The Wolf Of All Streets - Insane Rumor: Gensler Eyes Treasury, Crypto's Future At Stake!

Starting point is 00:00:00 There's an absolutely insane rumor circulating that Gary Gensler could be pegged for Secretary of the Treasury, and that's just one of the stories from this week. Luckily, we have NLW here to unlock the most impactful stories, unpack even, of the week. It's the Friday Five, guys. I've got on my McLaren hat. You'll see he's got his Mercedes hat. We have dueling hats. Let's keep it interesting. Let's go. What is up, everybody? I'm Scott Melker, also known as the Wolf of All Streets. Let's go. so that we can have dueling Formula One. I do. I had to wear this hat because the only other hat I have around is, I got it at ConsenSys, I think. And it's some crypto company that I have no idea what it is. So, you know, it's a great hat, but I can't, you know.

Starting point is 00:01:12 Oh, if you put the hat on and they like rug pull next week or something. Then I'm getting a caller from Gary Gensler, you know. That's right. You'll be getting a call from Gary Gensler. But before we dig into crypto, politics, Gensler, et cetera, first story of the day, US added 818,000 fewer jobs than thought, adding to concerns about the economy. So of course, this ties into the fact that Jerome Powell is speaking at Jackson Hole today. I think all eyes on the Fed, people looking for hints as to what he's going to do as far as rate cuts seems baked in that we're going to get at least

Starting point is 00:01:45 25 bps in September, but also leads to a debate as to whether we can believe the data, whether this was cooked purposely to make the economy look stronger. I mean, this amounts to basically 68,000 jobs per report. And those were strong reports because they beat by largely less than 68,000 jobs. So have we had a problematic job market this entire time that was somehow being hidden or that they just missed it in the data on the revisions? declining or anything. It's just growing at a slower rate than they had thought. Two, my general belief until proven otherwise is that the Occam's razor explanation for things is usually the better one. And their systems for tracking this stuff are kind of old. And there's a bunch of factors that they haven't really figured out how to deal with. One of the big ones being sort of a wave of undocumented immigration is a big piece of this. There are questions sort of coming off of COVID. Basically, I think that to the extent that we're worried about something, it's probably

Starting point is 00:02:49 better to be worried about how inadequate the models are than about them specifically cooking the books. That being said, the reason that the market didn't bat an eye at this is that it really is just the last piece of cloud cover to both let Powell finally kind of move to the rate cut cycle, but also make it so that he just can't delay any longer. The one sort of lingering thing out there was if the jobs market continues to be strong, I have as much time as I need before I start this cutting cycle. As you and I have discussed on the show before, I think Powell has a really strong sense that once he starts cutting, there is no going back that, that, you know, we are officially in a different cycle time.

Starting point is 00:03:32 And so he's wanted to sort of control that, that starting point, because it's kind of like the last piece of control he has. So, you know, for, for the market, this was just like the, the, you know, confirmation that it's actually finally really going to happen in september i largely agree and i'm not a tinfoil hat guy but i mean this came out the week of jackson hole yeah well it's interesting we'll see we'll see what he says he's he's speaking in a couple hours right and uh and you know the the question will be how much he decides to focus on right now versus you know the sort of big picture stuff over the course of the next

Starting point is 00:04:05 year? Yeah, listen, if I had to make a prediction, he'll say all the same things that he's been saying. And he'll allude to the fact that we're getting close and will not tip his hat to the idea that we would get more than 25 bits or what will happen in the future. I mean, I wouldn't be surprised to see us get a small rate hike in September and then kind of a pause and then another small rate hike down the road. He does have to keep going. There's no more tightening, but he doesn't have to knock off, you know, six rate hikes in the next six months as the market may be expecting. Yeah.

