Unchained - Bits + Bips: Trump’s Tariffs Are Causing Mayhem, But Will They Revive U.S. Manufacturing? - Ep. 811

Episode Date: April 3, 2025

After President Donald Trump’s proud announcement of ‘Liberation Day’ tariffs, markets worldwide took a tumble.  Shortly after Trump’s Rose Garden announcement concluded, James Seyffart, Steven Ehrlich, Ram Ahluwalia, and guest Quinn Thompson discussed: How markets reacted Whether tariffs can bring middle-class jobs back to America Who will end up paying the most Future possibilities of war, recession and stagflation How it all affects crypto Sponsors: Bitwise Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Ram Ahluwalia, CFA, CEO and Founder of Lumida Guests: Steven Ehrlich, High Scribe of the Unchained Kingdom Quinn Thompson, Master of Macro at Lekker Capital Links Trump Tariffs Shake Markets New York Times: A Stunned World Reckons With Economic Fallout From Trump’s Tariffs Wall Street Journal: U.S. Stock Futures, Dollar Tumble on Trump Tariff Plans New York Times: A Timeline of Trump’s On-Again, Off-Again Tariffs US Tariff History CATO Institute: The Problem of the Tariff in American Economic History, 1787–1934 Brookings: Did Trump’s tariffs benefit American workers and national security? Impact on Bitcoin and Crypto Unchained: Why Trump-Induced Stagflation Could Finally Make Bitcoin a Safe Haven Unchained: How a Radical Proposal in Trump’s World Could Hurt Stablecoins, but Boost Bitcoin The Concerned Consumer and CEO CBS: Consumer confidence slumps to 12-year low as Americans fret over their financial prospects NPR: Why CEOs are calm about tariffs in public — but 'very discouraged' in private 🤝 00:00 Introductions + Quinn’s background 📕 4:09 Trump’s take on U.S. tariff history 📉 6:11 The market’s tumultuous reaction 🏭 11:13 Will tariffs bring manufacturing back to America? ▶️◀️ 12:47 The contradictions in Trump’s policies and the threat of stagflation ⏳ 18:53 Why Trump doesn’t have as much time as he thinks 🥵 24:12 Will American consumers bear the burden? 💥 26:05 Taking a wrecking ball to market psychology ❓ 28:02 Whether Trump inherited a healthy or faltering economy 🫸 32:00 Why CEOs are hesitating and how to persuade them to invest in manufacturing ❌ 35:11 “This is not the way you go do it.” 🇹🇼 40:44 Another contradiction: Trump willing to defend Taiwan while being isolationist? 🪖 47:55 Why the current geopolitical climate is especially dangerous 😱 55:51 Is America heading for a recession? 🤔 01:02:00 How will this affect Bitcoin? Learn more about your ad choices. Visit megaphone.fm/adchoices

CEO confidence is down. They're holding back on CAP-X decisions. Cap-X means investing in a factory, investing in a new plan, investing in a data center. META said they're pulling back on data center. So everyone's paused and in their turtle shell, and that is going to create a self and an own goal. One question I have is how, like, what could Trump and the administration do to convince people that this is now the plan. Because again, I mean, one narrative that I'm seeing sort of in the air supply a little bit is that all of these tariffs are kind of a negotiating ploy to try to encourage all these countries

that own U.S. debt to convert to century bonds and lower our debt burden, lower the price of the dollar, which would theoretically stimulate the U.S. export economy. But then that goes back to the conflicting goals of onshoreing manufacturing, but the cheaper dollar. Those two just, it's a yin and yang. So I really, like, I'm still wondering, like, I guess just thinking of this conversation, like, are tariff's the end goal or does he have an even bigger angle at that point? Hey, everyone. Welcome to bits and bips, exploring how crypto and macro collide one basis point at the time.

I'm your host, James Safer, trad by Archmester, Lord of Blumrig Zen. I'm here with Rahm Al-Awalia, Master of Wealth, Leader of Lumida. How's it going? Also with Stephen Erlich, high scribe of the Unchained Kingdom. Hi, everyone. Today, we're also joined by Quinn Thompson, Master of Macro at Lecker Capital. Good day. We're here to discuss the latest stories in the world of crypto and macro.

Just remember that nothing we say here is investment advice. Please check UnchainCrypto.com slash Bips and Bips for more disclosures. Crypto moves fast. It's why BitWise launched the weekly CIO memo, a jargon-free summary of what's moving crypto markets written by one of the best in the business, CIO Matt Hogan. Get up to speed in five minutes or less. Check it out at BitWise Investor. investments.com slash CIO memo.

Carefully consider the extreme risks associated with crypto before investing. Quick little update before we dive in. Unchained is also launching a new newsletter. It's going to be called the Bits and Bips newsletter. Stephen will be mainly manning that fort, it sounds like. So we'll hear a little bit more about that. It's going to be updates and topics that we're mostly covering in this podcast. And sometimes we don't get to everything that we want to talk about.

and this will be a newsletter that gets into some of that stuff. Before we get into Trump's speech, his Liberation Day, announcement of tariffs, Quinn, why don't you, for those that don't know who you are, you're a pretty well-known person on the podcast host, I feel like in crypto and macro circles, regular guest on. Last week I missed Felix was on with us, who's your co-host. Why don't you give us a little background about who you are, what you're doing, where you came from, and then we'll just dive right in.

Yeah, sounds good. Thanks. Great to be here, guys. First time, first time caller, long time listener, first time caller. So I run Lacker Capital Global Macro Hedge Fund. We kind of invest across assets, try to make money in every environment. And different than most macro hedge funds have a much larger focus on digital assets and Bitcoin and crypto is with the view that a lot of the outsized returns in the coming years. is going to come from, from, you know, technological innovation in the crypto world. So, yeah, we cover a lot and, you know, I've had some good takes recently that have gone against consensus, so I'm pumped to debate here. So accurate takes, before we get into that, actually, I have a quick question for you. What's the background in the name Lekker Capital? Lekker is a Dutch and South African word, means like good vibes. it yeah it just kind of a positive word you can kind of it's a slang term you can ascribe to

anything like the food or the weather uh so it carries a fun and uplifting spirit to what we do all right awesome um all right let's i'll turn this over to rham um to start us off but really let's just get into what trump said uh what he what his announcement entailed i mean this is a really good topic for like a conversation here because I feel like tariffs are like a lightning rod issue. Like people love them. Most people hate them. And a lot of people have very differing opinions. So Ron, why don't you go into what Trump said and then we'll get into what your views were and then we'll go around the horn? Right. So Trump framed that has kind reciprocal tariffs. One, he oriented around American history. He said, look, from 1789 to 1913, the United States was backed by tariffs and was proportionally the

the faster-growing economy in the world. Then he talked about the history of a revenue generation. He cited the income tax rule in 1913. He talked about the Depression and terrorists, but did not really take the generally accepted, in my view, correct view, which is that terrorists exacerbated the Depression. Then he said, look, we cannot continue a policy of quote economic surrender, that he's standing up for the American worker. he talked about the greater foreign ownership of American assets. He also cited specific industries. He said, in pharma, we cannot, quote, produce enough domestically to treat our sick, end quote.

He discussed how phones and electronics and semiconductors are produced overseas. He talked about how China has a large shipbuilding industry. He described this as, quote, not merely an economic problem, but a national. emergency that threatens our way of life. Then he laid out three demands. He said, one, drop your tariffs and barriers, two, stop manipulating your currency, and three, start buying American goods. So that was really, you know, the main of his commentary really leaned in heavily on the tariff talk. And I'm sure you'll talk about the market reaction. Yeah, I mean, the market did not like this to be blunt.

I mean, the S&P 500. Actually, he started talking and until he got to like, he kind of sounded like he wasn't going to do some of the worst of what people thought he was going to do. And markets rallied, actually, in the post market initially. And then things just got way worse. And we were down over, I mean, I haven't checked in a little bit, but we were down over 2% since he started speaking in the S&B 500, which if you're a crypto guy, listen to you're like 2%, who cares, but for the S&P 500, that's a big move for a move in just a matter of a few minutes.

The other thing I would say that you didn't mention that he kept saying they are going to pay, but really at the end of the day, like, it's not the people who are paying at the end of the day. It's going to be passed on the U.S. consumers. It's the people importing those goods that are paying that tariff, not necessarily the people making those goods overseas. Now, granted, we can debate about what that is, but like he has his messaging down as though, like, this is going to be born by other countries and not born by us. And I mean, I think if his ultimate goal was to like, you know, get rid of some of these

tariffs, I mean, also some of those numbers he put out there that other countries were placing tariffs on us were seemed like very inflated from my just immediate eyes. I'm not enough of an expert, but like I would love to know what estimates he came to for estimating like how much currency manipulation there is for some of the numbers he put out there. But yeah, yeah, let's go to you, Steve. We haven't really gotten to talk to you at all. Like what was your visual thoughts? Anything you disagree with?

Yeah, I had a couple of takeaways from this. One short, one kind of longer. I mean, for one, I think it's hard to take everything that he said here at face value. I mean, notwithstanding everything that you guys just said, but he's going to get lobbied by all sorts of industry groups. And I would be stunned if there's not all, if some of these become like almost like Sives in a way, where there's going to be loopholes and delays and so on and so forth as the market digest it. So all the fluctuations we're seeing right now, that could change by this point tomorrow.

I mean, he's reversed himself on tariffs sometimes in the same day. But the bigger takeaway that I had, and I kind of come with this. I mean, as you guys know, my background is actually, aside from businesses in international relations, the international political economy. And in many ways, this kind of rang as a rejection of sort of the entire post-World War II, like Pax Americana, liberal world order. And I mean, he's been hinting at it for a long time, but now he's really kind of set it. And we might be going back decades to a period of more great power competition, like global insecurity, and that frankly is worrying because I know that the United States, we'd like to see

ourselves as the nine hege of mine, a power for good. I know we have not always lived up to that standard. But I think overall, it's been good for the U.S. to sort of play this role. and retreating from it, which is sort of manifested itself in all of these tariffs, is a dangerous thing. I mean, I can kind of get into, I mean, what does this mean for Bitcoin and other stuff that is beyond a little further down the line? But those were my initial takeaways because, again, Trump 45, some people could dismiss it as a fluke. Trump 47, this is the trend. All right, let's go to you, Quinn.

I guess like how much of this is him, like my initial read on this is like they're frontloading all the bad news for the market as quickly as they can from his inauguration to hopefully this gets sorted out by the time midterms come around. I mean, there was a, we don't need to get into this right now, but there was basically a complete rebuke of Elon Musk and what happened in Wisconsin this past week. Like there was a huge backlash, a huge support from the Democratic voters. I feel like this is just like something he's like he knows it's going to be bad for markets. He wants to get it out as quickly as possible. and hopefully like settled down going down the line. But Quinn, what was your initial reaction to what Trump announced today? Yeah, I generally agree with that.

I mean, I'm just wondering when the market's going to take him at his word when every single thing he does and that the administration does follows their rhetoric, word for word. And the only thing that goes against them are fake news headlines reports. Like, and then everyone acts surprised. It's like the things we've gotten in crypto for the last two months of these months. of these massive sell-the-news events that some, you know, big announcements coming. And the market falls for it.

And it's like, I can't believe it. Quinn real quick. So analysts' earning revision has been negative almost two months in a row. So analysts are walking down S&P earnings and the market's declining in lockstep. So institutions are selling. They're selling into those rallies. I think it's retail investors are on the wrong side. Yeah, I mean, or you can look at, I mean, Bitcoin, I think, is up to like a 7% intraday swing.

Stocks are at like a 4% or something intraday swing. So I'm sort of talking about the event specifically. My take is that I tweeted this out, which is in how I approach this situation, if like the positive vibes coming in from people were around, oh, there's going to be deals, everybody's going to settle, they're going to bring their's down, we're going to bring ours down. But that doesn't to me accomplish what they have been saying since day one they want, which is reshoring and bringing manufacturing back. If everybody drops their trade barriers and tariffs, our domestic production is still at the competitive disadvantage for the initial reason why these producers and manufacturers and jobs went overseas in the first place, which is for lower costs. So from that perspective, you're sitting here and

you're like, okay, because you had the headlines of Israel dropping theirs and Canada saying this. But that doesn't accomplish what they've been saying they want to accomplish, which is reshoring. So, like, there was just, to me, a no wind going into it. And yeah, it's everything that the Trump admin wants to do is not Wall Street friendly. You know, we just came off a year in 24 where every single thing done from the Fed to the Treasury to the White House was to pump markets going into election and now, you know, they're taking national security and domestic supply chains and reshoring and the middle class, seriously, and they're falling through on it. So I'm not surprised at all, and it's not good for asset prices.

It's not good for growth. It's just, yeah. Out of that, I mean, look, there are these internal contradictions in the policy. You identified one of them. There's a goal to have onshore manufacturing. it's not clear how you can drop down reciprocal tariffs. That's your goal. But there are other objectives. One goal is to sell American debt and treasuries and refinance the U.S. maturity wall. The way you do that is by importing dollars and handing China or other countries' dollars. They can turn them by bonds.

And China financed the U.S. deficit. We sold them bonds at one and a half percent interest rate, below the rate of inflation, stuff them with these bonds that are now sitting on losses, which is a great deal. for the United States. So that's yet another, you know, contradiction as well. And you talk about, well, these countries have to, quote unquote, stop manipulating their currency. You know, if a country lowers their currency, it makes their products cheaper for Americans, which means you're importing disinflation, which enhances the real incomes of Americans. 30% of lumber used to build American homes, which are extremely expensive, come from Canada. 30%. and the cost of materials building home is comprised of labor materials and lumber is right up there. So it's another internal contradiction to the policy statement.

These objectives sound good on a one-off basis, but creating a coherent framework around that, that's lacking. And what we're saying, that's why markets are selling off. This is economic 101 that we're missing here. Yeah, I kind of agree more. I mean, the idea of, I mean, he wants onshore manufacturing, he wants to start. strong economy, but he also wants a weak dollar. Like, those two things seem to just be very contradictory to me, and I'm not sure how he's going to be able to sort of thread that needle.

No, those are, but those are, yeah, my point is just, like, I don't really have opinions on it because my opinion doesn't matter. My view is just that every, every, my view is just that. Right as far as it's trades. That's all he cares about, which is. Yeah. Yeah, my view is just like everyone, like remove all the politics, the motives, this and that is just, you know, it's not that he wants to crash some markets. It's that the byproducts of his policy objectives are bringing markets down.

And I think actually on the dollar front, this is one of the reasons we're long energy. We view energy in a couple neighboring emerging markets to be the most interesting places to have longs on. because all of this is inflationary. All of it is both inflationary from outright cost of production, cost of goods, cost of labor. You know, I'm more focused than or have been prior to this on immigration going from 1% per year of our population to zero overnight. That's extremely inflationary. So you have that, plus you have lower growth, which then weakens a dollar. And to your point, Rom, I think that's where the rubber hits a road in all of this is when the debt.

the debt ceiling gets lifted and they have to they can no longer rely on TGA and RRP and have to go out and sell this debt. And that's where I think the problems are going to lie. But because it's not here yet, you know, they can yield the sword, you know, to be. I want to bring it back to to Steven's point and connect to that observation, Quinn. So, you know, one one observation to make is, first off, the American economy grew after the American Republic was founded due to the industrial revolution, things like the cotton gym and steamboats, and massive immigration, that's what drove the growth of the American economy. It wasn't tariffs. It was despite tariffs. And those tariffs, you know, to your point, were paid by American consumers and merchants. You can fact-check

that on Grok, was built by Elon Musk. Okay. So, and to Stephen's point, what we're really going back to is this concept of zero-sum great power as opposed to alliances. And the idea is that in this new world order, you must control the asset as supposed to have a trading partner. So if you want uranium, you could trade with Canada. Now it's like, no, no, no, you must control the uranium. If you want French wine, I don't know how you fix that problem. You can't get that problem. And it really is this mercantilist thinking.

It's a zero-sum thinking, which is not accurate. You know, these costs will be borne by one of only two parties. Either consumers will pay the cost in terms of cost increases. And the vast majority of earnings transcripts, we read dozens of them, they will attempt to pass through to the consumer. Those that cannot will eat the cost. So suppliers or services, maybe building supply materials, maybe auto-me-built companies, they can't pass on the cost.

They will eat it, which means a lot of money. lower earnings and stock prices follow earnings and earnings growth. So either you're getting inflation or you're getting earnings, and that's called earnings declines. That's called stackflation. By the last time the United States had a trade surplus was 1975, the year after OPEC, which is inflationary, stock inflation around. I'm not saying we're going to get that same period, but we are getting a mini echo of

those dynamics. Yeah. And Ron, as you kind of, I actually just published a story on stagflation and the potential chances of it and how certain assets would decline. Obviously, I focused on Bitcoin in particular because Bitcoin's come, has come decades after. And I think the stagflation concern is very real. I mean, we all remember Chairman Powell's comments after last FOMC meeting. And they're worrying about rising prices and slowing growth.

That doesn't necessarily mean we're. going to go back to the Arab oil embargo, which was traumatic for everybody who remembers it back in the day, which does not include probably hardly anyone that has invested in crypto, at least before the beginning of last year. But it's a dangerous time. And I, I forget who said it, but Trump kind of front-loading the medicine here, I don't think he has as much time as maybe some of us are thinking. I mean, midterm elections are going to be here sooner than we know it. The campaigns are going to be starting very soon. And, And he, like, I know he's been musing, or maybe now more than musing about a third term, but, I mean, unless there's some sort of resolution to that, he's not going to have a lot of time to turn this around, especially given what happened in Wisconsin. So I'm also very curious, again, to see how much he's going to stick with this if markets continue to go down. I've been surprised at sort of how steadfast he's been, given what's been going on across all asset classes, pretty much since the beginning of the year.

But it's going to get tougher for him because he's going to start feeling pressure from congressmen and women who are worried about losing their seats in next year. I'm going to share the screen here. So two things. On what Quinn was saying about how people need to start listening to what Trump is saying, I tend to agree. Like, I was the first person to say I was like, take Trump seriously, but not literally. And maybe we should actually be taking Trump a little more literally this time around than we were in when he was 45, right?

So that's the first thing I wanted to say in F-O kind of what Quinn was saying, because he's explicitly said what his goals are. As Rahm said, some of those goals are at odds with each other. But I'm sharing here, Zero Hedge tweeted out, like, the images of, like, exactly what the reciprocal tariffs are going to look like. And Quinn said, we can't go to zero if his goal is actually on-chair manufacturing. And based on these images, which I guess, I still, we still don't have all the complete information. Like, the minimum here is 10%.

So it looks like he just plans to impose, like, at least a minimal level of tariffs on everyone. I'm sure maybe there's some way you could get rid of them. But like the minimum number is some number, which obviously could go to some of the issues and concerns that everyone is talking about, including all three of us, all four of us here on this call. Another contradiction, by way, so he cited in his opening remarks that trade deficit has increased foreign ownership of American assets. But now he also cited the wins from having soft bank investing in the United States and other foreign countries. That's increasing foreman. ownership. You can't have it both ways. And by the way, when you have a trade deficit,

you are importing capital, they are one and the same thing. You're handing China dollars when you import, and China can only buy bonds with that, or they can import product from Americans, but they're not going to import F-35 jets or GPU. So what do they do? They buy bonds. So there's these internal contradictions that are in the policy. And to Stephen's point, I agree, They got to turn it around quickly. And the risks are more elevated than 2018. I see a lot of charts on Twitter, people looking at here's Trump, tariffs 1.0. The difference is that in 2018, the valuations for the S&P were around 16 times.

In Q418, which was one of these trade wars, they troughed at 14 times. We're at 20 times earnings now. So higher valuation. And earnings growth in 2018 was stronger. and you had a disinflationary backdrop. None of those conditions are in place today. So I agree. I think they've got to turn around.

And the other part is if this economy continues to weaken, and it is we're finally seeing cracks in the consumer. Look at the job and opening starting decline, challenge report. You're going to have a collapse of revenue. You're going to have less capital against tax. That's going to explode your deficit. You will lower the 10-year rate. You're seeing the 10-year drop, not a 4.1%.

but it still isn't where it was in September when it's 3.6% because other assets are competing for capital. And you know, you're not going to get the refinancing benefit that you thought you would, especially if you're putting up trade barriers because you're not putting dollars in the hands of foreign investors that would otherwise buy American bonds. Yeah. I mean, our number one export is dollars in treasuries, right? Like that's the one thing that we export around the world without question.

And I do want to say, I said that like it's the American consumer that's going to pay all these taxes. That's not completely true. I guess I should say it depends on like the elasticity of those goods. The people who are producing could end up eating some of that and the whatever percentages there are could change. But like for the most part, the American consumer is going to eat a lot of whatever these tariffs are potentially if they're not lowered. Yeah, just say I would question why he has to turn the, I don't know if I buy into like this idea of having to turn the ship around ASAP because for, for all those reasons, Rahm, that you just laid out of why the market is vulnerable at these valuations has nothing to do with him and everything to do with the previous administration's

policies to pump asset prices. So, you know, in my view, he's fast forwarding. I agree they're doing a not so eloquent job of storytelling as to why, you know, they're going about it this way, why they're engaging in trade policy, trade wars, etc. But I think they're just trying to fast forward what was inevitable. Like we, everybody here agrees that 22 times earnings for for the S&P 500 is, you know, at all-time highs and not sustainable. And also, you know, truth be told, the reason he's doing this is not for all of us asset owners and the people sitting in New York City.

It's for the bottom 50% who don't own any stocks. kind of could care less anyways. So I agree for the, you know, I understand the headwinds they face in enacting this policy, which is why I don't think they will be able to see it through for the full term. And I do think there will be pain handed to them from the market. The revenue reason that blows out deficits, as you mentioned, is huge. There's other things. Inflation likely comes back. but I do think, you know, taking them at their word and being their efforts being more steadfast than everyone's thought is maybe prudent because I, you know, that the whole reason they're doing this is for not the asset owners. I don't think it's inevitable. I don't think it's inevitable. Look, there was like the QE and 10 years of ultra low rates led to the strongest 15 year of equity market returns we've seen in history. And that was before Trump, no question about it. And wartime deficits before Trump and didn't make any sense.

And the chips act didn't make any sense either. And Europeans not paying for defense didn't make any sense also. So a lot of things that didn't make sense. However, you've got a policy mix full of inconsistencies. You've got CEO confidence low. Consumer confidence is low. And you've got cost push inflation, which is going to hurt real income. It's going to hurt Main Street America.

It's going to increase the cost of housing. You privatize Fannie Mae and Freddie Mac. I'm all for that theoretically as a free market capitalist, by the way. But those mortgage spreads are not going to come down. And markets are built on psychology. Psychology is layer zero. It's the base layer. The multiple in the markets is a product of psychology.

So this is taking a wrecking ball to psychology. That's a lever in Trump's control. The market bottomed in December 26, 2018, the end of kind of trade war, Trump 1.0, two things. One is Powell caved on those Fed Adjustment Hikes. But on the same day, Trump also said, go buy stocks are cheap. So, you know, the voice of leadership matters. And so I think, yeah, you could have a market that wouldn't run up 20%, but would run up on earnings growth. with the multiple being maintained with a more rational economic strategy, such as keeping tariffs

on China because there are legitimate reasons to do so, but not on, say, Mexico and Canada, where the cost of an automobile worker in Mexico is $10,000 per head, and an American auto worker is $70,000 and takes a long lunch break, has a compliance supervisor in OSHA work standards and other things. Hi, I'm Matt Hogan, CIO of Crypto Asset Manager Bitwise. Look, crypto can be confusing. There's so much noise and the space changes so quickly. That's why, every week, I write a five-minute memo on the biggest stories impacting crypto. In plain English.

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Carefully consider the extreme risks associated with crypto before investing. And I think it's also, I mean, just what you said, I think it's pretty simple. I mean, maybe Trump isn't to blame for all this, but psychology matters. And everyone kind of was in agreement that the Fed had sort of orchestrated a bit of a soft landing coming into the end of last year and that Trump took over a pretty healthy economy. So all of this is... I totally disagree. I totally disagree.

I think the economy was on all accounts faltering massively headed into this year. I mean, unemployment is still close to full employment. Inflation is 2 to 3%. I mean, I don't think Biden deserves playing for double-digit inflation that Trump likes to remind people for that had to do with supply shocks from the pandemic. And so it's tricky. I mean, the psychology of this really matters. But once you say, Quinn, that this, this,

I believe this is a self-own. Yes, I agree with you that. In Q4, there was softening. There's no doubt about that. Okay, but this is a self-own, right? The consumer is weakening. If you look at the transcripts, lower-end, how to have been weak, middle income as weak. You look at Walmart, Walmart on the earnings transcript is seeing high-end consumer shop at Walmart now.

Target's never been cheaper. Not saying go by target, by the way, I think retail is laying off. So, you know, this looks to me like a cell phone that's going to actually hurt revenue, hurt growth. And again, I just think the policy mix is kind of inconsistent. I'm all for the deregulation. I'm all for the tax cuts. I'm all for eliminating freight, fraud, waste, and abuse, and putting more control on the hands of local and states and individuals and businesses. we haven't even seeing those benefits yet.

That's not even in view right now. Look, I wouldn't go about it this way. So I'm not saying, I'm not necessarily an advocate for this strategy. But I guess where I probably differ is the zoomed out holistic approach of what's feasible, given the constraints that this administration is working with. To me, the sequester. RRP reserves, $2.4 trillion post-COVID in combination with the Treasury and, you know, Treasury's active issuance management and all these sorts of liquidity games behind the scenes

are what's responsible for the U.S. economy resilience, the strong dollar and asset prices in our economy. So all those were going away, and those aren't necessarily like a Biden thing. it's just the facts of what existed. And so for me, it's just a view that the only way to sort of achieve what they want to achieve is there's no, like, if you go back and plot budget deficits, U.S. budgets deficits and stock market performance, there's no way to go from six to two without stock market hurt in a reasonable amount of time. Okay, in eight years, if you did it. Her personal dominance is what you're saying. Yeah, there's just no, there's structurally, it's impossible. Like the economy was on fumes propped up by the government spending.

And if that truly is their goal, which there's, I think, I strongly believe that Besson is the most capable treasury secretary to have that role. And I believe that Trump listens to his admin much more than people think. He is not smart enough to put these numbers on each, you know, partner, et cetera. I think he listens to these people way more than people think. And I think this is their goal. And I don't see a world in which they can balance the budget, keep multiples at 22 times forward earnings. I agree. But then when you kind of look, and I agree, all of the good has been backdated. We haven't gotten into any of that. But if you then think about it from a strategic perspective, do I want to, you shoot all my good bullets now, or do I want to save all

those for end of the year in 2026? You want to match fund. It's like a revenue recognition. You want to time the benefit to the expect to have a smooth transition and project clarity. When people don't have clarity and they can't make long-term investment decisions or household decisions, then they pull back and they retrench and they don't hire as much. So what you saw from like the jolt's data is that the turnover in the labor market is coming down. By the way, I'm all for laying off federal workers that are unproductive. There's a comment here saying, but Biden stack the deck by hiring. Like, if you put productive workers in the private market and they get a job that creates

economic value, I'm all for that. If you have a labor market that has high turnover, generally the economy creates and destroys three to four million jobs per month in a normal economy. Now we're creating, destroying about 2 million jobs for months getting lower. So the ability to absorb layoffs is diminishing. And that's a problem. That's what I mean by the approach, right? CEO confidence is down.

They're holding back on CAPX decisions. CapEx means investing in a factory, investing in a new plant, investing in a data center. Meda said they're pulling back on data center. So everyone's paused and in their turtle shell. and that is going to create a self and an own goal. One question I have is how, like, what could Trump and the administration do to convince people that this is now the plan? Because, again, I mean, one narrative that I'm seeing sort of in the air supply a little bit is that all of these tariffs are kind of a negotiating ploy to try to encourage all these countries that own U.S. debt to convert to century bonds and lower our debt burden, lower the price that. the dollar and create something akin to a Mar-a-Lago accord, sort of a rebamp of Bretton Woods,

which would theoretically stimulate the U.S. export economy, but then that goes back to the conflicting goals of onshoreing manufacturing, but the cheaper dollar. Those two just, it's a yin and yang thing. So I really, like, I'm still wondering, like, I guess just thinking of this conversation, like, are tariffs the end goal or does he have an even bigger end goal at that point? And with so many different variables to play here, how is you going to stay the course? I personally don't believe that this is the right course to take. Like, Autarki, just in history, is not something that I think has been successful, but he is the president right now, and this is his policy.

I don't want to see people lose their jobs and lose their incomes and really struggle. So I hope, like, he is successful in this. But CEOs, I mean, when they build factories, when they put together business plans, They don't think in days or weeks or months. They think in years or decades. And I mean, at best, he's going to be president for another three and a half years or so, maybe more depending on what people say. The policy is called Fafo. That's what it's called.

Okay? This is Fafo. It's a lot of contradictory policy thing. I like, I like the iterative approach of the administration, which we saw in the first two months. They flow to concept, see the market reaction. They would say that. want to see what the market has to say. I actually like that. It's a very startup oriented, being nimble, responsible to the market. I think for tariffs, I do believe Trump genuinely

believes he's charging other countries. You know, he said it multiple times in every speech, quote, we are charging them, end quote, quote, they are ripping us off. The reality is, tariffs are a sales tax on American business or consumers. That's what they are. The reason why Mexico doesn't want to add tariffs is they don't want to tax their consumers. By the way, I researched head at the call. What can Mexico do to come into compliance and lower tariffs? Mexico doesn't have tariffs in the United States. What are they going to do? Of course, they should interdict fentanyl and those have dropped. And yes, it's a real issue. And they put troops on the borders. And that's a legitimate concern. These are complex topics of different tradeoffs.

I think, you know, Trump read American history. He read about Willie McKinley. He read about read about, hey, tariffs were around this period when America was growing, missing causality around industrialization and immigration, and what Alexis de Tocqueville wrote when he was touring America. And, you know, I think they legitimately, he and Lutnik legitimately think they can eliminate the IRS. I love to eliminate the IRS in some way. Okay, can we figure that out somehow? But this is not the way you go do it. This is not the way you go do it. I do think that, you know, they believe this is how economics works. And the thing about balance of payments, it's complicated. This is one step below quantum mechanics because when you look at a trade deficit, you see it as,

oh, I'm losing when in fact the trade deficits coincided with American economic growth and dominance because it reflects productive investment opportunities in the United States that the world is clamoring to access. No one wants to invest in Turkey, which is a mess. you know, Russia was a mess even before this war or Europe, 70% of the average family office invest in the United States. That's why we also have a trade deficit, because if you want to buy an American capital asset, a bond or a stock, you can only do it by not buying American goods and services. You take those dollars that you receive from American imports and instead you buy American

stock, which makes American entrepreneurs wealthier. So in SoftBank invest dollars in the United States, they are going to have more ownership of Stargate, but the entrepreneurs building that, they've got far more levered equity to the upside. That's the part that people are missing. Yeah, I want to echo something you guys were talking about messaging. I mean, you said, we talked to how this administration has not been great of messaging. They should just have Besson do all of the messaging when talking to the market. Because I'm with Quinn, like, he's talking about one of the most capable of people. Every time I hear him talk, I'm like, man, they should just let this guy explain all their policies. So, I mean, sometimes you can

tell he's kind of back into trying to say what Trump wants him to say and doing the best he can to realize it because he knows what these impacts are. He knows the things you just said, Ron, right? He's not somebody that, like, thinks this is all quid pro quo and it's one-on-one. Like, there's a lot of impact here. The other thing I want to go back to is like the numbers, the more I look at those numbers and those charts, like these numbers are completely blown up. This is like typical Trump art of the deal. He's saying you're charging a 78% tariff because is you have this other tax or that tax is equivalent to a tariff or this is currency devaluations. I think he just wants to negotiate with everyone and come up with something.

And I really do think the end goal is to bring some sort of manufacturing back home. I just don't know if like, I mean, I guess from like a U.S. security perspective, it makes sense to have certain things not be like everything being outside of the country. So maybe you could do it. There could have been a different way to do it like funding different things or supporting it in different ways. So Puerto Rico, just a few days ago, have a leading pharmaceutical hub. Guess what? They're a territory of the United States. Second, Mexico is our neighbor. We've got to move production away from China. They're committing

atrocious acts of cybersecurity hacks and espionage, and they don't stop. So yes, we've got to wean ourselves off of China. And it's important and in the interest of American national security, have a thriving Mexico. Otherwise, the primary export in Mexico will be fentanyl. And you'll get more illegal immigration. So, you know, you need Mexico to be a part of this. You If you want uranium, you've got to trade with Canada. If you want cheap lumber, Canada is a part of that equation also. So it's what you mentioned actually, Stephen. It's really going back to this great power concept around assuming you need control of the asset,

when really you just need access to the asset. Think about like the sanctions regime too. America is the only country in the world that can sanction whoever wants and people will jump and respond. It's a great asset in the United States. other countries are going to have less dependency in the United States because if you have a lower trade deficit, they're getting less American dollars, actually. You're actually weakening trade denominated in the American dollars. So it weakens our ability to influence through non-military means. Okay, just an aside, I mean, talking about Taiwan in the semiconductor industry, is something that kind of struck me, I guess it was.

late last week when Secretary Hegeseth was out there in Asia Pacific. He actually went much farther than almost any administration ever has in promising to defend Taiwan against a Chinese invasion. I know, at least the last time I was on this podcast, I mean, there was a lot of fear out in the Asia Pacific that because the U.S. seems to be willing to throw Ukraine to the Russian bear that maybe they would not defend Taiwan in case China tries for a forceful reunification. I forget the exact wording, but from the redos I saw, even the Taiwanese were surprised at how strong the U.S. was in being willing to sort of intervene there. And that also, I guess, speaks to another contradiction.

If the U.S. is really pulling away, they're still going to be very forceful out in Asia and then also with the strikes on the Houthis, which got all messed up with the signal gate. they're still getting involved. So I'm curious how all this is going to, how all this is going to fit. I think, so there's a couple underlying currents here. One is your, like, a given person's level of agreement or disagreement with these tariffs is going to directly be correlated to, forget the implementation.

We all agree. It's boisterous. But the agreement or disagreement of the tariffs themselves is going to, likely going to be highly correlated to your income bracket and how affected you are. If you can make a living doing podcasts, you're probably not going to care about, you know, like doing this. Like you're upset about tariffs because you haven't lost your job to shipping things overseas. But if you are part of the middle class that's been gutted and the reason Trump got elected

in the first place in this whole populist movement globally, you would love to see some, you know, well-paying kind of middle America jobs return. The second thing is from a national security perspective, it's been a quick, you know, four years since COVID. And it seems everyone's forgotten about the, what seemed to be consensus at the time around how big of a travesty it was, we couldn't supply ourselves with health, vaccines, and all this PPNE equipment and simple basic necessities

to prepare for pandemic. and wards and all these things. And now when someone goes on, just because, you know, he's doing it in a more noisy way and says that's what we want to do. We bring national security interests and be capable domestically. People are upset. And so I think, again, the messaging is unclear, but there's other, if you read beneath the motives, it's not that, I mean, again, he can't.

Canada and Mexico weren't part of this release. And if you kind of read between the lines, there's potentially a hint of creating a stronger Canada and Mexico and U.S. trade block that puts the same level of tariffs on China and overseas. So there's no dumping and all these things. And actually may be a stronger. And everybody, you know, the Trump admin knows we need Mexico. You just, if Mexico, the most important consideration is Mexico and Canada, in, in, in, in, in. that order because they're the largest trading partners. Carers and China don't really matter.

They don't. It's not even an impact consumer prices. So we have to see that. And that is a good sign. Trump has said that he's good a relationship with the Mexico prime minister. So we don't want to watch that. That's what the bull story starts to look like. But I do think it'll take months of this unfold.

We're still in the early innings. You've got to get deals done in a bilateral nature with a number of those countries. but the most important country to focus on is on Mexico. I don't think a Canada deal gets done anytime soon. There's no incentive from to get a deal done with Canada. There are incentives to lower the cost of housing, let's say, but I don't see any political incentives from to do that. Let me flip the script here.

And okay, so the whole Russia-Trump Ukraine thing is musical, you know, theater. The facts are that the U.S. is basically fighting the war on behalf and with Ukraine. We are basically pressing the buttons to shoot missiles. We've supplied them all of the equipment to defend themselves that's made Russia entrench. Without the U.S., even to this day, Ukraine is toast. So there's all this hoopla around, you know, Trump said this. They got in a fight in the Oval Office.

He could pull back if he wanted to do something to Ukraine, it would be over if we brought troops back. in the Middle East, it's the same thing. If Trump didn't want trade, he would let Yemen and the Houthis and Iran run wild not protect the shipping lanes. And we'd have inflation and every ship would have to go around the Cape and oil would be 120 bucks a barrel. And we would not be protecting national interests. And then go to Taiwan.

If the U.S., which I think China by every action will at some point make a move, fast forward 12 months from now, if this is what got companies to bring, come back to the U.S. ahead of a global war with China invading Taiwan and the literal number one dependency of our stock market, Nvidia and AI coming from Taiwan, talk about the biggest national security threat possible is out of our control. And China's going to do that, whether it's Trump, Biden, or whoever in office. So, like, there's a lot here that is under the surface that doesn't get picked up in headlines that is clearly probably driving a lot of this. There's a lot going.

I want to fact check you real quick on this. So the United States initially led on funding for Ukraine, but Europe has actually funded more of Ukraine military defense than United States, about 60 to 40. And they picked up the baton in the last year. Now, this is from GROC. This is Elon's AI, by the way. I think Trump is so consistent in his messaging that people believe what he says. But Europe is, you know, stepping up as they should. But look, I think it goes back to Cspoint and ground great power.

So it's like, hey, look, spheres of influence. We're United States. We want Panama. We want Greenland. We want line of sight on the Arctic. Russia. They want line a site on Ukraine and the Baltic. and China wants control of Taiwan.

I don't know if there's a conversation or whatever else, but that's whatever it is the case. That's the world we are going towards. It's a world where territory matters as opposed to, territory and control matters as opposed to allies and trade. And this is a very dangerous situation to be in. I mean, again, I studied this a lot, but the history of great powers,

of withdrawing or maybe to put this in the best light possible for the U.S. retrenching to areas, territories that are closer to where they're based is not a peaceful and calm one. I think that the one exception perhaps is the end of World War II, which, again, Russia and the U.S. and the U.S. and the wars all over the place, but U.S. and Russian go to war together, and then the collapse of the Soviet Union. Thankfully, the U.S. was able to kind of step into that security vacuum and prevent another World War before. But, I mean, looking at the decline of the British Empire and also, like, these are, like, when one power recedes, it doesn't, everyone else, it's a land grab for everybody else.

And I can understand, I mean, I can understand the impulse to try to withdraw from some of these conflicts. Again, like, I used to work for the U.S. military. And most people here in this country, probably, don't know Taiwan exists, let alone know where to point it out on a map. So the idea of us sending troops to defend an island that no one has ever heard of just seems unfathomable. But again, it just comes down to our credibility as an ally, which has already been under duress because of what Trump has been threatening in Ukraine. And if he does not handle this cleanly,

it can just lead to a cataclysmic world event, not to be like too hyperbolic here, but it can that would dwarf anything he's trying to accomplish from a trade. What kind of chalismic event do you see? A war. I mean, it could be a war. A war between superpowers or a regional conflict? Well, I guess sometimes they can be one of the same. But for instance, like, if China decides to invade Taiwan, my sense is we're going to

try to defend it. Will we be successful? I have some serious doubts, but we're not going to just let them go. And then what does that mean for North Korea and South Korea? And then what's like Iran going to try to do? I know they've been kind of crippled in the Middle East, but then what's Russia are going to try to do with the Baltics. It can really, like these things, because of how small the world has become, like a small

conflict, things can grow exponentially. And that's, that's my fear. Look, everyone's tired of foreign wars. The American economy had budget surpluses in the late 90s through capital gain taxes on the bubble we had then, which was called dot-com stocks. And then we had Iraq war, which created trillions of dollars in deficits, then an Afghan war. Ukraine, Ukraine is kind of really, it's not that much to be candid as compared to other things. But what you're saying is, hey, look, there's a role for leadership.

And without leadership on the global stage, then bad behavior starts to express around the world. And you can then call some destabilization and drag the United States into some kind of conflict. Yeah. To be more specifically, more specific around it, and we're on the right pager. If the U.S. is going to go American first, try to become more isolationist or just retrench back into the Western Hemisphere, which is, again, Trump's right as president. There just has to be a very choreographed plan so that there's not these security vacuums that regional powers might try to exploit. Because that's where something small can become something big. The Houthis are a good example of that, right?

The Houthis are creating issues with international trade. that hurts Europe more than the United States, but they don't have the military front. And that's what J.D. Vance was talking about, the signal chat. We're right there fixing the problem. And I would, I, where I differ is, I think this whole debate is a way bigger than Trump thing. It's a populism. It's a, it's a income, wealth, inequality. It's a, where should we be spending our money? You know, like, and I think Trump is a, is a byproduct of the larger populist movement as the economies have become so inequality. But I have, I mean, I do believe his strategies can come across as erratic, but I don't think they come across as weak.

And I would point to his first administration as the four peaceful, most peaceful years of maybe the last 12 in terms of starting new conflicts, solving things with North Korea. and, you know, so like, I agree that some of these things are erratic and boisterous. And, you know, like one of the things I said today is like if all these countries coming to the table and say, hey, hey, we're going to stop tariffing. Like, while if if the U.S. said, okay, no tariffs, you take yours, we take ours. I don't think that accomplishes what he set out to do and reshore jobs. But that would be the biggest win out of any trade negotiation. But then also like, you know, with the byproduct of Europe, they're like he woke Europe up

and he's got Europe actually thinking about defending themselves and getting smart on immigration and free speech and defense. I'm all for that. I agree with your connection. I think we have to delineate between result and method and look at outcomes. And the outcomes are, I'll never forget. When his first term in Syria, they did the chemical attack. And within like eight hours, Trump had 56 Tomahawk missiles or whatever shot down.

And there was not a peep out of the Middle East again. And I think I kind of view hitting Yemen and Houthis hard now to open up that trade route is a similar thing in my view. And so I don't, I just think that the broader like path of isolationists, America First, protectionism, populism, China looking at Taiwan, like all these things, I think, precede Trump and are part of a much bigger global shift. So I would say two things. One, on the populism thing and bringing manufacturing jobs onshore, I mean, there's no better proof of that than the UAW Workers Union at this speech, talking about loving the tariffs and bringing jobs back and re-aligned. AOC loved these tariffs too. Yeah.

So, like, that's definitely a populism thing. to talk about like bringing a good middle class manufacturing job. I just don't know, like, I don't know, I mean, maybe with like some sort of, you know, robots and AI to help, like automate this. But like you're comparing a manufacturing job, like Ron was saying, a $10,000 ahead in Mexico, even half that in China and parts of Southeast Asia to people who want $7,500,000 jobs, like doing those types of like manual line work, which I don't know that even the tariffs that Trump is talking about will actually bring a lot of those jobs back. Maybe it'll bring them back.

It'll resharm, friend sharm. I think it's all politics, more than everything, more than anything. Even if it gets done, it's still a good, it's looking as I can drive. You don't mean manufacturing jobs. I have three kids. I don't want them to go work in a union and go build cars and deal with heavy equipment and machinery. Healthcare as a sector of the GDP continues to grow year after year because the elderly are growing. We need more babies. We need more kids. We need more kids. We need more kids. We need care for the young, care for the old. A nursing job can start out $80,000 a year within five years, $120,000 a year, which unfortunately asks the cost of health care.

But we need health care jobs as a focus. There is like a part of like some of the stuff we do need to manufacture in house for like if China does invade Taiwan and we're getting all over shit from Southeast Asia and Asia in general and those are like cut off because we're at war with them. Like that's not good. I mean, Apple gets still gets all of its stuff from China. Like, yeah, I mean, there's a lot of real risks here. I mean, so let's, we're going to wrap up soon.

So before, I want to go to like, let's go to like a little bit of market stuff to finish up, right? So like, I guess we'll go to you, Quinn. As far as like earnings, rates, I mean, we talked about the market tanking. We actually saw the 10 year yield drop to 4.1 as well. I think it's like 413 right now. But so like rates have dropped a little bit. Like, what is your outlook after seeing this? So I want to know, like, we talked about, like, what these impacts could be, whether or not they're going to actually do anything.

But, like, Quinn, what is your, like, over the next six months, maybe a year, like, give us different timeframes. Like, what are you thinking actually happens? Like, right now we talk with the price to earnings ratio being in the 20s. And back in 2018, when Trump did all the stuff, it went down into the, like, 14. So, like, you know, where do you think we're going here? Yeah, I've been pretty clear, like, since January that I think we're going to a recession. And I think that for me, tariffs was like third or fourth on the list of what could potentially drive that. And obviously, it's creating a lot of business and consumer uncertainty.

But there's Doge, there's the budget reconciliation outside of Doge, which is going to cut costs when it's enacted later this year. There's the immigration, which is extremely detrimental to growth. And you have a Fed that's behind the ball and behind the curve purposefully delayed because they're not, you know, Bessent wants to bring growth down. and they need yields down and the Fed is higher for longer right now. So I just think it's been a very unattractive risk reward distribution. I do think in the next few weeks, eventually this, you know, we're at very poor sentiment levels. I do think, as Rahm and Steven have pointed out, like you can't just crash things.

You need to, they're trying to get a controlled burn done in the shift from government spending to private productive spending. And you can't do that by tanking the market and taking revenue. news. So they're going to need to get it stair step down, and part of that's going to be some big, vicious bounces along the way. But to me, I don't see a reason they take their foot off the gas and trying to enact what they were, believe they were elected to enact. And for me, that means lower multiples, and it means a hit to earnings. And it's something I see lasting because with the Fed now behind, it's sort of negative reflexivity. Like, what does 125 basis point cut here do, a

little, not a ton. Maybe if they get 50 or 75 because inflation comes down, it's better. But I think you're battling some quite negative inertia that's begun. And at the end of the day, probably late this year, early next year, they just do QE again and everybody kind of sings Kumbaya and they pump assets back up into the midterms. But I don't think it's from a six to 12 month. And I've been saying this since, you know, 10% higher on S&P and 20% higher on Bitcoin. I just don't think it's an attractive risk-taking environment for most of the assets out of one recently. Yeah, I'm not in my head on most of that. I think, look, you're going to get a wash out very soon in a market capitulation

that'll set up a multi-month balance that we're due for. Even in the dot-com bubble bursting, you had a multi-month rally where equities almost came back to all-time highs. However, the probability that we're transitioning to a bear market unfortunately has increased. And it's increased because we're at elevated valuations with declining earnings growth and elevated inflation. And tariffs will exacerbate those issues. And psychology has been impacted, consumer and CEO confidence and CAPEX. So I think about the GDP equation, every element of that,

equations moving in the other direction. Consumers pulling back, investments, cap-backs, federal outlays are pulling back, exports minus imports. The whole thing is pulling back. So, you know, you have to assess and reassess because Trump can fix these issues quickly. I don't think he will, though. I think he believes in terrorists and wants to see what happens and go from there. So, you know, there is a probability. that you can get an 18 to 20% pullback, it won't be a straight line. You know, if you have a large gap down and a panic washout, it may actually be viable, but you're supposed to sell rallies.

I think the key thing to watch is analyst revisions. You know, as I mentioned earlier, analysts are walking down earnings each week and equity market prices are going down in lockstep. institutions ultimately the set prices for for asset classes not retail investors so if institutions are are pulling back then that's going to cause equity prices to go lower so it's any what's difficult about the current situation is that ordinarily you would hide in consumer staples but consumer staples are also expensive Costco is a 50 times 4 PE ratio Costco is in a bubble never been that expensive.

Walmart's in a bubble as well, 30 times PE. So positioning is really where people should focus. Small cap value could be a good idea. International value could be a good idea. Perhaps European banks, after a pullback, where those earnings growth and you have high single-digit PE ratios. I think several of the max seven companies have been totally beaten up and destroyed, like Google.

They're very cheap. And I think a lot of the worst pain is behind them. But other names like Microsoft and Apple are not. And Apple's probably first in line to get punished if you're Europe from a trade war perspective, punish the iPhone. So I think spending time on positioning is really important. And it's going to be a very challenging year. This is not a Q418 replay.

Before we go to Stephen, real quick, Rom and Quinn, like, this is crypto and macro. So like you guys didn't say anything about Bitcoin or crypto. Do you just view Bitcoin as like similar to, is it just another risk asset in this world? Do you like QE liquidity? That's what we need. So it's going to really take that time to take off. Or it's like some of the fundamental pro stuff happening in Bitcoin actually matter. Quinn and Ron real quick before give it to Steve.

It's going to trade like other risk assets. And in addition to that, it's got all its good news behind it. So is my view. Like Ram said, there's going to be some. really great bounces here to play. And people are going to be thinking we're so back. And that's just markets. But yeah, the long and short is if there's a negative wealth effect hitting home prices, equities, and in all risk assets, crypto's not going to be able to remain insulated. You did agree with Michael Turpin last night. And I know he would remind me sharing his view.

for those I know, Michael Turpin's a kind of an OG Bitcoin investor. We got together in Puerto Rico. And, you know, his view is, you know, we're on track with the cycle, the season ally for Bitcoin started. I'm surprised that Bitcoin is holding up as well it is right now. I think that's just GameStop buying right now. You can think Sailor, GME, and Marathon. Yeah. I think overall, though, the right way to look at it is as a risk asset.

I think when earning season starts, you'll have a boost because expectations have lowered a lot. And most of Q1 was good. It was really tail of fed and March where you start to see acceleration and weakness. So I think banks will report and they'll exceed expectations. I think tech companies will report. They'll exceed expectations. I think the promise of AI is real. People will see more application.

They'll see more return on AI spend. And so that's the story that will create a lift in asset prices. I think the Fed probably does cut, to your point, Quinn, I don't think it matters from an impulse perspective. It's kind of too late. It's not the case that when the Fed cuts, asset prices just suddenly kind of go up in, 08, that didn't really happen. You know, if the Fed's cutting to forestall a recession, it doesn't matter.

The dominant variable is whether you have a recession or not. I'm not of the view that a recession is inevitable. So I disagree with Quinn on that. We still have earnings growth. We still have real income growth. The pace of that is declining. Yes, tailwinds have become headwinds, which is what Quinn's point is around immigration and inflation or the rest. Things are slowing, but we haven't rolled over yet.

And Trump can still take actions to reinvigorate psychology. And clarity on tariffs helps a lot, by the way. So oftentimes peak bad news is when market. market's bottom. Remember October 26, 2003, the tenure hit 5%. That was the bottom of the U.S. equity market. Same thing happened in 1982. When you had a hot inflation print in 2024, that was also the bottom. So I think you get a flush fairly soon. And that sets up an intermediate leg up. But you want to be careful. You don't want to chase those high multiple gross stocks. Those are rally too, by the way. They'll rally also. But you want to look for the exit and rotate.

focused on dividend pre-cash flow and avoid value traps high level the s&P 500 is down almost three and a half percent right now so it started a little over two it's gone down another percent and a half that's called a crash that's called a crash yeah we've had a crash stephen any any final thoughts on where you see the market going from your point of view and anything you want to add and then we'll wrap up we're a little over an hour now yeah just just a couple um one um excuse me rom just a funny anecdote um you were talking about to have you don't want your daughters to work in a factory. I have, I have three daughters. My nine-year-old says that she wants to become a nurse. And when she asks me what I do,

and I say I write about Bitcoin, she now knows that it's magic internet money. But right before I went to college, my uncle used to be, I guess, a safety engineer for a U.S. steel plant and fearless sales, Pennsylvania. That's around where I'm from. And he had me be his intern for summer wearing the hard hat and the flameproof clothing and the steel-toed boots and had me shadow him and do everything that he did so I would know what would happen to me if I effed up in college, excuse my language. So I mean, the idea that, and that plant closed years ago, it's never coming back no matter what policies Trump has. So I just wanted to kind of reiterate the idea that like manufacturing jobs, it's just even with tariffs, it's apples and oranges

from an economics point of view. But my other thing, other two quick thoughts were, one, I think Jerome Powell needs a hug wherever he is right now, because he's just facing a really difficult path. They held steady this month, but people, I think, are still expecting about two more rate cuts. But depending on what happens with these tariffs, the implementations and reactions around the world, at some point he's going to have choose between supporting employment, at least that's my belief, and taming inflation. And those are, again, contradictory. I'm not quite sure what he's going to do there. We'll get the rate cuts. You'll see tomorrow markets will price in more rate cuts. One last thing is you shouldn't panic

sell tomorrow morning. The panic happened already. Like selling in the open is not a good decision, right? Monday market markets gap down 2% and a percent. They closed 2% higher than the open. So what should do is be patient, wait for a multi-month balance, or reassess, and then maybe around in July when everyone's excited and they think the worst is behind them, that might be the time to rotate, take some chips off the table. Yeah. And that was kind of going to be my last point, too, just turning back to crypto. I know Bitcoin is struggling. I mean, it's trailing all the major indices so far year to date. All coins are down even further. And it can be tough. But I would just encourage investors who are, like some investors like they try to time the dips and the bumps. And

that's not necessarily what I do. But I know you guys are experts in that. I'm not necessarily one of them. But for people to have really strong convictions about Bitcoin and I guess maybe other digital assets that are not meme coins and just completely like ephemeral assets, just keep that long-term perspective because those types of assets will outlive presidential administrations, they'll outlive policies. And at least one good thing about Bitcoin is that it has one monetary policy and it can never change. So it's just always kind of keep that type of perspective when people are trying to think about what to do with their portfolios. And it just brings me back to something BlackRock published in December, I think, of last year.

And then they actually updated. And James, I think we spoke about this perhaps in one of the other times I was on the show. They incorporated Bitcoin into one of their alternative asset model portfolios for the first time. I mean, that's a major thing. And they didn't do that wondering what was going to happen with Trump's trade, our tariff policies, in the middle of 2025. I mean, they have a much longer perspective to put something like that on paper. So that's just something that I would add is I'm skeptical that traditional cycle timing for Bitcoin is applicable here. I've never been a cycle person.

I just shared Michael's view because I respect Michael and he's got a phenomenal tracker and people probably care more about his view on digital assets than I do. But yeah, I do think it's going to be a high beta, you know, risk asset. You know, what if we look back in a few years time and we say, gee, this period, of ultra-low interest rates in QE and wartime deficits, of course it corresponded to the best 15-year equity run in U.S. markets. And of course it corresponded to the $3 trillion creation of digital assets. You know, I think we're unwinding that and moving in a different direction. And so how you position has to be almost diametrically opposite of how you've been positioning the last two years or 10 years.

Yeah. Before I handed over Quinn, see if he has any final thoughts. I will say on interest rates, looking at what the markets are pricing right now, we're, oh, it just moved, but on futures and on index swaps, we're basically priced for at least two cuts by, more than two cuts by September, and we're overpriced for three cuts by December as of right now. So we're pricing still pricing in three cuts for this year. at the very least. Obviously, that changes. We've gone up and down from there, but that's what it

looks like right now. Quinn, any final thoughts before we wrap up? No, I think we, I really enjoyed the, yeah, we had a great, great, all angles. So good luck out there. It's, yeah, it's a trading market environment. It's not a buy and hold momentum market environment. Good to have you, Quinn. We'll have to have you back again. Always a pleasure, my friend. Yeah, I loved it. Thanks, guys. Yeah, I love getting people on like you that are a lot more tactical. Like, I literally am not allowed to be tactical at all, so I don't even tend to think that way, but I tend to, so my shortest term is very medium term where obviously you are way more able to flip and flop on what's going on. All right, guys, thanks for joining us for this episode of Bits and Bips. For those of you listening

live, thank you as well. We'll be back in one week to discuss more about how the world's of crypto and macro are colliding. Until then, everyone.