CIO at Unlimited Funds, will share his experience on how to protect your portfolio during conflicts and wars. As always on Thursdays, Dan from The Chart Guys will offer his technical analysis of the markets.  Bob Elliott: https://twitter.com/BobEUnlimited The Chart Guys: https://www.youtube.com/channel/UCnqZ2hx679DqRi6khRUNw2g  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉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  ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►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   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  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 #Trading 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.

Most investors are totally unprepared for war and conflict, even for recession and potential depression. Now, I'm not trying to be hyperbolic. You know, we don't do that here. I'm not going to play geopolitics and pretend that I know what's coming with the war in the Middle East, whether that will escalate or not. But there are some very valuable lessons to consider if that does happen based on what has happened in the past. I have an expert to discuss this exact topic, Bob Elliott. And of course, we've got Dan from Chart Guys at the end to share some technical analysis, thoughts on what is currently happening in the market. This is going to be a great stream, guys. You don't want to miss it. Let's go what is up everybody i'm scott melker also known as the wolf of all streets before we

get started please subscribe to the channel and gently caress the like button do whatever you want with the like button, guys. You don't even have to touch it. It's really up to you. I don't judge anyone's preferences for touching the like button. Anyways, as I said at the beginning, there are a lot of misconceptions or bad ideas about how investors should be positioned during a recession, depression, war, conflict. And the fact is that the way that we're told by our investment advisors generally only works during peacetime. Now, we've seen things like the 60-40 portfolio already perform the worst it ever has in history without even having a war or a conflict to be concerned with. So what would happen to that classic 60-40 construction in a situation where we actually have a war like this escalate? Again, I've got Bob Elliott. I'm

going to bring him on right now. Bob, how are you today? Hey, how's it going? Thanks for having me on, Scott. Going great, of course. So listen, we'll dive right in. You wrote an amazing thread that I've read like 12 times because it aligns so well with some of the things that I was talking about even here on the channel before I read it from other research. But here's what you said, right? And we're just going to kind of walk through this, I think, as the best way to educate people here on this idea. Most investment portfolios are totally unprepared for war. In times of conflict, inflation rises, golden commodities outperform, while stocks, bonds, and cash underperform. A typical portfolio of 60-40 plus cash is the worst portfolio, particularly on a

real return basis thread. First, let's talk about the 60-40 portfolio. That's obviously 60% equities, 40% bonds. The classic idea there is that during times when stocks suffer, your bonds basically cover the losses by outperforming. When bonds are suffering, it's because your stocks are absolutely mooning and skyrocketing like we've seen in the past. But of late, even without a war, as I said, this has been the worst time for a 60-40 portfolio from what I've seen ever. Bonds have absolutely gotten destroyed, and stocks were going down for even part of that. So let's talk about the 60-40 first and why maybe that works at certain times and not at others. Well, the 60-40 portfolio is really built on this experience really since the early 80s that we've had where interest rates have moved basically over the course of multiple decades from being in double digits all the way down, you know, at one point being just above 1% on the long end.

And during that period of time, basically two things were a big driver, which is we had a secular disinflationary dynamic, which was supportive to bonds as well as supportive to stocks because it created significant stability. And number two was we had an era of peace, which meant that the types of pressures that typically emerge, particularly inflationary pressures that emerge during conflicts from deglobalization, as well as the use of raw materials, weren't present. And so a portfolio that's 60-40 portfolio was really built on that expectation. The problem is the 60-40 portfolio is really an all-in bet on two things. One, that growth is going to be great. And two, you're going to achieve that growth without

inflationary pressures. And those two things are things that may have been true over a period of time in the past, but aren't necessarily true in the future. Yeah, this is one of your tweets in the thread that explains just that effectively, the peace dividend, the idea that we just talked about. Maybe we should talk about why people only invest in these two assets when obviously there are these other widely investable classes that perform exceptionally well during periods. Why is gold, why are silver, why are metals, why are those not a part of this traditional investment portfolio that everybody seems to always be pushing? Certainly Bitcoin's not a part of it, right? So talking about this show, but let's stick with the metals for now. Well, I think there's two core reasons. I think one of the core reasons is that there's no advocate for those assets. Who in the world is out there saying, hey, look, advisor, you should go and buy the iShares

Gold ETF. There are no marketers. There are no folks doing sales and distribution of those things, there's no financial incentive for the advisors to come in and buy those securities. And so the implication there, by the way, the implication there is that people sell you a 60-40 portfolio because there's more in it for them than there is for you. Well, I mean, I think that's where they make their money. Look, there's lots of financial products out there. There's whole industry focused on selling those financial products to advisors. I think most people are trying to act in good faith as they're doing that.