Starting point is 00:04:36 Yeah. The market has clearly proven themselves to be not good at guessing how slow he's willing to go. Yeah. I mean, the second we get the hint that it's really happening, which I think consensus is basically a hundred percent now that we'll get a cut in September. Now we're doing the same thing, which is predicting how many and how fast, which I have a feeling will be wildly, wildly wrong. Yeah. It's, it's fascinating to watch how group thinking markets are. You know, so, so obviously, I spent a lot of time in the AI side of things as well. And, you know, for the last three months, especially there's been growing, you know, Wall Street is finally asking itself whether there's, you know, sort of a bubble in the prices of AI related stocks, right, whether valuations have gone too far too fast. And it's so obviously connected to the fact that the cut cycle is coming up. If you look at the AI hype on Wall Street, it has been 100% exactly time correlated with the

Starting point is 00:05:35 rate hiking cycle. ChatGPT came out in November 2022. Wall Street needed a narrative to keep itself excited when hikes was going through this incredibly fast hiking cycle. AI enthusiasm sustained it for years and years and years. And now we're at the point where there's finally cuts coming again, so it doesn't need AI anymore. So it's fascinating to watch the sort of meta dynamics of how investors convince themselves of what's important at any given time. Well, I hope he doesn't sneeze left instead of sneezing right, because then the market could absolutely dump when it should have pumped, because we all know that we need to know his tone, his actions, and everything when he speaks. I'm hoping that this finally gives us some clarity

Starting point is 00:06:18 and we won't have to do too many conversations about Jerome Powell in the future. Another thing I'm hoping we don't have to have too many conversations about in the future, but I have a feeling I'm not going to get that wish. The Democrats exclude Bitcoin and crypto from 2024 platform, aligning with past hostility. I take a bit of, I don't know about the second line there, aligning with past hostility. I think there's an argument to be made here that maybe it's just not a big enough issue for them yet because they're still trying to figure out how they feel about literally every issue in America and probably to be made here that maybe it's just not a big enough issue for them yet because they're still trying to figure out how they feel about literally every issue in America and probably haven't gotten to crypto yet. But then you get this sort of counter narrative that Harris supports policies

Starting point is 00:06:54 to expand crypto industry. One of her aides saying this coming from Brian Nelson, part of her campaign team. So not in the platform like it was obviously in the Republican platform, but still during this time of the DNC two days ago, getting at least a story leaked that she may expand the industry or be more favorable to the industry. It never ends here. Yeah. I mean, listen, the platform was weird in general. The platform didn't even feel the need to change out the name of positions of Biden and Harris in it. So there's clearly weird process when it comes to the DNC platform. It was locked before Biden dropped out. So I think an expectation that there was going to be anything different there is probably a mistaken expectation. I think a very reasonable critique at this point is the Democrats are clearly signaling that they don't care enough about this issue to make it an issue.

Starting point is 00:07:49 Right. You know, at least not really. Maybe they'll they care enough to do sort of winks and nods through Brian Nelson to the press. But there's there's a clear difference in the prioritization of the issue. And I think that that's a reasonable thing to take. I think extrapolating the position from this administration forward is on slightly shakier ground, just in the sense that there's a lot yet to come in terms of what the actual policies and the personnel will be. But the best that I think can be said is that we are not seeing the same outright explicit hostility that we've seen before. And as we've discussed, for folks who are in the progressive side of the crypto wing, that's progress to them. It might not be progress that's going to win independents over, and it might not be progress that's going to win people who are sort of already inclined to be opposed to the Democrats over. But for those who are invested in the party and invested in the sort of progressive movement, there's some progress being made. Yeah. And a lot of people pointing to the fact that the greatest applause at the DNC was for one Elizabeth Warren. That's disconcerting.

Starting point is 00:09:05 You know, like we, I think in the crypto industry, we have this narrative that she's losing her power and that perhaps she'll lose to John Deaton, which I'm still hoping may likely be the case. But it's very clear that there's no major shift in the status quo where the crypto narrative comes from in the party. And for better or for

Starting point is 00:09:25 worse, the party in power always has the downside of having to actually govern and do something. One party can say a lot of things and then they have four years to either do them or not. If you're actually in power, you have to do something. I don't believe a single word of any of this. I don't think this is even on her radar. I think maybe there's a narrative coming down the road in a few months when they need it for the election, but I don't believe them. I just don't believe them yet. There's no reason to, right?

Starting point is 00:09:55 I love that people are saying in the comments that my left bias is coming out. I don't believe her for a second, if that helps you guys. Yeah, listen, I think that when it comes to Elizabeth Warren and that wing of the Democratic Party, hold aside all the discussion of crypto. It is still the case that over the last eight years, the Democrats have gone even deeper on money equals bad as a policy plank. And that is a legacy of the Warren side. But it's also, you know, Bernie and Warren were two of the biggest candidates, you know, a few over the last couple cycles. There's a huge portion of the Democratic base that has been conditioned to

Starting point is 00:10:36 think money equals bad. And when Elizabeth Warren first started talking about crypto, it was very clear that for her, it was just another money thing. And screw all of your conversations about it being technology and innovation and rights and anything like that. It was just people who like making money, making more money and money equals bad. So crypto equals bad. And that's been the calculus the entire time is really not more complicated than that. And until money doesn't equal bad again, there's always going to be some amount of hostility. So it's a challenging battle. You know, I don't envy the position of people who are highly invested in trying to sort of drive that party to the place where they want it to be. It's a very tough challenge. Not on the docket, but what do you make of RFK likely dropping out today and then the reports

Starting point is 00:11:21 that he could endorse Trump? I have no idea, man. I think that the dropout is obvious. The last real third party candidate that could take meaningful percentage that we had in American politics was Ross Perot. And that feels like a million, trillion years ago. Everyone else has been a spoiler. And one thing that you can, you know, you can't say about RFK is he was not in this to be Dennis Kucinich or be a spoiler. He wanted to, you know, he wanted to drag the conversation in places that he thought were important. He had moments where there were sort of like, there are, there are scenarios that we could concoct where he was a real credible contender as a third party candidate based on how things played out. It didn't play out that way. So he's recalibrating, um, you know, in terms of what, what it means for, uh, for, for like, you know, Trump versus

Starting point is 00:12:10 the Democrats. I think that RFK separation from the Democrats, I don't know. I don't think that he's been dragging a lot of them, uh, you know, over with him, you know, it's the question, I guess, is more sort of, you know, our independence is going to be more inclined to, to move over to Trump. I tend to think that at this point with the choice between Trump and Kamala, like people are pretty well made up in their minds. And where RFK goes isn't going to really shape that too much. But that's just my guess. Yeah. I mean, listen, I supported the guy.

Starting point is 00:12:37 And existentially, I just like the idea of having a third option, right? Whether it's a viable one or not. And I think anyone in the United States. You just described why Bitcoin exists. That's right. And I live in a state where my phone is utterly irrelevant, whether I'd like to think otherwise or not. It's interesting. I interviewed him right before Bitcoin Nashville live on the Wednesday before his speech on Friday. I haven't really told this story. I wasn't supposed to, but now there's really no downside. In our interview, which was live, he said something about Donald Trump. And

Starting point is 00:13:09 then he said, who's very, very likely to become the next president and continued on with his speech. And I start getting all these DMs. Did he just say that? Like this guy is supposed to be raising money. He wants to run for president. He's calling one of the other candidates who's had negative things about the likely next president. And then three hours later, the campaign requested that we take it all down and edited that part out and put the interview back up. So he clearly like there were plans. And then there was a conversation somebody had that night, somebody very close to me with his son that said, listen, whoever wins, whichever way he thinks the tide is going, he's going to angle for a position, you know, in the cabinet. And that was when it was still Biden. And I think when it went to Harris, that probably

Starting point is 00:13:48 no longer was on the table. And, you know, I think he's going to probably end up as health and human services, something like that for Trump. But I think that this was a long time coming is the way to say that, you know, I think months ago, he was already sort of angling and, you know, it is what it is. But I really just hate that we have only a two-party system regardless of your politics. I think everybody can cheer for the fact that we should one day have a viable third-party candidate. I mean, the good news is that it's getting closer, right? Independents are officially the most important voting bloc. And the competition for independence is still

Starting point is 00:14:25 Democrat versus Republican trying to peel them over, you know, but we saw glimpses with this campaign of, of there being, you know, more possibilities. It would just take the right person. If you had the right person leaning into a sort of a different approach in the middle, I think that there's a lot that could happen. There's certainly the level of frustration with the political system necessary to break from old norms. So we'll see. I will say if he does offer an endorsement and does end up even rumored to be a cabinet position, that is one more legitimate pro-Bitcoin person in the government. Absolutely. Yep.

