The Wolf Of All Streets - The Fed Pivot Is Here! What Does It Mean For Bitcoin? | Crypto Town Hall

Episode Date: August 23, 2024

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I guess we'll need to change the title to what is happening to crypto during Powell's speech, because it's happening right now. And he went full dovish, which I think we will discuss here, obviously. But I think a lot of people expecting him to sort of maintain the same tone that he had before. I'm hoping you guys can hear me where, As usual, we're kind of glitching here. But yeah, and I'm going to go ahead and share a couple of the quotes of what he said right here, which I just posted. I'll tag it up at the desk. But pretty interesting and worth talking about. We got, the cooling in labor market conditions is unmistakable it seems unlikely that the labor market will be a source of elevated inflationary pressures

anytime soon we do not seek or welcome further cooling in labor market conditions the time has come for policy to adjust the direction of travel is clear and the timing and pace of rate cups will depend on incoming data the evolving, and the balance of risks. We'll do everything we can to support a strong labor market as we make further progress towards price stability. Mike, I think, McGlone, fair to say this is a full pivot. Yeah, the market got exactly what it expected. I think the time has come. Full pivot. The thing is, now is it going to be 50 or 25 at the first meeting? I'm almost certain it's going to be 50. The market's right in between. I'm sorry, almost certain it's going to be 25. There's no reason to start out with 50 unless the next unemployment number is very low. So it's kind of like water under the bridge. It's done. Now let's move on. And I look over at markets. The stock market absolutely has to go up now because it's the most significant example

I've ever seen in my entire career since the 80s of market anticipating a Fed cut. Now we still have to wait another couple of weeks for that, about a month actually. Exactly 17 years ago on September 8th when they first cut for that cycle, it started in 2007. It was on September 18th and they cut 50. But that's when credit spreads were riding. This time they're probably going to go 25. But to me, that's where the problem is. We've priced this in since they first started pricing in futures one year ahead in Q123, which we talk about on macro Mondays all the time. So now it's looking at, I think what's happening is like from my commodity standpoint, I see nothing

but deflationary recession trends with gold's breaking out versus everything. Stock market has to go up now. And I think what's happening with Bitcoin is kind of figuring that out. So if you look at now, if we were just going to do a month then, gold's at a record high, S&P 500 record high, and Bitcoin's $1,000 off its high. I'm sorry, $10,000 off its high. It's at 61. That's not good. And that to me is now the problem is, okay, as long as beta keeps going up, we're all fine. But now we've all bought into this and the rumor has been great and it's going to be happening. It better go up. So I'll end with this. On a quarter to date basis, when I think some of the best performing assets the next few years are winning, TLT is up 6%, S&P 500 is only up 2%, Bitcoin is about unchanged, and gold is up about 8%. I think that's going to continue.

We'd love to get everyone else's opinion on what Powell has said and whether you view this as a full pivot and what's likely to come. Obviously, markets immediately, at least I'm looking at crypto, reacting favorably to the news. Mike, to me, you made one of the most important points. And we just talked about this, I think, yesterday. But we had predictive markets saying this cut was coming, obviously, for a year and a half. And it never happened. It was very clear it was going to happen now. But if you look at predictive markets now, it's sort of the same behavior. We have the cut, and now they're over probably guessing how many cuts we'll get and how fast. So the market now has moved on

from pricing in the fact that they'll cut to probably pricing in way too many cuts way too fast unless something's actually broken. I would love everyone's opinion. And Ladio, I saw you giving a lot of thumbs up, so feel free to jump in. Yeah, I completely concur. As you well know, I've been a proponent that crypto is always a leading indicator. Do you guys hear a lot of it because I'm in a glitch? Yeah, can you hear me? Yep. Yep. Okay.

All right. Keep going. I'll deal. Okay. I was saying essentially that you see BTC rallying in the last couple of days in anticipation. But as you said, the market has essentially priced in these rate cuts for well over a year now. And as you can see, the market isn't really reacting that dramatically to this comment because the market's already rallied in anticipation of a rate cut that it had priced in. And I believe the real pivot took place in December. And that pivot was worth, as you saw, a massive move in the market after seeing the

10-year go to the 5%. So I think this is good for RISCON. But once we get to the rate cut, I think it's going to be a buy the rumor, sell the news, because everything's already been priced in. So keep an eye on crypto and see if it starts to decline as we get closer to the rate uh cut he got done talking there yeah okay i can't moderate particularly well so you guys feel free to flow with the conversation okay i i'm curious, is Powell playing the wording that he's using? The Brits are the world leaders in understatement and with the revision,

at what point does the word cooling turn into something I don't know, like Ice Age? He's really downplaying what's going on. Peter, what are your thoughts? Assuming you can hear me. Yeah, I mean, I can hear you.