But we have to recognize that, you know, there's like. I think we got a freeze there on Bob. Well, I'm going to bring him down while he's frozen. Maybe he'll have to reset. I'll see in the background if that happens. We to bring him down while he's frozen. Maybe he'll have to reset. I'll see in the background if that happens. We can walk. I think he's working. I think you're back.

Keep going. Yeah. You did one of these. You did like a YouTube thumbnail. I don't know. I don't know exactly what happened. In real time. That's the beauty of the live performance here.

It's just there aren't folks who are out there advocating for it. I think there's also an underlying skepticism of those assets, in part because most people who are in their professional lives haven't necessarily seen the types of dynamics that have aligned with metals outperforming. Now look, if you grew up in an emerging market economy, right, Turkey, India, Brazil, Argentina, if anything, gold would feel like your neutral position. Gold is your primary saving asset. And why is that? Because those are economies that have seen conflict. They've seen inflation.

They've seen currency debasement. They've seen extremely high interest rates for long periods of time. Those are like gold is normal to them in a way that it's totally abnormal to us, given our lived experience. But but that doesn't necessarily mean that it's a bad asset because we may well have experiences, maybe not as extreme as something like Argentina, but in that direction, for sure. Absolutely. So listen, I want to dive a little bit more into your thread and talk about actually what happens with war. So I'm just going to read your tweet, then we can dig into each one a bit. Wars by their nature are inflationary as goods requiring raw materials are produced and then destroyed without an increase in productive capacity. They're also a bad time for cash since governments keep financing costs low. Cash is the worst asset

as seen in US 35 to 40. And here's that chart for anybody who can't see it. So let's talk about that. Yeah, well, basically what happens during a war, right, is that you create materials and then you destroy them through the course of pursuing a conflict. And that by its nature is inflationary because typically when you invest or you build things, you're doing it to increase future productive capacity. And in a war, you're essentially destroying productive capacity and using those raw materials. So you get that squeeze, you get that rise in inflation. The same thing is happening. The same thing at the same time,

what's happening is that governments need to finance the war effort and almost always keep interest rates artificially low relative to those price rises in order to essentially socialize the cost of the war financing to the entire economy through the tax that is inflation. And so basically what you see is holding cash is a particularly bad asset because not only is the yield a lot lower than it should be during normal times, but also inflation is elevated. You put those two things together. And while cash may feel safe during a conflict environment, it actually has a significant erosion of purchasing power. Right. And here's the bond real return, as you've showed here, also from 35 to 50. So

basically, I mean, most examples you're giving here are based on World War II, correct? Yeah, I think World War II, I would say, is, you know, obviously the most extreme international conflict that we've seen, you know, in the last, you know, since the 1700s. And so I think it's useful not to say that necessarily these are the exact price dynamics that we'll experience, but it is useful to understand how the linkages work, right, how the dynamics work. And I wrote this, you know, as a simple example, I wrote this, you know, right on the Monday after the Hamas terrorist activities in Israel. And, you know, if you look at how things have played out since that point, like gold is up, bonds have sold off, right, stocks haven't done very well, not nearly as extreme as what's presented here. But, you know, it's the conflict itself on a

global perspective is smaller, as well as the fact that, you know, it's been shorter in duration. So I think these things are useful. On the bond side, just an important thing to highlight is just how when you have increased war efforts, you have increased government financing. And so they have to issue a lot of bonds. And again, both on the short end and on the long end, they depress yields, usually by fixing yields in one form or another as bonds are issued during that wartime to socialize the cost as well. What I find so fascinating is that, yes, we have the example now of Hamas and Israel, but we also just had the debt ceiling lifted when we had $31 trillion in debt, and now we're over $33 trillion. So the government is already doing this, right?

We often talk here about the difference between monetary policy that people fixate on and fiscal policy when it comes to the Treasury, But we're effectively already doing this without being in wartime, right? We're issuing trillions of dollars in bonds. We know that there's less demand for those than there historically was. In fact, they're even selling off, as you said. So we're already seeing this without even having the conflict. That's right. That's right. I mean, we're running recession-like deficits at a time when the unemployment rate is at 50 or 75-year lows. And so that is an unusual circumstance

and suggests a level of expansionary fiscal policy that is unusual, to say the least, at a time when the economy is doing reasonably well, all things considered. Or at least they're holding it up to look like it's doing reasonably well. But I guess that's a topic for next week. Stocks perform poorly initially during conflicts because companies' priorities shift and there's significant uncertainty about who will win. In the US case, stocks were in a drawdown for much of the period until rallying once it became clear victory would come. So this is kind of the example. So, I mean, as you said,

stocks have been struggling, right? I think here in this period, that makes sense. War, not context again. And then obviously you go on to point out that if you lose the war, it's bad news bears. Right. Of course. I mean, I think across all of these things, we're very familiar with the U.S. experience, but the U.S. experience isn't necessarily the experience that you should protect yourself against, right? I have confidence in the U.S. and our ability to win an international conflict, but it's by no means certain. And what you see here is that even if you are the eventual winner, you can see

drawdowns in returns of 35%, 40% in real terms in the stock market while there's uncertainty. And if you happen to be on the losing side, you can see essentially all of your both bonds and stocks wiped out as a consequence of that loss. Yeah, I'm clicking. I'm literally just in the background. I was just clicking on yields. I mean, this is absurd, right? US 10, I mean, it's just absolutely crazy. The 10-year at 4.939. I mean, I was on a show three weeks ago and someone asked, do you think we'll see 5%? It was at 4.4%, I think. Three weeks ago, and I said, yeah, I think why not? We could tap it, but it's just really nuts. So obviously, we know what happens to stocks, but I think what people are more interested in here is what we were talking about earlier is why would you invest in commodities? Why would you

touch gold or even silver in a situation like that? What's the benefit of having that? Because we've already discussed the fact that people generally don't have that in their portfolios. I think everyone here who's a Bitcoiner or into crypto at least superficially understands why you would. But these returns in these situations are remarkable. I'm talking about here, commodities do very well during war periods. From the time of Pearl Harbor until the end of the war, commodities delivered a 100% return, right? Yeah, 100% real return too. And so I think that that is, you know, commodities, basically in conflicts, there's a limited supply of, you know, physical assets that go into the production of, you know, of armaments that are used during a wartime period, as well as the fuel necessary to accomplish it. And during a wartime period, as well as the fuel necessary to accomplish it. And during

a wartime period, basically everyone is scrambling to get their hands on those resources. You know, the U.S. is in a good position structurally along those dimensions, but it doesn't mean that there isn't a price squeeze on those assets. And that's essentially what we see here, which is when you take a diversified portfolio of commodities, basically all commodities go up during a wartime period. And that's essentially what we've seen in a much smaller way over the course of the last 10 days or so following the rising conflict in the Mideast. Right. Obviously, we talked quite a bit already about the 60-40 here. In any longer term perspective, this multi-decade period of low conflict is extremely unusual. Obviously, that's talking about now, right?

So we've really had sort of an unprecedented time. And we still do, guys, to be frank, right? This is a regional war, again, much like Ukraine and Russia for now. But this is actually an unprecedented time of peace that we've really had. Yeah, I mean, I found that chart to be very interesting, a 600-year perspective on the amount of conflict, the amount of global conflict, and just how extremely low that has been over the last 30 or 40 years. In many ways, most of us probably don't even appreciate that it is so low because it's basically been that way during the entire time of our formative professional careers,

as well as our lives. And that in any context, you would certainly not expect to see even lower global conflict or would want to necessarily bet on even lower global conflict. And what I emphasize here, this is not what we're talking about here is not a view that there will be. No particular insight, because I frankly don't think that, I certainly don't have any particular insight

on whether there'll be more or less conflict in the future. It's just recognizing that 60-40 is an all-in bet on no conflict, and there's likely to be some conflict in the future that you want to protect yourself against in the case that you see that. I mean, I'm actually just now glaring at this chart. Wow, after the American Civil War, man, there was a really a nice historical time of no major conflict, which I wouldn't have expected in the late 1800s and early 1900s. You know, I don't view as any time as the past as having been particularly peaceful. So listen, let's get into brass tacks, right? What you would do in this

situation or what you have done. Let's say you have a 60-40 portfolio, not financial advice, everyone. You have a 60-40 portfolio, you're sitting on that, you think that something like this could happen. Where do you start to reallocate? Let's say you're going into gold or oil commodities. Where do you take it from and how much of an allocation do you actually add to those things? And at what point do you scale those up based on what you're seeing geopolitically? Yeah, well, I think most portfolios will experience a significant improvement in the return relative to the risk that you're taking with a 10% increase allocation to gold and a 10% increase allocation to diversified commodities, oil, copper, etc. Is that via an ETF or would you be purchasing them directly in the small percentages? I mean, you know. Yeah. I mean, the good thing is there's very inexpensive ETFs that are out there. Like for a diversified commodity portfolio, there's something, BCI is a good one, which is a tax efficient version of it.

There's a number of other diversified commodity ETFs that are out there. For gold, there's ETFs, you know, you can buy IAU or GLD. GLD is a little more expensive. Also, a pretty good, pretty efficient and liquid way to express those things. And the reality is you just want to sort of take those out of your 60-40. Just take 10% out of the totality of your portfolio of your 60-40 and put it into both gold and diversified commodities. You do those two things, you can improve the amount of returns that you're getting relative to the amount of risk that you're taking by something like 30% just from those two different adjustments to a portfolio over time. Yeah. I mean, it's the

argument Bitcoin has been making forever. Just put 5% and if this thing goes up 10 times, your whole portfolio is covered no matter what happens. It's the more extreme sort of version of that, but that's something that we've talked about quite a lot. Really quickly, I just want to say, you're not the only person preaching this. This is BlackRock. Rebuilding resilience in 60-40 portfolios. Key takeaways, inflation poses a challenge to the traditional stock bond portfolio. A sensible evolution of portfolio construction can include complementing traditional asset classes. I just thought they're talking about commodities, guys. And three Ds of alternative diversifiers, diversification, durability, and defensiveness, right? So you're obviously not the only person talking about that. There's some other ideas that were shared. I think maybe it's here. How to prepare your

portfolio for the next war. To give you guys the hot takes on this, buying shares of major defense companies like Northrop Grumman and General Dynamics, for example, that supply military gear to American military forces and the forces of its allies. And by buying shares of American frackers like Devon Energy and EOG Resources, which stand to benefit from Middle East wars, they will pump oil as fast as they can to fill in the gaps generated from the shortfall in Middle Eastern supply. And obviously a larger conflict in the Middle East, one of the largest concerns that could cause all these pressures is that oil prices would rise,

right? Right. And I think part of that, I know there's a lot of talk about should you buy these defensive stocks and domestic commodity producers. I think one of the challenges of that is that if we were to get to a more heightened war-like stance, if you go back into the World War II, like the economic circumstances for corporations radically changed during a wartime situation. You actually already are seeing that reorganization, economic reorganization happening in Israel, where you basically, profit-seeking motives get removed relative to government incentives. And so it's one of the challenges of buying, for instance, the defense industry is if there's wars somewhere else, that probably will be, they'll probably benefit. But if conflict comes to the United States, I would not assume that they will experience significant economic gains as a result of the war because the government will basically force socialize their production capacity. So that's really why

you want to hold the inputs. You want to hold the goals and you hold the commodities because those really are, those are things that the government can't socialize in that way. I just laugh because that's why the military industrial complex exists and why we export wars to other places, right? I mean, I don't like to, anyone who read the Green Zone or is familiar with what happened in Afghanistan, you know, the United States goes in there and basically just funnels billions into these defense contractors on foreign land, and then they just leave everything behind and leave. So yeah, it's a sad situation. But to your point, those do benefit and perform far better when we're effectively funding a foreign conflict. Right, rather than socializing a meaningful domestic, you know, a sizable domestic conflict. And that's, you know, part of what we're talking

about here is protecting a portfolio against that, that particularly difficult environment that is challenging to understand. And the reality is, that can escalate very quickly, right? I mean, you have those of us who went through September 11, understand how quickly things can, can change. If you go back to the Pearl Harbor situation, it took, you it took months to totally reorganize the economy. And so as a financial asset investor, you don't necessarily want to be trying to time and be in a position of reacting to those circumstances. If they happen, you want to be prepared for a diverse set of possible outcomes and have yourself protected in that way.

That's why sort of now is the time to start to get prepared for that possibility. Not all your portfolio, don't go overweight, don't buy only gold, none of that, but at least have some preparation for that outcome were it to occur. Totally. I mean, it's always a good time to start thinking about what you would do in a defensive situation. And now is clearly a time to, whenever anyone thinks there's a lot that can happen. And I think that it's important to start being slightly defensive. Any final thoughts before I let you go? No, I mean, the only other thought is it's important to recognize that, for instance, a gold allocation and a commodity allocation, you know, we've talked a lot about their dynamics related to war, but they're also

two of the most effective ways to protect yourself against just generalized inflationary dynamics, which we've seen. Against the governments being assholes. Sorry, go ahead. Irresponsible children that are running. Yes, you get to hedge against them. That's why we love. That's right. That's right. And, you. And most folks have bonds to protect against their stocks and don't recognize that if you look over the last 55 years, gold has outperformed bonds in 60% of stock drawdowns. And so there is no good reason from a portfolio construction standpoint why you shouldn't hold some gold in your portfolio. It performs on average better than bonds as stocks fall. The same thing is true

with commodities. And so those sort of shifts to gold and commodities are good ideas, regardless whether or not conflict emerges and rises just from a pure portfolio construction standpoint, protecting yourself from elevated inflation pressures. It's a good idea. Absolutely. People don't understand that whether you think an asset's necessarily going to go up or down to have something that trades without necessarily a correlation to other markets in your portfolio, always a good idea. So thank you very much, Bob. Guys, follow him at Bob E. Unlimited. He's had some great threads. That one obviously really caught my attention so much so that we invited him here. So Bob, thanks for breaking that down for us. I think there's some incredible perspective, really valuable. Thank you. Yeah, thanks for having me. Really appreciate it.

