Unchained - The Chopping Block: The Macro Special – Trump’s Trade War, Bitcoin Reserve & Market Chaos - Ep. 799

Episode Date: March 13, 2025

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner break down the biggest stories in crypto. This week, we’re joined by special guest Quinn Thompson, Master of Macro at Lekker Capital, to dissect Trump’s Bitcoin Reserve. The US government is now officially hodling Bitcoin —Trump’s executive order creates a BTC reserve using seized funds. But markets didn’t buy the hype. Bitcoin tanked, and traders are still questioning what this means for crypto’s future. Meanwhile, the global macro picture is a disaster—stocks are down, trade wars are escalating, and recession fears are mounting.Is this controlled demolition of the economy, or just a side effect of Trump’s economic agenda? And most importantly, what does this mean for crypto? Let’s dive in. Show highlights 🔹 Trump’s Bitcoin Reserve Announcement – The US government officially holds BTC, but it’s not buying more. No new demand—just a change in optics. 🔹 Digital Asset Stockpile – XRP, ADA, SOL? Treasury isn’t sure what it owns, and no guarantee these altcoins stay on the balance sheet. 🔹 Market Reactions – Bitcoin pumped, then crashed. No net buying pressure, just an end to government auctions of seized BTC. 🔹 Trade War Fallout – Tariffs hit Mexico, Canada, EU, and China—S&P 500 posts worst day since 2022, losing $1.4T in market cap. 🔹 Trump’s Endgame? – Is this a controlled demolition of asset prices, or just chaos in motion? 🔹 Crypto’s Liquidity Crunch – The Fed isn’t stepping in (yet), but the macro backdrop is grim. Rate cuts may be the only way out. Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly  ⭐️Robert Leshner, CEO & Co-founder of Superstate Guest ⭐️Quinn Thompson, Founder & CIO at Lekker Capital Disclosures Timestamps  00:00 Intro 02:36 Trump’s Bitcoin Reserve 05:17 Bitcoin Tanks 14:30 How This Affects Crypto & Traditional Finance 19:36 Trade Wars Escalate 31:30 Corn Twitter Is Mad 35:16 Why Stocks & Crypto Are Dumping in Sync 41:39 Trump's Historical Stance on Tariffs 54:57 Government Spending and Crypto Market Learn more about your ad choices. Visit megaphone.fm/adchoices

So it sounds like your base case then is that this year going through Q3 is just going to be bloodshed in every risk asset. Yeah, I don't like it. I mean, this also is like, you guys are probably like, oh, nice, Quinn here coming on in the show talking about stocks down 10% and Bitcoin's down whatever, 30. Very amazing timing. I've been telling investors since late December and early January through all our communications have been very bearish and we've been pretty much out of the markets. Not a dividend. It's a tale of two pawn. Now, your losses are on someone else's balance.

Generally speaking, air drops are kind of pointless anyways. I'm named to trading firms who are very involved. Dalek.eathe is the ultimate pump. DFIPOTOCES are the antidote to this problem. Hello, everybody. Welcome to Chopping Block. Every couple weeks, the four of us get together and give the industry insider perspective on the crypto topics of the day. So quick intro is first you got Tom, the D5 Maven, and Master of Memes. Hello, everyone.

Next, we've got Robert. Crypto Connoisseur and Tsar of Super State. Good afternoon. You got Tarun, the Gigabrain, and Grand Puba at Gauntlet. Yo. Joining us today, we've got special guest, Quinn Thompson, Master of Macro at Lecker Capital. Welcome, Quinn. Thank you.

Great to be here, guys. Master of Macros is a good time. Master of Macro, indeed. I got to say, I got to say that. We got a macro special episode today. You go ahead. this is the first time I've seen a macro person whose background is Felipe Pantone Got a little bit of everything, Pudgy penguins

Exactly, you got like penguins, you got Felipe Pantone This is not your traditional macro person Yeah Maybe maybe the audience the crypto audience will yeah be more welcoming That's good you got your street cred So Amasee that had hype man a dragonfly We are early stage investors in crypto but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice.

Please see chopping blocks at XYZ for more disclosures. So guys, it's been an absolutely brutal week, and that's part of the reason why we wanted to bring on Quinn today to have a special pseudo-emergency macro episode. So we've alluded some to what's going on in the broader economic environment, but everything has been whipsawing so much over the last few weeks that we thought, hey, we should just try to get everything out of the way, talk about what's going on in the news, what's moving markets, and just what we think is going to be the vibe going forward under this very new economic regime we seem to find ourselves in.

But I want to start by going through some of the news. And part of the news, which is, again, kind of going against the grain of crypto really struggling over the last week, is this really positive news we've gotten on the legal and regulatory side. So first and foremost, we talked last week about the strategic Bitcoin Reserve that Trump tweeted out. It was vague. It was very unclear exactly what he meant.

and what he was doing. Supposedly, he was going to include Cardano, XRP, Solana, as well as Bitcoin and Ethereum. So we now have more clarity because Trump actually established the Bitcoin Reserve as well as a quote-unquote crypto stockpile via an executive order. Now, now we have a lot more clarity about what exactly we are talking about here. So here's how it's going to work. So first and foremost, we have a Bitcoin Reserve, and the Bitcoin Reserve is special. Bitcoin is a permanent reserve asset, meaning that it is not going to be sold or rebalance,

or anything. They're using the seized Bitcoin that the government already has on the balance sheet, which is about 198,000 Bitcoin. So this is basically like, what is it, $16, 17 billion worth of Bitcoin that the government currently owns on the balance sheet. And supposedly, they're going to try to acquire more Bitcoin using a quote-unquote budget neutral strategy. So the Treasury and Commerce Secretaries have been tasked with trying to find ways to, I don't know, what exactly that means, fudge the numbers or sell other things to buy more Bitcoin. Okay, so that's... Borrowing could be.

I doubt it's borrowing. But we'll see. So that's the Bitcoin Reserve. Then there's a digital asset stockpile. So what is the digital asset stockpile? These are the non-Bitcoin assets that have been forfeited to Treasury. So these are also through criminal seizures that are just sitting on the government balance sheet. Now, these may be sold or may be rebalanced.

Right now, apparently the government owns some ether, and they probably own some other digital assets. But right now, it's actually not clear what the government does. own. And so they were also tasked with doing some kind of audit to understand what is the government currently owned so that it's going to be seeding the digital asset stockpile. But the digital asset stockpile may be rebalanced. Things may be sold. There's no commitment that we're going to, you know, buy and hold these things forever. Now, there's been a lot of discussion about, okay, how does, how do we all feel about this? Some said that it was a symbolic move. Some said that this is concerning because it may be reversed by future presidents, being that it's an executive order.

It's not a permanent law. At the same time, many people said, look, this is great. This is what wanted. This is one of the things that we criticized on the previous show is that what are all these random assets doing in a crypto reserve or whatever. Now it's very clear. Bitcoin's special. Bitcoin's going to be sitting over here to the side. Then we also have this digital asset stockpile that's more amorphous and is probably going to be significantly smaller judging from the current state of things than the strategic crypto or strategic Bitcoin Reserve. So that's the state of play, as we can see it right now. Markets were down when they saw the announcement of strategic Bitcoin Reserve under the assumption.

that, well, hey, we were excited that the government's going to buy Bitcoin. Now we know the government's not going to buy Bitcoin. It's going to hold the Bitcoin that it currently holds on the balance sheet. But there's no net buying pressure, presumably, unless we find some new jujitsu. Not selling is the same pressure as buying. Well, so in principle, yes, that should be true that saying that, hey, we're not going to auction off these tokens, which is normally what the government does when it has Bitcoin in the balance sheet. That should be good because that's a laying future.

selling pressure, but it doesn't result in buying pressure today or in the near future. And that's what markets seem to have been responding to. So overall, I saw a mix of responses. Some people disappointed, some people happy and excited. Nick Carter, I think, was very positive and said, yeah, this is exactly what we wanted to see, which is Bitcoin special, treat Bitcoin as its own thing. Anything else is kind of subject to future discretion. How did you guys take it seeing the story of digital asset stockpile plus strategic Bitcoin

Reserve? Well, the headline, when it first came out, I was out. actually extremely excited about, as were most people who I think saw it, because when you zoom out, this is a moment that we've been waiting for for 10 plus years of Bitcoin being the topic of conversation. The United States government saying that they want to total Bitcoin is a big deal, right? And it's crazy that the magnitude of this announcement was dwarfed by the short-term focus on like, oh, there's no buying pressure. And so I'm still sort of enamored by the fact that we've gotten to this point. And I think it should be applauded and very excited we're here.

I think there's risks, right, a great example being this is done by executive action. If there's a different president in four years, this could be undone by executive action. This is not codified by Congress. This is not an, like a long-term institution that will survive through multiple administrations, like in the same way that we've gotten this through executive order, like we could also lose it by executive order. And so I think it's an incredible first step, but I view it as that first step. Quaid, what was your reaction? Yeah, I think I'm generally aligned. I think everything was priced in. So I can't recall a large anticipated crypto positive event that wasn't a sell-the-news. Just everybody is over their skis. We know people,

and crypto like to use leverage and leverage if you're buying coins or a house, it's pulling forward future demand that then needs to be digested or work through. So I think it's positive. I don't really understand the takes that people are disappointed with the Trump progress thus far and the administration. I think they've fulfilled on just about everything. And I mean, most probably important is just the declawing of the SEC and really letting innovation and builders run free.

So I agree with Rob. It's big win, need to see things get past. It's obviously probably going to fall behind in priority relative to trade, tariffs, immigration taxes. But hopefully they can get some of these things through the budget and just parts of legislation. Tom, what was your reaction? Yeah, I think they actually, I think Bitcoin Reserve was great.

I agree. I mean, I think there's risk around a. narrative lapse that they are spending your, you know, tax dollars to go buy Bitcoin, which is something we absolutely don't want and don't want them to do. But it dramatically shifts the Overton window in terms of what is Bitcoin. And I think where the U.S. goes, so many other countries follow. I mean, there was just, you know, a story a year or two ago about Germany selling much other Bitcoin. And I wouldn't be surprised if other countries follow suit.

And this seems perfect. I thought the digital asset stockpile was very strange. I mean, I think we kind of nailed it on the last show that they just went through, like, the top assets. And we, not not we. I nailed it, but you know, it's part of the collective brand. Well, and then, but then Sacks was on TV saying, oh, we don't actually know if we own any of these assets. But, and then the stockpile wasn't even, we're not going to sell them.

It's, we're going to have a stock. So that felt kind of like a no-op. And I felt kind of got everyone in this kind of, I got everyone all riled up for really no reason. So, you know, you got to take the good with the bad. But I agree with me, nice to have this codified into law versus just an EO, but, you know, you take what you can get. How would you guys feel if they said one of the budget neutral ways they were going to acquire more Bitcoin for the reserve would be to sell any confiscated non-BTC assets and convert it to Bitcoin? What would be that vibe? There's a lot of budget neutral things that could be done, right?

Relying on confiscation, I view as the wrong approach simply because do we want to live in a society where the reserve is created by taking things away from people? as opposed to being net new in some way. Yeah, I did see some good memes going around, or like the way you get your token into the digital asset stockpile if I have someone do some crimes with it. And so, you know, I would be surprised to go see. I would say the not financial advice is if you could go long Thorchain volume, if that's true, because people will just sell to Bitcoin automatically.

No criminal wants to hold this stuff that'll get sold, to be honest. Are you also alluding to Thor because they've been a faucet for all of the North Korea. Exit money into Bitcoin. Right. But will Thor wind up in the stockpile? That's above my pay. You have to have a working chain, right? Yeah, yeah, they have to have a working chain.

Well, it clearly was working. It was working. They got through. It worked very well. Maybe too well. Yeah. But I'd say, yeah, it already is the case that the majority. of criminal activity tries to go into Bitcoin anyway.

So I think this would just make it 100% go into Bitcoin. Yeah, yeah, exactly, exactly. And I think ironically, like the only other asset that maybe they're going to be seizing is tether. And so they're going to be putting tether in the. I saw some, does that count? I saw some XRP army people who, 4chan fraud level XRP army people who's kind of conspiracy theory was that the U.S.

put XRP in and Ada in because they've been. confiscated by many criminals and that's why they're they're real money. I was like, are you guys just making this up? No, no, this was like some like, that hex is really at the,

at the heart of the Bitcoiners. I don't think they confiscated any hex. Right. They dropped the case against Richard Hart, right? Also, he himself went all in to die. That was like the funniest thing when he sold.

He got out of his hex and went 100% to die. So, yeah. So, Yeah, so David Sacks, Cryptozar, did go on TV and basically say, look, I think the market is overreacting to what Trump trothed, or, you know, posted on truth social, which is him saying that there's going to be Cardano and XRP and Seoul in the reserve.

And it was kind of like, yeah, why are you guys, why would you assume that what he writes is correct? That's a crazy thing for you to do. So we got gas lit a little bit about, hey, how should we be interpreting things that are coming out of not even the administration, but the president? So there's no longer, it's sort of been unconfirmed, despite being confirmed by the president, that there is necessarily going to be these five assets in the digital asset stockpile. We now no longer are sure what's going to be in there.

And it's basically TBD. Apparently, I think it's going to be up to, it's up to Bessent, right, what goes in the stockpile like that. So we now just have a slush fund of tokens that we're going to hold on to and decide when to sell. So it's funny because, you know, as a as crypto punters, which I'm sure, you know, many people in the audience are just out there buying selling tokens. Like now the government's right there with you, like deciding when to sell random shit coins that it's accumulated. So it's no longer, it's no longer like this state institution that's just, okay, we automatically sell everything we get. It's going to be like, yo, this chart looks good. I feel like there's this breakout over here.

There's a, I can this, whatever, I have no idea how to even pretend to be saying. I did see a lot of like sad NFT people who were like why isn't there a strategic NFT reserve? I'm like, are you guys kidding? That would be amazing. Okay, what would what collections do you think would make it to the

to the strategic? Trump coins or Trump, Trump, Trump, NFTs is probably number one. Trump NFTs is probably number one. And then Melani and Evergent any NFTs. Is she otherwise that'd probably be probably, probably, didn't they all do like? I think there was an NFT a long time.

I think there was one. Yeah. I don't think it was like popular. Melania's digital assets have always been down only. Yeah. Okay. So, so, okay, just sense of perspective, U.S. government now formally owns and recognizes Bitcoin on its balance sheet.

What do you think that means for other countries buying Bitcoin? Because that's always been the argument is that now that the U.S. government, which is, of course, the large, you know, the treasury owns an incredible amount of assets, obviously all the goal in Fort Knox, is, well, some of it belongs to Treasury, some of it they own on behalf of other countries. What's very clear is that there's a lot of controversy around the strategic Bitcoin Reserve and the way that Trump has been approaching digital assets in his administration. Do you think that other countries will say, oh, well, great, the U.S. owns it now, so I should own it too, and it's time to join the club, and I don't want to be late?

Or do you think other people are going to look at this and say, well, Trump's being an asshole. You know, if you're Germany, you're like, well, you know, Trump's like starting fights and picking on us and now clearly we kind of have to go it alone. Do you think that people, other countries are going to look at this and say, no. I don't, like now that's like this mega-coded asset and I don't want to own it. And actually, if I buy Bitcoin, people are going to think that I'm following America and I don't want to do that. Right? It's sort of almost now colors Bitcoin with geopolitics. What do you guys think? Is this paranoid thinking or do you think that there's a, there's an error of this now in the way that Bitcoin is going to be perceived? I think I've been, I've

thinking about this as well. There's an anecdote back, the Bank of England sold. They're the largest holder of gold in the world. In the late 90s, they sold half of their holdings, and it was the pico bottom. And I made a tweet that was sort of playful, but just hinting at the idea of government involvement in your asset class might have opposite effects. I don't think really that's the case for Bitcoin, given its adoption elsewhere. But there is that risk that it is almost, co-opted as, you know, for the same reason we believe in Bitcoin as an alternative to holding U.S. treasuries or store value or this new digital gold, if it's viewed as the like U.S. state-sponsored store value, does that, you know, move it one notch closer to treasuries

or dollar, which is really what everyone's trying to get away from anyway? Like if we are indeed the, I mean, obviously it catalyzes purchases and people know that U.S. is actively going to be acquiring new Bitcoin. But other than that, it's, yeah, there is the chance it could be a deterrent for some. Well, I think it shows the incentive of America to stand behind Bitcoin. Bitcoin is owned by the United States government in size, right? And again, $18 billion worth is not size when it comes to the U.S. government or big geopolitical strategy, right? But if it is going to be owned by the U.S. in size, it shows a commitment to the asset. And it shows that it's being taken seriously as an actual strategic lever.

Now, we're not at that point. I mean, honestly, like, I don't think the Bitcoin that's currently in the reserve is enough to truly inspire other nations. But if there were more Bitcoin there, either. because the price goes up a lot or because there's budget neutral ways to add to it, then I think the calculus changes. I want to add one other thing, which is not quite Bitcoin related, but it is related to this point of other countries copying or following,

which is that there was EU Security Council meeting like today or yesterday. And basically they were like talking about how, like, like, hey, the U.S. is making crypto more legal. This means that U.S.D. stable coins will be pushed onto Europe. And like, we need to figure out how to do cryptocurrency stuff ourselves effectively. So I feel like the message has gotten across. Let's put it that way. I feel like that asked.

But I think people are more afraid of stablecoins than they are of the Bitcoin holdings, if that makes sense. There's only about five years too late on that per usual. It's Europe. Yeah, yeah, exactly. Come on. Like, let's be real. I do think, I mean, I agree. I think a lot of what's been said,

I do think there can be a sort of reverse Minsky moment that kind of pops up faster than you expect. And then everyone's like, like you said, has this FOMO and even sophisticated players. And I would say, honestly, the ETF approvals kind of remind me of this a little bit where you had all these players who had never been interested in crypto or only loosely interested or maybe you're actually very anti-crypto all line up. in very rapid sequence. And file ETFs or JP Morgan very famously, very anti-Bitcoin and then became one of the first authorites issuers for Bitcoin ETF. And so I think there can be this momentum where when you look around, you get one neighbor, two neighbor, three neighbors all lining up to, if not buy Bitcoin, have a similar approach

or philosophy or legitimization. I think you can really kind of snowball quickly. Okay. Well, so putting the Bitcoin story aside, let's talk macro, because of course that's the backdrop to all of this conversation, is that. macro has been absolutely fucking awful. So, of course, a lot of this has been instigated by the Trump tariffs and the trade wars that he's now instigated against Canada, Mexico, the EU, or threatening against the EU, and of course, against China. So right now, what we've seen so

far is that crypto market cap over the last 10 days is down almost 20%. We've shaved off roughly on the order of about a trillion dollars from the top of the market. And what you see in the S&P 500 is that just yesterday, March 10th, the S&P posted its worst day since 2022 are racing $1.4 trillion in total market cap in a single day. NASDAQ was down 4%. And this has been multiple days now of just back-to-back losses, basically over fears that Trump is willing to potentially allow the U.S. to enter into a recession. So the statement overall from the administration has been,

there's going to be pain. There's going to be a readjustment. of the economy. And he essentially is willing to put on arbitrary amounts of pain, is the message that markets are more or less hearing, in order to, one, basically recraft some of these trade relations with U.S.'s neighbors, both Mexico and Canada. It seemed originally like, okay, this is about fentanyl. And so if he can extract these concessions from Mexico and from Canada, and of course, the immigration issue between the U.S. and Mexico. Pentanel is just a way to justify using executive order versus going via Congress.

It's an emergency. You have to read the order. It says that. Yeah, look, I obviously agree with you because at this point, the immigration from Mexico to the U.S. has dropped 90 plus percent. So any concern that like, hey, this was this border problem was not under control, it's under control now. Trump has unequivocally accomplished that goal. And there's all these reporting, I was reading a report in the New York Times, talking about how the drug cartels are absolutely in shambles. And basically, there was Mexico, like, carded, like, 25 drug cartel

leaders to the United States to go basically. Well, if you notice, if you notice, Trump, Trump never says anything bad about Shinebomb, whereas he loves making sure he takes punches of Trudeau. I have noticed that. I have noticed that. So overall, the picture that you get is that initially people thought, like, oh, once he gets the fentanyl stuff, once he gets the border stuff under control, this is all going to be over and we'll go back to free trade and making money and getting rich together. And now it doesn't look like that's the case. It looks like, no, no, no, no. This is about fundamentally recrafting trade relations and undoing a lot of this globalized supply chain stuff and not just friend shoring, but completely homeshoring,

back on-shoring, a lot of the manufacturing and trying to bring manufacturing back in America. Now, I've been on record as saying I think this is a little bit crazy, but the story right now that everyone's hearing for the administration is that they're okay pushing the economy into a recession. And they're okay. Obviously, they're pushing Canada and Mexico into recessions because they're much more export-driven than we are import-driven from them. But, you know, Quinn, I want to get your take. First of all, how do you read the economic moment? Do you think we are going into a recession? Right now, Pollymarket is pricing, I mean, this is not a lot of volume, so liquidity, so you shouldn't read too much into this. But Polly-market right now, since about

two weeks ago, recession chances have been skyrocketing from initially 20% in mid-February to now 40% likelihood of a recession. How do you read the economic tea leaves right now? Yeah, I think for me, it's helpful to start to rewind a bit and start with the outlook and environment going into, let's say, in his inauguration. The last year of the previous administration basically tapped dry every possible stimulus, liquidity. Basically, the economy was on fumes. It was almost 100% of the job growth in this country for the last year plus has been government-related or government-driven.

So the private sector has been in a sort of a recession. Small businesses across the country have been quasi-recession for a bit. And part of that is due to trying to win an election last November and also just timing of when some of these liquidity facilities like the RRP ran dry. So Besson and team, I mean, I'm not that old, but it's the most markets-focused presidency I've ever heard of. They are doing everything with markets in mind and the economy in mind. and they knew the pain or the risks on the forefront with equity valuations at all-time highs, the U.S. dollar where it was everyone kind of praying for the moon still while under the surface things were really weakening.

And so when you go into that, you sort of have two choices. Do we take the medicine ASAP where we can hopefully have time to heal pre-midterms pre-20208? eight or and then also blame it on the the Biden administration or do we try and massage or smooth over and I think the majority of past presidents probably might have taken the play it a little safer and smooth and they're clearly choosing violence which I don't think anyone quite realized they would go this hard. The thing is though I would say these the economy and the markets become very reflexive, particularly in downside scenario. So I do think it's, I mean, just the fact that we're talking about macro on a crypto pod usually occurs probably near

bottoms for the market, at least local bottoms. So that that's one, but, but two. Financial advice? Yeah. Is this a local bottom? I mean, we're within an area, most likely. But the other side of it is. I will say the Paul Tudor Jones buys Bitcoin news articles are often very well-timed with the barrage. Yeah, he's good. He's good. All right. The reflexivity,

you know, let us know. The reflexivity where can be, where things could get out and go awry. If, let's say the S&P, this is the first 10% plus drawdown in over a year and a half, basically. If that starts to get to 15 to 20, it's very reflexive in the sense that,

okay, we already had some of these companies coming out saying their confidence and outlook is very uncertain. That affects hiring. the amount they want to reinvest. And so you create this self-reinforcing thing that can be reflective to the downside, where 20% dip without stimulus or measures to kind of support business confidence and activity can then create a bigger problem. So I think that's the risk they run.

I personally believe that sort of situation does occur. I don't think this is the big crash or I do think we are in the realm. maybe it takes another point or two on the S&P where they start massaging markets up, where they've been massaging markets down for the last number of weeks. But I think what they need to do in order to get through some of these tough changes is sort of a stair step down where it's, okay, we're down 10, up 5, down 10, up 5, without things really unraveling. Because if things unravel, you know, the tax revenues get hit, deficits actually widened.

They have to utilize more liquidity, more stimulus, which is inflationary. and puts the government and further debt to get us out of a bigger hole if they really send things reflexively down. So I think it needs to be a bit more massage. But when you try and run these controlled burns, there's always the risk that things get out of hand. So that's kind of how I'm seeing it. And I think people are waking up to it.

And that's why it's finally not just crypto getting hit for once. It's quite across the board. So hold on. Let me make sure I understand. What exactly is the theory of mind you're ascribing here to Trump? What is he trying to do? And what is he accepting as collateral damage and what sort of, he didn't wish this were the case, but it just seems as how things are happening.

So the problem that we were, we were basically running the economy too hot for the last few years, which was being propped up by more and more fiscal stimulus, higher government debt burdens. And then how normally that's a problem. If the government spends 6% budget deficits, that needs to get monetized somehow. And we were seeing in the last two years problems in the U.S. treasury market, in the sovereign debt market, where we were having these yield tantrums where interest rates would rise on the long end of the curve enough to kind of cause problems in asset markets and housing. And that was due to such high levels of government spending where the bond, they call them the bond vigilantes, we're saying, all right, we don't want to buy your debt anymore. yields are going to spike. We're selling these assets off foreign holders, Japan, China, the two largest holders of the government debt, we're saying, look, what you guys are doing

fiscally is irresponsible, we're out. And that was sending yields higher, and then that's negative for the markets. Besant, being the renowned hedge fund manager, he is, knows this problem through and through. That's why his largest holding going into the administration was gold. He's definitely been shorting treasuries, which is the number one asset he has to now sell to people, and the way to do that is get growth down. To get interest rates down, to get yields down, they need to slow growth. And that's tough, right? Because slowing growth means higher unemployment. So are you implying that the reason why he's starting these trade wars and grading tariffs is to slow down growth? To justify a zero percent interest rate again. But I feel like that's what you're

trying to get right, right? Because that's a very different claim than what Quinn is saying. Like, that's causing a financial crisis. They're related. The, the, the, the, the, the, the, the, trade wars is to help a, let's say, side effect of propping up the markets with government spending over the last few years and the way the Fed went about monetary policy outsizedly benefit the upper class and high earners at the expense of the low income small businesses across the country.

So large cap tech, that's why we've seen the bubble in VEBA and the Meg 7. Meanwhile, small caps are in the gutter and they haven't broken new highs since 2021. That is a direct result of how the Fed has conducted monetary policy in tandem with the Treasury throughout the Biden administration. And in order for that to be fixed for Main Street to get a little back on level footing, they need to reshore, bring jobs back, weaken the dollar, and kind of take away some of the

things that have benefited the equity market so profoundly over the last few years. So it's a rebalance. Let me push back, though. Let me push back though, right? So you say, okay, this is the story, this is the narrative has been in that it's rebalancing the economy. But what you're describing is reducing the amount of government spending and the amount of government subsidized jobs or direct jobs in the government time.

When Doge was going out, firing a bunch of people at USAID and at the IRS and so on, markets were going up, right? Markets were actually fine with that. They don't seem to care that there's going to be, okay, lots of government employees seem to be losing their jobs. Markets were cool with that. it's only the tariffs and these trade wars that are now causing markets to freak out. And I haven't heard you actually use the word tariff yet.

So how do trade imbalances and tariffs and bringing back manufacturing? How do these play into your story here? Because if that's what you're doing, just fire everyone in the government and tell everybody that, hey, we're massively decreasing government spending. Wouldn't that do what you're describing? Why the trade war stuff? The trade war stuff is, so Trump's, one of his core strategies is do a million things at one. and the media, you will hear some journalists and newsrooms and media companies talk about

how it's impossible to keep up with everything he's doing as a tactic to not get drilled on anyone. We've seen what the media does with him. So it's part of his strategy. I strongly believe tariffs, they are, well, debates whether they're inflationary, price-wise, probably in the short term, but potentially deflationary because it brings down growth. I do think that is a prong in the strategy.

However, the core reason the markets are puking, in my opinion, is weaker growth on the back of Doge and the cuts. I think, I mean, if you look at returns since- Hold on, then why would it happen when he announced these tariffs? Because Doge has been operating for months. I don't think people, it's, well, I mean, if you look at when his inauguration. This is nothing to do with tariffs. But I don't even think it's that delayed.

I mean, if you look at the market returns from inauguration 109 BTC to now, stocks down 10, I think it's pretty aligned. I think people overemphasize the tariffs, yes. Well, the days of the tariffs. Yeah, it's like within like five minutes. It's like. Yeah, as soon as tariff news happens, markets are whipsawing like crazy. Yeah, exactly.

That's an uncertainty thing, yeah. I would take a counterpoint. If I look at the spread between commodities and equities right now, the commodities are extremely sensitive to tariffs, right? Like, you saw the corn down like 10% today or whatever, because I was watching corn prices very closely. Corn is going to get crushed. I mean, I used to trade commodities. All my corn alerts were going off like crazy. I still have my my tendencies to look at, you know. Do you actually check corn prices? I mean, I check, I checked like the top 10. Like corn, no, no, no, no, no, corn corn corn, corn, corn had a huge horrible day today, mainly because

everyone thinks like corn demand outside the US. You have the big exporters. Corn Twitter is. Corn Twitter is in shambles right now. Unbelievable. Corners down a lot. Obviously, eggs going up a lot has been a political. No, eggs down. Eggs down. Eggs down now.

Yeah, yeah. But egg going up was the thing. I just want to think, like, if you look at the skyline. The shopping block commodity podcast. No, no, no, no, no. The spread between. Side line. Oh, it was the spread between corn and eggs.

No, no, the spread between the crash in. commodities and equities. The spread with your corned eggs is butter. No, no. Sorry, go ahead. All right. I never thought you would be a dad joke. Dad joke guy.

I can't, I just can't stop. I just can't stop. Okay, the spread between the commodity sort of like volumes and equity volumes was like quite crazy over the last one week, I want to say. We're like the degrossing in the highest P companies was like extremely fast unwis.

whereas the commodities on wines were very targeted to like this particular U.S. export is like going to get crushed. And it's sort of interesting. Crypto kind of just basically had insane correlation to like Nvidia. It was like it like even it outbeat everyone in terms of like how much it was viewed as like the highest risk level risk asset if you look at sort of some market cap weighted index. So the reason I bring this up is I think commodities prices tell. tell you more truth about tariffs and equities prices because like those are the things that are more

directly impacted right and and so when you see commodity crashes that's when you know it's tariffs i think i think when you see kind of stock crashes it's kind of a mix of all of these things much more you can't like i feel like there's much less causality that's kind of all i was getting out why why on the price crash though if commodities are being if tariffs doesn't that make them more expensive or you're saying demand is less demand is like yeah yeah demand from foreign foreign demaric. Yeah, yeah. The reciprocal tariffs are the reason that the commodities are crashing. Quinn, I mean, I think a lot of people, and I feel what you were saying around like, hey,

Bessent, and the admin overall being kind of the most market-focused administration we've had in a while, and people sort of relying on this like Trump-put idea that, hey, if markets go down badly enough, they'll say something or do something to kind of revive things. Now people are kind of looking and like this feels like a staring contest. We're going to see if Trump blinks, and maybe, hey, we've taken too much medicine and we've gone too far. Do you think that's still in play? Like, where do you think that happens? Like, do you think there's room towards sort of unwinding what's happened so far?

Or do you think it's just like, no, we have to accomplish the mission no matter the cost. And then, you know, we'll see how the economy plays out. I think, like I said, it's a stair step down type of approach where they need to manage it in a massaged way that doesn't just wreak havoc in one quarter and cause an extreme severe recession. but I do think they will take their time throughout the year. I don't think it's a first quarter and done. I think they probably want to aim to have it wrapped by, say, end of Q3, like mid-Q4. But the interesting thing here that I think other also people might not be, you know,

in tune with is the fact that actually Besson and Trump, there's a reason he hasn't, they haven't mentioned Powell or the Fed hardly at all, because they are actually basically on the same side at this moment in time. Because the Fed has gone on hold since that very hawkish December meeting where they got scared about inflation again after those back to back to back to back cuts. They're likely to cut in May again because the data is deteriorating and inflation probably weakens. But in this moment where they're trying to kind of rebalance and slow growth to bring interest rates down, it's actually better for Besson and Trump to achieve those goals if Powell's on hold. And that's why, in my opinion, you haven't seen the push on them.

When the market sell-off becomes a little too much for them to handle, a little too painful, and I think you're starting to see rumblings of it where now within the U.S., pretty much everybody knows at least someone or indirectly knows someone who's been affected by their federal layoffs or what have you, once sentiment starts to sour, I think you will start to see Powell and Trump kind of go back at it again. because if the equity markets, say, get to 15% down, that probably is getting to too much pain in the near term. And then I think you see pressure on the stimulative liquidity supportive type measures like the Fed.

And I expect to sort of push-pull on that year-round. But there's a big reason why Trump and Besson haven't mentioned Polly yet. But I do think that puts there. It's just way lower than people we're expecting. going in. So it sounds like your base case then is that this year going through Q3 is just going to be bloodshed in every risk asset. Yeah, I don't like it. I mean, this also is you guys are probably like, oh, nice, Quinn here coming on the show talking about stocks down 10% and Bitcoin's down whatever, 30, very amazing timing. I've been telling investors since late December

and early January through all our communications have been very bearish and we've been pretty much out of the market. So it's a view I've had. I mean, maybe, and I do think there's a pretty nice bounce to be played over Q2, whether that comes this week or next week, we'll have to see. But I do think that's coming because I think they're going to have to support markets a little in the near term. But, but yeah, I don't love the outlook. I mean, the thing that people need to remember is, I would say, at the end of day, Bitcoin has a lot

of its characteristic is a risk asset. And obviously, the rest of crypto for sure, it's more kind of. longer tail tech. And stocks going into this year were trading at peak 2021 valuation multiples, which is like a crazy all-time record and very out of the ordinary. So even a 10 or 15% correction where we're at today, stocks are still elevated from a historical valuation perspective based on growth outlook, et cetera. So it's not that crazy of price action, let's say, when you roll back time. For the last two years where every asset's been up only and we buy every dip and make money on that, it's unusual. But it's very not unusual, you know, rolling back even 10 or 20, 30 years.

You know, I normally wouldn't say I agree that much with biology tweets, but he had a tweet. I agree with his tweets at least 20% of that time. Yeah, yeah, yeah. Okay, I think that's maybe, maybe I'm in that range. But he had a very good tweet today about this, like, the fact that like A, all of these actions are just like, they're like the right symptom that you're trying to cure, but then you're kind of like curing the wrong thing. You're like making yourself less competitive in like many ways. And like basically the argument is like that Trump sees this as a way of like making sure there's no money that goes from, you know, obviously biology has this worldview of like America's two

countries. They happen to have some commerce between these two separate. countries, red America and blue America. And Trump's goal is to have red America never pay blue America. And this argument is that in the view of doing that, he's kind of made competitiveness much worse, right? Like the reason we're importing all this stuff is because it's just cheaper or better, right? And the idea of like forcibly trying to do everything in red America is kind of a way of losing your ability to borrow. And I thought that was like a very, in my mind, that's probably the best.

This feels like collateral damage of sort of someone who's hell bent on this like one tiny thing, but ignoring all the side effects. It seems like a really broken mental model of like, oh, this side of America imports things and this side of America doesn't. No, no, no, no. But I think Trump has, Trump has kind of said stuff like this. So like I'm not, I'm just saying biology is like maybe simplifying it. but it's not that disjoint from what I see on truth social.

I mean, the question I have is, how did Trump get so enamored by tariffs in the first place? Like, when did he get tariff-pilled? Like, when did he- Decades ago, decades ago in the 80s? He's been tariff-pilled this whole time? Yes. He's loved tariffs even way before his political aspirations, oddly enough.

Yeah, there's a lot of reporting now about how Trump has talked about publicly tweeted, has been on interviewer saying that, oh, we got to, we're getting jipped, we have all these terrible deals. He's got this very deal-setting mindset, and he thinks that, look, you win in trade by having an upper hand over your opponent. And I think it's just this kind of, it's very zero-sum mentality about trade. And, you know, it's ironic. I pointed this out on another podcast is that Trump clearly doesn't like trade.

He thinks trade is like almost intrinsically bad or weakening or hollowing out America to engage in all this trade. And so having these trade imbalances is very negative, and therefore, you know, we want to be using tariffs to re-normalize our trade imbalances to get them closer to equal. At the same time, he's very upset about the Panama Canal, which is used for only one thing, which is fucking trade, right? Like, that's why the Panama Canal exists. So if you're mad that, oh, people are charging towards money to go to the Panama Canal, isn't that good? Because that means there's less trade, and therefore we're forced to trade with ourselves. Well, he's mad. Canada is a state, is not a state also.

yes he's also mad about that well so whatever so i i think trump's gonna repeal the jones act in like six months so you know we're gonna be we're gonna be lit also i see you can't be saying jipped on this show that's not okay can i not wait why not it's short for like gypsies it's like the gypsies are written you on come on it's a slur to all the gypsies out there i apologize i didn't tom cancelling someone in 2025 like what is this i thought di i was over woke culture is back we have we do have it we do have a big Roma population that listen to the show, as I happen to know. So sorry to all the Roma's out there. So I asked a couple language models, when did Trump get into tariffs just as like a kind of different, I asked four of them just now. Almost all of them claim it was like during the first election. Like prior to 2016, he didn't really have that much.

But like obviously, I don't know how well good their training data is from the 90s or 80s. But it doesn't feel like this came up in 2016. Oh, it did. Oh, yeah. He did tariffs on China. Yeah, the whole 2018 market turmoil was tariffs. That time for sure. I mean, like, he was the one who instigated tariffs on China.

Right. Basically, Biden kept those tariffs. Right. No, but that, okay, I guess I remember that, but that didn't feel as significant. Yeah, to be clear, the magnitude of those tariffs were much smaller than the tariffs that are not being imposed. So the market kind of freaked out on tariffs that ended up net net being like a few percent. of total trade with China. Now we've gone up to 10%,

and he's now going to double that to 20%. And, of course, the tariffs on Mexico and Canada are unprecedentedly large. Okay, okay. Actually, I slightly reformulated my query and I got an interesting answer, which is there's some article from the 1980s talking about how he wanted trade protectionism

against Japan, because that was like the Japan. Yeah, that's right. He used to be... I mean, Japan obviously was once upon a time how we now consider China in the U.S., And Trump was very adamant that we should not be allowing someone to trade with Japan. They're, you know, again, hollowing out America and so on and so forth. And so I think he's clearly somebody who's just very suspicious of trade as a concept. And I think there's no way that Besson shares this worldview.

I think there's no way the people around him should have been. Ludnik is very tariff-pilled. I mean, maybe he's just regurgating Trump points, but he's been on TV. Was he saying this before? No, no, of course. Of course. He's his job, right? It's his job to, like, do his job, which is to talk about why the tariffs are

good and why, you know, basically spout the Trump party line. That's his boss. Was he saying this three months ago? I don't know. No way. Absolutely no way. I think, Robert, I think you raise a good point where you're like, we were kind of fine through the 2018 trade war.

There was a lot of market turbulence. That was a bumpy year. 2017, his first year was the lowest volatility equity market year on record. 2018, quite the opposite. It caused a lot of turmoil. There was Q4, 2018. a in in in February 2018 there's a 10% pullback Q4 2018 there was like almost a 20% pullback so there there were real ramifications what I would say is though as you kind of allude to like you forget

about him I think a lot of this action ultimately we see them stand down almost on every occasion I think it does end up being less crazy and mayhem I really do think it it is partially a diversion tactic because if you're his base, if you're the 52, 3% people that elected him in, what is a lot more palatable as the reason the market's going down is, oh, he's protecting us. He's sticking up for us on the international, you know, arena versus, hey, every- People are buying this? I mean, consumer sentiment is cratering right now.

Well, what I'm saying is that's a better thing. I mean, everybody in the show thought the mark, believes the market's going down because of tariffs. And my point, my position is that's a much better thing internally domestic politics wise to have your base think than, oh, the market's going down because he's laying off. The only reason the economy's grown in the last two years, which is all government-induced jobs. So I think it's a little bit of a diversion tactic here because Doge, like, their main goal is deficit down. Okay. You are describing some very, very clever approach.

to basically messing with very large levers of government, right? I think it's pretty likely that Trump is doing this anyway, regardless of how much of an impact Doge is having. Doge so far has not actually laid off that many people, right? And it's not actually cut that much spending. Like the amount of spending that's been cut is, you know, less than $50 billion or something. It's like not significant in the context of the government overall agenda.

Now, obviously he wants to cut more. But at the same time, he's also pulled back and said, look, you know, Musk, I don't want you cutting with an axe. I want you cutting with a scalpel. I want you to slow down and be very careful in any future cuts that you're making. So I think it's not that clear to me that the story is really that, well, he's going to hollow out the government. And that's why now you're going to get a recession because of the lack of government spending or you're going to get mass unemployment because of lack of government spending. And he wants to now blame it on something else.

Like if anything, what's really weird is that normally, if you're going to do a lot of changes early into your administration, that's the narrow opportunity that you can blame it on the previous guy, right? Trump owns these. Trump has been on TV owning it. He has not been saying, oh, this is because of Biden, this is the Biden economy, you know, he screwed us up. It's all his fault. He's instead said, no, I'm doing these tariffs and there's going to be pain and, you know, get over it. Like, all you Wall Street fat cats, like you guys have been getting rich too long, it's time for you to stand up for America. That kind of language is basically him telling the public, I'm doing this on purpose. So I think if you're basically said, this is all politics, and he's trying to deflate a bubble that he knows is going to pop, which to be clear. I don't think that's how Trump thinks about it. I think that's, I think maybe, maybe Besson, but I don't think Besson is driving this. It's clearly Trump driving, given that you know, Besson is not this guy who's been saying that, yeah, trade is terrible and we need to get back to, you know, neutral trade imbalances. It feels to me like this is the post hoc explanation for what Trump is doing that has to get digested by markets, but in reality, like Trump is, Trump is just kind of operating on instinct with respect to, oh, you know, Canada,

25 percent tariffs. No, now 50. No, now. Okay, back to 25. And, oh, okay, you're not being nice enough to me. You got to thank me when you're coming into meetings. Otherwise, you know, these deals are off the table. That kind of politics, it's a very different kind of politics, clearly strongman politics. And look, you might feel positively about that and say, hey, we need that in order to get back to our competitive position as America. You might disagree with that and say, hey, I think this is foolish and this is not actually

in the best interest of the country. But either way, it doesn't feel to me like there's this, okay, well, he's secretly doing this because he knows that markets don't understand that Doj, is actually going to be really bad and going to cause a recession. Markets are not, I mean, I don't know. That feels very easy for markets to digest that, oh, you know, we're firing much people in the government and government spending is going to go down, and that's going to be recessionary.

I agree. I think it is easy for the markets digest. I think that's why the markets are doing what they're doing. But why didn't they digest it earlier if that's your, if that's your thesis? Because I don't think people expected them to go this hard. I mean, there's other things, too. I'm not saying it's all just the one thing. But the cuts aren't that large, like this hard, like to Haseep's point, the cuts are

not like change like the overall composition of what he's not going to get $1,000, right? That's clearly not happening. I don't think it's going to happen. I think I'm yeah, there's a difference between what I think they're trying to achieve and the means they're trying to achieve it and what's going to be the outcome. I think all three of those can be different. My point is just around again, the perception in the public is goes a lot further on a positive side for them if what is bringing down the market is protecting the U.S.'s interest in trade

versus actually hollowing out this like actual jobs. And I actually personally believe maybe we different view on, I think he's listening to his people like Bessent more than he has in previous administrations. He's still very much himself, his style, his hit, hit people with a shovel on the way in and try and get what you can out of the negotiation. But I've noticed things that are markedly different. For example, not talking about the stock market. Trump is, Trump is not as savvy. When the stock market was going up, he was talking about it.

But Trump is not as savvy at some of these more deeper macro principles that only could have come from someone like Besson. And I think there's other signs that I find more interesting all of Besson's interviews on Bloomberg and CNBC and things and Fox, then I do trumps because you actually get a more less noisy interpretation. And it's pretty transparent. It's more legible. Yeah.

Okay. So let's take your theory seriously. Let's walk it forward. If the tariffs are basically all about basically a distraction, right? Like, oh, here's this, here's this flash of light that's going to distract you from the fact that I'm causing a recession through, you know, winding down government spending and firing much of people. then what is your expectation that of how the trade wars end?

Do you expect that, okay, once the economy goes into recession, you walk everything back and then you kind of take credit for unwinding it? Do you think this stays on because he really does believe that we need to fix these trade imbalances? How do you theorize what happens on the tariff side? So to be clear, I do believe there's intention and what they're trying to achieve this rebalancing with trade is there. I do think in tandem, I'm more so saying just the emphasis. They prefer the emphasis on that versus the other stuff.

But I do think they are trying to rebalance with the tariffs. I do think they want, I mean, there's tariffs still in place today on numerous occasions that were put in, implemented his first term, that Biden never removed. So that's kind of my point, right? Is if this is such a contentious topic, why were they not removed in the last four years, the previous administration, a lot of them aren't our executive action. You know, Biden let the open the border. He could have removed tariffs. So I think, I do think it kind of calms down. I think there will be new tariffs put in place. I don't think it's going to be 50 in perpetuity.

I think it'll be 10, 20, 30, somewhere in there. And I do think he's trying to rebalance things. And then ultimately, I think that they're going to run into issues on the Doge front, as you have alluded. I do think they're trying to get this out of the way as quick as possible. But this controlled burn style mentality is what I would consider it, is going to, in my opinion, run into issues when, I mean, today, take today's Tesla stunt, right? I'm not watching the market, oh, why are you doing this Tesla show and tell with the car? Well, Tesla's stock's down 50% and you feel bad for Elon because he's the soldier you sent out there to go cut all these jobs. And I think the other thing, too, is we're not seeing any data, unemployment rate, economic official data that it's all lagging.

So like the last jobs report was fine. But all these government workers and such are getting three, six, nine month buyouts and severance. And so a lot of these issues probably don't show up until the second half of the year or at least middle of the year. So I do think they'll run into issues. I think the market outlook is not great in the immediate term. I do think weakness over, I think, a bounce into Q2, but I think it's murky. And there's, oddly enough, the chance that it goes so awry that we do tip into a bigger recession, that then the liquidity response is required to be even larger, which would be the bad outcome for crypto,

I think, from an asset class price perspective. Okay, so let's bring you back to crypto. So we've talked a little bit about macro. So why does firing people on government payroll or enacting a trade war and tariffs, why is all this stuff feeding into the crypto market to the extent that it is? Like we said, the largest producer of job growth in the country, the last two years, has been government spending. And when you remove that, GDP is comprised of consumption, private sector, and government

spending. And the government's been spending 6% of GDP annually every year deficit. So it's a very large number that's bolstering the surface level numbers. And whether those are bullshit jobs or waste or fraud, it doesn't matter. It's still income in people's pockets that bolsters market liquidity. It's still 401K direct deposits into the stock market. It's still people going buying groceries and vacations. So whenever you remove growth, it's very negative from a liquidity perspective and needs to be

offset by something. And if it doesn't, you see asset prices fall. And so the other thing I think is this cycle, quote unquote, was really boosted off of holdover liquidity from 2021. We didn't have some new GFC or, I mean, we had the regional banking crisis in 23, which kind of helped. But a lot of liquidity that bolstered this cycle, it was sort of a retarded cycle, the crypto retard. But, you know, it was it was not a normal like 2021 style massive global liquidity boom, which I think could come in the next 12 to 18 months if if things do go south. So yeah, I think like Bitcoin and some of these other assets majors that are getting adoption

on ETFs and traditional vehicles are probably going to continue to be a little bit more stable. But yeah, we need we need Fed cuts. We need liquidity. We need something to really provide something more than just a bounce going into the back. after the year. Got it. So we're up on time, so we've got to wrap. But if I can summarize, it sounds like what you're saying is that macro picture is bad. You think it's likely to get worse. You think that this whole strategy by Trump is very intentional to try to guide markets down and deflate some of the asset prices that we're seeing in the market. Your prediction then is that

crypto is going to really respond to liquidity and liquidity is only going to show up once things get so bad that the Fed has to step in. And the Fed is only going to really going to step in if there's significant unemployment or there's a full-on recession and essentially they need to inject liquidity cut rates, all of that stuff. So it sounds like from what I'm hearing from you, not going to happen until maybe Q3 when we start to feel all the effects of this stuff. But long story short, expect more pain for a while. But there's light at the end of the tunnel. Yeah, I think that's right. And in between there's some things that can be pulled levers. The Fed does have a good two, three, maybe four cuts in the realm of normal to get short-term interest rates down to where they would

otherwise given where inflation is at. So I do think, again, I think there's going to be bounces and it's sort of the stair-steppy, but they don't have four rate cuts in three months type of deal like they had Q4 that really sent us higher. They have 25 here, 25 there, and it's a lot less impactful to the internal inertia of things. Understood. Okay, well, with that, we got a wrap. Hope that was helpful in getting an overview of what's going on in the macro side. And we'll be back next week. Thanks, everyone. Awesome. See you guys.