The Wolf Of All Streets - The Fed, Bitcoin, NFTs & Kim Kardashian | Jon Najarian

Episode Date: January 10, 2023

Don't miss this conversation with the legendary Jon Najarian: we cover everything from the Fed to the housing market, Bitcoin volatility, crypto leverage, inflation, ETFs, and more.  Jon Najarian: https://twitter.com/jonnajarian ►► JOIN THE FREE WOLF DEN NEWSLETTER https://www.getrevue.co/profile/TheWolfDen  GET UP TO A $8,000 BONUS IN USDT AND TRADE ALL SPOT PAIRS ON BITGET FOR ZERO FEES! ►► https://thewolfofallstreets.info/bitget   Follow Scott Melker: Twitter: https://twitter.com/scottmelker  Facebook: https://www.facebook.com/wolfofallstreets   Web: https://www.thewolfofallstreets.io  Spotify: https://spoti.fi/30N5FDe  Apple podcast: https://apple.co/3FASB2c  #Bitcoin #Crypto #trading  Timestamps: 0:00 Intro 0:56 Inflation 6:45 How to spot a bottom 10:50 Mortgage 13:30 Volatility in Bitcoin 17:00 Interest in Bitcoin will come back 20:00 Leverage in crypto 22:30 Insider trading 23:40 Kim Kardashian 26:50 SEC vs Bored Apes 28:00 ETF 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.

Every time I sit down with Jon Najarian, it's inevitably a whirlwind conversation. Today we talked about the Fed, markets, Kim Kardashian, NFTs, and everything in between. Jon Najarian is an absolute legend, so you don't want to miss this conversation. So, John, I know that one of your favorite words in the world is transitory. It is. And it's one that I love to heckle, not just the Fed, the former Fed. I love to heckle Janet Yellen about it, because when they're throwing trillions of dollars at the market, and it's not just this administration, it's gone on for, you know, better part of a couple decades. But I can't believe that you could actually analyze it and

say, it's transitory. Really? So how short is it? You know, what's your timeline on transitory? Now they've gone from weeks and months to probably years. And that's a big negative. And certainly the Fed's solution for it now is going to be pretty ugly, I think, Scott. Yeah. I mean, every time you and I speak, and it's generally more about markets and in real time, we sort of rail against the nonsensical Fed policy. And you've been making the point for quite a while that whether they're going to pivot or not, they should. Yeah. That they can no longer maintain this tightening cycle without breaking everything. And I think we're seeing everything breaking now. Yeah. And what's really surprising now, and I bet a lot of both the audience as well as Joe's and Jane's at home, they would like to hear probably a lot less from the Fed.

Not just see a lot less, but hear a lot less. Because now they all want to talk to us all the time. You know, they have these quiet periods where they don't. But the rest of the time, Scott, they want to speak to us. And, you know, Jay Powell, really smart guy, partner at Carlisle Group, obviously retired partner there. in industry. Janet Yellen, I could fault her for her lack of any industrial or any business acumen that you would get from being in the private sector. She's basically been education and government her whole life, adult life anyway. But certainly when Jay Powell's out there pounding the table saying he wants pain and he's going to bring the pain. And then you've got Kashkari, who used to be one of the biggest doves on the Fed, saying, well, yeah, we're going to have pain.

We're going to bring a lot of pain. They're right. They are going to bring a lot of pain. And I saw today that mortgage rates were up over 7%. They were under three a year ago. And when you look at the two year, which a year ago was 0.26 and now is 4.3, that's telling you everything you really need to know. So whenever my brother and I joke about one minute macro,

all you need is one minute to talk macro. The macro you need to focus on is as long as the rates are going up like that, as long as the two year and 10 year spread is as inverted as it is on the yield curve, we're going to keep seeing pain like this. I really love what you said about wanting to hear the Fed speak less because it feels like we have 12 representatives of the Fed making announcements every week. And now markets, people, but markets certainly don't care about the actual data. They care what the Fed says about the data. for them to say something stupid or to use a tone that they didn't intend and to move markets in one direction or another, which to me means that we've ceased to react to any actual news or any actual data or actual events. And now it's just completely sentiment and emotion. Yeah. And you know, when,

when you do something like what Scott and I are doing right now, none of this is rehearsed. So, um, you're speaking off the cuff. You can say something in a way, just as you said eloquently, that isn't as you intended it to be interpreted. And when you have 12 different people out there, some of which are great in front of crowds, some of which are not great public speakers, all of them smart in one way or another, and all of them political animals, or they wouldn't be there because this is not a meritocracy. When you're on the Fed, it is you're put there not because you're the best economist in the land. You're put there because politically, people of a particular party, again, Republican or Democrat, thought that you were the person that they wanted on that committee and they put you there. It's an appointment. It's not meritocracy. So when you have something like that, and then again, all

those things about you could have a misstatement or a misinterpretation or whatever, and we've seen both lately, that can really rile the markets. And I think, unfortunately, that is another thing that's going to continue, Scott, is volatility. And you and I have talked about it a lot. And I'm not somebody that says that we have to have a 50 VIX or something like that, a blowout top to finally have a bottom. I don't think we'll finally have a bottom until the Fed stops.

We didn't actually really see the blowoff top, actually, that I think a lot of people expected at the top of the smart markets or just kind of rounded out and fell off a cliff. Yep. So it'd be hard to expect a blowoff top from here, maybe a blowoff bottom. Yeah, that's what we're hoping for now. But what for you, I mean, you're talking about this on TV, literally every single day, you're dealing with the trolls, angry, angry pundits and trolls. I love both. Yeah, of course. Makes our life. But how do you personally on a day-to-day basis, how are you trading this? How are you reacting? And I guess more importantly, what would be your signal that this could likely be bottoming and it's time to start gaining fresh exposure? bps to 125 bps by the end of 2022. So there's only a couple more meetings. We know what that

means then. And they're going to say that because it's always easier to talk the talk than to walk the walk. But if they start seeing unemployment just pick up dramatically and the job creation rate slow down dramatically, both of which they sort of want to see. Those are going to be the triggers for them to finally stop. It's such nonsense, though, because they're literally trying to do that. They're saying we're going to break it. We want to crush demand. We want people to lose their jobs because that's the excuse for them to pivot and start printing money again.

Yeah, that that will be what happens, I believe. And thus far, I've mainly seen all the speculative paper, meaning in my world, people buying a lot of puts on European equities of all flavors, in particular, you know, Europe-centric, but if it's anything but North America, and so in other words, Europe centric, but if it's anything but North America, and so in other words, US and Canada, that EFA or whatever, you're seeing tons of puts being bought in these because they think that the recession that's spreading around the world, because again,

I've said many times, Scott, in the last six months, we're already in a recession. We've been in two negative quarters. We're going to print a third negative quarter, I think. And I was shocked when Jamie Dimon said recently that he said, well, things are bad and we're going towards a recession. Like, don't fall into that trap, Jamie. The only thing that's not a recession yet is the NBER hasn't declared it a recession. That is the only thing. We've had two negative quarters. We've got the twos inverted over the tens. That's the definition of being in a recession. Yeah, but you get to change the definition when you don't like what happens. Everybody knows that. If you're in government,

you just revise the dictionary. What do you think is going to happen, by the way, now that we've drawn the spur, the strategic petroleum reserve down to half the lowest levels in modern history? What do you think is going to happen in three weeks when it's down at about 20, 25 percent? And it's going to be just after the election. And Europe needs all the energy it can get. And all of a sudden, we don't have the spur to soften it up anymore. What do you think is going to happen? It's going to get worse. So I have to imagine that there's not many shorter term optimistic scenarios in your mind.

No. Instead, there's a lot of right now. Nat gas is still seven times in Europe what it is here, which makes it so attractive to export through LNG. So that's why I own LNG, EQT and GLNG. That's why I own those three, because they're big exporters of natural gas, potentially building LNG terminals and things. They don't have nearly enough. And then we're going to want it because when China reopens, they will stop selling energy into Russia. China's been doing it into, I'm sorry, Europe because they've been buying Russian crude, refining it, sending it to Europe for a nice, big, healthy profit. But that's going to stop as China reopens. So again, my statement would be,

what are we waiting for? We're going to see energy prices a lot higher over the next six and nine months. Well, that's an interesting place to focus some of your portfolio. Certainly, is there anything else that you're looking at that could benefit from this non-transitory inflationary pain that we're seeing? We've also seen a ton of put buying, in other words, downside bets in any of the mortgage companies. Or there was a mortgage REIT today. There's actually a REIT, CIM, I think it is, that had huge put buying. And that one has been cratering. And they're basically a real estate investment trust that invests in mortgage

portfolios for, you know, I guess, mall operators, hotel, anybody who basically has a mortgage that gets packaged up. Sounds a lot like 2008, doesn't it? Except they're not just shoving just enough good stuff into the mix so that it doesn't look like shit. They're actually, because that's what they did in 2008. You guys all saw the big short. That's what they did in 2008. Well, that's what they got caught doing in 2008. They were doing it for years before that. They were put just enough of the good stuff in the top of the pyramid so they could have all of the 500 and 600 score mortgages at the bottom. And they could just keep packaging it out, packaging it out and getting it rated higher because it had just enough of the good stuff on

top. There are a lot of companies right now that are going to have big problems, I think, sadly, Scott. Scott Martin In the short term, dare I say it, are you actually buying bonds or considering it or seeing an uptick in activity of people buying bonds? Although it's the rate of inflation, of course, 4% on a short-term treasury is pretty attractive. Yeah, it is. And I'll tell you what else is attractive, that anybody with $10,000 and a tax ID should go out and do it. And that's an I-bond because they're basically 9% right now. And you can go out and buy, you can only buy them once per calendar year, I think, maximum of $10,000. And it has to be only once per tax ID.

And you have to do it online. You can't do it through a broker. You have to do it yourself. And all those things have made it more difficult, of course, but for that reason, and because of inflation, the I-bonds are 9%. So you the, the time that the clock has passed on the last one, but the new ones, I think you can still get one. And if you hold them for 18 months, I think it is, you get that full coupon. So you're buying it at that big discount. That's some great alpha right there for sure. And we talked about the fact before we actually started recording that there's been incredibly dampened volatility in the Bitcoin and crypto space. I actually view this as a good thing. We're seeing the entire world melt down and Bitcoin's just trading and chopping sideways.

Where do you think that, in context of what we've described, is likely coming? What do you think happens, at least in that period with Bitcoin? This is one reason that I got lucky and sometimes it's better to be lucky than smart. Actually, it's always better to be lucky than smart. But Bitcoin really frustrated me because I hated not sleeping. Because those of you who really trade it know, and Mark Yusko right out here is, I'm sure, thinking the same thing. He's probably got his crack team on that overnight Asian hours. But that frustrated the hell out of me because the best time to trade it is at night. And I actually like to sleep. I also like having the weekend off. So I thought Bitcoin would be the ultimate great thing

to trade. And it is if you're a robot. It's not if you're a human being, unless you can be over in Asia, I suppose. If I was in Asia, I'd love it because I think there are great swings to play and all that kind of stuff. But I like sleeping too much and I like my weekends. So because of that, I had stopped trading. I still own it, but I had stopped trading Bitcoin before the big breakdown. Doesn't mean I got out at the top. That's not what I'm saying. I think that's good, actually, advice for your average person anyway, is just stop trading Bitcoin and treat it as an investment and buy it.

Right. I think that what you did, even if it was only by accident because you hated sleep, love sleep, excuse me, is probably the things that I that I did like a lot about Bitcoin trading was trading the options offshore. And of course, you have to trade them through a VPN and all that kind of stuff. And I would never do that. This is all theoretical. Theoretically, I would trade Bitcoin options overseas and get 50 to 100 to 1 leverage crazy stuff and i know you can go more than that but um you could routinely see uh people getting blown up on that and sometimes you could actually even ride the wave of them getting blown up obviously there are many people um with a lot more firepower and smarter than me that are doing that on a regular basis. But again, you have to be up really in the Asian markets to do it

effectively. You could actually argue that's what moves the Bitcoin market. Yes, sir. As leverage and liquidations and cascades, right? And unfortunately, that means that retail generally gets washed out by some big player. And also, I think that for Bitcoin to mature into the asset that we all want it to be, that actually has to be eliminated. And we have to see some of that volatility dampened. Yeah. And we will see, I think, a lot of those sorts of things, Scott, over the next months and years. But in the short term, I will say this about the interest in Bitcoin, the lack of interest is transitory. It will return, is my feeling. And when it does, it'll have everything, all the earmarks that it's had on every subsequent rally after a crypto winter. And that'll be melt-ups, FOMO, everything, because it's done it time and time again.

So you love sleep, but we believe that maybe we'll end up tokenizing everything and potentially all markets could become 24-7, 365. Yeah, I'm not a fan of that. I wouldn't be a fan of that. And I've been hearing forever that people asking, John, why don't options on the US markets trade 24-7? Because they don't. Obviously, stocks trade not 24-7 either, but you can certainly get some liquidity, depending on the equity you're talking about, an hour and a half after the market's closed and probably up to two hours before the market opens. But no derivatives trade during that time, unlisted exchange, unlit exchanges. But they keep pushing for it, and I think they should do it. I would think that

that would be something, Scott, that we will see. Not 24-7, but I do think you'll see options, the derivatives trading, become something in the next, I'd say, it won't be more than a year before we actually see derivatives that trade from, for instance, 7.30 a.m. Eastern time or 7 a.m. Eastern time. And then, you know, for another two hours after the close from the four o'clock close Eastern time. So that means less sleep. Well, a little, but not 24-7. And allowing people to trade out of them. There are a lot of us, especially in a room like this, that are sophisticated enough that you could figure out ways to buy stock against your in-the-money puts when you've bet on a downturn and they come out with shitty earnings and the stock gaps lower, you can buy the stock against your puts and just exercise out and so forth. But not everybody has that luxury because to do that, you're incurring reg T, you're incurring a margin call if you don't have a very

large account. If you were to buy a whole bunch, if you had Apple calls and you had a 5,000 lot of, not 5,000, if you had 50 Apple calls, that represents 5,000 shares of stock. It's a lot easier to trade those and trade out of those than it is to buy 5,000 shares against it because Apple dropped in the after hours. And all of a sudden your broker's going, what the hell are you doing, Scott? You know, you just bought a million dollars worth going, what the hell are you doing, Scott? You just bought a million dollars worth of stock and you've only got $275,000 in your account. You're over two to one. We can't let you do that. And so now you have to liquidate it. I would imagine the way you're speaking right now, and that's the point of options, right? Is it makes the market more efficient and allows you to do these things and allows hedging strategies. But in crypto, most people just view it as a gambling chip on a

hundred X leverage on some foreign exchange, as you said, right? The way that people are using leverage in crypto and options is not the way that they're intended. Right. I mean, when we first, when I started trading, it was 1981, came down to the floor of the Chicago Board Option Exchange. There were only puts on maybe 50 or 60 stocks at that time. There were hundreds of stocks, but they only had puts on a few of them. That ended up changing over the next year, year and a half to where obviously any stock that has calls has puts. And so people could insure their portfolio with a put, bet on the downside of a given stock with a put, not just bet on the upside. But still, unfortunately, as you say, retail tends to over lever and also misuse options to the point that Warren Buffett calls them

weapons of mass destruction, even though he's one of the biggest options traders on earth. Warren Buffett is, Mark Cuban is, Bill Gates is, IBM was. All of these folks trade a ton of options. And a lot of them, especially if you're a treasurer at a company that's doing a stock buyback, you can just bang out puts all day long. And if the puts expire worthless, looks like that's money to the bottom line for the quarter. And if they don't, well, you had a stock repurchase that said you were supposed to, or you could purchase X hundreds

of millions or billions of dollars worth of stock. So either way, you're sort of a hero and you're getting paid to be a hero, which is why, like I say, Michael Dell, IBM, all these companies used to do it all the time. Yeah. You just laid out a list of billionaires and corporations that have effectively become God-tier traders using puts. You know who else are really good at that? Apparently, Nancy Pelosi and everybody else in Congress. Yes, Paul Pelosi. Excuse me, Nancy doesn't trade anything. Her husband. And her son, too, apparently. The son that went to China with her. And, you know, we all know that she's made tens of millions, if not hundreds of millions in the market.

You can debate whether that's right or not. And now is pushing to shut that off for all of her colleagues. Well, we'll see. They did pass it under President Obama. They did pass a stock act that would have effectively shut it down. But many of them that don't trade on inside information sell the information about what their committees are looking at and looking at approving or disapproving. So that access is also very valuable. So as you might imagine, it got huge pushback from members of Congress.

So even though the president was willing to sign it back then, when it was first passed, it got gutted before he signed it. And so the present bill has almost nothing that stops. And I don't know what her bill might do going forward because I haven't seen it. But I imagine it'll do close to nothing also. Yeah, it's incredible to see what legislators in this country managed to pull off. And speaking of government, obviously pivoting to the SEC and regulation, and in this case, regulation by enforcement. I know something that you had quite an opinion on was what happened with Kim Kardashian of late, that she was basically charged $1.3

billion, $1.4, $1.3, $1.4 billion for promoting an unregistered security, which to my knowledge has never been officially deemed an unregistered security. Million? What did I say? Did I say billion? Oh, excuse me. $1.3 million. Kim Kardashian. $300 billion billion dollars guys it's crazy i remember when that was a lot of money uh 1.3 million dollars excuse me yep for 1.3 million security uh without admitting or denying uh she she did and uh two things were wrong there one she didn't disclose whether she was paid, and she was, a quarter of a million dollars, $250,000 to promote that token. The second part is problematic for her, but even more problematic for the issuers, and that was whether or not that was an improper securities offering because, you know, probably didn't have KYC, probably didn't have a lot of things that a securities offering needs to have. And it's why so many people, especially at a conference like the one we're at right now,

Scott, Web3, so many people are looking at NFTs that have utility and it has to be real and it has to be offered in the offering memorandum or they don't really have that for an NFT. But in the sales pieces that are done for that NFT, they have to describe what the utility is. You can't really do it after the fact and or after you've minted it or sold it. But if you did have true utility, then it does fall outside of what the SEC went after Kim for. Because an unregistered security is one thing, a utility, again, something with true utility is different. We talked about that this morning in a talk that we did. And that is something that you, you know, you're not just dancing on the head of a pin. It has to have utility. We did one, for instance, called the

zombie collective and we did it and it had things like, oh, if you buy this, some of the utility is you get Tom Lee's newsletter because you have a Tom Lee zombie NFT or an Anthony Scaramucci zombie NFT, and you get a discount to his salt conference or whatever. If they have real utility, you can get away from what the SEC tries to put you in as far as a box of selling unlicensed securities. Do you think that they're going to come more heavily after NFTs now and view them as unlicensed, unregistered securities? There's been recent news, actually, that the SEC is now looking at Bored Apes or Google Labs.

And we just, during that talk this morning, we heard that they were going after board apes, probably because of the token. Many of the board apes have utility. And again, it matters. This part is, again, not gray area, it's black and white. In the sales that you were making, did you disclose the utility at that time, or did you add it after the fact once you knew the SEC was after you for, the utility at that time? Or did you add it after the fact, once you knew the SEC was after you for not having utility, and instead, you're just an unlicensed security. So I think there will be more. I think that's why Kim was gone after because she's high profile enough that it's going to get in regular news, not just on a coin market cap, a recap of what happened yesterday, or any of the other news you might follow. This would get everywhere because Kim Kardashian.

I mean, in this case, I think it's because Gary wants Janet's job and is angling for that. It's not coincidental that he made a video and that there was Twitter announcements. It was basically a massive PR stunt. But to me, the real story still is that there's no clarity on what the crypto industry is allowed to do in the United States, but they will still enforce based on laws that don't really exist. Right. And the biggest joke, if we really wanted to get down to jokes, is why they haven't approved an ETF in the States. Because obviously you have exchange traded products, ETPs overseas like crazy for a variety of cryptos from Bitcoin to Ethereum to several others. The trade on, I think, Swiss exchanges, Swedish exchange, maybe even some of the London exchanges. And it's an exchange traded product that is one for one track of that particular crypto.

And if they had had that here, I don't think that the crypto winter we're in right now would have been nearly as bad. But sadly, three arrows and a bunch of other people that were shorting Bitcoin against the Bitcoin ETFs that they were buying that were at that huge discount. It's a natural arbitrage, obviously. But if you can't, if you don't have enough capital to withstand the carry on that one, you get into a world of hurt. And it took down BlockFi and Voyager and a bunch of other firms. Yeah, when you go from a 20% premium to a 30%, now 5% discount to NAV on GBTC, it's going to break a lot of things. But a spot ETF would effectively fix that and protect consumers, which is the mandate of regulators. Yeah, you would have thought that Gensler, who claims to be pretty knowledgeable about such things, would have figured that out and would have thought, you know, if we do this, we could basically keep that premium from being too high or the discount from being too low.

But instead, it was something that was just out there and given all the people that were lending coins and paying depositors of coins, 6%, 8%, 12% on the various tokens to leave them on the chain, to leave them in the brokerage rather, and then lending them out to NFT founder. I'm not NFT, I'm sorry, NFX, forgetting his name. I don't know why. It's okay. We don't need the name. But having those out there along with three arrows were why the system broke when it broke. And even then, it didn't take the whole. That's not what took the market down. I remember listening to Scott Minard from Guggenheim telling me that this was that crypto would take the market down. And I said, do you realize that the entire crypto market right now

is at that time was under, I think, 1.4 trillion. I said, you know, that's nothing. Drop in the bucket. Why would that take down the market? I don't understand. Well, it's complete nonsense that very soon we may be able to short Jim Cramer's trades via an ETF, but we can't get a Bitcoin spot ETF. No comment. I mean, what world are we, but what world are we living in? I love Jim, so I can't. I'm just saying it's not an indictment of Jim at all. I'm saying that that could be a serious product that could be viewed by the SEC as legitimate, but we can't get a Bitcoin spot ETF

means that we're living in some upside down world. Right, and, you know, to your point, Scott, about that particular gentleman, who, like I say, is a friend of mine, so I can't talk bad about Jim, but they do have an inverse Cathie Woods. I mean, you know. And it's printing money. Yeah. Innovation shares, I think, right, has it. And it's an inverse Cathie Woods that has just been killing it this

year. Because obviously, just take the inverse of Kathy, and you see where that one is. And I don't dislike Kathy either. But that one's out there. And it's different. Jim, with the people that hate on Jim. He does take a lot of arrows, Jim Kramer. He takes them with grace though. So I guess that's the, when you put yourself in that position, it's, it's somewhat inevitable. I'm sure you get your share of it being on TV and making recommendations and calls every single day. I usually just get, um, uh, I don't as often get people telling me, um, that was a shitty call, John. I usually get, you're a pump and dump guy. And I said, yeah, that was a shitty call, John. I usually get you're a pump and dump guy. And I said, yeah, that would work so well for me to, you know, get and retain a lot

of subscribers, uh, to my services. If every time I just, yep. So sold to all my customers as the thing rallied up, that would just work out great. Well, in markets, anyone who makes money is naturally. Yeah. Because if you lost money, then someone else must be doing something like pump and dummy. If they made money, it couldn't just be that they were smart or good at their job. Well, now we're up against time. And thank you so much for taking the time for this conversation. Scott, I always appreciate being here with the wolf of all streets.

And as I told Scott, I used to do sound effects. Mark and I always howl, but his howl is better than either of ours, Mark. So yeah, absolutely. Thank you, John. Let's go.