Unchained - Bits + Bips: Why a U.S. Recession May Be Coming — And Still Isn’t Priced In - Ep. 814

Episode Date: April 9, 2025

The markets are rattled. Tariffs are rising. Investors are pulling back. In this week’s Bits + Bips, the panel digs into what’s really driving the selloff, why the Fed may be stuck, and how Trump���s tariff logic could trigger deeper economic shocks than anyone expects. Plus: Whether Bitcoin becomes a safe haven What makes this downturn different from 2022 and 2020 Why a potential recession still isn’t priced in Whether Congress can take the tariff button away from Trump And yes, Ram coins a new term: FAFO tariffs 😀 Sponsors: Bitwise Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Alex Kruger, Founder of Asgard Ram Ahluwalia, CFA, CEO and Founder of Lumida Noelle Acheson, Author of the “Crypto Is Macro Now” Newsletter  Links Tariffs: Recent coverage of Unchained on the economy and tariffs:  Arthur Hayes on Why Tariffs Will Be Good for Bitcoin and Crypto Bits + Bips: Trump’s Tariffs Are Causing Mayhem, But Will They Revive U.S. Manufacturing? Trump Tariffs Sink Crypto, BlackRock Pumps Bitcoin’s Bags Why Trump-Induced Stagflation Could Finally Make Bitcoin a Safe Haven In Market Crash, What Should You Buy? Crypto VCs Are Making These Bets 10-year yield and the Fed CNBC: 10-year Treasury yield rises back above 4% despite tariff threat to growth Reuters: No Fed 'put' when it's unclear which way the economy may pivot 2008 Market Crash Federal Reserve: The Great Recession and Its Aftermath CNN: Bailout Plan Rejected - Supporters Scramble Can Congress Step In? Economist: How Donald Trump’s Tariffs Will Probably Fare in Court Politico: Trump Threatens Veto of Bill to Curb Tariff Power Timestamps: 👋 0:00 Intro 📉 3:30 Why this selloff feels nothing like 2022 or 2020 🪞 8:41 Why buying signals could be a mirage 🤔 11:28 Is the bear market already priced in? What investors are missing. 🏚️ 14:35 Could this turn into a fall “2008 scenario”? And what real buyers are doing now 🧮 25:57 Why Trump’s tariff math is wrong, and how it will create problems for the administration 📈 36:15 Why Trump wants the 10-year yield down, and why he’s failing 🛟 39:59 What counts as a safe haven right now, and is bitcoin one of them? 🏦 52:42 Can the Fed stand up to Trump’s pressure to cut rates? 🚫 57:56 Trump thinks that the trade deficit is a profit/loss statement. Why that’s a problem.  ⚖️ 1:01:19 Can Congress pull Trump’s tariff authority? 💵 1:06:32 Can stablecoins save dollar demand? Learn more about your ad choices. Visit megaphone.fm/adchoices

No, no, no. The word is nonsense. It's disrespectful nonsense. It's like, it's like they come into you and saying, look, the sky has been read in the last hundred years. You're like, oh, no. Well, yes. And they repeated a million times and then basically 50% of their supporters believe it, the other 50 don't. And they believe it. And how can you negotiate about the sky? with your partner, if your partner says, but it's blue. No, it's red. We tear off the penguin. It's a fundamental problem. It's straight out of 1984. If the government says two plus two is five, then is five.

Anybody got anything positive to say? Hi, everyone. Open to bits and bips. Exploring how crypto and macro collide, one basis point at a time. I'm your host, James Safert, Tradfai Archmeister, and Lord of Bloomberg's End. Here with Alex Kruger, Kruger of House Asgard, Protector of the Round. Hi, everyone. Also with Noel Atchison, high seer and keeper of the Crypto is Macro Now newsletter.

Hello, everyone. And last but not least, Rahm Al-Aliya, Mastor of Wealth, leader of Lumida. Hey, guys. We're here to discuss the latest stories in the worlds of crypto and macro. Just remember that nothing we say here is investment advice. Please check unchaincrypto.com slash bibs 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 bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. All right, guys, right now we're recording this on Monday, April 7th. Anyone who's been following anything with the markets will, by the time you're listeners know that today was insane. Friday was an absolute bloodbath.

no matter how you look at the numbers, things are not looking good. So I'm just going to throw out some risk metrics or risk assets that I look at. We have the S&P 500 is down 17% since mid-February. The Qs are down 21%. Mag 7 itself is down 25, 26%. Small caps are down over 20%. All of this is obviously due to Trump's tariffs. When I look at a bunch of data in the ETF world, we have these fear gauges and market

capitulation gauges. pretty much everything is ringing off the hook. We look at total volume in ETS. We look at spy volume. It tends to correlate with VIX. But like when all of these correlate together, it's like a really good signal that there's a lot of market capitulation happening. A lot of people moving stuff around and that's all happening right now. U.S. ETFs alone just smashed their record. They're trading over around $650 billion today. The prior record is from 2022, which was like $480 billion. So these numbers, like, Like everything is kind of off the charge. Volatility is really high, not absurdly high. We hit a VIX of 60 today, which is extremely elevated. Again, these types of times are usually signs of capitulation. Longer term from them, they tend to be good times to, you know, think about dipping and buying into these markets. You know, buy when there's fear in the streets, blood in the streets, you name it, all those things.

But it doesn't matter. When you're staring this in the face, it's kind of hard to, you know, look at this when you're thinking that there might be a completely re-shaking and rejiggering of the world. order with what Trump is doing these tariffs. But, um, Alex, you are probably the most actively trading in the space on the, on the panel today, on the podcast. Why don't you talk to us about, like, what you've been doing like the last few days and compare it to, you know, 2020 and how is this different? And then we can get into, uh, how ROM is, is handling us. Let's see. Um, it's been very different on 22 and 2020. Um, I would say this is like, how to put it.

The difference with 22 is that that was something, we had two drivers. One was the Fed, the other one was Russia, maybe in Ukraine. So we had, on one hand, we had the Fed delivering the most aggressive shock, monetary shock. since the early 80s, Sis Walker. And on the other hand, we had basically Russia and being Ukraine and supply chains around the world, just literally going tip-top, right? When it comes to the market, the correction was you could in a way maybe compare this with April 22, which basically followed the FOMC of the end of March of 2022,

which is when the Fed said really fuck you to the market. But that was not even remotely as aggressive and sharp and vertical as what we just experienced. So let's put it this way. The Biggs hit 60 today. The Biggs in 22, the lowest we went at any point in time was we didn't get to the 40s. But at least Biggs didn't close in the 40s once, a very big difference. So this was much more volatile. It's been way more vertical and it's been manmade, not out of necessity, very fast.

And usually it's something with this kind of moves, is they tend to be very fast. And by the time people get bearish, you're usually too late. That's why most people should not be trading because by the time they get bearish, it's too late. Which brings me something that I've been seeing. Let's talk about it later. The complacency I've seen in crypto. But anyway, that's 22. 2020 was also very different.

But in the other direction, 2020, the big's got all the way up to 80. and we basically had, we had two full weeks of what we just experienced today. So we had two full weeks in 2020 of the bigs above 40. Now, that being said, even 2020 was not, it was equally vertical, but you had a lot of backtracking, like it was down up, down, up, down-up. It was very chaotic. This was just down, easy, painful, fuck you, tramp is in control, new world order, and you're just waiting for basically everybody to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, to, I've been doing. I've been, I've been, I've been, I've been, I've

short the market from Wednesday, Liberation Day, till this morning after the close. And I think we're due for a bounce here. How big the bounce? I don't know. The problem is very difficult because it's headlines driven. And Trump and Europe can send everything to you know. Yeah, it's people are looking for certainty. There's no way to be certain here. It's like I agree with what James, you were saying before. It's like long term, long term, this is a great place to buy anything. But we don't really know if we are witnessing a 2020 kind of move that reverses in one month

or we're seeing a 2022 kind of move that reverses in eight months, eight, nine months, or we're seeing a 2008, 2008 kind of move that reverses in years. We don't really know, unfortunately. I said it on, guys. Sorry. That was too long. I'll say real quick, look, I think the dealers had a lot of fun. Speaking this Monday,

Marcus opened up, down four points, went Shroft to peak up 10% finished flat. Dealers love days like this market makers. Deal everyone confirmation bias, get a lot of transaction volume, and you finish nowhere. So just one observation. The dealers are going to do well here. You know, zooming out, I'd say this.

Like coming out of Wednesday, on Liberation Day, you know, I noted that the probability that were in a bear market has increased substantially. I remain of that view today. It's even higher than it was back then. However, as of this morning, we're confronted with this paradox of, on the one hand, tactically, extremely oversold capitulary conditions with James referenced earlier, on the one hand, which means you're supposed to buy.

On the other hand, you're also faced with the prospect of declining earnings growth across all markets and elevated inflation and cost pressures and an uprooting of supply chains and declining CEO and consumer confidence, which are all pulling in. And so that means stock prices are overrated relative where they should be given this policy Molotov cocktail that's coming in. At the same time, you've got an administration that's digging in their heels. They're not relenting. They want to, quote, reorder global trade. And they haven't learned the lessons of history with Smooth Hawley. Didn't really work out well there.

They're not listening to corporate executives and small business people. Nike has 500,000 employees in Vietnam. They moved that production from China to Vietnam. Their tariffs actually went higher. And they've got 100 plants. And they're delivering a low-cost, high-quality product in American consumer, and doing right by their shareholders. where's the win? There's no win here. There's no win for Nike. There's no win for American

consumer. There's no win for a shareholder. There's no win for American taxpayers. There's no win. And that Nike story can be told a million times over small businesses. There's a small business that imports hockey sticks from Vietnam at $30. Tariffs make the price unsellable. So they have to shut down. That means it delay off American workers and not pay taxes. Those workers will go on the unemployment rules, so deficits will actually go up. So this is Fafo. This is called Fafo stuff, guys. It's Fafo tariffs. You're seeing dissent in the White House. Elon is pushing back on Twitter. The smartest people in the White House are pushing back. That's good. But Trump is digging in to his heels. So I think you're in a bear market. Tactically, this is all about

tactics and headline risk. And the number one thing you want to know is, will Trump stop tariffs. If so, markets grow up 7%. And, you know, bear market's over. But if you stay the course, then you're set up for bare market. And that is the detention. You know, you're relying on what does Trump say any given moment. And pulling on that, Ram, totally agree with you, bare market. But bare markets can be priced in. So again, that could make on the one hand, this is a moment to buy. I'm more concerned about what's not priced in, and I don't think the inflation that's coming is priced in, especially if you're going to buy the swaps pricing for interest rate cuts, for instance. When we start to actually, we know that the expectations are there for

the consumer surveys, that's soft data. The hard data is what I think will spook the next leg down, the hard data from unemployment as well as that starts to kick up as suppliers just simply can't can't import what they need so they close down. It's not even just the tariffs that is going to be moving the inflation needle. It's the currency. The dollar is down and that adds even more onto the cost of any imports. And contrary to what the administration, Navarro, Trump are saying, you cannot replace everything that you've imported with domestic production. The U.S. cannot, for instance, grow coffee at scale. And so he said, how happy are people going to be? their coffee is suddenly 80% more expensive. You can't grow bananas, you can't grow avocados. There's a lot

that you simply cannot reproduce at scale in the U.S. And this is even before we get into the Nike example that you're reciting around, which is just they manufacture in Vietnam because it's cheaper to manufacture in Vietnam. They're not going to be replicating Vietnamese wages in the factories that they build in the U.S. So it's the hard data that I'm more concerned about and that's not priced in there. I'd add to your point, you can't even manufacture. Dianums have 500,000 workers just on Nike. You don't have that many workers to manufacture in the U.S.

And Lutnik had the zany ideas that you have robots build Nike sneakers. This is nonsense. Robots are just learning how to handle eggs. They can't do fine handicraft stitchwork, much less fine than American worker that's going to take a sub-minimum wage job under a hot ceiling fan and try to persuade the Vietnamese, to switch their dining cuisine from noodles to expensive American beef to close a trade deficit. It doesn't make any sense.

I think you brought up a great question of, is this pricing? I'd say no. In a recession, the 10-year should reflect the expected nominal growth expectations. And it's still elevated, number one. Certain sectors are very close to pricing in recession, certain tech stocks in the MAG-3 kind of zone and area. But the median valuations are still more expensive relative to what you saw in 2022. Tech declined the most, so it's closest to pricing and recession, but other categories have not. Financials are still expensive.

The real estate sector is still expensive. The energy complex is rolling over as oil starts to shift towards recession. So we haven't seen that pricing, and people are not positioned for recession. That's why we've had three of these gap downs and why I expect institutions will sell rallies unless we see a changing course. You know, I want to say my basic scenario right now is not really dominant. And also, this is not a prediction. This is not, I'm not going to take credit for this happening. I don't want to if that happens.

It's just about how I'm thinking about the market and how I'm thinking about position. in myself, it makes sense to see a strong rally may have started today. It may be during the week. I am expecting now a strong rally across risk assets, including crypto. But that being said, I think that there is a very high probability that we see some sort of mini 2008, where basically what we are seeing right now is a replay of October 2008. For those who were not, I mean, for some people, this is ancient history, 2008 was basically we had a very down, a strong down year, but it was like a slow demolition.

And then on September 15th, we had leave and fail. Then there was talks of tarp. the traveled asset relief program, $700 billion, for basically rescuing the financial system. And at the end of September, right at the end, the Congress rejects TARP and unleashes an insane vertical move, which is very similar to what we are seeing right now. We may be at the end of that move, I hope so.

That's what I was saying. I think it's a good time for a tactical bounce. But my fear and what I'm thinking of is this is we bounce. And then we have a, it's kind of like in line with what you were saying that the real economy going to shit is not priced in. So that's when you get like you don't get this V. Then you start getting like this drip lower as 2008. You got job losses. But the mini 2008 is around the mark.

In fact, we spent this weekend looking at 08 all over again. And the driver of rallies was policy response of which you named several. naming Geithner, Parp, Geithner. And those were one hit one to rallies, by the way, and they rolled over. But this is pretty serious stuff, right? Earnings is going down. Inflation is going up. Inflation is more toxic to asset prices than even interest rates in earnings guys.

So it's a bad, bad cocktail. Especially if the Fed's hands are tied when it comes to interest rates. I mean, if inflation is threatening to come back. They just can't cut rates, as they have been saying until they're blue in the face. And yet the market isn't listening. Yeah, the non-farm payrolls report last week was extremely strong. And like that shows the economy is maybe not as weak as they thought for cutting. But I just wanted to say going back to something that Alex was talking about with this being a headline-driven market.

I mean, this morning we had a bogus report out of Binzenga that basically said that Trump was going to pause the tariffs for 90 days, which was not true. and it was like markets were way down and the S&P rallied like 6% in like 20 minutes. So like the market is like looking for some sort of relief to say like this idea that we're going to go into this real type of recession we're talking about is out there. So I would say the risk is like something like that happens where Trump actually does pause or he comes out and starts saying he's making a bunch of deals with all these countries. Like watch out this thing is going to go vertical in the opposite direction. Now whether or not it is like going to be sustained movement.

in the opposite direction like Alex was talking about, it could be just the bounds. That is like a real risk here if Trump actually does something like that. So, yeah. So we had a press conference about an hour ago, I'll be really brief. He had a press conference an hour ago where we said, we can have permanent tariffs and permanent negotiations. Yeah. We're in early innings of working out these deals in negotiations.

I was just going to say, like you talked about 2008. Like I looked at, I talked about all those like these warning sirens going off, all these things going off. When they go off at the same time, it's typically, like I said, like it's usually a good time to buy. So you look at the taper tantrum in 2011, Flashgrass, Valmageddon, which was when Vicks, everything blew up. Even the COVID pandemic, the Bank of Japan and Fed mess that happened in August of this year, when these things kind of start flagging off on my radars, it's usually like even a one month, three month, six month forward return, it's really good. But you go back to the great financial crisis. And all those things went off after being down like 10, 15%.

And then we went down another 34% from there. So like the real risk is kind of what you were talking about. Like we could still go way down from here if these tariffs are actually instituted as they are said to do. And then also the other example is 22. We had all this shit go off in January of 2022. And as Alex was talking about, the Fed kept hiking rates, growth was not doing well. Basically, you had bonds and equity selling off together. And we had six months later, we were still down 10%.

So that just continued. So like those are the types of like worst case scenarios from where we are. Yes, most of the time this type of stuff, this signs of capitulation, good time to buy. But like there are plenty of times and examples in history, namely 2022 in 2008 where you did not want to be buying at that moment. The difference is one is, do you think Buffett's buying now? I say no, he's not. No. He's not fine now.

So I point Buffett out to say that there are large pools of capital. We call them real money buyers. They're not buying now. Okay. So there's a conflict between the trader view and the investor view. And both are right, actually. Like, this is a trader's market now. The horizons are coming in more locally. You just had a five to six point rally on a Monday that finished flat. So you had the rally that Alex talked about. And it's going to mess people up. Because they said, oh, the market's line. No, no, no. You actually just had a rally. Markets are actually overbought now. If we had a rally tomorrow, I would actually de-risk. So, you know, that's what's happening to eat. You know, the real money buyers will step in when the Ford P and the SMP is around 17 times, based on the work that we've done. That puts the market priced in for recession and at historical valuations. That puts the S&P at a 4,500 level. I'm not saying it'll go there again.

If Trump pivots, then you're right. We get a rally. We're off to the races. But if he stays the course, then that is the destination. So the most valuable website in the world is Trumpwatch.com. I don't know if that exists, but it would get millions of views if it did. That 4,500 level also, that was the peak at the end of 2021. And it was resistance in 2023 before we went down and sort of going back up towards the end of 23.

So there's also technical support down at that level. So just throwing that out there is my two cents. In 2022 and 2020, in 2022 and 2008, policy was trying to solve problems. That's a big difference between today and those two eras. You could bet on policy intervening through stimulus, through QE, through liquefying the high-yield market, which you did in 2008, or through Talif and TARP in 2008 or during COVID. We don't have that now. So I think there's a mistake to say, hey, look, capitulation, things triggered. There's a tactical by there, yes, but it's not an intermediate bounce setup.

I think it's a Selva rally setup. Yeah, I agree. And Pertu, your comment about it not being, I mean, this being policy driven rather than policy trying to help here. It's also different in that we have competing interests. You have China and Japan maybe threatening to sell treasuries. and that is, again, provoking even more of the crisis rather than stepping in and stemming it. Europe are going to be doing their own thing. Everyone is using the markets to try and win here rather than try and stop the damage.

Retaliation just is starting now, right? China said, we're going to slap a tariff package on the U.S. The European Commission came out proposing a tariff package package on the U.S. they struck a deal with Argentina, which doesn't matter. I love Argentina, Alex, so no disrespect there. Argentina is irrelevant. You see all these Republicans getting excited about everybody flying tomorrow, Lago. And it's like, sorry, guys, Argentina is irrelevant.

Who else? Singapore is irrelevant. It's a nice country, great country, but it's irrelevant. Only Europe and China matter. and then maybe Japan. Mexico. The real trading in Canada. You know, Trump really believes that, one,

the United States has been ripped off by countries for decades, while American real incomes and GDP has outpaced the world, including Europe since the post-World War II. And he believes that in imposing tariffs we're charging them. That's the language he uses. I think if you say things enough times, you start to believe it. And he believes that. And it's a corporate sales tax.

And it's the largest corporate sales tech hike in American history where there's not even a grace period for compliance. You can't address supply chains. It's as if McKinsey had a PowerPoint slide and it has dragged the arrow of the supply chain from the right into the left and say, well, voila, we're going to have advanced robotics done. I solved it. It's a technocratic top-down fallacy that you typically see from. the far left like AOC, where they're trying to will things to existence like EV charging networks overnight. We couldn't even do that. We blew how many billions of dollars saying we're going to create these EV charging networks and create driverless cars everywhere. And now you're trying

to move the, we order the global supply chain and move the United States from the front of line as the consumer to the back of the line as an export-driven economy. Meanwhile, China's a mess because they're powered by exports. The United States in the Great Depression was export. lead, and we were devastated by Smoot-Hawley. And all of this really makes no sense, because if you're the dollar reserve currency, guess what? You get trade deficits because the world's going to finance your growth. And it's a great privilege to be in that position. You get to call the shots. You get sanctions authority. People have to buy your bonds. They get a finance American investment. Hi, it's Matt Hogan, CIO of Bitwise. Every week, I write a five-minute memo

on the biggest stories impacting crypto. This week, of course, I tackled Trump's tariff gambit and what it means for Bitcoin both short and long term. I think it's one of the most important and impactful memos I've written this year. Check it out at bitwiseinvestments.com slash CIO memo. That's bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. Let's talk a little bit because Alex wasn't here for our live room.

when we got into the tariff announcement. And I wish, like, I wish I knew things then that I know now, like the more diving in. Like, when we were looking at it, we're like, how are they calculating these numbers? These numbers seem insane. And now we know that the way they calculated was absolutely dumb. No, no, no. The word is nonsense. It's disrespectful nonsense.

It's like, it's like they coming to you and saying, look, the sky has been read in the last. 100 years. You're like, well, no. Like, yes. And if they repeated a million times and then basically 50% of their supporters believe it, the other 50 don't, and they believe it. And how can you negotiate about the sky with your partner if your partner says, but it's blue?

No, it's red. We tear off the penguin. It's a fundamental problem. It's straight out of 1984. If the government says two plus two is five, then is five. I had the 2 plus 2 equals 5 thought exactly them I had this one. I agree. It's like if you insist it and say it a thousand times and people believe it,

I mean, why are we terrifying Penguin Island? There's not even a hilarious answer for that. Lutnik actually answered that. The journalist asked him point blank, and the reason is so that these particular island is not used as a loophole to divert shipments from China to this little island and then into the United States, as if that would happen.

I would so like the the formula they used also one, let's talk about the fact that we are saying using trade deficits as a reason for tariffs and trade imbalances are only because other countries are playing unfair and using tariffs is nonsense when we're the world reserve currency. We don't need to get into that. But also the fact that like a bunch of people have come out and said they use the formula wrong. Like they use like one of the multipliers that you're supposed to use that is basically determines the elasticity or inelasticity.

of imports and demand, like, they used the wrong one. So like, they also inflated the numbers that they should have used if they actually followed the textbook numbers. And the other thing I wanted to say is when we were watching it initially, the market kind of went up when Trump said it was just going to be a 10% floor and we were going to do reciprocal tariffs. And then when people realize that these were not reciprocal tariffs, like if we were actually going out and saying Australia or whoever has like tariffs on us sending them beef or like whatever, we're going to tariff them on the same thing and we're going to equivalent. I think the markets would have been like, okay, this is like not great for growth, but like this is fine, but this nonsense about the trade

deficit calculation, the way they used it. I mean, people out there are going to argue he's just using it for negotiating stance. It doesn't really seem like it. Maybe it will be at some point, but obviously it's not really good for growth. But again, like markets responded positively to like the idea of 10% and reciprocal tariffs. And then what we got was not at all. Like, I don't know anyone who knows anything about economics, they would say what we're doing is reciprocal tariffs. Now, I want to say something on that elasticity thing there and the formula, this is very important.

That formula basically is trade deficit. They're saying is, sorry, let's not get into the formula you already covered in the other episode. Let's go into the elasticity thing. What they are saying with that formula on the elasticity side of things is that they're literally saying with math, that they believe that the increase in, basically the cost of tariffs is fully absorbed by foreigners.

That's what they're saying. That's exactly what they're saying. They've been saying that we've seen Besson also say this, not fully, but he's saying that the foreigners are going to absorb most of it. But then you look at their formula, and the formula says, in a cubic, inequitically, whatever you say that, is that the,

that is fully absorbed by foreigners again. Yeah, 95%. We know for a fact, yeah. We know for a fact that that is not the case. There's like in very extensive empirical evidence, like really extensive. We have decades of this.

This is not, oh, economists, don't know what they're talking about. No, no, no, this is very simple. It's like measuring boats. You know, you go and you measure the boats and you count the boats. So historically, it's just quickly, the number historically is basically 60 to 100% of tariffs is passed on to the local consumer. 60 to 8 in the short term. In terms of who pays, in terms of who pays, in terms of,

who pays 100% American in terms of the incidence of tariffs. That's what you're frankly. Sorry, to import prices, not to consumers, which means basically it hits corporates and then corporates decide what percentage of that they pass on to consumers or not, which is also very large. So foreigners actually do get hit. Yeah, they do get hit, definitely. But they take a small hit in relative terms.

And the problem with this, and then I pass it on, is that the problem with it is that, The problem is that they tell you that they believe in an alternative reality. That's the problem. It's very hard negotiate with someone who believes in a parallel universe. Well, well, that 2 plus 2 equals 5. That's what it is. Also, the blanket tariffs, 10% tariffs on everybody, except Russia, Belarus. 10% tariffs on everybody means that 10% that imports are going to

cost 10% more minimum because let's say you have Mauritius, a very fancy, a very high quality, low cost widget producer. The United States is importing from Mauritius. 10% extra, where they can either not import from Mauritius anymore, but where else are they going to import from? They don't make them domestically. It's going to cost 10% more, whatever they do, because of the blanket nature of these tariffs. You want tariffs to be useful in bringing down costs. You don't make them uniform and universal. What does Besson do in the situation? You know, Besson was out of the loop.

He was asked very basic questions around why Mexican-Canada in the reciprocal list. He didn't have any clear answers. He actually said, I don't know, which I thought was, you know, hats off to his honesty there. He's out there saying this is a tariff thing. You tariff us, will tariff you. And yet, Navarro, Trump, Lutnik, are saying something totally different.

And Trump's not inspiring confidence. He had a message which was, don't be weak today. don't be weak. That's not the message you're supposed to share. It's not the right message. He also said on the airplane that we're not stopping until all trade deficits are zero. We don't want a trade deficit with anyone, which, again, is just bad-should. It's bad shit crazy.

It's not mathematically possible. It's bad-shin-crazy. Gravity has like things float in the air. It's just not mathematically possible. this could bring us to what happens next. And again, this is so totally crazy. And I'm an optimist, as I've said, and I like to think that there is some intelligence behind this. What if this, yeah, this is bad shit crazy. And they do believe what they're saying. But bigger picture, what's the negotiating tool? I mean, obviously he's not going to get what he wants. He's not going to get all deficit down to zero

because the only way to get that would be for the United States dollar to no longer be the reserve currency and he's made that clear. That's not what he's looking. Is he looking for a big reset here? Is this the case where six months from now, he calls all of the major leaders to Mar-a-Lago and gives them the new deal, which includes a 100-year-zero coupon bonds and it includes agreeing to bring the dollar down gradually? Is that possible in your pan? Trump likes bilateral deals. He doesn't like consortium trade agreements. He's pulled out of that. he views life as a series of transactions with another party. He, about an hour ago, he was saying that Nanyahu from Israel was coming in with a proposal

to lower tariffs and some other value, which he did not specify. So what Trump is doing is he's shaking the tree vigorously and waiting to see what apples will drop as opposed to saying, you know, hear my standards for compliance or here's my ask to conclude a deal because the main of what he wants is to reorder global trade and bring manufacturing to the U.S. and have robots magically appear and do all this stuff. But he's saying, look, I'm open to an opportunity if you want to present something I haven't thought of before. And he said that when Netanyahu presented that, they offered a value that they had not

anticipated. He wasn't clear what that means. Was that intelligence? I don't know. Help with Iran, maybe? Maybe that? Yeah Maybe that

And by the way The other part That came up in his press conference He said Iran cannot have a nuclear weapon They said You know Would you rule out military force

You just said look Iran cannot have a nuclear weapon And we're having conversations At a very high level with them So you have geopolitical risk in the background If you're going to clean up house You do it all now You do it now

You do it in year one Isn't that what we're seeing here? Yeah In the midterms He would have be doing this if we were closer to midterms, I don't think, or at least he wouldn't have done it this way. I mean, I don't think he should have done it this way, and no matter what, but that's my own personal view. But I would bet you any amount of money that this wouldn't have happened if he

didn't try to do it this early. I mean, this goes back to part of the other thing. Like, one of the proponents of this, people saying the tariffs are a good idea. I mean, maybe in the long run, after we settle everything, and America will be better off if we really do get trade deals with all these countries and we get tariffs, all these things. I won't put that out of world. But like, one of the things that were like, well, they're getting what they want. They want the tenure down. And like, on this podcast, we said many times, like, Besson, Trump, Lutnik, they were like walking down risk assets. They want to get the tenure lower. And it was like the one thing that people were touting was like they're finally getting the 10 year lower. And like we went from like four three is, like four

three, three, three, three, eight something, three nine almost. And that is gone today. Today, we rallied up to four point two, which like the whole idea is like these terrorists are tax, it's going to raise revenue, then they're going to try to bring down the yield. This is the best case scenario in my mind, right? They're going to bring in a whole bunch of revenue from these tariffs. Tenure rate rates are going to be able to refinance at lower rates. They're going to bring in the deficit. And like, now none of that is seeming to happen.

There's been $10 trillion dollars in wealth destruction in just the last two days, Friday and Thursday, to go for their stated goal of $600 billion in revenue, actual realistic goals, $300 billion in revenue through sales taxes on Americans. The Jews isn't worth to squeeze. I mean, we should have done an AOC-style wealth tax

and seized people's asset holdings like FDR did in the Great Depression was seizing gold to pay off the deficit. We'd all be better off with that. I'm not saying we do that, of course. I'm just saying this is like a really kind of like a far left concept

that we see, but you're right, you're right, James. Like the 10 years gone nowhere. How much does the SB have to dropped him with a tenure. The CIO of HSBC recommended their clients today owning cash, gold, and European bonds. Where is the United States in any of that? And it's not even in the United States. It's not even the United States as hands. I mean, again, if some of the trading partners realize that Trump is serious, he's not willing to budge, well, their weapon is their holdings of U.S.

Right. Macron said, we need to curtail investments in the U.S. We're going to hand them less dollars by importing less. We're going to get more expensive Nike sneakers from, I don't know where. So what likely happens, I think other nations strike their own free trade deals and gradually over time start to reduce their reliance on the U.S. consumer. That's the appropriate approach you should take. It's actually what Trump wants. That's the thing.

That's exactly what he's telling us he wants. He's severing the link between the U.S. and the rest of the world. I don't think he's saying that is he, I think he has contradictory outcomes from a policy that's not internally consistent. But if you pick any goal on its face, it sounds sensible. Like, I don't think he's saying. Yeah, but by definition, if you want no trade deficits, you will have nobody. the balance of payments is basically the exact opposite of the capital account. If you have no trade deficits, you have no money coming in, period.

Over the weekend, he was touting something like $6 trillion in foreign investments to the U.S. as a win, which makes no sense, to your point, because that's the capital account surplus. Also remains to be seen how much of that actually ends up happening. Right. And who are these companies? You mentioned TSM's not writing a $6 trillion. Yeah, SoftBank is up there. Yeah, we're talking like a couple billion dollars to build a foundry.

We're talking maybe $40 billion for Stargate from SoftBank, which, most of which will go to Taiwan anyway to Taiwan Semiconductor, right? So where's the $6 trillion? Like, who's writing that check? Ram, you mentioned the portfolio reallocation, rotation into safe havens. Gold was in there. I noticed Bitcoin wasn't.

It obviously is still too soon for that to become a global store of value for those, other than those in the Black Rock circle. But we saw Bitcoin outperform between Wednesday and Sunday. Then something happened on Sunday. It could be Asia, I'm not sure. Where do you see that now? really good question. I'd say, first off, there were a number of Safe Haven trades that were working over the last few weeks. One was the stock of Berkshire Hathaway. One was insurance companies

because they're balance sheet businesses not exposed to tariffs. Can't hurt that. Third were staples, like the XLP ETF, and its beneficiaries like Costco, even though has 50 times earnings, it's one of the top weights of benefit from the flows. Fourth was a gold liner trade. Guess what? Friday, They all broke down. Costco's below the 200-day moving average, even the tenure went up today. I interpret that as, you know, a risk-off signal. And, you know, you're going to have a capitulatory event, which arguably we had this morning. So, you know, the preponderance of evidence is that you're seeing breakdowns, isn't it?

So one way to interpret us say, gee, when markets rip, Bitcoin can get going, which I agree with. That's true. Like, if you relax policy and get back to, to a rational kind of footing, that's pretty interesting for anything that I'm in there. But without that, with the current set of policies, I think it's like an asset on risk assets. It just kind of breaks things down. And the reason why is because people use financing to express positions.

Someone that owns Bitcoin probably owns Tesla stock or uranium stock. And if you're getting liquidity in somewhere else, you've got to fund it with whatever's working. So correlations rise to one. Yeah, I mean, the Bitcoin thing was weird. I mean, everyone in their mother was talking about it on Twitter, like the potential decoupling. And it, it was kind of weary. Like even gold was down at points when Bitcoin was up. I mean, if you, I mean, I'll add this back to this stage. The green line at the bottom is I bit. I mean, it was great. It held up pretty damn strong until literally Sunday yesterday when we're talking about this, right? So everyone was like, well, this is either going to be their front running what's coming

on Monday or it's catching up to what happened last week. And I thought like last week it was held up by, you know, I don't know, GameStop, Michael Seller, Marathon, buying Bitcoin in the open markets. But we now know that really wasn't the case. So it's just weird. Like it's just one of those weird things that that didn't happen. I don't know. I don't know if you have any thoughts, Alex, on why Bitcoin stalled as somebody who's constantly actively trading. I'm also curious to hear why you think the Treasury, the U.S. 10 years has spiked so much today. I'm curious to hear your reasoning or thinking there on both those. So on on on on Bitcoin I think we did see say him flows okay and I would I would say that

we had been seeing basically US is over over simplification over generalization but we've been saying America US sell Bitcoin and Asia by Bitcoin so like US treating Bitcoin as a risk on risk risk risk risk risk asset and Asia as a safe haven asset. That being said, it's just because you see it in one day that doesn't change the fact that when markets are breaking, they're just breaking. You just don't take positions fundamentally on what makes sense. You know that just it can break any minute.

it's as Rambo's saying is even gold was down today silver actually for example like sometimes things just don't make sense because they're not driven by by logic they're driven by flow somebody's blowing up somebody has to put a trade somebody needs to get the fuck out of a position

silver following a liberation day Liberace day it was basically it went down 10% and it went down 10% And I went down 10% again in the days following. It finally rallied today overnight after being down 3% again. So the point is things don't have to make sense. You take a step back and say, okay, let's wait to see where things settle.

I think and I want to hope, and it's like I'm biased here. I'm in crypto, right? that Bitcoin is going to do well eventually out of this because people need to put their assets somewhere and if the U.S. is not the place where you want to put your assets and say, okay, so the HSBC chairman or CEO he recommended basically, you said James, he said gold, boons and cash, right? Gold bonds, cash, European bonds, by the way.

European bonds. Well, I'd be concerned about being long European, specifically wounds, not European, because of Germany's fiscal policy. So I'd be concerned about that. But then you go to the U.S. and do you want to belong to the dollar? Well, I don't want to belong to the dollar. not in an environment where actually you have an administration literally driving the rest of the world

to stop investing in the U.S. Because that's what's happening. Contrary to what he's saying, yeah, you may have some guys here and there for the anecdote of how they're building some factories here and there, but money's actually ceasing to flow. And that's why we're saying bonds down is people are dumping pressure reborts.

And maybe China, too. Maybe China, we just inflicted retaliatory tariffs on their retaliatory tariffs, on our tariffs on China. So they said, all right, there's a package. And that is going to end trade with China. I mean, 105%, and that's just for starters are going to keep going up. That end trade with China. We can't overlook the impact of stimulus, which we know is coming from China. I mean, they've pretty much said so, and it could come within the next week or so.

But many other governments, UK, Vietnam, Europe, have said that they will, stimulus is coming to help companies get through this, to help individuals get through this. And that is also going to influence risk assets, not necessarily the U.S. rate outlook, but it is definitely going to influence risk sentiment in other markets. We are now in Band-Aid mode. I'm counting three Band-Aids right now. I posted this a few hours ago. Here's Band-Aid number one.

we're going to fix the automobile industry by providing an auto loan tax deduction for the Americans consumer. Its prices are going up. Okay, like the Band-Aid is you get the deduction. If you qualify for deductions, most Americans don't only 10% of Americans qualify. Number two, we're going to fix the trade war with a newly proposed, quote, export tax credit. We don't know what that is yet. But so let's say you're Nike, you get an export tax credit to offset something something.

something. The third, they're contemplating some kind of exemption for trade dealing with Vietnam or some kind of deal there. Right. So this is Band-Aid mode. The patient is bleeding because they got a knife on the neck, the American economy. And what they're doing is they got an IV infusing them with blood over here instead of just addressing the situation directly. So, and this is part of face-saving maneuvers and trying to respond and the issue is the people that will be cared for are those that have access because a squeaky wheel gets addressed first. How do you get access? Well, you make a campaign contribution to an inauguration bar or you're like Mark Zuckerberg who now is lobbying for this

and that. I don't blame any American CEO for doing that by the way. You got to look after your employees, your shareholders, and your customers. You got to do that. But if you're a small business, you can't do that. You cannot afford to do that. And that sets up by dynamic that you see in other countries like India, where like reliance and Tata Motor have an entrenched position due to the corruption between government and industry. So whoever sets the policy gets, if you know Howard Lutnik, you've got a golden ticket. Tether's got a golden ticket. Yeah.

What's the word for that in English is a term? absolute power corrupts absolutely uh corruption checks and balances public of interest a fiduciary duty right crony capitalism chronic capitalism that's it yeah um i did the other thing that i wanted to point out we kind of touched on it i talked about the fact that like one of the main goals of this was to drive down the tenure and what i think it was best in it might have been ludnik but i think it was best and talked about like the dollar will also strengthen on this tariff news which is typically what does happen, the dollar like will strengthen and it's done the exact opposite.

So like they're like a dollar strengthened will offset some of these concerns and it's like, nope, the dollar has actually gone down. And then going back to what we were talking about, the rates before, our rate strategist actually put out a note basically saying this is either people afraid of foreign sellers, price and sensitive foreign sellers like China and others that are going to de dollarize in some way, or it's actually those foreign sellers just selling into a market without any care in the world about what's happening. And like, You look at like what's going on with the two-year, 10-year, 30-year. Like, I have a chart where I can look at the bars of like how big the changes were on a daily basis.

I mean, specifically the two-year, there's only been two days that were bigger than we saw today when SVB collapsed and during 2008. So we've seen a bigger range in two-year yields today than only, there's only been two other times pretty much going back to like 2000 that we've ever seen this happen. So like people are dumping this stuff. And if you're dumping and moving to dumping the two-year and moving to cash, I mean, That's just, you know. Yeah, the Europeans are pulling back. I talked to a Canadian friend. He's like, look, man, we're looking into like Samsung and Nokia phones.

Like, forget Apple. The Europeans are doing the same. They're pulling back, right? Like, who's going to buy John Dier or a caterpillar around the world? Yeah. Ugh. Anybody got anything positive to say? The medium term case, yeah, the medium term case for Bitcoin certainly seems more clear these

days. There'll be great deals at some point. Yeah. But also on the crypto thing, I mean, Bitcoin, to choose that one, it will benefit, apart from the flushes that could hurt it. It will benefit from the stimulus. It will also benefit from the safe haven demand. So it has the double narrative working in its favor for a change. I think people need to be very careful with that narrative that is being pushed around on Twitter about Bitcoin going to be. to 250K on stimulus, etc. It's overperforming or doing well on relative terms doesn't mean that it's going to go into a massive bull market.

I hope it does, but it's kind of very risky. All these safe haven traits haven't worked, folks. Yeah, that's very true. And risk sentiment does, you know, dampen enthusiasm for pretty much everything other than the safest of assets, which crypto certainly isn't. Yeah, people like to talk about like the Fed cutting and doing QE and like it's going to be great. But like for the Fed to get back, like it's good when they're doing it just for like, you know, responses to market conditions that aren't like we're going into a recession.

Like a recession is not going to be good for anything that's considered a risk asset no matter how you slice it. If everyone's losing their job, they're not going to be spending their money on. I mean, obviously some Bitcoiners will, but it's not going to be something that like, you know, people are just out there normally buying. We should talk about the Fed. Fed's a good topic, right? So Powell, last tale of last week on Friday, 11 a.m., gave a speech where it was not dove it. She did not make any indication that he would respond to tariffs. He did say that the tariffs were larger in size and scope than initially anticipated and the likely consequences were inflation. My expectation is hands are tied in the short run, wait for hard data

to deteriorate, like labor data, and then aggressively cut. They're not going to give Trump a pass on this they can't. At the same time, they're dealing with heightened inflation expectations from consumers. There's an NFIB, a small business survey that came out around price, prices paid expectations. It's also going the wrong direction. So the Fed needs to wait until some deterioration and then jump into action. Markets are pricing 100 bibs and cuts now. So the Fed watch now for the Fed has adjusted. Yeah, so 50% cut odds for me. I don't see it.

It's just what Rambos saying is it's too much. The Fed has been telling us very repeatedly over and over again, they have plenty of time to decide and they will take their time. And here we have markets now pricing in one cat, 50% odds in May, FOMC in exactly a month. And we have, what is it, two cuts by June. It's too much. I agree with later and bigger if things go bad or not. The market is relying on the old playbook.

They came in before they'll do it again without realizing that this time, the stage is very, very different. And even should we start to see stress in treasury markets or should we start to see banks teeter, there are other things they can do. Which is rare. The market is usually right. It's a very unique. It's very unique. I'll poke you there. So markets got the Fed pivot wrong for the last two years. Yeah. So I don't know. I think these Fed fun cuts actually sign a panic, indication of panic. I'm not saying that these cuts won't happen because if they don't change course, then they need to cut.

right? But there is a Fed independent showdown that's brewing because Trump has said the feds like to occur that they need to cut while he dealt the Fed with a healthy dose of inflation. What do you do with that? Powell has an ally in Bessent in that aspect. Besson has spoken in public before about the importance of an independent Fed. Does Besson's voice matter in the Oval Office? That's also a good point. I think it does for many things, but some of them it does.

And there's no way his voice mattered based on what we saw with that tariff announcement, in my opinion. Yeah, I don't think so. I don't buy Besson, I actually believe in tariffs. He's just repeating the party line. I think Besson is a very, very well-informed person who truly understands markets. What he's saying is the opposite. So I think he's following orders. That's the way I interpret it, which means he has no power.

I think he'd be fully on board with reciprocal tariffs that were actually reciprocal to actual tariffs that were out there. He'd be on board with that. He might even be on board with some low level of tariff, but this idea of like, we need to get rid of trade deficits. There's no way anybody who studied economics or finance would think that that's a reasonable thing to do. Yeah, he was on Meet the Press this Sunday. He looked like he hadn't slept well. It didn't look authentic. Stephanie Ruhl, who's a reporter at MSNBC.

take for what it's worth. Former colleague of mine. Former Wall Street Journal reporter. I give a lot of credibility to Wall Street Journal reporters. They're very good. As are Bloomberg. Two favorite news sources out there. But she said there are rumors that Besson may be leaving

because he has his own legacy to protect. And if you look at the policy they're rolling out, it reminds me of Andrew Mell and Herbert Hoover. What's the famous quote? Liquidate the bonds. liquidating the stocks. It's almost as good as Michael Saylor. Trader's going to tray, short's going to short, long is going to long.

But yeah, look, I think if you're best in, you're saying, gee, do I want to be associated with this? And he's not allowed a sort of assertive personality like Howard Lutnik. He's not a bulldog like that. And Lutnik can appeal to Trump's prior beliefs and instincts and his own personal grievances. Part of this is you're saying Trump's dealing with. with, like, say, Japanese real estate investors in the U.S. in the 80s and feel aggrieved about that.

We've kind of seen that play out here, right? Yep. Anyone have any more comments on tariffs and Trump and what's going on right now? Yeah. One last one. It's, again, I'm going to be repetitive, but this is what they're saying is they believe, they're telling us, and I think they're telling us this because they believe in this. That's a problem.

It's not a negotiation tactic. They believe in this. They believe that 75% of tariffs will be absorbed by foreigners and 25% passed on to the US. When in practice, on the short term, is 60 to 80%, more like 80, passed on to the US. And in the long run, is closer to one. So if you believe actually the U.S. only takes 25% of the burden, then in that universe, you believe tariffs are the best thing since the invention of, I don't know, the will, the, I don't know, sex, you know, the submission of sex.

He sees it as a scoreboard. In fact, Trump, in this press conference today, he says, the trade deficit is like a profit and loss statement. quote, the trade deficit is like a profit and loss statement. How do you change someone's mind if that's their anchor? I don't know how you get. They're not even thinking about like elasticity. He thinks the scoreboard is a trade deficit's negative.

Actually, he's got it backwards. I want bigger trade deficits. I want more trade. I want more capital investment in the United States. And yeah, like open up foreign markets. sell the F-35 just to the Europeans. They're not going to buy that now. They're going to buy, you know, French and UK jets from BAA systems or whoever.

Yeah, I mean, the trade deficits, like some countries in some areas get very good at very particular things. And they can offer things because they're more efficient, do them at lower cost. They have lower costs of capital, lower cost of labor, all these different things make it efficient. And we can outsource that. And we benefit from those efficiencies. Their argument, obviously, on the other side, is that we're, taking those jobs away from people in middle America and manufacturing jobs and things like that. But, I mean, manufacturing jobs are like less than 10% of the jobs in the U.S.

So, like, I mean, it hasn't been something in the U.S. that we've been doing for a very, very, very long time. And like, you keep saying, like, okay, automation, robots, we can bring some of this back. But, like, if that was your goal, like, you don't need, like, my view is like, if Bessemer and Church, he would have done a more gradual approach. Like, I felt like we heard him talking about we're going to incrementally add on as tariffs as time goes by to force companies to like, you know, start onshoreing and doing things unsure, but doing this blank and like shooting, shooting the gun right off the start.

Yeah. How do you create jobs if your game plans to build robots? Like, where's the win? Someone's got to program the robot. I have no idea. I have two points to make. One, further, something I was trying to explain before and didn't do a great job is if you are tariffing everybody, a minimum of 10%, then the exporters have no incentive to lower their

prices. They don't have to. You have to continue to pay for imports because you're not going to get the products anywhere else, especially if everyone is paying the same tariffs. And the other thing is we haven't talked about, and we should sign off with hope, and that is the regulatory pushback, the pushback from Congress. We've already seen some moves on this front. There was a bill passed in the Senate, I think it was, that with actually,

Republicans voting with Democrats enough to pass this and get that. Something was about Canada, I think. I'm fuzzy on the details there. There's another one that has been presented with seven Republican senators co-signing with, obviously, a Democrat as well, to overturn the tariffs on, I think it's Canada. And again, the details are fuzzy. There's also a lawsuit based in Florida that is questioning Trump's ability or his right to, to use the IEPA for broad economic policy. The IEPA is an act that was passed in the 1970s, if I'm not mistaken,

to give the president the opportunity to use targeted economic measures in times of an national emergency originating outside the U.S. It has never before been used for blanket applications of terrorists. It has never before been used for the application of broad economic policy. And it is not hard to argue that this is way beyond what it was designed for. So if they manage to undermine Trump's declaration of a national security and then the use of the IEPA to push these through, then they have a very good chance of curtailing some of the scope that Trump wants. Maybe not all of it, but certainly some of it.

Now, the problem is that the Republicans control Congress, but they're going off for recess this weekend for two weeks, where many of the representatives in swing states will be talking to their constituents. And they very, very, very much do not want. Trump does not want to lose control of either the House of the Senate and the midterms because we know that right after they do impeachment proceedings start. Well, so he's not going to lose that tariff negotiation authority. It's just the votes just aren't there. There is dissent, though.

Ted Cruz is pulling back, shouting now and saying, look, there's different things on his podcast. By the way, real quick, here's a chart showing the middle class. And the story on this chart is that the middle class is graduating to 100,000 plus high income. Now, someone out there might be saying, well, gee, that's inflation. No, no, no. These are in constant dollars. This is after inflation. So people are getting better off.

You know, there are real issues. There are always real issues that need to be addressed. You know, Americans are one of the unique. countries where people have multiple cars, washer and dryer, enjoy all sorts of benefits. And what the United States really needs is healthcare, care for the elderly, care for the young, healthcare jobs pay really well. You can be a nurse, a nethesis, like a kind of anesthesiology light, earn $100,000 after going to school for a couple of years.

And it's not hazardous, it's like manufacturing. So they're focused on the wrong objectives. things were working. Things are working. We're the beneficiary of globalization. The biggest beneficiary, arguably, aside from maybe China. They're focused on big-teamhood, which is ironic because it's part of the criticism towards the liberal machine that they breed big-teamhood in people. You're a victim of the system.

And here we have Republicans doing exactly the same. You're a big team of the system. And some listeners may be upset about me saying this. But Trump is saying this very, with those words he's saying, we're being abused. Who is being abused? A victim. So that's exactly what he's saying. Where's the loss?

Who's the guy complaining about Vietnam making Nike sneakers? Where's the victim? The victim's a Nike shareholder, the Nike customer. and the human being in Vietnam. But you're right, it is grievous. It's populist language. I don't know if it'll work. Americans are a lot smarter now.

Like, Twitter consensus is that tariffs are bad. Yep. I mean, the other thing is like, we didn't really explain why, Rom, you basically said, like, the Congress getting rid of some of his tariffing power. The reason is because you need a veto proof, because the bill would have to come to Trump's desk

and you need a veto proof majority. And while we have enough senators and congressmen to pass it through now to get to his desk, the question is, will they have a veto proof majority and right now they don't? But I mean, if things get really bad, who knows how this could go? They could take it away.

And before that happens, Trump will probably have to capitulate a little bit himself on what he's doing here. Before we wrap up, I will, the one other positive light here is that there, I feel like every week, read something positive happening with Stable Coins legislation. We have the two acts right now going through Congress, the Genius Act and the Stable Act.

There's like 80 plus percent overlap between exactly what they want to do. They just got to fine tune it. So, I mean, that's one thing that will definitely almost certainly help to create more demand for U.S. dollars. I mean, like it or not, actually, Paulo Ordoino, the CEO of Tether was on Tracy and Tracy Alloway and Joe Wisenthal's podcast, Odd Lots today, which is one of the biggest, It is the biggest podcast from Bloomberg, which like, when I saw that he was on there, I was like, what is going on right now?

Like, this is how you know things have changed from like 20, 23 or any time earlier. Like, they had people on that saying it was a complete scam, not that long ago. And now they're talking to CEO and he's talking with the administration about the way some of this should work. So, I mean, we're trying to look at for a positive spin here on different things could be happening. A stable, the stable act or a genius actor, some combination of the two of them would be tremendously helpful, I think, potentially for the treasurer.

market, but definitely for the crypto market overall, it's a things are heading in the right direction. I don't know if you guys have any thoughts on either of them. No, good points. All right. Anyone have anything else to say about the current markets? Alex, what do you think? You think we're due for a rebound by the time that people are listening to this? And then you think it's just sell the rally.

Is that your short-term tactical view or you need to wait and see? I think we can see a very strong rebound. Also, it's like, I know we're over time, but like on headlines, like, for example, how crazy or sensitive this market is, Trump could put a tweet on true social or tweet, right, a post on true social saying, we'll be having a call with G tomorrow, expecting very nice things,

expecting to have a very good deal. Great deal on the way. And the market will rally 3%. And then you say it. And then it's like, yeah, and then it's like, yeah, it's like, okay, fuck this. Sorry, Mike. Yeah.

That is the opposite, you know. The fake asset nude was a 5, 6, 7% move. So it would be probably even more than 3%. So, yeah. Ron, you were going to say something. I agree. It's headline risk. And it's just not inspiring confidence in capital markets.

It causes a lack of trust in markets. So investors pull back. Investors wait and see. They build cash. They sell rallies. They don't trust statements from leadership because they're inconsistent. The policy is incoherent. that sets up a psychology that's called a bear market.

And it can become a self-fulfilling prophecy. It's kind of simple. And that's what you have right now. I agree with Alex. This is a lot of headline risk. And Alex pointed this out, I think two weeks ago, it's a Trump-driven market. It's all about just follow Trump notifications on if you can get in, quickly get in. But these sharp, furious two-day rallies, I expect will be sold.

And that's what happened in Q4, 2018, until you had clear. and resolution. There's no clarity. How do you build a DCF model of your Apple? How do you model out your margins? How do you model out your cap-ex? How do you model out your revenue? How do you know whether someone in Canada can pay for an out? That's just one company. That's the issue. Analysts don't have any clarity. There's a risk premium. We went from a Trump bump last year. I was one of the earlier people to write about that. And I went into the election and say, don't be hedged, stay long, long and strong. Now's the opposite.

You're going from a Trump bump to a Trump risk premium because of the uncertainty in markets. You know, if you don't know, it's like, like you just use chat GPT. Yeah, I mean, Trump is like they did. Yeah, there's a non-zero chance for those that don't know that the administration used chat GPT to come up with their calculations for what to do with tariffs to level out the trade deficit we were talking about. I mean, Trump has been a bid on the vol of all, right? Like, he has done nothing but increased volatility and the volatility of volatility itself.

So it's interesting to watch, if nothing else. But yeah, it's not fun. I mean, we've said this many times on this podcast before. Markets do not like uncertainty. And things are more uncertain now than And I feel like since 2020, in my mind, like during the depths of COVID, we didn't know what the world was shutting down and how bad it was going to be. But like right now, if you're running a company, like, is Trump going to get rid of these tariffs and lower them in three months after you started like investing and insuring your manufacturing? And it's hard to know when to make a decision. And companies, they thrive on certainty and, you know, knowing exactly how things are going to work in the U.S. and Trump is really diminishing, you know, that sanctity of the U.S. market in one way or another. So that's my last final two cents, I'll say.

But that said, I feel like most of the selling is done is my personal view. I think they'll figure it out. I don't think we're going to go that much farther down from here. And like Rahm said, I think that 450 level kind of makes sense as like, you know, really, really, truly heavy support for potential buying. But who knows? On positive things that you ask, James, so here is let's try to be optimistic. One of the main goals on tariffs on the Trump admin is going after China.

So it's kind of like this two-fold thing. On one hand is we want tariffs to raise revenue or threefold. Tariffs to raise revenue, tariffs to bring manufacturing back. and tariffs to fuck with China. And the third thing is more likely, I think. And that will be like a good case scenario. It basically unfolds us. Him establishing trade deals with almost everyone that matters, isolating China.

I can see basically with a little luck tariffs going down with Europe and staying very high, which is not good, but it's better on the alternative. It was staying very high against China. All right. This is a rather depressing episode, but some positive outlooks to close it out, I guess. Earning season's coming. earnings will be up. There you go.

That will cheer people up, right? Thanks for joining us for this episode of Bits and Bits. We'll be back in one week to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone.