Unchained - Bits + Bips: Why the Stock Market Wipeout Might Not Achieve What Trump Wanted - Ep. 802

Episode Date: March 19, 2025

The financial market is getting wrecked, inflation is still a problem, and bitcoin isn’t acting like the hedge that it’s supposed to be. Is this a real economic shift, or just noise? With tariffs, stagflation fears, and fiscal dominance taking center stage, hosts James Seyffart, Joe McCann, Ram Ahluwalia and Noelle Acheson break down: Why markets are struggling—and whether a recession or stagflation is coming Whether the Fed has become irrelevant How the stablecoin bill could rescue sales of treasuries Why bitcoin isn’t following gold’s rally The factors that could kickstart the next crypto boom The latest on all the dozens of crypto ETFs in the works Sponsors: Bitwise Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Joe McCann, Founder, CEO, and CIO of Asymmetric Ram Ahluwalia, CFA, CEO and Founder of Lumida Noelle Acheson, Author of the “Crypto Is Macro Now” Newsletter  Links The stagflation trade Bloomberg: Stagflation Trade Emerges as Rare Winner in US Stock Market Rout Reuters: Fed's Powell gets chance to address trade war, stagflation fears Tweet by Noah Smith Budget bill Wharton: The FY2025 House Budget reconciliation and Trump Administration Tax Proposals: Budgetary, Economic, and Distributional Effects Stablecoin bill: Unchained: Stablecoin Bills Could Squeeze Out $140 Billion Tether CoinDesk: U.S. Senate Takes First Big Step to Advance Stablecoin Bill Solana futures Cointelegraph: Solana futures finish first trading day on CME Solana ad Unchained: Solana Deletes ‘Cringe’ Ad After Crypto Community Backlash Timestamps: 👋 0:00 Intro 📉 1:39 Stagflation fears and which tariffs actually matter for the economy 🌎 6:11 Why the outlook for commodities is so uncertain 📊 10:49 Is the Trump administration sabotaging itself? 🐶 16:57 Why DOGE’s role in the market is bigger than you think 📉 23:51 Why the 10-year yield isn’t dropping as expected 💰 28:04 Will shrinking liquidity grind the market to a halt? 🏛️ 32:37 Why the Fed has become irrelevant 🔄 36:53 Is quantitative tightening (QT) ending? Plus, one key thing crypto investors don’t get ⚠️ 41:13 Why a recession is not a foregone conclusion 🥇 48:25 Gold is hitting all-time highs—so why isn’t bitcoin following? 🏦 51:24 How the stablecoin bill could save US government finances 🚀 1:01:47 How bitcoin gets its next rally  📉 1:07:16 The hidden benefit of CME SOL futures ✅ 1:12:15 The latest on pending crypto ETF approvals 📣 1:17:26 Reactions to the controversial Solana ad Learn more about your ad choices. Visit megaphone.fm/adchoices

How do you expect to get the business community to rally behind you when you're eviscerating the value of the stock market, which also is a revenue source for the federal government? It's just very bizarre to me. And I think we saw this over this past weekend. You're starting to see some of the media come out kind of hit Trump pretty hard on this stuff. He may be starting to hear from some of this constituents in the business community of saying like, hey, like, we're team Trump. but like maybe tone down the recessions are cool rhetoric. Hi, everyone. Welcome to bits and bips, exploring how crypto and macro collide, one basis point at a time.

I'm your host, James Safer, Tradfai Archmaister, Lord of Bloomberg Zen. Here with Joe McCann, Lord Commander of Asymmetric and Master of Bonk. Also joined by Noel Atchison, High Seer and Keeper of the Crypto is Macro now newsletter. Hello, everyone. And finally, Rahmalaala, Mastor of Wealth, Leader of Lumida. How's it going? We're here to discuss the latest stories in the worlds of crypto and macro. Just remember the nothing you say here is investment advice.

Please check unchaincrypto.com slash Brits & 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. a full house with no special guest, actually. So this is, I don't remember the last time we had one of these where we had four of the main crew. So this will be fun. Well, let's get into, we got to start with macro. I feel like that's the main overarching thing. I feel like there's really not a ton happening since we spoke last week, or it feels like there's not a ton happening, but there's a lot happening on the macro and geopolitical front. I mean, there's a lot of talk recently about, you know, a stagflation trade. There's a lot of, I'm going to read a tweet from, from Noah Smith, who's an opinion columnist actually for Bloomberg.

And he said, Trump and the Senate GOP are asking for trillions of tax cuts, interest costs in the debt are soaring, Medicaid cuts won't make up for it, Doge is not cutting spending, tariffs are just going to hurt economic growth. My friends, we are in trouble. There's been a whole bunch of other things. Reuters put out stuff. We had other Bloomberg reporters put out different pieces. This seems to be the hot topic of like the last, you know, less than a week, I guess.

I'll turn it over like Rom, what are your immediate thoughts on this? And then go to Noel and Joe. So there's a gap in the perception of inflation and actual inflation. If you look at like true inflation, other metrics, inflation's coming down. It's coming down in goods and services. Labor pressure has also been softer. That might change in the future, but so far, so good on that. I think the perceived inflation is higher because you have products like eggs,

which have gone higher, and people anchor to that. They look at mortgage rates. anchor to that, but the reality is there's actually more freedom that the Fed has. On Doge, I'm not so sure why people are so skeptical about spending cuts. I don't know the size and scope of what cuts will find there, but I think at least over $100 billion. I mean, the question is, can you cut fraud from Social Security, Medicare, and Medicaid? You know, the numbers that Elon shared on Twitter were that there's like hundreds of billions of dollars. And that's, that's, That's fraud that's going to American consumers, by the way.

I think one thing you've figured out is, you know, those are American consumers paying for Netflix subscriptions, Amazon orders, you know, cars and houses it all the rest. Maybe grandma and grandpa passed away one day and they're still collecting a check. I imagine that's the nature of the fraud. I'd want to size and scope that, but I don't know why it's so much skepticism. On the tariff stuff, you know, tariffs on China really aren't a big deal. They really aren't. Like, it drives furniture costs and, you know, it's not a material driver of consumer spending

anymore and there's so much natural deflation in China manufacturing. The tariffs to watch are Mexico because they're a significant trading partner. Terrorists on Canada really don't matter, and they're probably not going to go away. But as for terrorists on Mexico, Trump apparently has a good relationship with the prime minister, number one. Number two, fentanyl interdictions are down substantially. Three, Trump is getting earful, no doubt, from GM and Ford and other leaders in business roundtable saying, hey, we have production. Fourth, Trump needs a strong, economically viable Mexico to stop the flow of illegal immigration. If Mexico becomes a failed state, you get worse issues.

And lastly, if you need an alternative to China production, it's got to be Mexico. So for all those reasons, I expect Trump will find a deal with Mexico, and that's the one that matters. We have more trading with Mexico than Europe. So I think that's a story people are not talking about. I'm going to push back slightly on a couple of things there. But first of all, the inflation expectations, obviously not tethered to actual inflation, but the danger is that the actual inflation responds to those expectations. I'm not just talking about the behavioral changes that inflation expectations trigger

in consumer purchases. I'm talking about corporates looking at inflation expectations and thinking they expect inflation, so we might as well raise prices. And that's another way we're going to start to see inflation. come back. On the tariffs, I'm also going to argue that the tariffs themselves aren't the issue. Tariffs, we can adapt, you know, it's going to hurt, etc. It's the uncertainty around the tariffs that is having everyone totally paralyzed and that's where the big hit will come. Once we get greater certainty, which hopefully will be in a few months, hopefully someone will talk some sense

into the dialogue going on, then we just, you know, we adapt, we work around them. And then over the stagflation trade that you were talking about James. It's a confusing term and there's no set definition to what even the stagflation is. There's no set definition to what stagflation means. For some, it means stagnating growth with high inflation and high unemployment, and for others it means declining growth. It depends. Stagflation trade typically involves defences and commodities, but commodities, the outlook for them, is totally up in the air. It's oil, for instance. We've got the US bombing Yemen and blaming it on Iran.

We have Syria marching to Lebanon. Any conflict in the Middle East could push the price of oil up. But otherwise, with stagnating growth, especially with declining growth in China, the oil consumption theory is coming down, especially with OPEC, actually increasing production come April. And copper and everything. Where is the demand going to come from? Again, unless the Ukraine war finally draws to a very painful close and building recommences.