Starting point is 00:15:03 We could take that as a silver lining regardless. The next story of the day, Mt. Gox moved $700 million in Bitcoin. Bitcoin unmoved at $59K. Of course, this was two days ago. Now it's moved, but not in the direction that you would think if Mt. Gox creditors were dumping their Bitcoin

Starting point is 00:15:19 all over the market. Bitcoin currently trading at $61,000. Interesting take here from Tim Copeland. Mt. Gox casually repaid 92% of creditors and we're still at $61,000. Ain't bad. I would say we now have a solid 10 years of talking about the bearish Mt. Gox unlocks that we assumed would be a nothing burger that are a nothing burger. There's nothing like 10 years of forced holding Bitcoin to convince you that Bitcoin's a pretty good thing to keep holding. That's sort of always been my position. And it seems to be the market,

Starting point is 00:15:51 the market seems to be playing that out. Yeah. Easy enough. See, that's how you unpack a story. Done. Next, the towel behind Mango Markets votes for SEC settlement. To be honest, this one wasn't highly on my radar. Obviously, Mango Markets has been Eisenberg, what's his name, right? Abraham Eisenberg, being charged by effectively everyone. But this is a small settlement, specifically with the SEC on the civil side, for $223,228.

Starting point is 00:16:22 What does this mean sort of for the market, for DeFi, and for mango markets specifically? Kind of nothing for all of those. The thing that was interesting about this to me is, you know, part of the weirdness around DAOs has been this question perpetually of how separate from the legal system actually are they, right? This has been a lot of the last couple years has been, are DAOs just weird LLCs? How do you plug them into the system? And these are questions that remain unresolved. And so DAOs as a viable alternative structure, I think there's still a lot of questions there. What was interesting about this is that I think this is the first time

Starting point is 00:17:01 that we've seen the members of a DAO vote on a legal action like this, you know, the, you know, DAO voting being used for this particular purpose. And so it's kind of an interesting glimpse into, you know, what the future might hold. Now, that said, this is a situation where the SEC has, you know, picked a target that can't defend itself in any meaningful way. And so there's never really a question about what, you know picked a a target that can't defend itself in any meaningful way and so there's never really a question about what you know if if a bunch of rogue members decided to vote not to accept the settlement i don't know what the hell would you know they think would happen so it's not actually all that interesting in that sense but just the fact that it's sort of

Starting point is 00:17:37 a uh this two two systems that are very different from one another trying to figure out how to interact i think is is maybe a little bit of a preview of the future, depending on how things shake out. Absolutely. I mean, it's clear the SEC hasn't stopped, I think, also, right? I mean, it's a small settlement, but par for the course as far as crypto versus the SEC. Here's the story that we had in the title, Insane Rumor, Gensler as Treasury. So Scoop, Kamala Harris likely to nominate Gary Gensler as Treasury Secretary if elected. Senate sources, this is from the Washington Reporter. We don't know if this is true or not. We do know that Gary Gensler always wanted the job of Secretary of the Treasury. So it's a highly believable rumor that was put out there. But we also know that there's an easy rumor to spread if you want to just make the Democrats look stupid.

Starting point is 00:18:26 We immediately had about that Gary Gensler for Treasury story, obviously coming off Caitlin Long saying she spoke to multiple Democrats immediately and it was not true. Sheila Warren saying, I spoke to multiple Republicans, not true. And when asked for sources, we got this guy. Source, I made it up. So what do we make of this? Because there's a lot to unpack. Whether it's true or not, it's telling how quickly it spread and how much people wanted to believe it. Yeah. So a couple of things. One, the sourcing is not just dubious. It's just literally the headline doesn't actually match even what the fucking article says excuse my language like the article basically says that uh you know the the only way that gary wouldn't act in a certain way was if he was treasurer like it just is so separate from the actual headline you know this i don't know where

Starting point is 00:19:17 the word likely came from but it's basically journalistic malpractice now the washington reporter is a effectively a a blog you Reporter is effectively a blog for conservative causes. It's not a newspaper or anything like that. Okay, so let's take it for granted that the subject matter is very dubious. I think that there are a few different possibilities about why it would spread like such wildfire. One is if there was more of this going on behind the scenes, right? Like this particular sourcing wasn't particularly notable, but because this was bubbling in lots of places, this is just the one that broke through. That's one possibility. A second possibility is that it is just a representation of the general nervousness and shell shock of this industry. And I think this one is probably a lot more likely that, you know, there are, there are, you know, if you if you look at the camps who are kind of examining what a what a Harris administration might look like, there are those who are convinced that it's going to be a repeat, Operation Chokepoint