Awesome. Yeah, guys, I want to just share a couple of quick news stories before we go on. Obviously to Dan, who we've got here every Thursday, we're going to cook through this really quick. We just talked about this, but why do we're in Middle East could tip the world economy into recession. We don't need to beat that one to death here. Obviously, we're starting to see some heat around the spot Bitcoin ETF. You guys know that we had the fake news from Cointelegraph this week, which sent Mark Bitcoin from 28 to 30 and right back down to 28, all while we were live streaming here on Macro Monday, which made for some very entertaining content, disappointing at best. Obviously, this article is talking about the expectation of price return. Many people

saying that, listen, we just saw it go to 28 to 30 in 30 minutes on fake news. Imagine what happens when the real one comes in. I think that's a viable argument. But I'm more concerned with what would happen long term if we would see real movement into these funds over time and how much AUM these actually collect. Novogratz thinks Bitcoin ETFs will be approved this year. He also, I believe they partnered with Invesco to file for one at Galaxy. So he's clearly talking his book. But as we know from Eric and James, who are both here from Bloomberg, we're looking at a 90% chance of January 10th. By the way, if it happens on January 10th and everybody dunks on

these people for saying this year, I'll be very disappointed. I think 10 days is a pretty close gap there. I do want to also play this for you because Gary has changed his tune right now. There's some bad takes about this quick video I'm going to share with you guys. People saying that this is him saying that it will be approved. I didn't hear that in the language, but Gary Gensler was just interviewed about this and this is what he had to say. To me, this is a very definitive change in tone. Is it still ongoing since you didn't appeal? We didn't appeal last Friday. I think that's accurate. So you could still in the future.

But what we have in front of us, just so that the viewing public understands we have not one but multiple i think it's eight or ten filings that the staff and ultimately the commission is considering for what's called exchange traded products for for bitcoin to be in a in a in a security so the bitcoin would be held and then there would be something called an exchange traded product and that would trade on various stock exchanges. And those filings are in front of us. I can't prejudge any one of them, but there's eight or 10 that we're looking at. Well, there is a large number and there is kind of a narrative in this market. And I wonder if you could put it to rest that someone's going to get to go first.

Is that likely to happen or is it likely to be a group approval? If you're going to have one, a bunch of products could be approved at the same time. Again, I'm not going to prejudge the staff's doing work on those multiple filings, but it's also. Well, looking at him is emotionally triggering to me, to be quite honest, but whatever. I just think of Mr. Burns. He's excellent. But yeah, there's a clear change in tone here where he's been outright dismissive in the past, has not even addressed questions about this. Now he's saying this is what would happen. And I just think that it's clearly coming. You have Larry Fink on TV talking about Bitcoin as a flight to quality and the importance of the ETF.

And BlackRock, we all know, is probably the fourth branch of the United States government. So I think it's very clear that these are coming. And I think that Gary is sort of tipping his hat to that. And that's exactly what he should be doing. Now, I loved on Twitter, people were like, literally took what he said in quotes and changed the word would to will. So it said, these will be approved and this is what will happen. Nope, not at all what he said, guys, if you actually read that. And finally, this story, I got to touch on it really quickly. I know, speaking of emotionally triggering, looks like she's just going to jump out of the screen

and slap me in the face for talking about her. But Elizabeth Warren, U.S. lawmakers urge White House crackdown on Hamas use of crypto after Israel attack. Now, you might just dismissively look at this and say, oh, it's Elizabeth Warren again, but it's actually one hundred and five senators and congresspeople sending this letter to the White House expressing grave concern that Hamas and an affiliated group called Palestinian Islamic Jihad were using digital assets to fund their operations and evade U.S. sanctions. Congress and this administration must take strong action to thoroughly address crypto illicit finance risk before it can be used to finance another tragedy. OK, like on the surface, actually, I conceptually agree that we should stop all manners of illicit financing to terrorist groups, which happens, as we know, with Bitcoin, crypto, I don't know, pallets of dollar bills, gold, literally every

asset in the world has been used to fund these things. But it is a fair assessment that we should be cutting off the rails that allow that to happen. So I'm not going to pretend that it's not a problem that terrorist groups are able to use crypto for these purposes. But as we dig in, there's a lot of pushback as to what role crypto is actually playing. And so it starts as you dig into it to make it look like maybe this is Elizabeth just using this as another narrative for her anti-crypto army crackdown. And when you dig in, sensational early reporting on the scale of Hamas crypto fundraising significantly misstated the amounts involved in this important debunking chain analysis shows how actual terrorist usage may be one half of 1% of the previously reported

numbers and did a very long report on it. This is on chainanalysis.com. You guys should dig into it. I'm not going to dig into it entirely. But when you actually dive into the numbers here, it's really, really clear that the numbers being thrown out by the United States government and Elizabeth Warren are extremely inflated. No surprises here. I'm going to bring on Dan because that's a lot more interesting than looking at Gary Gensler and Elizabeth Warren, who I'm convinced are probably dating. Dan, how are you, man? I'm great, Scott. How are you doing? Are you also emotionally triggered by Gary Gensler or not? No, I don't have that relationship, fortunately, but it's definitely a stonewall reaction every time I see him. Absolutely. Well, that's good. So where do you want to start, man? Let's

bring up your screen and talk about what's happening in markets. I know you were listening to the previous guest. I do find it interesting that all the sort of lessons that we were talking about there, as I said, because of even fiscal monetary policy right now, have been pretty consistent even without the war. I think that people should be looking at metals, as I know you agree. I think people should be looking at Bitcoin. I think they should be a little more skeptical on maybe stocks and bonds. But you're looking at Bitcoin here, obviously, great place to start. What are you thinking? Yeah. So obviously, the dust has settled from the headline fiasco. And we had the previous, you know, I'm just looking at 28,000 psychological, which was resistance. And then we have the

headline and now it is acting as support. And you know, all things considered, I come back from the headline and see that, well, there's still progress in the sense that, you know, the dust settled that day. And we're still up 1% from where we were before the fake headline. And so if it were really going to be, you know, marking a temporary top, I think we would have given back more than that. And some of the altcoins did that where they dropped down and broke the previous 10 hours of progress before the headline came out. But Bitcoin, I was impressed just in the sense of there is still progress. We're holding a support level that we couldn't previously. And all in all, the headline, I look at the price action and say,

well, it only benefited because we're a bit higher. And so I think that's a good takeaway. And as you mentioned, if you're assessing what could be the reason for that, part of it could be the market saying, well, that was a bigger reaction, even though it was a fake headline, a bigger reaction than I would have thought, $2,000 in less than an hour. So maybe I do want a little piece just for when that headline does come out. So it's a good thing for the bulls to be holding on up here and they just want to keep holding 28,000 and try and grind back up towards 30. Yeah. Just for confluence of that level that you're looking at here, this is the weekly chart. That is the 200 MA on the weekly chart. There's one, two, three, four rejections here, obviously one before this fourth one, not yet. But I mean,

you know, this is, this is the battle right now, I think on the upside, but on the downside, your point, the support you're talking about perfectly aligned with the 200 MA on the daily, which is kind of right here in this square. And we saw one, two, three, four, five, six, seven rejections at the 200 MA effectively before the drop just a couple of weeks ago. So you're seeing a nice reaction, some down wicks, some real demand here into that area. So I perfectly aligned with your analysis there. I think we're kind of sandwiched between these levels, but I think if we start to get a close here above that 200 on the weekly, I think maybe we're leveling up our ranging. Maybe before it was kind of 25 to 28. Now we go 28 to 30, 31 as the range if we can flip that to support. That's

sort of my base case right now. I'm waiting for that weekly close on Sunday. And that's what's going on in markets all over right now. It's really a tale of two timeframes. As you mentioned, we've got the daily 200 support and the weekly 200 resistance. We started this week and the NASDAQ was in a monthly uptrend, a weekly downtrend, a daily uptrend, an hourly downtrend. And so it's like, it makes perfect sense why social media is so split on bulls and bears. And we've got this balance going on right now where the NASDAQ isn't really doing a whole lot in terms of where we were a few months ago. We're there now. But in the meantime, there's a 7% drop, a 7% bounce, a 5% pullback. And so it's just the market supply and demand. I always refer to the scale, the old fashioned scale that's just supply

and demand. And right now it's finding a balance. And then once it finds that balance, we get a spike in volatility as that breaks. And so I think a lot of the markets right now, as we trade sideways, have bull cases on some timeframes, bear cases on some timeframes. And so when you're communicating with people, just ensure that you're specifying timeframes, because I would say 90, well, 75% of all arguments on Twitter about markets are just different timeframes and not clearly stating what you're talking about. I'm bullish the NASDAQ. It's like, well, okay, what timeframe?

You can be bearish the weekly, you can be bullish the daily. I'm very, very bullish the NASDAQ for the next 30 years, extremely. I have no idea what's going to happen in the next hour though. Okay. So what are you looking at markets though? Obviously, I've been kind of keeping an eye, as I said during the first part, I mean, on these yields. These look like altcoins going parabolic. This is a 10-year yield. I mean, it tapped 4.977. I was saying I was on a stream like two weeks ago and it was at 4.3 or something. Maybe it was three weeks, four weeks ago. And he said, is it going to get to five? I said, well, why not? It's totally

possible. I mean, two-year yields right now, 5.225 and the 30-year went over 5%. I can't believe that stocks are not absolutely dumping, to be quite honest with you. Yeah. I mean, that is definitely, this is the 10-year now on the daily. That's, that's something that, you know, it can be said is the bulls are positioned well, if they top, if these yields top, but there's no indication of that right now. And we just had, you know, if the bears are going to show up, this was here to do it. We have to confirm the daily downtrend and they just failed. And if you fail to confirm that trend, it's just a bull flag. And so weekly bull flag is now confirmed. And everybody keeps asking me about TLT. Is it time to be looking long TLT?

I got in and out, man. I got in and out. I bought it like 84.5 or something and then immediately exited when it came back down to that level. I said, listen, I have no conviction anymore. I thought I knew I was trying to catch a knife. I didn't lose anything. It was up a bit. I guess I could have got caught a little bit of profit, but, uh, I'm not, I'm not, I'm not getting in front of this runaway train at the moment, even if I'm right. Yeah. That's one of my styles is, you know, making an attempt, selling partial into a little bit of, of upside, lower my cost basis a little bit, and then setting a break, even stop. And then you either nail it or no harm, no foul. And, and my answer just

keeps being the same. I've been saying this for months. It's just confirm a daily uptrend and I'll start to get interested. Are you looking to buy TLT? Give me a confirmed daily uptrend with just a clear higher low and higher high for the first time in two and a half to three months. And then I'll start considering looking for a swing position there. But even this last bounce, you know, it was a big one, 5%, no uptrend confirmed. And so that's just keeping me patient. And it's just, it's just so easy when you're looking at technical analysis to just make a concrete statement. I will not look long in TLT until we confirm the first daily uptrend in three months. And that was that above that 80, there's that kind of high right there, 88.47,

I'm looking at. So it's, here, I'll just show you on mine so you don't have to scramble around. Right, I mean, this is a pretty quick one, but we have now made a lower low than here. So, I mean, to me, you can even almost consider this 88.47, the first higher high, if it's broken. Yeah, that's definitely-

Some people might look higher, but I'd be looking for one of those. Yeah, that's definitely the new line in the sand. And it could be something like an inverse head and shoulders could shape up if we were to drop down a little bit here and then bounce significantly. And then I have no idea what it would look like. I am keeping an eye out. I've been seeing a lot of flags that confirm with no follow through marking reversals. And so I'm starting to keep an eye out for that. And so this is a weekly bear flag that just confirmed. And so if we were to get a multiple day bounce from here, I would then start to get a little interested. But again,

we can bounce 4% from here and still just set a daily lower high. So give me that uptrend and we'll talk about a shift in momentum taking place. So you're not interested in that yet. So what do you make then of stocks? Obviously, we generally look at QQQ, SPY, things like that. I mean, I'm pretty ambivalent here, man. I don't really have much conviction in what's coming next. I think it's a scary time for me. Yeah, I'm keeping an eye on this potential NASDAQ falling wedge, but this is a four-hour timeframe on the futures. I don't have a ton of high conviction either.

Right now, again, a weekly lower high is the most likely scenario, and a daily higher low is the most likely scenario. So again, just two conflicting things here, and we're going to scout a daily higher low eventually, and then if bears confirm a daily downtrend, you know, we'll be looking back towards the October lows and seasonality. You know, obviously I'm aware of seasonality and the end of the year, Santa rally and all that. Just looking at the statistics, I was a bit blown away where, you know, the NASDAQ from October lows to the close of the end of the year is green 88% of the time, the last 52 years. Yeah. It's crazy.

That's like, that's a lot more than I thought it was. And so a lot of people are looking for the October lows to hold. And statistically, that makes sense. So I think a lot is going to hinge on these October lows. Just looking at SPY here, again, a weekly lower high is the most likely scenario. But if the bulls can hold the October lows, I think a lot of bulls are going to be using that level as a benchmark and say, as long as these October lows are holding, we can get this end of the year Santa rally. And so I think if we do drop to the lower low, that's going to have everybody say, wait a second,

is this year going to be one of those 12% years? And so that's the most important level for me. But again, it warrants patience right now because so many different timeframes are conflicting. It's so much easier to trade when you're in the same trend on a bunch of timeframes. Yeah. Yeah. I'm looking at that daily as well, which I think that's the weekly you've got, but it effectively looks the same. And the thing is, if you now look at this, obviously, we were doing the higher highs, higher lows. Once this kind of broke, you can see this trend of lower highs and lower lows. There's a lot of upside still here, even if it wants to put in a lower high.