We just don't know. It's all up in the air in geopolitics. is playing a very, a much larger role this time round than the last time we were actually talking about stagflation trades. Yeah, I think I'll build on a little bit of what you just said, Noel, because you bring up a really good point around commodities specifically. It's like, where's the bid going to come for these things? And ironically, the tariff talk has led to, I think, an under-discussed topic around what's

known as the repatriation trade, which is today, NIP is something like $23 trillion in the United States. That's effectively foreign investment directly invested into the U.S. That's a lot of that's starting to go home. And so you're seeing this in places like Germany in Hong Kong, et cetera. It's being reflected in the stock, the moves and the stock prices there and ultimately the stock markets. But you can couple that with the stimulus that. these countries are now alluding to. So in Germany, they're talking about a trillion euros of stimulus. They finally got off the debt break and they were like, it's time, let's go.

And that could be a reaction to the uncertainty around tariffs. It could be a reaction to the rhetoric out of D.C. And are these really our allies? I mean, that's probably like the most extreme case. But I do think that a lot of this stems from the uncertainty. around the tariffs, to your point, it's the uncertainty around it. In fact, there's the uncertainty index is at the highest level it's been at in years, which should not come as a surprise given how uncertain things are, right? So I think as that relates to things like commodities,

where would that stimulus money be spent? I mean, if China really starts to stimulate, it, look, they actually now have, I think they came out and they said, we're, we still want to hit our 5% GDP target and run a 4% deficit. It's the highest deficit. decades. That's pretty meaningful. Now, it's China. They talked about some things back in October and we didn't really see a lot. But with the dollar declining, they actually have a better chance now to run a higher deficit. So I do think that if China starts to stimulate to the extent that they are suggesting, you may end up actually seeing a bid for commodities, irrespective of the tensions that are brewing in the Middle East. Oil actually, I think the, I saw something today, oil head funds are

the least long or the least position in crude futures that they've been in ages. That's typically a time to get long. You could have some other idiosyncratic event in the Middle East actually trigger this, but I think longer term, if these stimulus packages pass in the rest of the world and the developing world, you're going to start to actually, I think you have to see a bid actually come back to two commodities. Yeah, I mean, I'm going to share this for anyone watching. This is just looking at chuflation, which I know is kind of, you know, some people love it, some people hate it. But it has been pretty good so far in leading what the CPI numbers are. And it just kind of goes to show what what Rom was talking about, that inflation is actually coming down. And I mean, it basically has

fallen off a cliff since the numbers have come out in those recent things. So I think that's part of obviously what you spoke about, Joe, is like everything is extremely uncertain. Like, the whole talk was, you know, take Trump seriously, but not literally. And that's kind of like, now everyone's saying, okay, maybe we should have taken seriously because of what he's doing. And I think it's more about like just the, no one can plan for this. I mean, we had small caps are off 20% from where they were at the highs, right? Like this is, this is not some baby little sell-off. I mean, large caps are off 10%ish. So, I mean, it's all because of the things that like, we talked about the last time. There's so many cross currents and so many things and no one

knows what's happening. And part of it is like how much of it is he's just trying to negotiate and put something out there and he knows he's going to settle somewhere lower. But like he can't act like that's the point of it. Even if that's the case and it is more of a serious, you know, taken literally not seriously. It's, it's super strange. Like the approach that has been taken by Scott Besson and Lutnik and other members of Trump's cabinet, you know, on the one hand, I just do want to point out, if you look at inflation expectations by hard. line. Yeah. I mean, they are so radically different. So, yes, my inflation expectations are aligned with, you know, if my party has a person in the White House or not. But let's think about

this, right? They want to get the deficit down. They want to, you know, they want to get yields down. They want to get mortgage rates down. They want to figure out how to balance the budget and et cetera, et cetera, right? So wiping out $5 trillion of the stock market is a good way to do that. I mean, it's just mind-numbing to make- Do you think that, no, was that intention or deliberate or- No, no, I'm saying that's the net result, right? Like, like, you know, you saw Trump come out and basically say, like, he wasn't, he didn't, he wasn't definitive as to whether or not he was okay with a recession.

You've seen Bessent kind of be like, yeah, corrections are healthy, and yet, that type of language is very different than Trump 1.0, right? Extremely different. Look, you know, when you wipe out $5 trillion worth of market cap and stocks, that's 12% of GDP now. That is a major amount of capital that's just been eviscerated. And furthermore, the folks that actually own stocks, which is not the majority of Americans, are going to pull back on spending due to the negative wealth effect. And finally, let's assume that the stock market ends here on December 31st.

Where's the cap gains revenue coming from? Exactly. If you're actually trying to generate more revenues for the government, you probably need to stimulate assets or at least keep them up to some extent. And so the washout has been very strange. Like to James's point, I see this a lot because when I've talked with a number of folks in the industry about this, you see the headline of S&P is only down 10%. If you look underneath the surface, first of all, usually when you have like these types of pullbacks that are quick moves in the VIX, correlations are super high, meaning most stocks are down, right? Correlation was super low this time. And then dispersion was super high. So if the concentrated stocks like the Mag 7 got decimated, Palantir down 40%. Robin Hood down 50%. I mean, these moves at very specific stocks hit retail. for the most part, right? And so to me, again, like, I question the messaging approach over the

past few weeks, given the kind of mechanistic selling that has occurred. I know there's a whole topic we could cover around multi-platforms and factors and all the stuff that happened in the markets, but like, how do you expect to get the business community to rally behind you when you're eviscerating the value of the stock market, which also is a revenue source. for the federal government. It's just very bizarre to me. And I think we saw this over this past weekend. You're starting to see some of the media come out, kind of hit Trump pretty hard on this stuff. He may be starting to hear from some of this constituents in the business community of saying, like, hey, like, we're team Trump, but like maybe toned down the recessions are cool rhetoric?

Yeah, I was not in my head as you were saying that. Look, Maria Barterromo and quite a few others that are center writer asking Trump tough questions and with follow-ups. But they are starting to soften the tone, right? Besson last week said, hey, we need a detox. But then this Sunday, I meet the press. He said detox doesn't mean a recession. So they are starting to soften that a bit. Look, I think this is reality TV presidency.

You know, Trump is very deliberate about that. You know, he said, this is great television after ejected Zelensky. He's very conscious around that. And they're iterating on policy in public, right? tariffs have shifted from universal to targeted and reciprocal. But I would say that peak policy uncertainty is bullish for forward returns. So, you know, here we had a 10% correction in the S&P. Markets love to rugpole.

You get a temper, nice magic number like that, get a lot of headlines, judge report indicator flashes. I don't know if we had a CNBC market's in turmoil. And now you've got two back-to-back strong days in the markets. So we haven't had that in a while. I'd expect where we stand today on Monday. I expect we retrace a bit tomorrow going into CPI. But, you know, as I look around markets, things are very bullish now. Like animal spirits, your point mentioned Rob Hood and Palantir.

Things look always to rally and are rallying across the board. What you're seeing is capital leaking from Mag 7, which was a consensus crowded trade and idea for the last two years, into everything else, into the bruce. breath into the 493, into international. Even Mexico is up like 12% year to date. This thing with these tariff issues with the United States, outperforming. The thing is one thing to bear in mind is the timing of all of this. Trump and his team have an agenda. They want to bring spending down. They want to put the deficit back on the right track. And now is the time to do that. The short term pain means that come the midterms, things will be rallying again. And they will be able to say,

look, we did it. So I think they are actually willing to withstand the pain, the hit to the tax revenue, the whole sentiment thing as well. Now is the time to do it. Trump doesn't seem to give a shit what people actually think of him, and he's not running again. So this is the only opportunity the United States has to do that kind of thing. I hear time and time again about how, you know, nothing stops this train. Of course, we're going to be stepping in to continue spending to protect the economy. And of course, there's a Trump put in the market. Of course, none of this can continue to go down for much long. But then I'm also hearing from other. very intelligent people, such as, for instance, Fed Chair J. Powell, saying this is unsustainable.