Starting point is 00:20:30 2.0, 2.0, and just the same thing over again, for whom this would be the greatest confirmation of that. There are people who are desperately hoping that that's not going to be the case, for whom this would be the single biggest contradictor of their, of their hope system, you know? And so they're interested in it because, you know, it's the scariest thing that could possibly happen in some ways. And so I think that in a lot of ways, the speed with which this whipped around is mostly reflective of just the,

Starting point is 00:21:01 the fact that we are for the next couple months stuck in a position where we're holding onto our hats and waiting to see what happens with almost no control to shape the outcomes. We are much more than this industry is used to subject to what happens completely outside of our control. And that's an uncomfortable place to be. And it leads to a lot of rampant know, rampant speculation about rumors. So I don't know, that's my take at least. Yeah. I mean, when you read the article, it goes on to talk about the CLO of Paradigm, who literally has nothing to do with the government floating the possibility of a Gensler plan, which would leave him putting Carolyn Crenshaw, who's anti-crypto into the SEC as he steps down and making sure that all of his cronies are at the SEC. I

Starting point is 00:21:45 mean, it's just so much conspiracy theory in one article. It's pretty wild. But to your point, it's highly believable. I would say this. Listen, I would rather have Gary Gensler. If you're a crypto only person, Gary Gensler at the Treasury is probably better than Gary Gensler at the SEC. Oh, I'm going to take the other side of that. No, because he ruins the economy and Bitcoin goes up, right? Because it's such a train wreck that it's the reason that we have a crypto. I'm just kidding. I don't think anybody wants Gary Gensler at the Department of the Treasury,

Starting point is 00:22:16 but we certainly want him outside of the chairman of the SEC, but not if he just puts in one of his cronies. The final story we have today, Donald Trump, and it kind of actually goes back to the RFK question, who's going to be helping him along and in control. Howard Lutnick, Linda McMahon to chair Trump transition team, obviously Vance,

Starting point is 00:22:36 Trump's sons, Eric and Don, who announced their crypto platform this week, by the way, which Trump endorsed on Trump on truth. Social we'll be leading the team. This is meaningful to crypto because Howard Lutnick is the CEO of Cantor Fitzgerald. They have come out very pro-Bitcoin, say they own a shitload, and also have said that they

Starting point is 00:22:55 custody Tether and have basically put all the Tether FUD about backing to rest. So Lutnick was one of the superstars of Bitcoin Nashville, gave an incredible speech. So one more huge mega crypto Bitcoin bull in power in the Trump administration. Yep. I mean, that's the story. It's just more and more sort of folks that are stacking up around that campaign that are pretty deep in this and not just sort of lip service deep. So I think there's nothing new here. It's just more confirmation of the same direction. And it certainly seems to be reflective of who Trump is deciding to listen to around him right now. Yeah. I mean, we made the point after his speech at Bitcoin Nashville that regardless of

Starting point is 00:23:41 what you thought of the speech, the very fact that he said, hey, I'm going to appoint a council of smart people from the industry was maybe the most impactful part because I don't think any of us expect any of these candidates themselves to become outwardly pro-crypto, but if they actually bring in people who are in favor of the industry and listen to them and stay out of their way, it could be extremely bullish moving forward. Yep. I think, listen, regardless of who you want to win, I mean, look, if you're a Democrat in crypto, you have the single best silver lining of any Democrat in America right now. If your candidate loses, your industry is likely in a much better position than it otherwise.

Starting point is 00:24:25 You might be really upset about a whole bunch of other issues, but you have something that basically no other Democrat has, which is this unbelievably massive silver lining. So, you know, listen, maybe it's all actually positive for everyone. To all the producers and people listening, clip that. That was amazing. I'm ending the show right there. That was perfect. It's so true. And I never really thought about it. You can be super depressed, but maybe at least you'll be in a better financial position

Starting point is 00:24:52 in your industry. You'll cry into your money. Cry into my heavy bags. All right, guys. That's all we got for you today on the Friday Five. Thank you. Everybody follow at LW, of course. Check out the breakdown, all of the things that he is doing. And we'll be back next Friday.

Starting point is 00:25:09 See you guys soon. Thanks, man. Bye. Let's go.

The Wolf Of All Streets - Insane Rumor: Gensler Eyes Treasury, Crypto's Future At Stake!

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