Right. You can move all the way from here up to effectively 450-ish and still put in a lower high and head down. So to me, that's why it makes it such a low conviction situation. Yeah. You could be right and lose quite a few times trying to trade that. The NASDAQ is definitely holding on a lot better than SPY just in terms of proximity to recent highs. And again, a lot of that is the major names. And these major names do have earnings coming up the next week or two. We're talking about Google, Amazon, Microsoft, Meta. And so we just had Netflix earnings and Tesla earnings. And that has a little bit of

an impact, but I think the more major names are coming. And so again, it's just patience. This is the time in the market when you're seeing this kind of bear control, bull control, bear control, bull control. You just be patient and wait for clarity. There's nothing wrong with that. And as you were in your last guest for talking about the metals, I'm definitely interested in the metals. Just proximity to all-time highs. Gold is 6.5% from an all-time high. And we know that for me and my trading history over the last 13 years, I easily have the

majority of my gains in blue sky breakout markets, whether it's crypto, cannabis, the market as a whole discovery. Yeah. That's, that's when there's the best opportunity. And so anytime anything gets near all time highs, I pay extra attention. And so, you know, the metals recently they had, we were, I was on here talking about, you know, keep an eye on the metals. And then we dumped it. I was like, okay, well, I don't have to pay as close attention because we're not as close. And then of course the the geopolitical conflict saw a spark. And gold has now set a higher low every single day, nine days in a row. And it's right back to hitting the highest levels in a couple of months. And so it's right back in terms of this is a three-month timeframe.

And just the fact that we've got a triple top at all-time highs that everybody in the world is watching, if we can set this higher low and get back to that that everybody in the world is watching. If we can set this high or low and get back to that level sometime in the next couple of months, I do think that there is going to be some opportunity in the metals. So again, I'm still watching these metals very closely. Well, Peter Schiff, would have loved this stream. We had the first guest talking about the power of gold in your portfolio, and we're all bullish metals right now, including gold. And I tend to agree. I've said it here many times. Novogratz said, a lot of people said, once you take out that triple top, especially for a recession or some sort of conflict, gold should go to $2,700, $3,000.

That blue sky price discovery breakout you talked about becomes a very, very easy trade, even on an asset as big and quote unquote boring as gold. Yep. And then you got, of course, your miners, which are lagging much, much behind. Lagging hard. Yeah. Lagging hard. But then you got your, you know, three times leveraged ETFs for those that want more volatility from the crypto world, you know, and UGT just the last nine days while gold has had this rally and UGT is up a nice, you know, 36%. So for those that love the volatility, there are some instruments out there. Don't do drugs, guys. Use a stop loss. Well, I guess, I mean, it'd be better to play the

ETF like this than to be on futures leverage to the gills because at least you're not going to blow up your account with this ETF. Yeah, this is the safe leverage because there's no margin call. Right. Exactly. Thank you, Dan, man. I love the perspective as always. Everybody follow, obviously, Chart Guys and check out his YouTube channel. And you can get a lot more insight from him directly there.

Thanks, man. Always awesome. Hopefully, we just stay boring like this because I would hate for us to be having one of these everything's melting down and collapsing conversations at some point. Yeah, it's on the table. Prepare for it. Just like you were talking about. Prepare for both scenarios.

You just don't want to be caught deer in the headlights. I don't know what to do. Have a game plan laid out. Always be prepared. Thanks, Dan. See you next time, Scott. Awesome, guys. That was a great stream.

I really enjoyed the perspective. And we try to, even though it's going to be a little more boring, try to give you some education sometimes. I know there were no hot takes today telling you which altcoin was going to thousand X next, but at least you know what to do if there's war coming. Pretty exciting today. So obviously, I have Twitter spaces at 1015 Crypto Town Hall. Right after that, I'm doing an OKX Twitter spaces. But then more excitingly, I'll be doing a lot of that in the car because I'm heading to Gareth Soloway's studio and to an event near there tonight. Mavericks, our new show with Mike McGlone at 3 p.m. Eastern Standard Time live in his studio. Mike will be on a screen. Mike's too good to sit with us, but I'll be sitting in the studio directly there with Gareth talking markets, just doing it because we can. It's going to be awesome. Can't wait to do that. So guys, check that out. We do, it's mainly streamed on his channel,

but I do stream it on this channel as well, which you've likely seen. Awesome, guys. I will see you hopefully on Spaces at 3 p.m. and tomorrow morning. There's too much of me. As I think about this, I'm like, nobody wants to listen to me that much. I'm sorry, guys, but I will see you here tomorrow. Oh, tomorrow is the Friday Five with NLW, guys. Last week, that was one of our most popular streams. I'm really loving how we're dialing in on that one. So definitely check that out tomorrow, 9 a.m. Peace.