Now, which is true? Are we going to continue to spend, or is this unsustainable? Do you have a view on a Doge? Like, are the cuts credible and real and to what amount? Like, if I can figure out one thing, that's the variable I would really want to understand. And the related to these is matched with tax cuts. Yeah. My view on that is that it's material. I mean, you know, a billion here, a billion there. soon you're talking about real money, right? But it is just scratching the surface for what needs to be done. The two biggest sources of expenditure are interest and defense. And interest will come down as the yields come down, and they're doing pretty well on that front. And defense spending's

going to come down if Europe is paying for more of itself, is Japan is paying for more of itself, if Australia is paying for more of itself. So they're on the right track for that as well. Short-term pain, and then this time next year, as we're able to say, look, we actually made a different. and that makes the midterms a very different outlook. Yeah, that's a great point. I mean, the one thing I may slightly disagree with, or maybe I'm agreeing, I can't recall if you mentioned this or not, Noel, but I was looking at the CRFB's impact of the current House Reconciliation Bill,

and it's eight times the size of the 2022 infrastructure bill, eight times. So the irony is there's, is this narrative of we need, this is unsustainable, we need to get, you know, interest rates down, we need to control the deficit, et cetera, and control spending. Yet this bill is like $2.8 trillion. It's huge, right? And so within there, there's a lot of stimulative things on the tax cut side. I think one of the things that stood out to me that I don't think it gets a lot of press is interest rate deductions from automobile loans, right? Like, how stimulative could that actually be? how many average Americans actually have car loads? Almost all of them, probably, is my guess.

Imagine, you know, that little bit being in there, what could that actually be, could that actually be a material, material stimulant for the broader market? But I actually don't think that, I don't think the Trump administration believes that they're not going to be continuing to spend loads of money because it wouldn't show up in this reconciliation bill. They are going to continue to spend lots of money. And so as those deficits continue to rise, and we need to get rates down, how do we go about doing that? Well, we talked about the tax policy or the tax revenues is one. I'm sure there's some impact that Doge can have. But the other thing about Doge, and this is just my own opinion on it, is I don't think finding all the waste and fraud and abuse is pulling that cash out of the market.

I think it just gets reallocated to something else, right? Like the money's already there per se. Instead of it going to some random country for some random, you know, ideological or social, you know, program, it goes to defense, right? Or something. It goes to one of like these five buckets that the Trump administration is comfortable spending that money in. One other thing I will mention about the recent stock market route is, yes, a lot of it is sentiment driven. We talked about the breadth broadening out, which is great. We haven't seen that in a very long time.

The mechanisms for how this stuff actually sold off was almost like textbook systematic selling. And so let's talk about what I mean by that. First, those crowded trades, the Mag 7s of the world, crowded longs, you like to call them, in, I like, you know, hedge fund speak, those all got rapidly unwound quickly. Why? And so if you dig into it, what you learn is these large hedge funds that run multi-platform, they're multi-platform hedge funds. They have these things called pods, which is usually like a PM, a trader, an analyst. They manage a couple billion dollars. And they could be focused on a sector like industrials, or they can be focused on a factor-based investing model like momentum or beta or realized ball or something to that, a

These pods have billions of dollars, and there's dozens of them across all these multi-platform hedge funds. And these are like your Millennium, Citadel's, Balayasnees of the world, 0.72, etc. That's about $400 billion. It wrapped up in that. That's about 10% of the market, but they use leverage. So that leverage is actually closer to $3 to $4 trillion notional. And so when there's a de-risk event across these pods, they all have to de-risk at the same

time. Well, if they're all running the same factor models or they're all in the exact same longs, guess what? They now have to de-gross. They got to de-risk. Uh-oh. We all have to de-gross. We're all de-grossing at the same time. And it creates this kind of violent feedback loop. That's why you end up seeing the Palantir's and the Teslas of the world down 40-50 percent because there was four selling. Has anything fundamentally changed for Palantir in the past three weeks? I don't think so. Has anything fundamentally changed for Tesla or Invidia? I think for the most part, the answer is no. And so just to finish the thought, Rom, the selling that occurred as kind of depending on where you were hiding out was really aggressive. And that was also a continuation

of what was happening with the VIX. People were trying to hedge, but the VIX was just marching higher. So now you have VAL control funds have to sell, right? So this was mechanistic selling through the markets. You know, I'm not suggesting that this is the ultimate bottom of the year or anything like that. But like, man, it just feels like there was some force liquidations out there. A lot of these pods blew up. And now we're a reset and time to regross again. So first off, fully great with all that, you know, this is a momentum factor unwind. Momentum is an incredibly effective and powerful factor for generating risk adjusted returns that outperform the market. And you had Cidale, Millennium, turn in negative returns. It's very rare. But there are other considerations too.

There's a wonderful quote from John Templeton where he says, you know, Bull Marcus dying euphoria. Shortly after the inauguration, we had euphoria. Trump was at the UN and say, we're going to lower interest rates, America first, rah-rah, you know, space rockets, you know, all this stuff. And there was overpositioning everywhere, right, including from retail investors, which were sent Palantir to like 400 times PE ratio. So meanwhile, you had investors like Warren Buffett that were building cash, taking the other side of that to enable other people to get long. So yeah, you had you had peak sentiment conditions. You had euphoric conditions.

And the top of the market to the day was when Trump ejected Zelensky from the White House. That scrambled everyone, set up a risk aversion, things were price for perfection, and then, you know, we've reset since then. Yeah. I mean, you also had them, like, it was almost impressive. Like, everyone in the administration was, like, walking down risk. assets in the way they talked. There was no defending it whatsoever. They were kind of like, here we go. And you know, they're always, they keep talking about they want the 10 year lower, which again is still sitting. What is it at right now? 4.4.3 almost. So it's actually up a little bit from last time we did this. I mean, is wiping out $5 trillion worth of the stock market good enough for 30 bips drop in the 10 year? It should be later. The 10 years, I would have guessed,

if you told me that market dropped that much, I would guess that 10 would be at 3.9 or 3.8. I completely agree. Which is also. also why you're like, hey guys, maybe you should pay attention. This isn't working. On September, what is it? September 30th, I want to say? Like the 10 year was around 3.5-ish, somewhere in September. 3.6 in middle of September. Here, wait out. I'll share my screen. One sec. At that point, you had a growth scare is too strong a word, but you had concerns around slowing growth, which is the concern now. And you didn't have that severe correction. Now, the difference between now in September is you have Bonneils in Europe are attractive. And they're competing for capital now.

And you have four markets competing for capital. So it's a, it's not, I, there's a, there's decent chances that we've bottomed right now. And then we're going to rally for a bit. And now we're standing kind of a quick kind of a little pullback here. But the situation is, is like diceier than September in a sense. And if you look at Q4, 2018, it's a study I keep going back to. You had trade wars then. it was also Trump 1.0. And you had a 19% correction. And the four PEs in the stock market

were around 16 to 18 times, by the way, which is much lower than we are now. And your earnings growth back then was 20%. Now it's 8%. Higher valuation. It's like I guess you called the peg ratio of the S&P is higher. And so it's a very interesting situation where we're in versus September. Oh, I completely agree. And I think, you know, the other way to look at this is, I wrote about this actually at the beginning of the year. I was like, the easy money is over. 2024, certainly for like Bitcoin and crypto, it's like Bitcoin ETF probably going higher.

Like it's relatively easy contract, right? Like, you know, this year I was, it's just, it's going to be much harder. And furthermore, when you look at back-to-back 20 plus percent years in the S&P, the third year, is very, very difficult to pull that off. Now, we haven't started to really see earnings, forward earnings estimates come down. I think that's going to be the thing that's going to really start to pinch the stock market

if we actually have at bottom. I think there's been a few here and there, but for the most part, I haven't seen like across the board changes in earnings expectations, which, frankly, if the consumer is slowing down or you have this negative wealth effect or whatever, high inflation, you name it.

earnings are going to offer. So they're probably overvalued. But then could all of a sudden there is this 180 by the Trump administration that says, we're printing a zillion dollars or we're going to do massive stimulus or we're going to do this enormous tax cut or whatever the thing may actually be to kind of stabilize those markets so that they can continue higher? I just don't know. So the big question is how do you position in all of this given these other assets classes? But on the earnings estimates, so within consumer disclaims, discretionary, they were slashed, and in energy, and I believe there's one other sector.

And if I look at the X, O Y, E TEP, that's down 18%. So it's already priced in a lot. Notably, Tesla down again today, about 6% while everything else kind of rally today. So I think markets have discounted quite a bit of the tariffs. The fundamental question, though, is around how do you position against this backdrop? Because I agree, the easy money is made. This is more like advanced class. And there's like a difficulty nine gymnastics in the Olympics at this point. Right.