I mean, there's two questions. Obviously, you know, what is the Fed planning to do? And does the Fed know what the hell it's even supposed to do? You know, I lean toward the later question. I mean, if you look back at the Fed's reaction to interest rates over really the last couple of cycles, it's always too late. It's always too little. It's clueless. So, you know, I care less what the Fed's going to do. I want to look at the charts and see what the charts are telling me, because I believe the charts know more about what the market's going to do than the Fed will ever know. And, you know, right now, I just see that the charts really tend to reflect lower rates. So, I mean, I look and don't know why the Fed doesn't lower rates by 50 basis

points. I mean, that's what the charts tell me it should do. But of course, I think the Fed will be late in doing it, as they are always late in doing it, because they really don't know what to do. They're always tailing marks. Look at Nate Silver's book, The Signal and the Noise, where he analyzes the performance of PhDs, such as those serving on the Fed, and the ability to anticipate what economic indicators will be, and it's horrible. It's worse than random probability. So I pay little attention to what the Fed's going to do, although I do have to trade in the volatility it creates. So, you know, I look at charts, I think we're going to go to lower interest rates. I look at gold, gold charts continue to be really dramatically bullish. Now, the big news to me that I'm looking at is the

dollar. The euro currency has broken out of a 22 week diamond for me. So I just think the dollar's cooked. And so my big trade really right now has got to be a short dollar trade. Bitcoin continues to be in the six-month congestion. At some point, that gets resolved. And then I think we end up with the bull cycle that takes place at the back end of every having. So that's my view. Love it. Duane? Hey, good morning. Well, I think the overall narrative that the consumer employment is weakening is going to continue to persist. Between 600,000 to 800,000 job revision here is really nothing to sneeze at. And if you look on the bigger picture here, you could make the argument that the consumer is weakening.

We've seen companies like Walmart, they've just put in crazy discounts on over 7,200 items. Some other retailers have done 5,000. So we're going to see this sort of thing persist. If you look down the supply chain, these sorts of companies are going to put pressure on other suppliers like Hershey's, et cetera. We're seeing foot traffic year over year decrease significantly as well. So if the argument is that the consumer is weakening and we look at Bitcoin as a, I'm just putting this all in air quotes, of course, because this is sort of the perception, in my view, and now we're going to get out of this tightening cycle with the expectation of inflationary concerns as well as job market

concerns, then Bitcoin should also rise with this sort of narrative occurring. I also think this is really good tailwinds for gold as well for a number of reasons. If you look at the supply chain dynamic, if you look at how gold has performed within a rate tightening cycle and then as you ease into expectations here. So I expect great things for both Bitcoin and gold moving into the next, say, well, two to four quarters here. Tom. Tom Dunleavy, hopefully you can hear me. Yeah, sorry. Sorry, I can hear you. I'm trying to find the unmute button. Morning, everybody. So now that we've officially or almost officially, Powell's all but confirmed the rate tightening or rate easing. And I sent you a chart the other day, Scott, you know, what do markets do after that?

And if we don't have a major recession and if growth is still fairly strong, that's actually been enormously positive for markets. And I think, you know, it's pretty apparent that, at least to me, that growth is going to continue to remain strong, especially in the back half of the year. We've had a number of folks calling for increased liquidity conditions, not only from the US, but the PBOC and others. And then we have, I think, whatever administration we have is going to have an enormous amount of government stimulus spending. And, you know, I think that's where we're at politically right now. I don't think there's any doubt that a lot of these policies are going to be very growth positive. So I think this is just the start of what we hoped would be an awesome Q4 and a Q1. Eladio, hopefully I can hear you.

Okay, two things that could change cryptos and interest rates. The first one is the Japanese carry trade. Sure, supposedly a large part of it was unwound. But let's not forget that the fourth largest economy in the world, Japan, is for the first time that I can remember going in complete opposite directions of where we're going to be going. They're going to have to raise rates and we're going to have to lower rates. And that's going to increase the disparity between the rates that we have. That could be a problem. And the other thing about crypto, I think the RFK endorsement, if it happens today, I was talking to Brian Krasenstein in one of the spaces earlier today and you look the last election was determined by only

55 000 votes in three states essentially uh battleground states and there are more than 55 000 crypto uh investors and you look at the the demographics of crypto investors and i imagine most of the crypto investors are under 50 year olds-olds. I think that RFK has shown himself to be the most pro-crypto. I mean, he's even been talking about putting reserves of our country in larger amounts. Trump obviously took the initiative away from Kamala Harris by going to the crypto currency convention. Now, with the addition of possibly adding RFK in some capacity, I think the crypto crowd could have an impact on this election, and it could be positive for crypto longer term in the same way that those lawsuits ended for Gary Gensler in the wrong way that he expected.

Go ahead, Joe. Yeah, thanks, Scott. First of all, looking at, I mean, somebody made a comment earlier, and you hear this bandied about repeatedly about consumers weak or the consumer stress. If you take out the bottom 25%, right, consumer demand, ohover-year, is up 3.5%. Retail sales came in for July, up 1% for the previous month. And year-over-year with all, including the bottom quartile, you got 2.7%. Now, go back and analyze the data for any recession in history over the last 100 years where there has data available from various sources about consumer demand.

You've never seen that in a recession. That is never—usually consumer demand in advance six months to a year out from a recession is cratering, right? So I think the bearish argument just loses a lot of credibility. I mean, you've got people that have been wedded to these positions for years, and now you're entering a period where the Fed is telling you openly that there's going to be, they're pulling their pedal off the gas in the form of at least one rate cut. I particularly think there's not going to be a whole lot more. Maybe you get another 25, 50 in all, but you're going to keep it high because demand is high, because the economy is high, because although

every person on these posts points out any flaw or any doomish narrative they want to put out, the reality is the economy is still growing, right? You still have 3% real GDP growth. You have unemployment, which is softening, right? But historically, it's far below the 50-year trend of 5%. We're not even at the 5% trend, you know, while absorbing millions of new workers in the form of additional immigration because the Biden administration's lax immigration policy. So I just think, like, you know, you can always point out something negative. You can come into a room and you could always say something's bad about the economy or this data point is ominous or there's clouds on the horizon. But the reality is, if you look at the preponderance of evidence we have right here, the economy remains strong. There's some concern right on long term basis. That's why the Fed is reacting. And as Powell said in the last FOMC, the balance of risks has now come into the various risks have now come into balance. What he's basically saying is that unemployment, along with the consumer prices, are basically at the same level of concern right now. So we should begin the process of easing.

The time has come to begin the process of easing because we know about the long and variable effects of monetary policy. So, I mean, that's the good thing. This is the soft landing being stuck. And people that want to argue otherwise and want to point to every factor under the sun, you could point to that data throughout history and show that this time really is different in terms of the factors we have.

And we're looking at in terms of government spending, in terms of the labor market, we are dealing with pandemic error fallout that still has not yet been resolved. And by the way, that's probably been the majority of the disinflation we've seen. I mean, I have clients now that are finally getting over supply chain disruptions that go back all the way to 2021 and 2020. So, you know, take a step back, go into the real economy, and you'll see that business owners are still doing very well. Yes, the bottom, you know, quartile is struggling because they don't

have much buffer at all. But, you know, the bottom quartile doesn't drive the majority demand in our economy. It's the upper 40, 50 percent that does most consumers depending on services and and on goods. So I got to follow up on that. This is Mike. The facts are CPIs 2.9% year-over-year, and retail sales are 2.7% year-over-year. For over a year now, retail sales minus CPI are negative. The most significant time we've had this type of retail sales distorted by CPI, which, as you mentioned, Franrick, was right before the great financial crisis. I'm a commodity guy. I look at declining demand for diesel, unleaded gas, and container boards in this country. These are facts of why part of reason crude oil is declining and gold is advancing.

I see plunging bond yields in China. This is a global recessionary trajectory. I would just point out the facts. You mentioned retail sales. I know retail sales, less CPI, are negative. You're looking at retail sales, and I alluded to this, so you didn't really address it. You have to break it out by quartile. You have to take out the bottom 25%, which really doesn't drive the demand.

And if you look at the overall number, it includes that bottom, which is pulling down the average. You take out, if you do the top 40%, you see 7% growth in consumer demand. And that's not my numbers. What was the firm here? This is Cheddar Flows. CoreSight. CoreSight Research. So tell me a recession where you've had the top 40% responsible in an aggregate sense for the majority of demand. Show me where that's ever occurred. You see tremendous demand among people that are benefiting from higher asset prices exactly you win you win i get just point out the facts of a global situation here why is the fed starting to ease why are commodities pointing this out um and you can dig into the details like that but the macro

big picture for retail sales is just negative compared to cpi the fed is starting to ease because inflation has cratered and you're admitting in your statements because unemployment is going up at the same pace as it was during barely well it's never bottomed from such a level 100 probability since 1947 without going to six percent maybe it's different this time i and again you win i don't want to argue with you i'm just pointing out you're looking at the equity markets most stretched in my lifetime. Volatility is at a six-year low, and things are just starting to revert. The yield on the 10-year note is just starting to roll over.

The 200-week moving average of VIX is just starting to roll back upwards. It's all pointing that way. So I'll just put it this way. What did you do in September 17 years ago when the Fed first cut rates? The thing to do was to sell stocks. Okay. Volatility. it this way what did you do in september 17 years ago when the first fed the fed first cut rates the thing to do was to sell stocks okay volatility here what did you say how many year low we just printed almost above a 60 on the vix what are you talking about 100 week again i this we're going to waste other people's time you win good luck i'm just saying this has been the argument

for a year economy is slowing and what you actually see is a real acceleration. I mean, you can see it in the data. One important point here is household debt service as a percentage of total personal income. And you alluded to it, Joe. It's really about the consumer and our propensity to spend in the U.S. is at the lowest it's been in almost 50 years. So people have plenty of money to spend. Debts are low. I think recession probability is equally low in my mind. And you have that in the face of fiscal, which will expand, right? We know that the

president during the first 100 days of the administration, whether it's Kamala or Trump, they're going to be putting forward a package to try to spend. Trump's going to try and renew the tax cuts, which explain to me why that's bearish. I will never understand. And then Kamala's trying to get through a big spending package in the first 100 days. That's the mandate that comes with a new administration. And hopefully if there's, you know, if there's something that gets through, right, it's going to be pro markets. Eladio? Yeah. By the way, I think Peter and Joe are making great points and they're both, they can both be right. The question isn't whether the economy is slowing down or not.

The question is, what has the market priced in already? That's the key, because the markets are so detached. They've made a bet for so long. I mean, where were we eight months ago on the expectation of rate cuts even last year? And all that has been priced in. So I expect a buy the rumor, sell the news event, but the election may interfere in any correction because, you know, the market's lost its capabilities. But let's say that Mike is right, that we are seeing a slowing economy. It actually might actually help the market because every time the economy slows down, money leaves small caps and it leaves, you know, lower quality cyclicals.

And it goes to technology because technology is still considered a safe haven in the event that the economy slows down. And as we know, tech stocks have hijacked, they monopolized the market weighted indices, whether you look at the S&P or the NASDAQ 100. They're the same 12 stocks are basically in charge of the market. So if we get the slowdown that Mike is talking about, we might actually see a rally in the market because tech will rally as a safe haven. So let's just assume everything is priced in, okay? If everything is priced in right now, which is what my base case is, I think the market reacts right away in prices in the data, then what you can see is the majority of flows to the S&P 500 will continue. Irrespective of valuation, you can say, oh, they're stretched

so far. It's a mindless robot that's plugging in cash into the S&P 500 on a going forward basis. As long as that bigger upper income demographic does not fall apart and there's not mass layoffs in the tech sector and the high wage earners, that money is going to be coming flowing in and they're going to be pushing to those companies. So people can complain about how concentrated it is. But if you're not really tackling that upper income bracket, the stocks are going to go higher. Once again, I was trying to change the title and got caught mid title change. So now the title will look awkward as we continue on here with the conversation. I want to talk about specifically what we think that this inevitable pivot now will mean for Bitcoin.

I mean, we kind of saw it coming. We have the four-year cycle, the election coming. To me, it feels like largely tailwinds and Bitcoin is ahead of where it even should be at this point in the cycle. But I would love, I mean, Peter, you sort of pointed it out already. You said we're sort of in the summer doldrums and you expect that move through the fall. That seems to be consensus, which always worries me, but it's also my opinion. Tom, what do you think actually? Yeah, I mean, my stance hasn't changed. And if we just did the sell in May thing, I think we would all be a lot happier this summer. We all set it for the summer and we're starting to see a lot of the things that we've pointed

to the pivot rate cuts, liquidity, you know, jobless numbers while they've been revised. I mean, still in an absolute sense, we're still gaining over 180,000 jobs, I think, on average versus the whatever 220 per month we were. I mean, those are not recessionary numbers. You know, we're still adding an aggregate amount of jobs to the economy every month, and inflation is now, despite what the doers say, it seems fairly under control, though obviously at a much higher level than it was previously.

So no real changes for me. All systems go for Q4. I'm just ready for summer to be over. Yeah, there needs to be a caveat, though, to the sell selling man go away. We need a selling man go away, but always remember to buy in September or something, right? You have to come back in. And, you know, you won't regret not selling in May if it's January or February and what we think is going to happen does. So, hey, Scott, do you actually believe this is a pivot or is this exactly what Powell has been saying for a year? Because I favor the latter.

But I'm curious to see why you think it's a pivot. I mean, I think pivot is a technical term. A lot of people said last December that he pivoted, and I disagree. For me, when I say pivot, I mean actually cutting. Forget narrative. Yeah, I think it's fair to say. And Mike would agree with this. I know we've talked about this.

Powell has been very direct in exactly what he thinks and exactly what he's going to do. And markets or pundits have just read into his words incorrectly when he's been wildly consistent. And so, you know, him remaining consistent is not a pivot. But when I say pivot, I think we had a pause and now we have a pivot if we get a cut. So the pivot comes in September. That makes sense. Historically, the pivot came out of 2018, where if you remember, he came out and said the balance sheet runoff is on autopilot. That was his quote. And that he didn't expect to cut rates. Well, what did he do into 2019? He stopped the balance sheet runoff, and then they cut rates in 2019. That was a pivot, right, from what he was telling the market. This is not. He's always said inflation doesn't need to get

back down to 2% for us to begin a cutting cycle. He said that a year ago. We have to be confident that the trend is down with a series of data that we believe show it's going on the long-run targets of 2%. He said that for over a year. Yeah, I don't like to start using terminology based on our interpretation of what he says. So for me, the pivot is when we actually see the cut because people were arguing that it was a pivot last December. And I said, no, a pause is not a pivot. The pivot's when he cuts, right? Maybe it's a slight pivot, not by the same definition in narrative, but I just think the pivot is when he cuts. Jonathan, go ahead. I just want to bring it back to what you were talking about, the cycles.

And if you look at the historical performance of Bitcoin in different months and different quarters, I think looking at September as something that's going to rally, probably not historically. It is over the last 13 years, it's been down. September has been a down month. It is on average, its average performance, it is the worst performing month. Its average performance is negative 5.16. So if Bitcoin were to close today, it would actually beat it and beat that average um and and in general the third quarter is is the blech of crypto it's the it's it's miserable the when when the when bitcoin closes up when it's had a positive month and if you're looking at

all the months august july and then september those that is the third to last second to last and last place performing months i mean it's september you don't expect it to to be some kind of crazy rally time yet jonathan just uh yeah that's why up to october is a meme if you guys remember 2020, literally like October 1st, the market completely skyrocketed the day that September ended. Yeah, I think people need to be reasonable here with time frame. But like that means that if you think things are going to go up in October, then September is the time to start buying, right?

Not after it goes up. So I agree with you. Summer doldrums exist in all markets, particularly in crypto and particularly in this year of the four year crypto cycle. So your point is well taken. Eladio? Okay, Scott. And I understand your argument about the pivot, but Janet Yellen was the master at doing nothing and just using rhetoric as if it was a pivot or a rate change. She did that when the Brexit hit, I remember. And in 2016, we also had a huge downt as you pointed out, the market bottom in October got in front of the Fed when we saw the 10-year hit 5% and front-loaded the Fed's pivot. And then that's when we went off to the races, and I used price action and technicals to confirm that it was a pivot.

And if you look at the parabolic move, that's when the cyclicals and the small caps attempted to rally in anticipation of a rate cut that then, if you remember when we got hot CPI numbers this year in the first quarter, or hotter than expected, that's when we had a sell-off because we had overpriced a pivot from a rhetorical standpoint, which is, in my opinion, as powerful as a rate cut, given what the market did in terms of its moves. Anyone else thoughts on what a lot of you just had to say? I mean, I think that Powell and Yellen are not the same. I think that Powell's been very direct, and a pivot is very clearly when policy actually changes. Because otherwise we can parse people's words endlessly until the end of time and it's just opinion.

If he's going to cut, he's going to cut. Maybe we should talk about how many cuts we're going to get. Because I align very closely with what Joe said. I think this cut is red meat. It has to be done. He has to do it for a number of reasons, but I don't see a reason to do what predictive markets are saying, which is five, six cuts in the next seven to eight months. Isn't the smarter move just to cut and then pause

and then see what happens? Dwayne, what do you think? Well, yeah, I agree with those comments to a certain extent. If we look at, you know, what Powell has been doing in terms of his actions, it has been a lot of rhetoric and a lot of talk without actual, a lot of action. And in some ways, we're playing the sentiment game here where I'm just mentioning a couple of comments or saying that you're going to look at the data. And now coming out with dovish comments does actually affect investors and investors have almost a euphoria, so to speak, here. And they're looking for any sorts of, I mean, there's a chance sort of positive comments. So I

don't anticipate there being five or six rate cuts, at least immediately. I do think that there will be at least a perfunctory rate cut of, say, 25 basis points, which probably isn't going to be enough. However, I think that there will be a cut and then we will wait and we'll play a waiting game. And then there perhaps may be another cut depending on the data. But I don't think there's going to be an easing cycle, so to speak, within the next two quarters here where we're going to have cut after cut. Go ahead, Joe. Yeah. So if you look back historically at what their policy objective is in theory, right, they talk about if inflation expectations are too high or if inflation is trending higher,

they want to move to a restrictive rate. And then what they do is after they're confident that inflation expectations are well anchored and it's on a downward trend towards what Powell says the long run target of 2%, long-run emphasis on that. Then what they do is they move it to neutral before they move it to accommodative. So the parallel that I'm going through is the 1995, where they cut in July. They did one more follow-up cut several months later in December, and then they held it stable throughout all of 1996 and 1997. They didn't do another cut until, I think, September or fall of 1998.

So that's the better proxy. And I think we're all focused on this 10-year, 20-year trend where they start a cutting cycle and it's rapidly cutting and it goes lower and takes out the lower low of the prior cutting cycle. I think that's wrong for this cycle. I think they're moving to a neutral rate where they think it's neither accommodative nor restrictive from an interest rate policy. And I expect them to stay there until we get inflation substantially lower. Maybe we do get a recession like Mike has been calling for. Maybe not, right? But unless you're seeing recessionary forces, I don't expect them to be cutting aggressively five or six times, like you said. Anyone else have thoughts?

Peter? Yeah, I think this can be 50 basis points and that's it for the rest of the year. But could be wrong. And that's based on what the bond market is telling you i assume yeah and i just think if they go 25 it sets the expectation for some continuing 25 25 25 and i'm not sure that's the message they want to send so they do 50 and they say, Hey, now,

now we'll take a look later on. And then they don't really need to make a decision the rest of the year. Does anyone have an opinion on whether this is political in any way, shape or form with the timing coming into the election? Oh, oh, yeah. How do you miss all those jobs and then you let everything damp

for a number of months and then all of a sudden it's like, look what I did with the economy. This is a joke. The whole thing is a joke. The $818,000 revision this week is definitely a little bit

suspect in context of the timing of Jackson Hole. I'll give you that. How do you miss... What were they doing? This just doesn't look good. Let's just not put that... It just makes no goddamn sense. It's a bunch of liars.

A lot of them. Dave. Well, first, you have to understand the birth death model and the stuff that they use to do these reports. A lot of it is a bunch of bullshit anyway, and it's not incredibly surprising they missed it. But a couple of things that are important here. First, they do this every August. So the timing is the timing. It's what they do they do you can go back there's a time series you can look on the website and you can see it so it there's nothing conspiracy theory going on it's

just it as far as jonathan's point that they're a bunch of liars i mean they have models that are ridiculous and they use them anyway because they haven't updated them. So, yeah, they suck. Now, as far as whether they're being political or not, I mean, if you both don't believe that the Federal Reserve responds to pressure from the administration, then, you know, come on. I mean, I'd love to sell you something. We'll figure – I don't even care what. You know, a new meme coin, a Brooklyn Bridge, doesn't matter. Of course they do.

And, you know, it is what it is. But the only prediction I will make with certainty, because I don't have a prediction, whether it's 25 or 50 in September, I'd probably guess 25, is that whatever happens, they're going to be behind the curve. And unemployment is going to likely increase, you know, barring major political change, unemployment is going to likely increase faster than they move, and then they'll have to overreact, because that's what they do. They, the Federal Reserve historically has piloted the economy, which is an aircraft carrier, like it's a speedboat or a race car. And they've been behind the curve every time they're always

way too early, way too late to raise. They're always way too, they always over tighten beyond where they should, it's just been it's historic. And, and it shouldn't surprise anyone, because the data that they're using is the same crappy data that allows them to miss, you know, over 800,000 jobs. So it's not that surprising. Now, the thing that James lavish always points out, that is incredibly important is that unemployment, once it starts to increase, it's exceedingly rare that it stops and turns on a dime. It becomes self-sustaining. And so it generally requires fairly sizable lift. The interesting thing is Powell is not an idiot. And the reason Peter may very well be right is Powell may be thinking, well, yeah, that's true. So that's why I need to

do 50 now. Because if I do 50 now, maybe there's a chance I could arrest it in its path because the market will be, you know, will believe it. But that's really the question. So if you know the rate which they think is neutral, get to the bottom end of that range, because it's always a range, that's where they're going to want to take rates to as quickly as possible. Yeah, just to add, okay, two separate governors, one was Harker and Presidents, excuse me, they both came out and said they expect the unemployment rate to trend towards 5%. And that's, you know, their forecast, right? And they have the summary of economic projections where they also expect it to trend higher.

So they're not stupid, right? They know the unemployment's likely to head higher and that's consistent with their policy objective. And Dave's right, right? They are persistently behind the curve and there's a reason they're behind the curve. It's because markets move faster than the Fed moves. And that's a structural issue of our system.

So it's not like, there's no way- And lagging data. And lagging a structural issue of our system. So it's not like there's no way. Correct. Correct. Correct. And keep in mind about the conspiracy theory about, you know, that's largely effective at the birth death model. Again, somebody pointed out this happens every year. Number one. Number two, that's those are BLS numbers. Those aren't Fed numbers. They're relying on a separate part of the federal government, not the Fed data itself, not like they're doing the survey. Eladio? Yeah, I'm going to push back on the BLS number. If we had a year where we should have had revisions that were this large, it should have been in 2020 when we had COVID, where we had the most uncertainty and certainly

any models or formulas or algorithms that they use in order to figure out what the employment monthly numbers are, you know, would have been more affected. It's just too coincidental in my opinion to see the largest move, the largest drop in jobs in 15 years. And I'm not quite sure that I would say, Joe, that it's just the Fed's internal numbers, because the markets sort of do anticipate the Fed and force the Fed's hand, even though Powell, to be fair to him, has been much more stoic and to this date hasn't lowered rates. And he's stuck to his guts. Eladio, the one thing you have to realize

is if it really was a conspiracy theory, the revision would have come out on November 10th or 3rd or November 20th or whatever the hell the date was. Coming out in August, it doesn't serve any purpose whatsoever. Literally, there's no way anyone in the administration is happy about this.

They probably are all gnashing their teeth. Hell, the Secretary of Commerce claimed that she didn't even know what it was which of course tells you that how wild that was the worst thing ever that was the worst thing i've seen this year so far well i mean you have an administration that that's that's completely incompetent what do you what do you expect i mean you you have someone who's she's only the highest ranking government official responsible for business. She shouldn't know anything about employment numbers or where they get generated. That's sarcasm, folks, by the way. To end.

Right. Well, I mean, you know, there's something to be said about politics as well in Fed policy. But, you know, just to echo some of Eladio's comments here, if they were, you know, if this was a political issue here, then I mean, we would have to, I guess, go even further back to say, like 2019, I believe, under the Trump administration, there was a revision of something to the tune of like 500,000 jobs as well. So if the Fed is making errors here, then they're making errors to, you know, arguably the detriment or to the tune of like 500,000 jobs as well. So if the Fed is making errors here, then they're making errors to, you know, arguably the detriment or to the support of both parties here.

So, you know, we have to look at it within that context. That's really interesting, actually. Pivoting sort of what does it mean for Bitcoin? I mean, Simon, you've been here for a long time. I'm inclined to say that this has effect in the short term, but Bitcoin is going to do what it's going to do long term. But I'd love your opinion. Teed it up and nobody took the swing. Anybody else have any feelings on what this means for Bitcoin specifically, being that this is a crypto town hall Dave. I love your opinion

Yeah, I mean my opinion is this is unchanged God, I'm sorry I hate to be a broken record But it's just we're more the same. I think that Bitcoin is not going to doesn't give a crap about big truck going by That sounds like you have a hose on your head. No, no, there was just a big truck. Yeah.

How about now? Yeah, just a big garbage truck here on Long Beach Island. In any case, I mean, look, I don't expect to see a whole lot. I think politics matters more. I think what RFK and Nicole Shanahan say and what Trump says later today probably mean more to Bitcoin than the Fed, considering we kind of all know the Fed is going to try to go toward

neutrality. And we kind of all know that Bitcoin is the antidote to the fact that they're always behind and it's managed, it it's literally you know manipulated money which is a a big freaking problem and so all these the fed follies are good for long-term investors but in the short term the market is driven by liquidity and right now there's more liquidity being injected and there's some bitcoin specific liquidity that's coming off. But the thing that makes me say that there's not much going on is, you know, Bitcoin reacts quicker. And all coins, most of them, certainly Solana and Ether, have basically been, you know, the least volatile I can remember since last August when nothing happened. So, you know, why should we be terribly surprised at how much is happening right now?

Not surprised, but go ahead, Simon, you're back. Yeah, similar sentiment to Dave, you know, I do think all of these things impact Bitcoin in the Bitcoin benefits from, you know, rolling over the Ponzi because that drives more risk capital into the market. And when things go wrong, it also provides a solution to the problem. So it's why Bitcoin is like, you know, it's affected, but not affected as well. And so it just does the same thing. I still expect the four-year cycle. But in terms of, you know, what types of events are happening in US politics, I do think if RFK dropping out and there being a guest speaker at the rally tonight, I do think that that revives in a good way the whole fundamental understanding. If RFK has got any chance of joining the

administration and playing any role, whatever comes from that. I think that's really good for Bitcoin. He will. Awesome. I mean, you know, that was a pretty strong rumor already when I interviewed him in Nashville recently. I mean, I talked about it yesterday, but he kind of slipped in our interview. We had to take it down, edit it and put it back up. And then we heard pretty likely that he would be, you know, head of health, human services, something like that. Nothing Bitcoin related, but I think everyone can agree that wherever RFK lands, it's pretty positive for Bitcoin. Yeah. You know, and he's got some very strong narratives around Bitcoin as an energy play, a national security play, a strategic reserve asset play, an inflation hedge,

and the federal reserve type play. So he's got all those narratives and he can help hopefully communicate how Bitcoin is a solution to some of these prevailing problems. At the same time, the inflows into the Ethereum ETF, they've now passed a billion dollars. So the Ethereum ETF is some better than I thought it would do. That's by the way, I think it's a billion just into BlackRock. Just into BlackRock. All right. Okay. Even bigger than I thought it was across all of them. I know you're right. You're right. It's just, yeah, just BlackRock was the first Ethereum ETF to pass a billion dollars. And then I think the next one down Fidelity was about 350 million. And I think there's two and a half billion of outflows in total from Grayscale. So there's a bit of a redistribution. And then the SEC under the current administration has rejected the Solana ETF, saying that they think Solana is a security. So it indicates that the current administration will be more of the same in terms of its crypto stance.

And really that points towards a Bitcoin market, an Ethereum market and BlackRock looking to tokenize on top of Ethereum. I tend to agree with you, and there's nuance when people argue what the election means for Bitcoin. I think it means very little for Bitcoin, but means a lot for the crypto industry in the United States. You know, just like... No, I think the strategic reserve asset is a big story for Bitcoin. The crypto, the regulation story is a crypto story, definitely. Exactly right. You make a good point. I'm not saying that... I should have said that the

negative side of it is probably more for crypto than for Bitcoin. But Bitcoin could get a huge boost if we see the campaign promises fulfilled by the Republicans and they win. But I think it's going to be a very interesting cycle moving forward. I mean, this week we saw obviously that crypto and Bitcoin were completely unmentioned in the Democratic platform. I don't think that that was necessarily a surprise to anybody paying attention. But at the same time, you had, I believe, Brian Nelson from the Harris campaign saying that basically Harris is pivoting herself to a more crypto friendly position and that, you know, she's going to expand cryptocurrency policy in the United States. And I think everybody in the industry just says, OK, do it. Right.

So we're going to have to. Yeah. And I think her version of crypto means what the banks want, what's good for us, you know, an Elizabeth Warren type policy, more surveillance. I think that's what she thinks you mean or the administration means by good for crypto. Yeah. Good for crypto to her might be like clear stable coin regulation that means only banks in the united states can issue stable coins right

and it should not go unnoticed and something i talked about this morning i mean elizabeth warren arguably had the most positive reception to her speech at the DNC of anyone outside of, you know, Harris and Walls. So I think our hope or narrative in the crypto community that her power is waning or that her popularity is waning might be hopium to some degree. So, you know, it's worth watching. It's not like Elizabeth Warren came into the DNC looking marginalized and less powerful. I don't think that's the case. So it's really important, I think, to watch things like that as we know that Elizabeth Warren is effectively behind the anti-crypto army and all of the policy coming from both regulators and the White House against the industry. So I think it just remains to be seen what's going to be rhetoric and what's going to happen. But I think everyone agrees that the current administration is going to have to actually show something before November and not just share sentiment or words or rhetoric. And Simon, I know we agree on this, but at the end of the day,

it's still, we talk about it a lot a lot, but still strange to be talking about crypto and Bitcoin and politicians because we were supposed to be opting out of that entirely. Right. there is a market for governments to protect their irresponsible fiscal policies and their Ponzi scheme like monetary policies so that we can actually transition to something more sustainable. And I think Bitcoin plays a role in that. So for me, Bitcoin was always politics. It was always geopolitics. And just by the very definition of providing the ability to store your own money without a bank, spend your own money without the government censoring it, and protect yourself from the policy of the Federal Reserve for inflation. It was always about politics, and so it was always going to play its role. There was a couple of other things on the more global strategic side.

Russia did announce that it's launching its cryptocurrency exchange ahead of the BRICS conference, and it's going to have two stable coins. One's going to be the Yuan stable coin, and the other is going to be the BRICS currency stable coin. And Tether also announced its UAE-backed stable coin. So a lot of movement happening around there for the longer-term trends. There's a lot happening movement happening around there for the longer term trends. There's a lot happening around the world. We're all completely focused on what's happening in the United States. But, you know, Tether with a UAE-backed Durham stablecoin and all the things happening in Russia, there's a lot happening in the world. And once again, I view it as largely all tailwinds given enough time. And if anyone didn't notice as well, Scott, there was a cyber attack on the Iranian central bank that took down the bank, the system for a day as well.

Got literally completely missed that. So this shows how wild the news cycle is at the moment. All right, guys, I think we covered it for today. I wish we could do a space as maybe tomorrow we can do one, depending on what RFKs or tonight, depending on what RFKs announcement is. I think that that is probably going to be the biggest news of the day and really could be impactful for our market in particular. So I'm going to visit that with the team and we'll see. But until then, I think we've covered this really, really well today. And we're going to be talking about the Fed and Powell for months to come. So we don't need to exhaust it all. Guys, have a great weekend. It's been a great week of

shows. Really enjoy it. Love having all of you guys on the panel and appreciate everybody listening. Have a great weekend. See you guys either later for an emergency spaces or on Monday. Peace.