Noel, any thoughts on that before I jump in? No, no, I totally, totally agree with what they're saying. The uncertainty is the key. Liquidity is something we also need to think about. Liquidity, not only in terms of money rotating into other markets, but liquidity in terms of there's a massive wall of debt maturing this year, 33% of outstanding debt matures this year, how they're going to refinance it,

especially since much of that was taken. out during COVID at very low rate. So liquidity is, in my opinion, more likely to head out of the market than come in, which is going to affect risk sentiment, which is going to affect the stagnation trade, et cetera, et cetera, unless there is liquidity coming in from other sources. So I think that's a phenomenal point, by the way, is can you refinance the five-year money that was borrowed at one and a half percent plus a spread five years ago coming due? here's a question, though, like, who is at risk of refinancing or of a failure to refinance that is material market cap?

It's not Walmart. It's not Costco. It's not Meg 7. I mean, those are bubbles, especially I think Costco and these guys are 49-4 PE ratios. They probably reflate a bit before they roll over again, same thing in Palantir. But leaving that aside, I think it's a central crowd. I'm genuinely trying to figure this out now. I don't see the credit risk in commercial real estate.

I see the risk all over that, yes. And that's been a slow-moving controlled demolition. And we're two years into a five-year demolition. But you look at the East Coast, you have names like SLG, which are not too far off from their highs or Vernado. They've all rallied through return to office. I actually bought a stock called HPP. It's a West Coast-based, SF-based commercial real estate firm.

I think it's back from the dead trade. They've got a shit ton of debt to equity, but you've got these VCs that are funding AI startups and they're going to office. And if they can pay their debt, I buy a call option with an equity-like risk feature and the lows are behind me. So actually, I think, Noel, you're raising the right question. I just don't see where the big debt is. Is it Barnes & Noble?

Who cares about Barnes & Noble? Barnes & Noble probably goes away. Bed Bath and Beyond goes away. Okay. Retailers are in pain. people are shifting to Amazon and they're shipping to Walmart and Costco. Dollar General Dollar Tree, they're fine. Yes, they are losers from a retail behavior perspective.

But I don't know that it really matters other than commercial real estate. That's what the debt issues are. Well, what if I told you that there's a solution for the corporate bond market to have a 0% interest rate as long as you use that money to buy Bitcoin? Is you preferred stock and convertible debt? Yeah. Now you're targeting all the bond guys. You're like, oh, wait, I want it on this Bitcoin trade. That's all you've got to do.

Just refinance it at 0% and use the proceeds to buy Bitcoin. And we've been wondering where the new demand was going to be coming from. Now we know. You know who should do it? I'm going to share my screen here. This is the U.S. government's distribution. There's about $9 trillion that needs to be, yeah, this is the maturity schedule. That's why Besson wants to talk down rates.

He just wants to refuncle the balance he's issuing. But still, there is $9 trillion that's going to be refinanced higher. Yellen left him one hell of a gift on the way out the door. Yeah. I mean, he was complaining about this long before I think even most people were thinking he'd even be remotely related to Trump. And he was right. I mean, that was a massive liquidity injection by going short term. And now he has his hands tight.

He can't really unwind that even though that would be the right thing to do. He's absolutely right. And the insanity of the U.S. government not terming out their job. debt when rates were one and a half percent below inflation and nominal GDP growth, that's a kind of a negligence at the level of the trade the treasury. But there is one way to fix this issue or a potential remedy. It's called free trade. Because if you can trade with China, when we import from China, we're handing them U.S. dollars that can turn around and buy U.S. capital assets, which are bonds. They're not buying our exports because they don't need and we won't sell

them, NVIDIA GPUs or F-35. So that's a solution, right? Like, the issue is that this policy approach has conflicts. If you're trying to punish China, yeah, like, I'm all for terrorists on China, actually. They're bad actors. But if you do that, then you're giving them less dollars to the world to go buy your bonds. So these policies are at issue with each other. They're in conflict with each other.

No, I'd love to kind of get your broader take on this because you really, I think, were one of the first people to, certainly in the broader kind of Bitcoin crypto community champion the fiscal dominance concept. And I have absolutely come around to it. You know, I was a little skeptical, but I got to give you some credit. Like, I have come around to it. And the Fed is really, you know, fucked, frankly, because, you know, like, you look at this $9 trillion that needs to be refinanced. but at what like how are they going to get yields down to refinance it well maybe if the Fed cuts rate I mean you know the 10 years trading below the effective Fed funds rate right now right they want it even lower well what if the Fed cuts rates well if they cut rates we have the potential for inflation

all over again even though the trend is lower I do think we're going to be approaching 2% but what is your take on this like if you could wave a magic wand for your from your fiscal dominance of purge the way to fix it the way to fix it if you make a merit the best home for capital in the world, which it was. And the proxy for that is the USDJPY. It's a measure of foreign demand for U.S. assets. And that's why the tenure isn't at 3.9 or 3.7%, which it was in September. You know, there are ETS in Hong Kong that trade at a premium to NAV just to access U.S. markets. I bet they've declined by now. And now the America first approach has caused people to look inwards their home markets and bid up their own equities.

And in China, like, you know, there was an article in Bloomberg, I think it was yesterday morning how the China premieres laughing that, you know, the U.S. has these trade wars with its allies. And so Besson, of course, knows all this. You know, if you make, you know, American capital markets the finest place to park your capital, which it is. And now's not a get, not a bad time to get back in when you've got NVIDIA at a mid-20s PE and Google at an 18 Ford PE, like this is a,

This is a nice time for rotation back into MAC 7 or US equities more generally. But that's when they get out with the deregulatory agenda. What are we waiting for on that? But, Joe, to answer your question, I'll go on a limb here and I say the Fed isn't relevant anymore. The Fed was not able to produce the tightening it wanted to. I don't think it's going to be able to move the needle on the easing either, largely because its hands are tied around inflation.

There's no way it's going to be able to cut rates sufficiently. Animal spirits matter a lot, especially for the risk assets that we all focus on, but the Fed is increasingly irrelevant. It is very much now down to fiscal, as he pointed out, and it is very much down to the global flows of funds that Ram was referring to. And I think that's not going to change, especially given the size of the deficit spending that we have coming, in my opinion. What are your thoughts on QT? I think we're going to, hopefully, I mean, this comes out on Wednesday, I imagine, and we may have had the, FOMC statement by then, but what I'm most going to be looking for is any indications that they're going to pause QT. This is something they've hinted at before that they might do, especially given

some coming tightness in the treasury market. They might pause that. That actually would make a difference. It's not a huge amount of QT at the moment, but it's enough to move sentiment, especially in terms of the fact that there's not, you know, there is a new buyer coming back into the market. They're going to not just let the bonds roll off. They're going to be in there replacing them. That's significant because that is quite a lot of money. And that is the only kind of easing they can do at the moment because their hands are tied because of the threat of inflation and who knows what tariffs are going to do to the incoming, you know, the incoming price indications that we're going to be getting. Yeah. So two things for me. One, this is an example of one of

those ETFs that's trading a premium. It's basically just an S&P 500 ETF that's listed on Mainshore China. And you can see that this here, this middle table is the premium. So we went up to 20, then went back down to under five, and all of a sudden, today, we're back over, or as of Friday, we're back over 20%. So some of these are back to trading at premiums, though. So there is, I guess, demand coming back from that China example you talked about. And then the other thing I would say that what Noel was just talking about, the QT side of things, we, my, are rates analysts who I sit next to in this office, they're not here right now, but I've said in this podcast many times, we're going to, we're nearing in and on the LCLR, which is the lowest comfortable level

of reserves where like they need enough liquidity in the system just to keep things you know almost like oil in an engine right and they they went beyond that which caused a bunch of rage and temper taper tantrum type issues and what was it 2018 i think i don't remember exactly but one of those times and we're basically nearing on that level of reserves that they're going to keep no matter what so QT's going to have to end because they can't keep selling things off if they want to keep you know some certain level liquidity. And now I think the polymarket odds are basically saying they think it's definitely going to happen before May. I've been saying that I thought it was going to happen in Q2. And that's what's going to happen. But the one thing I would say is I always see like people

specifically in crypto world think if there's no QT, then it automatically means there's QE. And those are two very different things. And it's like anyone listening to this, if you hear people telling you that QT ending means that QE is beginning, just don't listen to their opinion on any of this stuff anymore. Well, and by the way, the BTFP, right? Like they created BTFP after the SVB collapse and the kind of shocks that were sent through the regional bank system. Do you know, what if I told you that it's zero?

All that got paid back and you hadn't heard a peep out of the media about that. Oh, maybe they could create a new funding program again or maybe the discount window or these other tools that they have in their disposal. But I think, you know, I'm really warming up this idea that Noel is sharing, which is the Fed is irrelevant, given the constraints that they have, I do fundamentally agree, though, that any, I'm looking for the same thing, any duffish commentary around QT or any other, you know, potential dupish commentary in general from J. Powell at the presser will change the sentiment, because if he continues to come out hawkish and then they, you know, guide something

to the extent that QT is not, you know, ending any time. I think you're going to see risk get absolutely smoked again. I agree. Any positive news flow is going to benefit risk assets very quickly, and so it can turn on a dime here. Look, we get a peace deal that can happen, right? Trump apparently is discussing recognizing Crimea as a Russian entity, for example. So this is a chart of 30-year mortgage rate versus the 10-year treasury. This is something Besson's looking at.

They've talked about lowering mortgage rates. best in a few weeks we've talked about how the spread of mortgage versus Treasury has been coming down. I think with the ending of QT, this is going to help mortgage rates come down. And that's good for the real economy. This is why I've been investing thematically going back to position around mortgage refinance ideas. I think mortgage refinance would go up. Mortgage refinance actually did shoot up in September. There's a short period of time when mortgage rates came down.

And consumers are smart. They see their mortgage payment. and people respond to incentives and then they go refinance. Again, the refinancing isn't anything at the volumes we saw in COVID. Those people are not going to refinance for a long time. But the sensitivity to refinancing is there. So, you know, that's good for the real economy and housing. I mean, I completely agree.

And this is, you know, I think one of the reasons you see Trump and Besson talk about the mortgage rates coming down, of the spread between the 30-year mortgage and the 10 being so important. We haven't had a refinance cycle yet. And it's super-stimulative, right? I think if you started to see mortgage rates drop into a five-handle, you're going to see an explosion of refinancing happen, which is stimulative to the business cycle. And also, you know, I don't have ISM in front of me right now,

but I think the print that the most recent print that came out was pretty bullish. And are we starting to see the business cycle start to kick back up again? Are we going to see the credit cycle actually starts to improve? We saw kind of green suits of this in January. I haven't been able to check it recently. But all of that is certainly possible if we can get the uncertainty out of the way and the sentiment to marginally improve. I mean, I don't see any recession risk.

I don't even see credit cycle risk. You know, we had September 23. You know, if you had a degree too, I would say as well. Right. I mean, household assets are flush. Their home equity is significant. And even though there's a 10% correction, we still have significant runs in markets over the last two years.

And corporate credit, I just can't find credit cycle. It's all CRE. And I think what's happening is people are going to kick out consumption. Everyone stared at the, staring at their TV screen, trying to figure out what Trump's going to do next and tariffs. And they are in this kind of state of shock over the last few weeks. but human sentiment has a floor and it has a ceiling. We can only get so excited, and then the novelty wears off and we go to somewhere else.

And we can only get so despondent, and then we make peace with that, and then we get back to business. Especially since we're used to, especially since we're used to the market going up. I mean, we have that muscle memory still. We take a lot. We take a very big shock, such as another 10% correction from here for people's mood to really start to think about that. Mood is bad right now, but mood is bad right now because there's been some change in tone in the economic data and because the market has gone down. But it's not bad, bad yet. Isn't it amazing that people are talking about, are we going to have a result? I just find it an amazing question. The question I think is a reflection of sentiment. You want to be contrarying to that. Now, there's a legitimate question on risk assets and asset pricing. Like, what's the valuation relative to earnings growth in a world of competing assets? That's a legitimate question. But the recession, like it's just so, I don't get that.

I completely agree. And the sentiment is actually showing up. Like the credit spreads kind of, you know, they ticked up a little bit. CDX ticked up a little bit over the past couple weeks. Nothing crazy. But I still struggle to see some massive credit event as well. Yet today, Goldman's out saying, we're seeing a surge of clients hedging credit portfolios, proposing 10x gross payout hedges.

So there are people that are really freaked out or expecting given sentiment a credit event. And look, a 10x payout is great. Like, go for it. But that to me isn't bound in the realm of reality as it relates to credit right now. And I just don't see this credit event that these folks are hedging against actually coming to fruition.

Hi, it's Matt Hogan, CIO of Bitwise Asset Management. Ever wonder why Bitcoin tends to fall during periods of market turmoil, only to turn around and recover sharply when sentiment improves? In this week's CIO memo, I explain why this pattern, what I call dip, then rip, happens nearly every time and what you can do as an investor to profit from it. To read my memo, go to Bitwiseinvestments.com slash CIO memo. That's bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. One place that may rear its very ugly head is, again, of outside sovereign defaults. We were talking about them a few years ago, especially during the pandemic.

And given the trade war that we are now in, given the move of the dollar, we don't know where that's going to go, it's possible we do start to see some of that, especially in the new U.S. mood of you're on your road. own fellas. So that could then trigger some other type of credit event that finds its way onshore to the U.S. I'm a bit more skeptical about the credit outlook. That's a good point. I have two things on this. One is I think in order for that to happen, you need to have the types of tariffs that Trump is saying, right? I think that would be the way that you could see a serious hit to growth and, you know, recycling or changing of the way that trade works internationally with specifically the U.S. that could cause a shock to have some sort of credit event in some pockets of, you know,

the U.S. market. That's the only way I could see it happening personally. The other thing I would say is what you guys were talking about is just because there's no recession doesn't mean there can't be hit to risk assets. And this is a chart from Lynn, which is fitting because I associate her very closely with also the fiscal dominance type of narrative that Noelle has been a proponent of. And this is a great chart because it's just showing this trend line of like this is the international markets versus the U.S. markets.

And everyone's been talking this year about how Europe is outperforming. A lot of it has to do with like the expectations for earnings in Europe and these European stocks was so low and just so bad that like all you needed was some little tiny sliver of hope and like upward progress. And the U.S. was the exact opposite. The expectations and earning to worth expectations that were priced into the market, I mean, were insane. It was like it was the 2023, 2024.

Well, they were reasonable and they were exceeded just to be. clear. They were just expensive. No, no, no, 2020, 25 going forward. Yeah, yeah. I'm not, 2023 and 24 were reasonable and when they were exceeded. And that's why we've had such good performance. There has been good earnings, despite what Bitcoiners will say, it's all fake. That's not really true. The earnings have been there. But like going forward, what was priced in going forward from like starting at from December after Trump's election, things got crazy. So like you get into 2025 and all the sudden, you have all this tariff talk and all these things and things come off. And like, that's the divergent we're seeing. But like, you look at

this on a grand time scale and like, what's happened? far in 2025 is like kind of irrelevant. That's not to say it can't be a turning point going forward, particularly if you have these countries putting more in defense and spending more and stimulating their economy. You can have a scenario where kind of everything goes up because U.S. assets have corrected. Now international assets are getting to bid. China has an AI story around it. Europe is introducing fiscal spending. Inflation is coming down in Brazil. Like you kind of have a decent backdrop for a global, you know, risk rally. Yeah, and their PEs, their valuations are way more, you know, amenable compared to like what we're seeing and what we saw in the Mag 7.

I mean, we talked, I mentioned small cap was down 20% and the large cap was down 10, but the Mag 7 itself was also down 20%. And Tesla down way more, as you guys mentioned. So like everything got hit. It's all about what do you own, which is a question of position. Look at South Korea. It's up the most out of old developed markets 3% today. It's also the cheapest developed market. I mean, one of the leaders in the index is SK Hynix is making all this HBM memory for

Navidia, and it's got a sub 8x Ford PE ratio or Samsung's cheap. So these are just ignored market. And again, South Koreans were buying Tesla stock. They were buying Tesla dropped 50% in the last three months. Now they're watching their home market start to rally. So yeah. And they have currency issues. Again, Europeans, for instance, have lost.

so much money on their U.S. stocks since the beginning of the year, not just because of the decline in the market, but because of the decline in the dollar. And that further encourages the repatriation that Joe was talking about. We got to talk about gold. I'm sorry. Like, can we just have like a couple minutes? I know we'll get to the crypto, but I feel like we've got to talk about gold because, as everybody's probably aware, it hit a new all-time high. I think it hit a new all-time high today, March 17th, and it's over 3,000 an ounce or it's around 3,000 an ounce. Why? Why does gold keep rallying, Noel, in your opinion?

Well, one, the stagflation trade, but two, just the uncertainty around the world. And a lot of it has been to do with physical delivery in the U.S. That's why Bank of England has been scrambling to try and get the bars on the planes. But we're not asking the right question, which is why is there suddenly a shift to physical delivery in the U.S., which is normally not physical delivery. And I think it's because people actually want to hold. It's not just a financial instrument anymore. It is a resilience asset.

And this then brings the next question. Well, why is Bitcoin not rallying the same? Well, that's in a slightly different bucket because it is also a risk asset. No one would accuse gold of being that. It's a sign of the uncertainty around the world. It is the hedge that the traditional investors, macro investors, and sovereigns are turning to. I think this is late momentum.

I mean, obviously there's a China bit. around it. There's the anxiety bid supporting gold. There's the, hey, it's real and fiatta's deflating bid around it. But this looks like late momentum. By the way, this is a logarithmic chart. So you put this on a normal chart. This is the definition of a parabola. This is late cycle stuff. I think people by now probably not wise to do so. Yeah. So the one thing I would say So like if we look at like one place that timed us really well, it's Costco, which started selling the gold bars in June of 23, which was right around here when it was under 2,000 an ounce, obviously. So I think a lot of it also is like the main buyers over the last few years. I mean, people have been talking forever. I feel like in 2022 and 2023 and 2021, like central banks are buying up tons of gold and it's not moving. Eventually it's going to get up. That's the one thing that like came to mind that wasn't mentioned. And part of the, I think some of the, I think some of that has to do with, you know, we sanctioned Russia. We're doing a bunch of things with our treasuries. We weaponized it in a way that we had never done it before. And I think people are

turning to gold. And they're not really turning to Bitcoin yet as much as many of the listeners here would prefer. But that, you know, that implies, though, James, that they're turning to gold instead of U.S. treasuries, which means there's less foreign demand, especially at the sovereign level for U.S. Treasury. So where's the demand that the U.S. needs going to come from? Probably can the private sector because it is a safe haven. U.S.S. Trevries are a safe haven, but we do have to think that there's not necessarily new money going into gold. It's money that is being raised from other assets. I got an answer for you. That is a good, really good segue that we did not plan at all. It looks like there's movement on the stable coin bill. It got out of committee. It's going to

actually get voted on. They could be a new source of demand if they're actually like, I mean, obviously Tether is one of the largest holders of treasuries in U.S. debt. There's a lot of lot of, I don't know if anyone's really dived in or dove into like exactly what the nuances here of this proposed bill. But it looks pretty good from my point of view. I mean, obviously, like I've said in here a million times, these people in the space, crypto, like you're going to get rules and laws and regulations. You're not going to like all of them. But I think for the most part from the stuff that I'm looking at and from my personal point of view and what I would expect it to look like, it looks pretty damn good to me. Like it's kind of like what everyone kind of wants

if we're going to do this sort of payment on the defying crypto rails and what better do it than stable coins. I don't know. You guys have any strong thoughts on how the bill looks, if it's bad, good, or whether it's going to pass? I'm certainly biased because I'm an investor in Circle, but I do like. Good disclosure. Yeah. I'm an investor in Circle. So, but take Circle Alvin for a second.

If you look at, it's hard not to look at Tether and be like, if this, can be repeated, there's a huge potential buyer of U.S. Treasuries, and we're kind of propagating digital dollars around the world. It's not that hard to make that logical leap, right? The question is, we have one data point, which is tether. And so will, you know, this bill light up, you know, further light up Tether, light up circle in the U.S.E.C., PayPal, and frankly, the myriad other folks that are attempting to launch stable coins as well as a kind of a latent set of demand for U.S. Treasuries, I think that narrative could work really well. Is it going to be in the magnitude of what's required for the Treasury?

I don't know. But I have heard this narrative that, which I completely fundamentally disagree with. And I mean, I would love for, you know, Noel and Ron, if you guys have view on this, to challenge me on this. but the notion of that the U.S. Treasury auctions will not clear at some point. I've seen Ray Dalio talk about this, and the guy's brilliant. I have nothing but great things to say about it, but I just think he's dead wrong here. Part of the reason that these U.S. Treasury auctions have to clear is that if you all of a sudden

don't have a treasury auction clear, then what is the value of a U.S. Treasury that's sitting in the Reserve banks all around the world, right? What you thought was risk-free or what you thought was like the best form of collateral in the world, which is used as collateral for other things, is now wrong. And so on the one hand, I could see how the stable coin bill could potentially create like a repeat of tether with other companies that could provide latent demand for treasuries. But on the other hand, even if it doesn't, I still don't understand this concept of like the treasury auction is not clearing. Like, they actually have to clear. Like, it's just the way that it works. Right, rates will cause them to clear at some rate.

Rates will go up. And not just rates, but also the regulators. I mean, all the regulator needs to do is say to the banks, I need you to buy these treasuries. Exactly. Exactly. I agree. I don't think there's an issue. I do think this idea of gold versus bonds is a really interesting one.

I think, no, that you shine a light on. Like, gold is the safety trade and it's got positive carry because it's going up and it's making money. So the gold trade must die. That's what it must be. trade must die so the U.S. can refinance its debt. The bond market must be the safety trade. That should be the objective of Besson. Yeah. And the one thing I would say is, like, there was a lot of concern I saw, like, when this first came out, that it might like make Tether completely illegal and not able to hold treasuries, which doesn't actually look to be the case based on my

understanding of how it looks. But basically, Tether could choose to, you know, fully come in and get lit up and be covered by the regulators, but they don't actually have to do that. They just wouldn't be able to be used as like cash equivalence for different accounting, margins, be used for like interbanked synonyman collateral. Like they just wouldn't, it wouldn't be able to be used in like the actual plumbing and infrastructure of the Tradfai world, I guess you would say, or the financial system. But they don't have to do that. I mean, they're not doing that now and they're plenty successful. So it kind of, I would be very interesting. Like if this finally gets through, like, is Tether actually going to go in and like try to, you know, comply with everything here?

are they just going to sit and idly buy and just be happy with what they have? Or do they just spin up something else completely different that actually is fully lit up and meets these requirements? It'll be interesting to see how it plays out. But then obviously you have the circles and plenty of other people. Every bank, I feel like, is going to get into this game, right? Like, we talked about this last time. Like, every bank is going to get into this game because even if it's competitive with

their current business model, like they need to understand how this is working. See, their demand is going and, you know, play around in here. And that's where we're going in the next few years, particularly if this thing gets through. James, check out this link I put in the telegram or chat. If you can play that, it's Elon Musk talking about how there are eight or nine different computers where they just make the money and then spend the money. And it links back to how do you pay for your debt? And can you get a sovereign default?

You know, can you get a decentralized leisure to create some accountability? Yeah, I saw that. I confess I did not understand what he was talking about. Does anyone know? Let's take a look. Then we can react for you. One of the things you told me about is what you call it. Magic money computers at the current reason.

Tell us about it, because I've never heard of that until you brought that up. Okay, so you may think that the government computers all talk to each other, they synchronize, they add up what funds are going somewhere, and it's, you know, it's coherent. That the, you know, there's, and that the numbers, for example, that you're presented as a senator. Yeah. are actually the real numbers. One would think. One would think.

They're not. Yeah. Okay. I mean, they're not totally wrong, but they're probably off by 5% or 10% in some cases. So I call a magic money, any computer which can just make money out of thin air. Best magic money. So how does that work? It just issues payments.

And you said there's something like 11 of these computers at Treasury that are sending out trillions in payments? They're mostly a Treasury. some are with the sum at HHS, some at there's one at two estate, there's some at DOD. I think we found out 14 magic money computers. They just send money out of nothing. But basically, I don't know, it kind of was, it was like, I don't know, money's created when banks are like doing lending and stuff as well with my initial thought when I saw this,

but I guess like this goes back to like Larry Lippard, who's doing the circles for his book that he just wrote. He's like, he talks about how like you were just pushing it. button printing money. There's no work. There's no nothing done to produce that and why he's like so all in on Bitcoin. I guess you can make the same argument as gold. Somebody went through the process of digging it out of the ground essentially. But yeah, I don't know. It was a weird clip. Ram, obviously you had some strong thoughts on it. What was your what was your view? I think we're in the age where people are forced to think critically about matters that they

didn't have to before because Trump is a pending, any prior conceptions, good or bad. Like, I'm a believer in free trade. I don't think we need to revisit that idea. I think David Ricardo got it right, Adam Smith got it right, 300 years ago. But, you know, this idea, you know, people on crypto have talked about these issues around Fiat for a long time.

And a lot of people struggle to connect with the idea that the Federal Reserve can create money in a computer database. They struggle to make that connection, or that maybe there's a significant amount of waste or other kinds of issues out there. From the clip, at least what I got from it was Elon was kind of blown away that there's a handful of completers at U.S. Treasury, the Department of Defense, HHS, a handful of government agencies that receive invoices and just pay them. But the payment is not attached to a bank account balance, literally sending money. but where did the money come from? I've had this running joke.

If you follow me on Twitter, I've been doing this for years where I say, what if I told you it was all made up? Like, it looks like it's all made up, right? Like, it looks like it's just an entry in a database. And in fact,

you know, just this past weekend here in Miami, I was on a boat with some friends. It was buddies's birthdays, late 50s, and no exposure to crypto. And he's like, I don't understand it.

You know, I'm just a stocks guy and like cash and whatever. And, you know, and I'm like, but do you hold the stock certificates? And he's like, no. I'm like, do you hold cash? He's like, no.

I'm like, your money is an entry in a database that you actually don't know exists, right? And that's what's so alarming about this video is that to your point, Ron, like a lot of these conspiracy theories or preconceptions of how money is actually generated and licensed, if you will, throughout the system, people just didn't really want to believe that it was a magic internet money machine. or whatever Elon calls it. Turns out that's actually true. Because let's be clear,

I don't think you can like or dislike Elon as a person. The guy is not making any money doing this. In fact, he's losing a huge amount of his wealth. If you look at like, you know, his Tesla stock and probably the privates for SpaceX, et cetera, why would he just randomly make this up? Like, I'm pretty sure he's, you know, such a hardcore engineering mind that he was,

like, I can't believe that this computer can just send out money that's never been made before, right? Like, that's probably what actually happened. And isn't it absolutely amazing, Joe, how many people we know that work in finance, I used to work in traditional finance, and I thought I understood money. And it wasn't until I discovered Bitcoin that I realized I didn't understand money at all. And how many people do we know that work in traditional finance today that don't understand money. And this brings us a good segue into Bitcoin as we're heading into wrapping up here. We often ask ourselves, where's the new money coming from? In my opinion, it is going to be coming from everyone who's suddenly realizing, holy shit, this is not what I

thought. Holy shit, we have a new type of money in our midst. Holy shit, there's a new type of asset that is going to change the way we think of stores of value. It's a whole new market out there that doesn't yet understand, but will, especially if things continue to, shall we say, hint at going off the rails. I completely agree. And like, whether it's, it's Doge or it's this magic internet money machines that they're finding, I think some of the hysteria around it is very partisan and very, like, politically one-sided for the most part.

But it is shocking to have this stuff. come to light where we're figuring out or we're finding out where this money is going. I mean, like, I run an investment firm. I have to have my financials audited every year. It is a major pain in my took us to do that. The Department of Defense hasn't passed one in how many years? And it's just, okay, what? This doesn't make any sense. And so by shining a light on a lot of this, I think, yes, you're going to have people really panic and freak out. It's chaotic and it's hysteria. But maybe by, I don't know, upgrading the systems with arguably the greatest scientist, at least since I've been alive, at the helm of that, it feels like it's going to be better,

longer term for the U.S. government and, frankly, the United States of America. However, by shining that light, to your point, Noel, people are going to realize that it's all made up. And if you actually find an alternative financial system, Bitcoin and other parts of crypto, maybe you should participate in that one as well. The big reset that we were talking about earlier. Now is the time to do it because literally when else? There was a question that Lex Friedman, I think, posted Deepseek a few weeks ago. And he said, tell me something that's distinctively human.

Then Deepseek does a deep think. And it says, humans are the only species that will create stories and myths about the meanings of things like money and borders and some other concepts too. It's true. And they call it a collective hallucination. The AI is telling us that we're hallucinating around these shared concepts, which is exactly true. I think what Elon did is he made operational and physical, this intellectual idea of money creation. He said, here are the eight computers and I saw their registers. And you're like, there it is. Yeah. Well, by the way, I mean, there's precedence to what the deep seek response was they likely got trained from Yuval Harare's book Sapiens because he

talks about this is years ago. It's an amazing book. I think we've all going off on the AI stuff, but Sapiens, I thought, was a great read. And on there, he talks about human beings in like once we got past kind of hunter gathering, we're doing, you know, agriculture, and we were in groups of more than 150 people, you actually had to invent stories to get people to all agree and do stuff. And one of the three things, religion, politics, and money. It was shared cooperative mechanism, said humans create stories and missed systems around symbols to create cooperation mechanisms. I was like, yeah, if you had to write a one sentence book report on human civilization, that would be it. All right.

Anyone else have anything else on Bitcoin broadly or what we were just talking about before I jump on to Salana futures and ETFs? I'll say, look, animal spirits can rally here. Bitcoin's on long-term support on a long trend line of all the assets in crypto. Bitcoin is a shot to rally here. If it doesn't, then watch out. It's right at the trend line. But, you know, historically has. So that's, that I think is notable.

Yeah. I also would say, unfortunately, I don't think there's going to be an alt season. I know that's probably from someone who likes alt. I don't think there I think Bitcoin dominance I've been saying this for a long time I just don't think it's topped yet and To Ram's point, it's the probably one of the assets if not the crypto asset that's down the least In this pullback and dominance is rising so you know I I struggled to see a scenario beyond various idiosyncratic events for various tokens to have you know massive outperformance to Bitcoin and I'm not even sure what

but would actually trigger an alt season because of Bitcoin's rising dominance. And historically, it's been retail that's been participating in bidding up a lot of, you know, the all coins. Well, they've been buying meme coins, and now they're decimated on that as well. So I think retail is like, I'm good at this casino, right? So then it raises the question like, and this is a, you know, I thought that I have a analyst that works with me at asymmetric. We've been thinking about this.

what would actually cause a bid for alts? And if it's not retail, is it institutions? And I know that sounds crazy because why would an institution buy Maker or, you know, Lido or Gito or any of these other kind of, you know, uniswap, you name it, right? Any of these tokens, why would they do that? And the only thing I can think is maybe that there is, you know, an asset issuer that's progressive enough that just wants to ETFify everything. sub 1% chance of that, maybe, but unlikely.

Or they actually start to do real fundamental analysis on some of these protocols that are generating real revenue and saying, hey, this can look more like a stock. Therefore, I can actually package this up or find ways of actually bidding it. I think this is a long ways out to be super clear. I don't think this happens any time this year. But if there is no retail bid behind alt, Bitcoin, I think by definition, in the crypto asset space has to benefit the most.

on a relative basis. Yeah, flight of quality. I want to ask you a question. What do you think the impact of the CME solve futures is going to be? Great question. So to reiterate, they listed today. So we're recording this on March 17th, so they started trading today for anyone. So I think from a trading perspective, short term, I don't think there's going to be a huge impact.

but the signal that it's actually sending to, I think, tradfai and institutions is pretty powerful. Because we've had, you know, we've had Bitcoin and Ethereum for a long time. James is the expert on the ETF stuff and now there's an observable market, right, with the CME futures. Will that just then become another basis trade for hedge funds? Potentially, there's no sole ETF yet. But when that launches, you likely see a lot of flows in the ETF, but also a lot of, shorting on the on the on the future side i just think that the broader signal that it sends is like hey there's actually a third cryptocurrency that is in the realm of a bitcoin and ethereum in terms of

its uh appearance to institutional investors so like we're likely not going to trade it because we really don't need to we don't have like we don't run basis trades with you know an 8% or 10% annualized yield is just not part of our strategy but there are a lot of stratify funds that will And even with the Bitcoin ETA or the Bitcoin basis trade with the ETF and the futures, once it's above 10% annualized, they tend to pile into that because that's a lot for a Tradify fund. That's not a lot for a crypto fund, right? So I think that the signaling is super important. When the ETFs come to market, I'll probably have a much more informed view as to how important this listing actually is. But the fact that it's even on the CME, to me, is, you know, as a long time slonable, you know, on the almost the five-year anniversary.

of Solana. Yesterday was the five-year anniversary. So it is pretty remarkable to see it come to fruition. So I have a few things to add. One I would say is like you were talking about like what sends an all king altcoin you know rally. I would say one you now have the government basically endorsing you know Bitcoin is distinct and separate from everything else. So it's not just other people saying this right like this is literally the US government via executive order albeit that's saying that as well. So I think that's part of the reason. I don't know how much that plays in it, but it's definitely part of the zeitgeist. The other thing you were asking about what other demand could be, we are going to see index funds of the crypto space.

The problem is these all coins that would go in there are going to be very small percentages. Like if you do my market cap, it's going to be like 80% Bitcoin or 70-something percent Bitcoin, 20% of Theorem, and then everything else if whatsoever else is in there. So it won't be a ton of demand. The other thing I would say that could possibly do it that goes along with what you were saying, Joe, it's like just to additionally add on to what you're saying. if we do have rules that come to the SEC and the CFC where they can flip those switches where they can share revenue and it's not going to automatically create them, get them a Wells notice and get them into a lawsuit with the SEC. If there's some rules and regulations around that, all of a sudden people can see, oh, wow, there actually is revenue being generated on these chains for doing different things from the likes of Salon and Ethereum, you name it.

There are a lot of things. I mean, Uniswap is a perfect example of something like you just flip that switch. And all of a sudden it's like, oh, wow, they're actually making a bunch of revenue here and trad-five people are going to like that. And then the last thing I would add is on the basis trade. I wrote about the basis trade last week. It was one of my most red notes in a while. And basically, I was saying we've seen $5.5 billion come out of the Bitcoin ETFs, which is a big deal. It's a record coming out since February 10th.

But a lot of that is almost certainly from what you were talking about, Joe, from like the beginning of December until the end of January, there was points on days where you were earning 25% annualized returns. Now, granted, you're not getting 25% in one day, but if you could keep those types of yield going forever, you would have earned 25% virtually risk-free. So, like, you were in well into double-digit territory on annualized yield basis, and hedge funds piled in. That's why there are so many new hedge funds that were in there at the end of the 13F filing at the end of December, because people piled in. That yield went down well into the single digits starting in early

February, and that's when likely, I'm not saying that's all of it. Like, undoubtedly, there's probably people selling prices way down, but like a lot of the flows specifically to come out of the ETFs or almost certainly have come from that sort of basis trade from the hedge fund side of things. Interesting. Should we get into ETFs? Okay, I'm going to share my screen here. I'm going to share this file that I maintain,

which is I'm going to have to scroll to share it because it's just kind of crazy. This is my file that I maintain. I imagine you have a table of 85 ETFs about to launch. That's the point of line. It's literally a line. And there's like, these are all the filings that have been, anything green has actually been approved.

But these are, and this isn't even, even all of them. So some of them include like filing for in-kind, filing for options, filing for staking, all these individual tokens. Like there is a lot of stuff in front of the SEC right now. Actually, James, can I give you a quick plug here? I tried to keep track of all of the filings for the UTF and I had my spreadsheet and I had the 19Fs and I had the S-1s and everything. And eventually I keep up because I'm thinking James has got a handle on this. I'm going to wait for James to publish it.

Yeah. So I maintain this as the best I can. There's probably stuff I miss because there's like it's crazy. And one thing the SEC did last week was they kind of like kick the can down the road on anything that was remotely coming due in the next month or two. And it makes sense. Our view has always been they're not going to actually approve anything before options on Ethereum ETFs, their final deadlines in like early April. So that's the only thing I could see getting through because it's the final deadline. I don't think you're going to deny them. But everything else, they're not going to do anything until Atkins is in his seat, right? Like I don't care what their view is. I don't care what Hester and Eater are going to do. They're not going to go through and just change

trajectory of different things without, you know, assuming Atkins gets into his role. So that's, that's been our base case. That seems to be what's coming out of the SEC and what the SEC might be telling issuers based on news reports. But there's a lot of things coming. And the right now, I think we could see a Salana Futures ETF launch potentially before the end of the month. I haven't seen much movement on it, but volatility shares filed for one. So there's a whole bunch of different issuers that have filed for leverage Solana Futures ETFs, XRP, ETFs, different things like that. So they're coming. And there's a whole bunch of different spots. ETFs that have also been filed.

Way too many. Have any of the big names? I read the other day Franklin Templeton have filed something that have any of the other big names, the traditional asset managers, filed for anything that isn't Bitcoin or Heath? So Franklin is in on, they have a basket ETF that they filed, and they've also filed to basically, what it comes down to is you have Grayscale and Bitwise have these over-the-counter trusts or funds that trade at premiums and discounts like the Grayscale Trust used to, and

they're filing to convert those just to full-blown ETFs. Then you also have hashtags and Franklin, which filed ETFs that are Bitcoin and Ethereum. And they've also filed 19B4 is basically saying, let us add all the other tokens from our index that this fund is supposed to be tracking. Like it always said in the get-go they were going to do that. So that's the number one thing. And then you have all the other ones, like coin, Solana, XRP, Dogecoin, Cardano, Pocod, and HBarr have all been filed. But Franklin's the only one of like the Tradfye manager. But we have, I mean, you're looking at Grayscale as filed for every single one I just mentioned. Wisdom Tree has filed for XRP.

Van Eck is filed for Solana. Wisdom treated XRP? Wisdom tree filed for XRP. Oh, I know. We send a CISS order, too. So XRP is the one with the most filings on it from an issue. It has a market cap greater than ETH for like a hot minute this weekend. Is that true today?

I don't know, actually. From an FD perspective, yeah, it's been flip-flopping back and forth. Yeah, crazy. Just a quick note here. when Rom said Ripple's market cap, he meant its fully diluted value. But yeah, I mean, everyone's filing everything. They're waiting to see what's going to happen. Our view is kind of like nothing's happening until Ackens gets in. But I think we could see stuff move before the ultimate deadlines. All of them have deadlines in October. The only thing with

deadlines earlier than that is those index funds I was talking about, specifically gray scales and bit-wise's, their deadlines for their 19B4s is in July. So at the very latest, our expectations as we're going to have approved index funds that hold way more than just Bitcoin and Ethereum in an ETF wrapper in July. So first off, I agree with the point of all coin season's dead. Rapid product proliferation is, that's top signal kind of stuff. 100%. Obviously already topped us behind us and it's kind of, I don't know if this dream does much.

But I don't know. I think sometime this year, though, digital assets as a category, including Bitcoin, hits peak. Is there any indication on when? Atkins gets into a seat. I know Gensler wasn't approved until April of the previous administration. Any idea when Atkins goes before the committee? My understanding is probably sometime in April. I think, I think Garrett, like you said, it was mid to late April when Gary was ultimately confirmed. So it could go into May, June at the absolute worst, from what I understand, talking to people. But I don't have any inside knowledge of when his hearings are going to be.

But he's also not a controversial chair, right? Like he's not somebody, he's not the likes of you know, our defense secretary and different positions that this administration has put people up. He's like done both sides of the aisle from what I can gather and talking to people in D.C. So he'll get it. It just has to go through the process, and that's when they can start the approval schedule. Yeah, believe it or not, getting in your SEC chairman is not as important as getting through attorney general or secretary of defense or health and health secretary, you name it. Who knew? Yeah. Did you guys see that Solana Accelerate video going around?

I thought it was kind of funny I thought it was pretty funny I don't know if they intended this or not but the guy is kind of tall and lanky like Vitalik except I think he's a carnivore that's like the meta joke in that video I think

right? I mean the contrast I mean I think I saw the video just like everybody else did but I think that you know the Solana team and community has for a long time really wanted to focus on building and innovation. And, you know, the founders are American citizens and a lot of the folks that work in the

foundation are Americans. And I think the, you know, it was obviously satire to some extent, if not fully, to promote this conference that they're doing that I believe is going to be in the United States. Whereas they haven't really had Solana, I should say, has been associated with various SEC lawsuits and these types of things. And so I think the poking fun at the focus on ideology versus actually building and accelerating as to what they're describing was pretty spot on. It's definitely going to piss some people off. That's for sure. They lean into the zeitgeist. No question. All right. All right. We'll wrap up. Went a little long again today, but this was a fun one. And it was good to get four of our recurring guests

on and once. This was great. All right, everyone, thanks for joining us for this episode of Bips and Bips. We'll be back in one week to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone.