1
00:00:00,000 --> 00:00:25,360
whoo episode 38 true north we are back and um in the spirit of decentralization

2
00:00:25,360 --> 00:00:33,360
uh we successfully repelled a ddos vacation attack jeff tried to uh get us to take the

3
00:00:33,360 --> 00:00:39,820
some pto but then like he doesn't pay us so that really didn't make any sense um so dan

4
00:00:39,820 --> 00:00:45,120
was ripping the research and couldn't help himself so we are running the episode tonight

5
00:00:45,120 --> 00:00:50,100
and um just to give a little background if anybody's tuning in for the first time

6
00:00:50,100 --> 00:01:00,380
Jeff put this group together to try to filter out some of the signal in what has been described as what will be the most hated rally in finance.

7
00:01:01,400 --> 00:01:06,700
And we're just trying to filter out some of the noise and provide some signal.

8
00:01:07,120 --> 00:01:10,200
So Dan is anxious to rip the research.

9
00:01:10,360 --> 00:01:11,820
So what do you got for us tonight?

10
00:01:12,740 --> 00:01:18,840
Yeah, I think the topics I want to cover, I think this is going to be a very abbreviated True North.

11
00:01:18,840 --> 00:01:23,020
so probably we're going to cap it at an hour so we'll go 9 p.m eastern to 10 p.m eastern

12
00:01:23,020 --> 00:01:27,280
we'll hit the important topics we'll let you get on through evening so i think first we're going to

13
00:01:27,280 --> 00:01:32,740
talk a little bit about macro stuff which kind of bump ideas off each other i'm not really a macro

14
00:01:32,740 --> 00:01:38,600
guy but i think it's important to understand the entire picture then we'll hit on uh press stocks

15
00:01:38,600 --> 00:01:43,980
just the uh the ex-dividend dates and the payout dates specifically stretch we'll talk about the

16
00:01:43,980 --> 00:01:48,900
mechanisms for which stretch is able to be stabilized. And that's kind of coming up and

17
00:01:48,900 --> 00:01:53,640
traded up to almost $97,000 today. And that's pretty important. It comes to the future of both

18
00:01:53,640 --> 00:01:58,920
strategy and Bitcoin just generally stretches like a pretty important product in the entire

19
00:01:58,920 --> 00:02:02,840
scheme of the Bitcoin market. If we're going to attack the bond market stretches the product to

20
00:02:02,840 --> 00:02:08,140
do it. And then finally, a little bit of the pref stock ATM. I have some kind of charts to show how

21
00:02:08,140 --> 00:02:14,860
the pref stock or when the pref stocks have been issued via atm the volume volumes there and finally

22
00:02:14,860 --> 00:02:20,620
uh is there anything else uh we'll go with that maybe there'll be some bonuses cool

23
00:02:23,340 --> 00:02:27,180
so like i'm going to share my screen this might be a 30 minute episode you guys get lucky

24
00:02:29,500 --> 00:02:36,860
okay so and so like please hop in um just just right on

25
00:02:36,860 --> 00:02:48,340
Yeah. Is there anything you want to say before we get rolling? Anything you're thinking about in terms of price action? I watched your video today. It was great. You're just hustling shares, aren't you?

26
00:02:49,560 --> 00:02:57,960
Yeah. Yeah. It's business as usual and nothing's changed about the thesis. I know people are getting bored, but it doesn't even seem like this is capitulation.

27
00:02:57,960 --> 00:03:06,240
It seems like they might put the screws to the price a little bit more, but hopefully Bitcoin rips and we rip with it.

28
00:03:06,860 --> 00:03:11,180
I agree. Soleil, let me stop sharing my screen for one second. I put on a hat for us tonight.

29
00:03:12,860 --> 00:03:15,420
It says Strife. Okay.

30
00:03:15,840 --> 00:03:16,360
Hell yes.

31
00:03:17,020 --> 00:03:17,600
Thank you.

32
00:03:20,480 --> 00:03:27,560
I really look at the Manufacturing and Services ISM. The Manufacturing ISM is in contractionary territory.

33
00:03:27,560 --> 00:03:33,880
You know, just around 50, anything below 50 means it's a diffusion index.

34
00:03:33,880 --> 00:03:43,840
So across a broad survey of different manufacturing companies, the manufacturing base and supplies

35
00:03:43,840 --> 00:03:45,320
and resources are contracting.

36
00:03:45,320 --> 00:03:48,680
I don't have a great handle on exactly what it is, but the charts look squiggly.

37
00:03:48,680 --> 00:03:59,000
So then the services PMI has been pretty tightly correlated to both global liquidity and Bitcoin price.

38
00:03:59,000 --> 00:04:03,960
You can see these two peaks during which have been kind of boom cycles for Bitcoin.

39
00:04:04,520 --> 00:04:07,860
And we're still in a kind of a contractionary services period of time.

40
00:04:07,980 --> 00:04:09,600
And I think that's quite good for Bitcoin price.

41
00:04:09,700 --> 00:04:11,340
Again, we're sitting along the power lock trend growth.

42
00:04:12,080 --> 00:04:14,800
If you look back, our historic CAGR has been like 50%.

43
00:04:14,800 --> 00:04:17,220
We haven't had any real sort of crazy moves up.

44
00:04:17,220 --> 00:04:23,420
So I think you're sitting here in spot, like there's never been a better time to just sit in spot Bitcoin is the way I look at it right now.

45
00:04:23,420 --> 00:04:31,060
It's like at FTX collapse, you'd probably want to be in some leverage if you're a Bitcoin believer, like twist your arm.

46
00:04:31,060 --> 00:04:32,980
You probably want to be in leverage here.

47
00:04:33,420 --> 00:04:34,140
Who knows?

48
00:04:34,580 --> 00:04:40,980
I think right now, spot Bitcoin is like your friend, you know, or that be MSTR spot, whatever it is.

49
00:04:40,980 --> 00:04:42,900
Spot holdings with very little leverage.

50
00:04:43,300 --> 00:04:45,260
Awesome place to be, in my opinion.

51
00:04:45,260 --> 00:04:49,260
And if you're a covered call seller, I mean, selling upside here, the market's still kind of hot.

52
00:04:49,380 --> 00:04:52,240
Premiums are still kind of high relative to volatility.

53
00:04:52,440 --> 00:04:55,180
I mean, if you're a call seller, your mouth is watering too.

54
00:04:55,300 --> 00:04:56,600
I imagine yours is Soleil.

55
00:04:57,060 --> 00:04:57,420
Yeah.

56
00:04:57,540 --> 00:05:03,660
And even if you are just in spot and you think, okay, the bull market has run its course, you're not leveraged.

57
00:05:03,820 --> 00:05:08,460
So yeah, you can just sit in spot and you can grid it out through the next bear market if that's what happens.

58
00:05:08,860 --> 00:05:09,020
Yeah.

59
00:05:09,020 --> 00:05:09,460
What do we do?

60
00:05:09,520 --> 00:05:11,860
We drop to 80K from here and you're sitting in spot.

61
00:05:12,580 --> 00:05:13,080
Fuck them.

62
00:05:13,080 --> 00:05:18,980
You just level up 30% of your port into three-year-out call options on margin.

63
00:05:19,280 --> 00:05:20,000
That's what I would do.

64
00:05:20,320 --> 00:05:21,920
That's why I think spot's such a good play here.

65
00:05:22,000 --> 00:05:25,800
But if you move up, if we move up significantly, you're not missing any of that upside.

66
00:05:25,960 --> 00:05:28,200
I just think it's really hard to play leverage right now.

67
00:05:28,260 --> 00:05:35,580
That's something I'm managing outside money, and I'm trying to figure it out, trying to really figure out how to position.

68
00:05:35,860 --> 00:05:39,260
And so I think being conservative right now is a good way to do it.

69
00:05:39,320 --> 00:05:40,920
Conservative, aggressive, but more conservative.

70
00:05:41,800 --> 00:05:46,280
yield curve here obviously you'll see what interest rates bring over the next six months

71
00:05:46,280 --> 00:05:50,360
i think that's really the big unknown and i have a little bit on the jackson hole speech that powell

72
00:05:50,360 --> 00:05:54,920
gave some interesting tidbits i don't think people really know what's what's going on 50 basis point

73
00:05:54,920 --> 00:06:00,440
rate cut i mean i've heard so there's the market's expecting a 25 basis point rate cut in september

74
00:06:01,560 --> 00:06:07,240
i've heard theories that 50 basis point surprise rate cut would be incredibly bullish and i've also

75
00:06:07,240 --> 00:06:12,440
heard it's been it would be incredibly bearish because of you know the indicates a weak underlying

76
00:06:12,440 --> 00:06:16,520
economy i don't know let's cut rates let's get these rates down let's send strife to the moon

77
00:06:16,520 --> 00:06:21,160
that's kind of what i'm thinking and so you can look here and we'll just benchmark uh the credit

78
00:06:21,160 --> 00:06:26,600
spread so obviously stretch the shortest duration strategy pref should be benchmarked off the you

79
00:06:26,600 --> 00:06:33,400
know shorter t-bill um uh risk-free rate so they're trading at about right now a 500 basis point

80
00:06:33,400 --> 00:06:36,920
credit spread, which quite frankly is just insanity. And then you look at something like

81
00:06:36,920 --> 00:06:41,000
Strife, which is a longer duration instrument, it's a perpetual duration instrument, you should

82
00:06:41,000 --> 00:06:46,040
benchmark it off sort of the longer term rates, which are closer to 5%. And so it's trading closer

83
00:06:46,040 --> 00:06:49,880
to a 400 basis point credit spread. That makes a lot of sense considering it's the highest in the

84
00:06:49,880 --> 00:06:54,440
capital stack. Now, if you look at something like strike, which is underappreciated right now,

85
00:06:55,160 --> 00:06:58,920
granted, it's lower in the capital structure. So that's the key. Why is Strife different than the

86
00:06:58,920 --> 00:07:03,320
other prefs? Well, they can't go out, it says in the prospectus, they can't go out and issue

87
00:07:03,320 --> 00:07:08,360
any equity that's senior in either liquidation preference or dividend payments. So,

88
00:07:08,360 --> 00:07:12,680
Stripe will be the top preferred equity, the highest rated preferred equity, no matter what.

89
00:07:12,680 --> 00:07:17,320
All the rest of the prefs, they can slot new ones in any which way. So, I think that's really

90
00:07:20,120 --> 00:07:25,160
increasing the credit spreads, depressing the kind of principal appreciation for those securities.

91
00:07:25,160 --> 00:07:29,640
And when you look at something like Stripe, if you subtract out the convertibility,

92
00:07:29,640 --> 00:07:35,920
let's uh let's actually go to this here so like see this let me switch the tab i'm sharing

93
00:07:35,920 --> 00:07:47,820
window there you go got it if you look here on the strike this is an update

94
00:07:47,820 --> 00:07:52,940
that they made to strategy's website it's the equity component and this is something i think

95
00:07:52,940 --> 00:07:58,180
jeff and i and solan all of us kind of parsed out along the way we were like okay how do you

96
00:07:58,180 --> 00:08:01,720
price this strike thing and everyone's like, oh, well, there's an embedded call option,

97
00:08:01,720 --> 00:08:05,440
but it's far out of the money. So you can't really price it. And the market's discounting.

98
00:08:06,220 --> 00:08:10,240
You can convert strike now if you'd like. I forget who you call, but you call someone

99
00:08:10,240 --> 00:08:16,900
and you can convert your strike. You can't. Yeah. But so like, no one would ever do that,

100
00:08:16,900 --> 00:08:23,320
right? Because why would you do that and lose $50 or whatever? It's $55. You're a fool or $65.

101
00:08:23,320 --> 00:08:33,600
$60. But the point being is you got about 35.8%. 35.8% of your strike holding is exposure to MSTR.

102
00:08:34,220 --> 00:08:41,520
And that's an important part. So, okay, you subtract out 30. It's 35.8%. It's $34. Subtract

103
00:08:41,520 --> 00:08:48,740
out your $34. You're getting like a 13.3% cash on cash yield when you subtract out the convertible

104
00:08:48,740 --> 00:08:53,700
portion of strike, which is insanity considering it's a cumulative dividend.

105
00:08:54,580 --> 00:09:00,740
Stride, non-cumulative dividend. So if the dividend doesn't get paid, they miss the payment.

106
00:09:00,740 --> 00:09:06,580
It's terrible optically, but there's no really recourse by which the shareholders have.

107
00:09:07,060 --> 00:09:09,940
Strike, on the other hand, if they miss that dividend, it starts compounding against them

108
00:09:09,940 --> 00:09:14,500
immediately and they can't pay the stride dividend until the strike dividend gets paid.

109
00:09:14,500 --> 00:09:20,740
And then furthermore, there's a million reasons why I think strike holders will be able to vote

110
00:09:20,740 --> 00:09:24,900
someone in as a board member to make sure that everybody gets paid. There's a bunch of protections

111
00:09:24,900 --> 00:09:28,580
around these cumulative dividends. So the fact you're getting a 13.3% cash on cash yield on

112
00:09:28,580 --> 00:09:32,100
strike, I think quite frankly is insanity right now, absolute insanity, considering the price

113
00:09:32,100 --> 00:09:36,260
of which Stride is trading at. So either strike is cheap or Stride is expensive, or people are

114
00:09:36,260 --> 00:09:40,020
pricing in a drop in MSTR by a strike, which wouldn't make any sense, that would be expressed

115
00:09:40,020 --> 00:09:42,580
in the options market. So we got all of those things working for us.

116
00:09:42,580 --> 00:09:48,820
Yeah, that's wild. That's got to be like voting machine in the short term and weighing machine

117
00:09:48,820 --> 00:09:52,940
in the long term. And the market's got to figure it out eventually.

118
00:09:53,940 --> 00:09:59,880
Exactly. I think strike is like insanely undervalued. I mean, so like, let's say you're,

119
00:09:59,880 --> 00:10:06,460
you want to hold MSTR and cash and cash, right? Well, you could hold MSTR and then hold cash.

120
00:10:06,460 --> 00:10:14,400
but instead of doing that, you buy the package that is STRK, you get 13.3% yield on the cash

121
00:10:14,400 --> 00:10:22,760
portion of which you're holding. You also get the MSTR exposure, plus you get the liquidation

122
00:10:22,760 --> 00:10:26,560
preference, the moving liquidation preference protection. So if something happens to strategy,

123
00:10:26,820 --> 00:10:30,440
if for some reason something happens to the common or this, that, and the next thing,

124
00:10:30,440 --> 00:10:36,220
you have this protection in the case of bankruptcy against your entire package of the cash and MSTR.

125
00:10:36,220 --> 00:10:43,420
So I think Strikes, relative to the common, I think it's an extremely, extremely undervalued security right now.

126
00:10:43,700 --> 00:10:47,040
Granted, they have this Monster ATM out on it that is kind of nerve-wracking.

127
00:10:47,700 --> 00:10:51,120
But, I mean, they have now a Monster ATM right back on the common.

128
00:10:51,300 --> 00:10:53,080
So I think Strikes is a good buy.

129
00:10:55,600 --> 00:10:57,940
Yeah, I still haven't dipped a toe into any of the preferreds.

130
00:10:58,720 --> 00:11:00,640
And I don't know.

131
00:11:00,640 --> 00:11:11,220
I had a little bit of, I don't want to say regret, but I think some of you guys that jumped on it right away rode that quick repricing.

132
00:11:11,880 --> 00:11:19,220
But even when I did the calculations, and I think at current rates, the theoretical ceiling was over $200 a share.

133
00:11:19,960 --> 00:11:24,080
And if rates come down, that ceiling just keeps getting higher.

134
00:11:24,420 --> 00:11:29,000
And there's no reason it shouldn't be trading at that ceiling now, really.

135
00:11:29,000 --> 00:11:30,880
So still early, I think.

136
00:11:31,320 --> 00:11:32,020
I completely agree.

137
00:11:32,480 --> 00:11:35,960
Yeah, it's just weird because obviously we don't look at interest rates.

138
00:11:36,060 --> 00:11:39,020
I never really looked at interest rates for the past few years.

139
00:11:39,080 --> 00:11:40,060
I was just a diehard Bitcoiner.

140
00:11:40,180 --> 00:11:42,240
But looking at the bond price and all this stuff,

141
00:11:42,300 --> 00:11:44,260
when you put it in a Bitcoin framework, it's pretty interesting

142
00:11:44,260 --> 00:11:46,600
just to figure out what these securities could potentially do,

143
00:11:46,660 --> 00:11:49,660
especially now that the collateral base is continuing to be expanded

144
00:11:49,660 --> 00:11:51,580
via the common equity issuance.

145
00:11:51,640 --> 00:11:54,500
It's only going to bolster the credit worthiness of all of these securities,

146
00:11:55,020 --> 00:11:57,600
potentially tightening the credit spread and upping the principal

147
00:11:57,600 --> 00:11:58,800
over long amounts of time.

148
00:11:58,800 --> 00:12:04,000
So, you know, as liquidity develops in these products, like these products are, they're quite meaningful.

149
00:12:04,000 --> 00:12:08,940
I think people underestimate their impact on, they're like, you know, Bitcoin is supposed to be a peer to peer cash.

150
00:12:09,440 --> 00:12:10,740
Why is anyone talking about the press?

151
00:12:10,740 --> 00:12:12,160
These are securitized bullshit.

152
00:12:12,640 --> 00:12:17,940
And I mean, the global bond markets are absolutely the biggest capital markets in the world.

153
00:12:18,160 --> 00:12:22,120
And if you want the money to turn into Bitcoin, this is the conduit by which that can happen.

154
00:12:22,560 --> 00:12:27,200
So, I mean, I think they're a pretty big part of the story and I think they'll continue to be a big part of the story.

155
00:12:27,200 --> 00:12:50,262
Yeah and I kept getting surprised by the new preferreds right So Strike came out I was like okay let digest this let figure it out And before we had even really figured it all the way out they released another one and then another one and then another one And now I just kind of like I kind of anxious I like where the next flavor You know I kind of want to see what they come out with next

156
00:12:50,982 --> 00:12:59,222
Yeah. And don't they have an addressable range? They mentioned it briefly on the latest earnings report. It goes mid duration kind of securities.

157
00:12:59,222 --> 00:13:09,982
Yeah. And there was that big, you know, black space in between, I think it was somewhere between like four and I don't know, 10 ish years on the duration.

158
00:13:10,322 --> 00:13:10,562
Right.

159
00:13:10,562 --> 00:13:27,582
So, I mean, I was kind of thinking because you mentioned rates and maybe the rates will come down and kind of a side note on that. It's like, yeah, if they if they lower rates, then that signals, you know, weakness and the market could tank maybe temporarily. But I think that would kind of just be a repricing event.

160
00:13:27,582 --> 00:13:39,242
But if they don't lower and the market is expecting it, you know, the market might have like a taper tantrum and crash anyway, kind of like demanding that the Fed lower the rates.

161
00:13:39,402 --> 00:13:41,082
So the market's going to get what it wants to get.

162
00:13:41,902 --> 00:13:46,542
But you mentioned the Fed and it kind of made me think about the next product that might come out.

163
00:13:47,722 --> 00:13:57,502
Maybe it'll be a variable interest rate like STRC, but instead of them controlling the rate, it'll just be tied to like the Fed rate or something like maybe Fed rate plus five or, you know, whatever.

164
00:13:57,582 --> 00:14:13,762
Yeah, I think you're totally spot on. And that's a pretty standard kind of product that exists in the market. So I think that's something I need to do a little more research on. Maybe we come up with an outline for what it could be and hopefully we get it right.

165
00:14:14,542 --> 00:14:17,682
Yeah, maybe we'll have a competition so you can guess the next pref.

166
00:14:17,682 --> 00:14:20,682
Yeah, exactly. That'd be pretty cool.

167
00:14:20,682 --> 00:14:24,522
um labor statistics

168
00:14:24,522 --> 00:14:30,642
jobs came in below expectations for july um

169
00:14:30,642 --> 00:14:39,782
okay like uh nothing really new to see here and you know job growth has been slow over the past

170
00:14:39,782 --> 00:14:44,762
few months like this slight weakening this is non-farm payrolls um

171
00:14:44,762 --> 00:14:51,062
uh non-form payrolls no i don't have that here sorry unemployment trends unemployment right here

172
00:14:51,062 --> 00:14:55,562
starting to tick up slight weakness in the economy um you know that coupled with the

173
00:14:55,562 --> 00:15:00,522
jackson hole speech we'll see that i think they're kind of laying the groundwork for justifying rate

174
00:15:00,522 --> 00:15:06,622
rate cuts as powell's on his way out uh especially this kind of weakness in the labor market and the

175
00:15:06,622 --> 00:15:13,082
now that inflation isn't a fixed target it's just to stabilize prices uh we'll see how how that kind

176
00:15:13,082 --> 00:15:19,882
of provides the framework for future rate cuts. Fed funds over time, this is a pretty interesting

177
00:15:19,882 --> 00:15:23,402
chart and I think everyone in their head, I mean, most people who watch this stuff have been through

178
00:15:24,202 --> 00:15:27,642
lots and lots of market cycles. So you have an implicit understanding of where interest rates

179
00:15:27,642 --> 00:15:31,642
have been historically, but for younger guys like myself, it's really important and helpful to go

180
00:15:31,642 --> 00:15:36,602
back and look at where rates have been over time. And you can see the Fed funds rate. I mean, it's

181
00:15:36,602 --> 00:15:43,002
at a historical high relative to the post 2008 period. I think lower rates and we'll see that in

182
00:15:43,002 --> 00:15:50,042
jackson whole speech again um pal specifically mentions that rates will likely come down but

183
00:15:50,042 --> 00:15:56,202
they won't be at sustained lows like they were um during the great financial crisis so uh i mean

184
00:15:56,202 --> 00:16:00,282
this is interesting chart you know pick your poison where's this going and then should you

185
00:16:00,282 --> 00:16:08,202
buy strife and the answer is probably yes what do you think so i you probably know yeah about this

186
00:16:08,202 --> 00:16:12,602
than me you've lived through you've lived a lot more life hey we don't we don't have to talk about

187
00:16:12,602 --> 00:16:16,602
that yeah all the shade all the shaded areas on this charts are kind of interesting too because

188
00:16:16,602 --> 00:16:23,402
every time the the um the yield curve gets inverted we get a shaded area you know aka recession

189
00:16:24,202 --> 00:16:29,962
and it just seems like they have to print their way out of it but you see that little tiny one at

190
00:16:29,962 --> 00:16:37,882
2020 and so i mean the only way we get a soft landing is if they lower rates now and and kind

191
00:16:37,882 --> 00:16:41,722
of make up for that over correction i think that they that they had when they were pumping rates

192
00:16:41,722 --> 00:16:43,742
and basically screwed over the banks,

193
00:16:44,422 --> 00:16:46,922
promising them that rates were going to stay low forever.

194
00:16:47,322 --> 00:16:51,942
And then presto chango, they kind of lied about that one.

195
00:16:52,342 --> 00:16:58,102
And so I need to really learn how to understand Fed speak

196
00:16:58,102 --> 00:17:00,382
because they'll say one thing

197
00:17:00,382 --> 00:17:02,502
and you kind of have to read between the lines

198
00:17:02,502 --> 00:17:04,442
and figure out what they're really going to do

199
00:17:04,442 --> 00:17:08,622
because they might just play the reverse Uno card on you.

200
00:17:08,622 --> 00:17:15,762
um so yeah completely yeah completely yeah so i don't know if that perspective yeah i don't know

201
00:17:15,762 --> 00:17:22,422
if that tiny little recession line at 2020 i don't know if they um if they cooked the books

202
00:17:22,422 --> 00:17:28,582
to to make it look like that was all the recession was or whether we really had just been in a rolling

203
00:17:28,582 --> 00:17:34,742
recession for like two three four years maybe and you can see that the you know maybe we're

204
00:17:34,742 --> 00:17:35,622
recovering from that.

205
00:17:38,182 --> 00:17:42,262
I highlighted a couple points from the Jackson Hole speech.

206
00:17:42,342 --> 00:17:44,522
I'm going to go through them and you can interpret them as you wish.

207
00:17:44,622 --> 00:17:51,222
But I think a few key points kind of start to emerge as you read in detail.

208
00:17:51,862 --> 00:17:53,562
The labor market is a case in point.

209
00:17:53,902 --> 00:17:58,162
The July employment report released earlier this month showed that payroll job growth

210
00:17:58,162 --> 00:18:02,142
slowed to an average pace of only $35,000 per month over the past three months,

211
00:18:02,142 --> 00:18:08,402
down from 168,000 per month during 2024. The unemployment rate, while edging up in July,

212
00:18:08,562 --> 00:18:13,722
stands at a historically low level of 4.2% and has been broadly stable over the past year.

213
00:18:14,702 --> 00:18:19,882
Slowing in both the supply of and demand for workers, this unusual situation suggests that

214
00:18:19,882 --> 00:18:27,042
downside risks to unemployment are rising. This was kind of an allusion to AI. And then downside

215
00:18:27,042 --> 00:18:31,302
risks to unemployment are rising. This is the justification for lowering interest rates. And

216
00:18:31,302 --> 00:18:36,882
And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and higher unemployment.

217
00:18:36,882 --> 00:18:45,822
This is very explicit, saying they're very concerned about rising unemployment in the face of, you know, not materially higher unemployment yet.

218
00:18:48,762 --> 00:18:52,582
Yeah, this case is, there's a way to hop in.

219
00:18:52,582 --> 00:19:00,382
Yeah, I was going to say with that, I mean, the jobs, I that's kind of I don't know if that's just an excuse to lower rates.

220
00:19:00,802 --> 00:19:04,502
But with AI particularly, I mean, I see you put that in the margin.

221
00:19:05,222 --> 00:19:07,882
I mean, it's it's coming for all of our jobs. Right.

222
00:19:08,662 --> 00:19:14,502
Which is why I think when Tad said that, I think it was when he was his first maybe his first interview with Tim.

223
00:19:14,502 --> 00:19:21,322
he said that if ai is going to do all of our jobs better than us you might as well just do what you

224
00:19:21,322 --> 00:19:26,102
love because you don't want to do something that you hate and a robot still does it better than you

225
00:19:26,102 --> 00:19:32,182
yeah like that's that's not a good look for your future um and i think really that's just a good

226
00:19:32,182 --> 00:19:37,262
point to go back to the beginning and realize that we're all bitcoiners and

227
00:19:37,262 --> 00:19:45,042
And what AI is going to do for deflation is going to benefit everyone in the world.

228
00:19:45,102 --> 00:19:46,362
It's going to make everything cheaper.

229
00:19:46,742 --> 00:19:52,002
But if the fiat system is going to put up a fight, then it has to inflate to counteract that.

230
00:19:52,602 --> 00:19:55,562
Otherwise, fiat kind of can't keep up.

231
00:19:55,562 --> 00:20:02,382
So it's just a good reminder that Bitcoin is really the only solution and way out.

232
00:20:02,382 --> 00:20:11,702
And it's the way that we can capture the actual deflationary pricing basically forever.

233
00:20:12,122 --> 00:20:17,302
If you're not into Bitcoin, then you're getting left behind.

234
00:20:18,282 --> 00:20:25,602
And so, Leigh, that reminds me of this clip I posted the other day on the Peter Diamandis Moonshots podcast.

235
00:20:25,822 --> 00:20:26,722
Let's listen to it real quick.

236
00:20:30,722 --> 00:20:32,082
I can't hear.

237
00:20:32,382 --> 00:20:37,662
oh you can't hear um did you share with audio you might have to reshare the whole entire screen and

238
00:20:38,382 --> 00:20:49,742
check the audio box okay let's see share window share tab instead chrome tab twitter share done

239
00:20:51,502 --> 00:20:56,702
so i can hear this now because people are yep it's low

240
00:21:02,382 --> 00:21:09,402
get the general trend and get the general formative trend and then I would pick certain verticals

241
00:21:09,402 --> 00:21:14,962
where you had to make a massive difference and then invest in the companies. What's in your bucket?

242
00:21:18,042 --> 00:21:20,942
Hell no. So I'm trying to put everything into Bitcoin so it's hard to think.

243
00:21:21,742 --> 00:21:24,562
Yeah, you might have to try it again with the volume cranked up.

244
00:21:25,122 --> 00:21:27,542
Okay, that's all. Essentially, they're just saying...

245
00:21:27,542 --> 00:21:28,122
That's the title to go?

246
00:21:29,202 --> 00:21:29,462
Yeah.

247
00:21:29,462 --> 00:21:39,602
okay just recap it then yeah what salim says is or what what peter's asking uh excuse me i apologize

248
00:21:39,602 --> 00:21:47,202
for that failed transmission um what what peter's asking is okay what you know how are you how are

249
00:21:47,202 --> 00:21:52,762
you positioning for the you know riding the ai wave and uh you know he says i get it salim says

250
00:21:52,762 --> 00:21:58,842
i get a basket of of different industry disruptors and kind of be diversified because i don't know

251
00:21:58,842 --> 00:22:02,742
exactly what the winners are, but I want to ride the trend. And then Peter says, okay,

252
00:22:03,122 --> 00:22:07,622
but what exactly are you buying? He says, well, I'm just buying Bitcoin. So that's kind of,

253
00:22:07,782 --> 00:22:12,822
watch what they do, not what they say. So I think that's a important part of the whole story.

254
00:22:13,462 --> 00:22:17,302
So now let's look at the inflation picture. Obviously, inflation was a little bit higher

255
00:22:17,302 --> 00:22:20,722
than expected. And the effects of tariffs on consumer prices are now clearly visible. We

256
00:22:20,722 --> 00:22:23,782
expect those effects to accumulate over coming months with high uncertainty about timing and

257
00:22:23,782 --> 00:22:27,742
amounts. The question that matters for monetary policy is whether these prices increases are

258
00:22:27,742 --> 00:22:34,662
likely to materially raise the risk of an ongoing inflation problem. A reasonable base case is that

259
00:22:34,662 --> 00:22:39,482
the effects will be relatively short-lived, a one-time shift in the price level. Rates are

260
00:22:39,482 --> 00:22:45,702
coming down. Boom. They said it. In the absence of inflationary pressures, it might not be necessary

261
00:22:45,702 --> 00:22:49,902
to tighten policy based solely on uncertainty and real-time estimates in the natural rate of

262
00:22:49,902 --> 00:22:53,122
unemployment. That's kind of protecting themselves. They don't have to prevent.

263
00:22:54,122 --> 00:22:57,062
I don't know exactly what that means, actually. I'm going to leave my commentary out on that.

264
00:22:57,742 --> 00:23:06,042
We cannot say for certain where rates will settle and over the longer run, but their natural level may now be higher than during the 2010s.

265
00:23:06,182 --> 00:23:07,282
They were effectively at zero.

266
00:23:07,762 --> 00:23:12,962
Reflecting changes in productivity, demographics, fiscal policy, other factors that affect the balance between saving and environment.

267
00:23:13,562 --> 00:23:21,622
However, they're kind of, you know, when you're trying to sell a product or something and you put out a price to kind of locate people's,

268
00:23:21,622 --> 00:23:26,982
you may say a crazy price to bring people's expectations to that price and you negotiate down very subtly,

269
00:23:26,982 --> 00:23:31,462
but you've already fixated them on a price that was way above kind of where they initially had

270
00:23:31,462 --> 00:23:36,602
thought you'd settle. This is what that is, in my opinion. They're referencing this kind of

271
00:23:36,602 --> 00:23:40,682
very zero interest rate environment, very low interest rate environment, and then saying,

272
00:23:40,762 --> 00:23:45,442
we'll probably settle above that. But it kind of seems like the undertone is we'll settle lower

273
00:23:45,442 --> 00:23:50,002
from here, but maybe I'm overthinking it. And just the last couple of quotes, the revised statement

274
00:23:50,002 --> 00:23:53,962
reiterates that the committee is prepared to use its full range of tools to achieve its maximum

275
00:23:53,962 --> 00:23:58,282
employment and price stability goals, particularly if the federal funds rate is constrained by the

276
00:23:58,282 --> 00:24:03,282
ELB. Second, we returned to a framework of flexible inflation targeting and eliminated

277
00:24:03,282 --> 00:24:07,462
the makeup strategy. Flexible inflation, this is the thing that's been going on that you've seen

278
00:24:07,462 --> 00:24:12,762
on all the Bloomberg terminals with regards to inflation rate not being pinned to 2% and the

279
00:24:12,762 --> 00:24:16,562
target inflation not being pinned to 2%, but it being kind of a variable flexible target,

280
00:24:16,722 --> 00:24:20,542
grow your way out. This is all kind of seems to be cut from the same cloth.

281
00:24:20,542 --> 00:24:26,942
yeah and just just a reminder for everybody that everything that they say is keynesian bullshit

282
00:24:26,942 --> 00:24:35,902
so they think they can just control the uh the jobs and the inflation and unemployment and we'll

283
00:24:35,902 --> 00:24:41,862
just crank this knob up and crank this knob down and i mean they they literally only have a few

284
00:24:41,862 --> 00:24:48,642
things that they can do they can adjust the interest rate and they can print uh so they're

285
00:24:48,642 --> 00:24:55,522
going to screw it up one way or another. Or even if they do it right, they, um, what's the guy that

286
00:24:55,522 --> 00:25:00,802
always talks about the, uh, the, the way that the world works. Anyway, he always calls it like a,

287
00:25:00,802 --> 00:25:08,202
a beautiful deleveraging or some other kind of ridiculous thing. But, uh, you know, they, they,

288
00:25:08,202 --> 00:25:19,284
they have to print it It just inevitable They think that they think they think they can these things and really they just kind of handcuffed to their to their two or three levels levers that

289
00:25:19,284 --> 00:25:24,844
they can pull exactly we look at the dollar i've never been able to trade the dollar uh with that

290
00:25:24,844 --> 00:25:28,884
much accuracy so i know a lot of people are calling for breaking down with the dollar to help

291
00:25:28,884 --> 00:25:33,044
grow our way out of this uh so any comments on the dollar before i move on

292
00:25:33,044 --> 00:25:36,564
no i don't know i don't know jack about the dollar all right fuck the dollar

293
00:25:36,564 --> 00:25:42,004
weekly Bitcoin gold. Yeah, this is a pretty big chart. I think more people are starting to look

294
00:25:42,004 --> 00:25:47,604
at this. I feel like two months ago, the hot chart was global liquidity of BTC, which is kind of a

295
00:25:47,604 --> 00:25:52,064
manufactured chart because you fit the global liquidity to the BTC price and then trying to

296
00:25:52,064 --> 00:25:56,284
assume where the Bitcoin price is going. And you can really fit a lot of charts together based on

297
00:25:56,284 --> 00:26:00,504
kind of data manipulation. So I don't think that's a be all end all chart. BTC gold, we're sitting

298
00:26:00,504 --> 00:26:07,624
around the 2021 all-time high um 2022 and i mean i don't think you want to fade this chart i mean

299
00:26:07,624 --> 00:26:14,424
we could be topping and it's all i mean big and gold's been on a tear so if gold falls i mean we

300
00:26:14,424 --> 00:26:19,544
could see this expand while we chop steadily higher wait which one is is bitcoin in the

301
00:26:19,544 --> 00:26:29,944
numerator or gold is this is this is btc gold by gold so this is big one yeah yeah i mean it seems

302
00:26:29,944 --> 00:26:35,384
like gold has to go to zero eventually but i don't know maybe a bunch of countries decide to peg to

303
00:26:35,384 --> 00:26:42,664
gold again to try to save themselves yes i think it's a both and i think bitcoin and gold but but

304
00:26:42,664 --> 00:26:48,424
you'd want to see the point bitcoin will continue to outpace gold over a long period of time and if

305
00:26:48,424 --> 00:26:52,584
you look at the btc gold power law we're still sitting along the floor so i think i think gold

306
00:26:52,584 --> 00:26:56,104
is being treated i mean we've seen all the central banks starting to buy up gold buy up gold so the

307
00:26:56,104 --> 00:27:02,304
So I think there's a gold power law too, so no dollars.

308
00:27:03,344 --> 00:27:06,644
Yeah, you can price because it's essentially just a different unit of account, right?

309
00:27:06,864 --> 00:27:07,244
Interesting.

310
00:27:07,244 --> 00:27:11,144
You can price BDC, USD, and we're sitting right along the trend there.

311
00:27:11,764 --> 00:27:17,604
So we have an expected 40% annual CAGR now, decreasing to 30% over the next five years.

312
00:27:18,004 --> 00:27:21,524
But pricing gold, we're sitting right along the floor, the very bottom of that arc.

313
00:27:22,684 --> 00:27:25,244
But I don't think gold recently has been...

314
00:27:25,244 --> 00:27:30,184
you could argue that gold is this represents stable prices but it seems like gold is still

315
00:27:30,184 --> 00:27:36,944
being speculated on so i don't think gold is necessarily or hasn't been increasing at the

316
00:27:36,944 --> 00:27:42,364
inflation rate over the past year is the point i'm trying to make yeah the most annoying um

317
00:27:42,364 --> 00:27:46,484
commercials that i have to listen to on my favorite like libertarian podcasts is like

318
00:27:46,484 --> 00:27:52,804
monetary metals like come on guys buy freaking bitcoin but it's good right like this will trend

319
00:27:52,804 --> 00:27:56,404
up and to the right. And so a lot of people are worried about topping, a lot of people

320
00:27:56,404 --> 00:28:01,284
working on cycles. As long as we're sitting here, I'm super comfortable. I'm very, very comfortable

321
00:28:01,844 --> 00:28:07,524
sitting at an all-time high priced in gold, right? Especially if gold remains strong moving forward,

322
00:28:07,524 --> 00:28:12,644
I think the outlook continues to look positive. Maybe we don't get a blow off. Maybe we get a grind

323
00:28:12,644 --> 00:28:15,204
higher, especially with the interest rate environment we just talked about. They're going

324
00:28:15,204 --> 00:28:19,764
to be cutting for the next year. Think about what happened in 2020. Interest rates were taken to zero,

325
00:28:19,764 --> 00:28:27,444
risk assets mooned and then they did the fastest rate hike cycle in the last two decades

326
00:28:29,044 --> 00:28:33,524
and so obviously btc slammed down there's a ton of leverage in the system and and things melted

327
00:28:33,524 --> 00:28:38,484
down as brutal the macro i think people want to just look at four-year cycles and be like oh this

328
00:28:38,484 --> 00:28:42,164
is going to happen this is going to happen or look at the price or whatever like i think you have to

329
00:28:42,164 --> 00:28:47,764
look at the macro outlook and then you kind of step work your way back to the cycles it's like

330
00:28:47,764 --> 00:28:52,884
okay, well, we're a year post-having, we're over a year, however many days we are post-having.

331
00:28:53,524 --> 00:29:00,644
And the macro outlook, things are getting frothy. Global liquidity is looking to peak over the next

332
00:29:00,644 --> 00:29:05,604
six months. Interest rates are still very high. We've grinded higher. We're still sitting at a

333
00:29:05,604 --> 00:29:11,604
peak in BTC Gold. There's a lot of comfort signals. MNAPs have collapsed across the Bitcoin treasury

334
00:29:11,604 --> 00:29:16,324
landscape. So that bubble has deflated. Credit spreads are incredibly high in Bitcoin-backed

335
00:29:16,324 --> 00:29:21,544
credit it's difficult for new companies to get uh funding for a bitcoin treasury strategy even

336
00:29:21,544 --> 00:29:27,104
though some people have been able to like i mean i just think the top signals aren't there in the

337
00:29:27,104 --> 00:29:34,244
bitcoin market in the same way they are for the equities market right now um but we'll see yeah

338
00:29:34,244 --> 00:29:39,924
and there's you know there's some there's always everybody's got their little theory but um if

339
00:29:39,924 --> 00:29:47,384
you're political at all and you believe that uh you know president trump thinks highly of himself

340
00:29:47,384 --> 00:29:54,784
he might want the stock market to like completely just blow the roof off throughout his presidency

341
00:29:54,784 --> 00:30:03,664
so he can cement his legacy so um don't uh don't don't be short the um the egos of people that want

342
00:30:03,664 --> 00:30:05,564
to put themselves in the history books.

343
00:30:05,564 --> 00:30:06,564
Exactly.

344
00:30:06,564 --> 00:30:08,924
And I think, you know, yeah.

345
00:30:08,924 --> 00:30:12,304
So Bitcoin gold, I think one of the most meaningful charts out there.

346
00:30:12,304 --> 00:30:14,684
CMC fear greed, coin market cap.

347
00:30:14,684 --> 00:30:15,804
This is a couple of days old.

348
00:30:15,804 --> 00:30:18,204
We're now like sitting at 40.

349
00:30:18,204 --> 00:30:22,564
And this uses options data across different exchanges and some other inputs.

350
00:30:22,564 --> 00:30:25,844
I figured exactly what all the inputs are, but this is a great way to, great chart to

351
00:30:25,844 --> 00:30:26,844
look at.

352
00:30:26,844 --> 00:30:28,564
I mean, you can't trade it.

353
00:30:28,564 --> 00:30:31,044
You can't directly trade it, but it gives you a sense if you're overheated.

354
00:30:31,044 --> 00:30:35,804
I think extreme greed is a place you really want to avoid taking leverage out.

355
00:30:36,244 --> 00:30:41,864
As long as you're in that neutral zone, even in the lower greed zone,

356
00:30:41,944 --> 00:30:42,924
really anything could happen.

357
00:30:43,024 --> 00:30:43,744
It's anyone's game.

358
00:30:44,204 --> 00:30:46,444
The market's not pushing you in one direction necessarily.

359
00:30:46,844 --> 00:30:48,324
So that's a good one.

360
00:30:49,904 --> 00:30:51,924
Strike, strike, both taking a beating.

361
00:30:53,204 --> 00:30:53,964
That's a bummer.

362
00:30:53,964 --> 00:30:59,704
I think a lot of people made nice exits, hopefully, around these higher prices

363
00:30:59,704 --> 00:31:03,784
as they started to see this kind of turn around and the etm started to be put online on those two

364
00:31:03,784 --> 00:31:08,904
securities so i hope everyone made a lot of money there and i think we're going to get to run this

365
00:31:08,904 --> 00:31:16,584
back here i'm about to lever up pretty big for the strf uh dividend coming up like big big uh just to

366
00:31:16,584 --> 00:31:23,384
collect the dividend and then um if let's say people sell right after the ex-dividend date i

367
00:31:23,384 --> 00:31:27,944
don't mind holding those securities on on margin i think by those securities i mean specifically

368
00:31:27,944 --> 00:31:32,904
strife you could do this with stride problem is i don't want to hold strive for a long long period

369
00:31:32,904 --> 00:31:38,264
of time if i have to strife right is the only one i will because of the different covenants in the

370
00:31:38,264 --> 00:31:46,744
prospectus um strike atm so i did a little chart here showing the weekly atm issuance on strk

371
00:31:47,384 --> 00:31:50,744
they're marked by these dotted lines those correspond there's little numbers there you

372
00:31:50,744 --> 00:31:58,324
you can't see them with the actual issuance here of SGRK weekly issuance. So it's been pretty

373
00:31:58,324 --> 00:32:03,184
consistent. There have been periods of time during which it hasn't been issued. I'm missing the most

374
00:32:03,184 --> 00:32:08,124
recent one as well, but we're pretty consistent ramping up. It's a high percentage of volume.

375
00:32:08,404 --> 00:32:13,424
If you look on a weekly basis, it's anywhere between 15 and 30% of the weekly traded volumes

376
00:32:13,424 --> 00:32:18,984
issued by ATM. So these are resilient securities. And once the volume continues, if the volume

377
00:32:18,984 --> 00:32:23,944
continues to build which we've seen and the volume is not bad here the volume is still higher than it

378
00:32:23,944 --> 00:32:28,824
was in the winter winter months i think these are going to be you know pretty popular securities and

379
00:32:28,824 --> 00:32:33,704
they continue to be yeah and if we do get the rate cuts it'll be bullish for for these preferreds

380
00:32:33,704 --> 00:32:39,544
which should be bullish for the atms completely yeah i mean can you imagine you have 50 basis

381
00:32:39,544 --> 00:32:45,304
point rate cut well i mean these are professional yeah i mean i know luke grumman's got a lot going

382
00:32:45,304 --> 00:32:50,184
on he's like and viscer's talking about this as well it's like what if we see you know fed funds

383
00:32:50,184 --> 00:32:56,504
rate cut but then the long end of the curve goes up right with like anticipatory inflation

384
00:32:56,504 --> 00:33:00,504
expectations like what if the 10 year doesn't come down or the 20 year doesn't come down

385
00:33:01,144 --> 00:33:06,024
i mean that possible that's a real possibility this is extremely bullish for stretch which is

386
00:33:06,024 --> 00:33:11,384
the short duration so that's the crazy scenario so late and we should talk about that right now

387
00:33:11,384 --> 00:33:18,104
and i'll put the stretch price up just so we can ponder on it 50 basis point rate cut in september

388
00:33:19,704 --> 00:33:26,264
august 31st the dividends increased on by 25 basis points on stretch because they they're

389
00:33:26,264 --> 00:33:32,824
trying to push it up to par as quick as possible so i mean your short term you're probably like a

390
00:33:32,824 --> 00:33:39,624
four so you're at close to a four percent you know month t-bill rate and stretch is paying 10

391
00:33:39,624 --> 00:33:46,424
10%, right? 600 basis spread. I mean, come on. And it's trading up and it's at par.

392
00:33:46,824 --> 00:33:50,164
If those two, that could be the perfect storm to stretch down and thinking about it.

393
00:33:50,384 --> 00:33:51,264
I think we got to lever up.

394
00:33:52,264 --> 00:33:55,884
Yeah. And I was talking on my stream that I was excited for the next prep to come out

395
00:33:55,884 --> 00:34:01,904
and somebody had to check me in the comments. They're like, can we get STRC up to par first

396
00:34:01,904 --> 00:34:07,064
before we release another preferred? And I was like, okay, yeah, you got a point there.

397
00:34:07,064 --> 00:34:12,704
and maybe that's what they're doing like maybe they're just ready to to release it and as soon

398
00:34:12,704 --> 00:34:17,784
as they get it to 100 maybe that's the uh the starter's pistol for the next preferred yeah i

399
00:34:17,784 --> 00:34:21,684
don't think i think stretch is their winning horse here so and they just gotta they gotta get that

400
00:34:21,684 --> 00:34:26,084
thing up to par because people don't want to fuck around with it below par right now because they

401
00:34:26,084 --> 00:34:30,844
know it it's going to be difficult for them to stabilize it it needs to get to par the liquidity

402
00:34:30,844 --> 00:34:37,324
needs to build and we need to see how they respond to the current pricing via a change in

403
00:34:38,604 --> 00:34:42,764
coupon rate. When the coupon rate is announced, it must be the business day closest to the end of

404
00:34:42,764 --> 00:34:47,484
the month, but the change in the next month's coupon interest rate will be announced at the

405
00:34:47,484 --> 00:34:50,844
end of this month for the next month. And the ex-dividend rate, the date at which you have

406
00:34:50,844 --> 00:34:55,804
to be holding the security is recorded on the 15th of each month. Those are very important.

407
00:34:55,804 --> 00:35:00,124
So for example, if the dividend rate is increased by 25 basis points for next month,

408
00:35:00,124 --> 00:35:04,684
September and you're holding it by September 15th, you get that dividend payment even if you sell it

409
00:35:04,684 --> 00:35:11,964
after that point in time. Stripe ATM, much less aggressive than strike. That will be a continued

410
00:35:11,964 --> 00:35:17,404
theme. We can talk about Bitcoin ratings later. Stretch price, very limited amount of trading

411
00:35:17,404 --> 00:35:22,684
days. Lots of green recently, which is very cool. We can see volume is much higher than the other

412
00:35:22,684 --> 00:35:28,604
press. I think volume will continue to be very high. Stretch mechanism. So I got this wrong.

413
00:35:28,604 --> 00:35:36,524
there's an optional redemption so strategy is able to redeem the stretch token at 101 per share

414
00:35:37,084 --> 00:35:44,844
which should put kind of a gravitational force um around that price able to stabilize it up around

415
00:35:44,844 --> 00:35:52,044
100 and um you know bonds a lot different than kind of atm mechanisms so like that redemption

416
00:35:52,044 --> 00:35:58,524
tends to put a ceiling on the price of the bond so 101 kind of you know this is the the targeted

417
00:35:58,524 --> 00:36:05,164
ceiling and that's upon the um what do you call it uh the decision of strategy strategies able to

418
00:36:05,164 --> 00:36:13,164
redeem at 101 strc whenever they they deem it fit now you can also look at the atm atm issuance

419
00:36:13,164 --> 00:36:21,004
there's no regulated price at which they can atm they can atm at any price um they don't have a

420
00:36:21,004 --> 00:36:30,924
hard floor uh but they're able to excuse me they're able to to issue atm above the 100 floor and um

421
00:36:33,404 --> 00:36:36,124
yeah i forget exactly this the specs here so

422
00:36:38,684 --> 00:36:43,564
so there's no hard floor but they have a mandate to keep it between the 99 and 101

423
00:36:44,124 --> 00:36:50,604
um and so you know atm likely won't occur below 99 because it optically would be

424
00:36:50,604 --> 00:36:51,284
Yeah, that makes sense.

425
00:36:51,964 --> 00:36:55,884
But we can expect ATM to happen between 99 and 101.

426
00:36:56,124 --> 00:36:57,644
We'll be tracking that on a weekly basis.

427
00:36:58,024 --> 00:37:02,584
But there's no hard kind of cap on the ATM price at which they can sell.

428
00:37:02,824 --> 00:37:07,244
This allows them to algorithmically manipulate the price on an interweek basis.

429
00:37:07,364 --> 00:37:09,144
Right now, there's two levers at which they can pull, right?

430
00:37:09,504 --> 00:37:13,584
They can pull the monthly dividend rate change.

431
00:37:13,864 --> 00:37:15,504
That's how they can manipulate the price of the security.

432
00:37:15,864 --> 00:37:19,964
They can also redeem at 101, and they can issue ATM at any price.

433
00:37:19,964 --> 00:37:26,324
but um you know they're going to use that to their best ability uh strike redemption there's also

434
00:37:26,324 --> 00:37:30,844
redemption clauses if you know the number of outstanding strike falls below 25 of the initial

435
00:37:30,844 --> 00:37:36,684
issuance but that's all like classic press stuff anything there so i i rambled through that but

436
00:37:36,684 --> 00:37:44,264
no no keep going all right right on s&p inclusion dates uh this is important so the

437
00:37:44,264 --> 00:38:01,066
The committee decision will be announced on Friday September 5th 2025 and the actual inclusion will be effective September 22nd So that the third Friday So what is that The first Friday in September is the announcement

438
00:38:01,066 --> 00:38:05,946
and the third Friday is the change has become effective. The open on Monday after the third

439
00:38:05,946 --> 00:38:11,066
Friday of September. If anyone's curious, if anyone's looking to gamble, I don't think that's

440
00:38:11,066 --> 00:38:15,946
going to happen. I think that info gets leaked and the market doesn't seem to be front running it.

441
00:38:15,946 --> 00:38:18,946
So I'm not a betting man, and I'm not betting on that.

442
00:38:20,126 --> 00:38:20,226
Yeah.

443
00:38:20,426 --> 00:38:22,246
Is there a betting website?

444
00:38:22,446 --> 00:38:23,626
Is it actually on there?

445
00:38:23,906 --> 00:38:25,366
I wonder if anybody's on there.

446
00:38:26,226 --> 00:38:26,626
Yeah.

447
00:38:26,746 --> 00:38:27,206
Is it really?

448
00:38:27,606 --> 00:38:28,526
I haven't looked.

449
00:38:29,806 --> 00:38:31,646
That would be actually an interesting data point.

450
00:38:31,766 --> 00:38:32,446
We should look that up.

451
00:38:34,386 --> 00:38:37,026
Don't they always, aren't they pretty reliable?

452
00:38:37,226 --> 00:38:40,306
Like, didn't they predict the election results and all that good stuff?

453
00:38:41,466 --> 00:38:43,226
Like it was actually more accurate than the polls?

454
00:38:44,006 --> 00:38:44,326
Yeah.

455
00:38:44,526 --> 00:38:44,826
Yeah.

456
00:38:44,826 --> 00:38:45,686
Leading into it.

457
00:38:45,946 --> 00:38:48,686
I bet you feel the same way about the polls I do.

458
00:38:52,406 --> 00:39:04,146
But I mean, they're also saying 62% chance Bitcoin goes below 100 between now and the end of the year, which I mean, I guess that's probably the right percentage.

459
00:39:04,326 --> 00:39:05,606
I mean, I would put it at a coin flip.

460
00:39:06,646 --> 00:39:07,926
So yeah, I guess that's fine.

461
00:39:07,926 --> 00:39:13,446
And also I think people forget like when it comes to financial securities prices, there's all kinds of hedging that goes on.

462
00:39:13,446 --> 00:39:22,746
Like there may be an arbitrage between taking that bet, going long that bet, or going short that bet in some options position over the next six months.

463
00:39:23,046 --> 00:39:27,246
So I really don't think those are as reliable as people would like them to be.

464
00:39:27,526 --> 00:39:37,126
Like if the options market has a different probability, then theoretically you could close the spread between those two kind of different wagers and there'd be the kind of mispricings.

465
00:39:37,126 --> 00:39:43,326
But maybe those get arbed out and it is accurate probability representation. I don't know.

466
00:39:43,446 --> 00:39:50,866
Yeah, and I guess we still got some Bitcoin whales that are big enough to, what, a weekend or two ago that somebody sold a bunch and crashed the price.

467
00:39:50,866 --> 00:39:54,286
So I guess there can be some shenanigans going on.

468
00:39:55,586 --> 00:40:00,566
Yeah, I'd probably be buying, like, if we go down to 90, I mean, I'd be buying two-year-out calls.

469
00:40:01,246 --> 00:40:02,706
I would totally change the strategy.

470
00:40:02,986 --> 00:40:05,886
Yeah, I would be buying, like, really, really long-dated stuff.

471
00:40:06,346 --> 00:40:12,646
Because then we could, you know, we could see, like, six months of, like, I mean, right now we could see six months of brutal disaster.

472
00:40:12,646 --> 00:40:17,866
but if something goes like anything below 100 i mean you just want to be levered long over a really

473
00:40:17,866 --> 00:40:23,446
long period of time but if you're like at 130 140 150 160 170 you got to be kind of more Nash

474
00:40:23,446 --> 00:40:27,286
equilibrium like this thing could blow off but like i don't want to be holding i don't want to

475
00:40:27,286 --> 00:40:35,266
be sitting in two-year calls at 180 bitcoin like that's just yeah i got excited for for power law

476
00:40:35,266 --> 00:40:40,806
when i first saw it and then i kind of had a little bit of um second thoughts about it um

477
00:40:40,806 --> 00:40:45,726
but one of the more interesting ones that i heard recently it was like i can't remember if it was

478
00:40:45,726 --> 00:40:53,286
exactly called like fair value or something and it was based on the the price that bitcoin should be

479
00:40:53,286 --> 00:40:58,986
at for miners to actually make a profit since they're the ones that should be setting the market

480
00:40:58,986 --> 00:41:04,526
like they can't operate if they're not at a profit and this guy was saying you know bitcoin should be

481
00:41:04,526 --> 00:41:11,446
at 320 right now so that's bullish but you know who knows like all the models are how does it go

482
00:41:11,446 --> 00:41:16,906
all your models are uh destroyed not exactly well not destroyed but um i mean i say that too but

483
00:41:16,906 --> 00:41:23,446
it's like they're uh useful but they're not all 100 accurate completely completely yeah no this is

484
00:41:23,446 --> 00:41:29,346
a human this is a human phenomenon at the end of the pricing and security pricing commodities

485
00:41:29,346 --> 00:41:31,426
is based on the market participants.

486
00:41:31,426 --> 00:41:32,326
So, and they're on.

487
00:41:32,326 --> 00:41:33,326
Yeah.

488
00:41:33,326 --> 00:41:34,546
And the market's irrational as fuck.

489
00:41:34,546 --> 00:41:38,906
So that's not going to change anytime soon.

490
00:41:38,906 --> 00:41:43,966
Look at dividend, looking at dividend liabilities here right now, there's, this is a bit off,

491
00:41:43,966 --> 00:41:48,226
but there's just over 600 million annually in preferred equity dividend liabilities.

492
00:41:48,226 --> 00:41:51,006
I did a little rough math.

493
00:41:51,006 --> 00:41:57,846
If you were to clear out all the converts and issue the same blend, the same blended

494
00:41:57,846 --> 00:42:02,406
percentages of each of the common to replace the converts and get you back up to that about

495
00:42:02,406 --> 00:42:07,766
20% leverage ratio, you'd be looking at about 1.4 billion of annual dividend liabilities.

496
00:42:08,326 --> 00:42:15,046
Kind of seemed like a lot to me, but I get that that's a small percentage of the daily or

497
00:42:15,046 --> 00:42:19,366
weekly traded volume. But I was like, ah, the market's not going to like that one.

498
00:42:19,366 --> 00:42:25,446
1.4 billion in annual dividend liabilities covered by the common ATM. So we'll have to get some good

499
00:42:25,446 --> 00:42:29,486
good messaging going out there. But I mean, that's why I do love the idea. It's like, what if you

500
00:42:29,486 --> 00:42:36,186
just raised common, you just slammed the common ATM one week or two weeks, you know, you get that

501
00:42:36,186 --> 00:42:40,726
1.4 billion and be like, yeah, we have our dividend and cash reserve for the next year.

502
00:42:41,086 --> 00:42:46,266
Like, please don't bother me. When we, when we weren't having a, uh, an episode tonight,

503
00:42:46,266 --> 00:42:50,686
I was actually going to share the Preston Pysh interview that he did most recently just came out

504
00:42:50,686 --> 00:42:55,966
today, I think. And he was saying, you know, one of the things that you have to remember

505
00:42:55,966 --> 00:43:03,286
is that unlike the convertible bonds, these preferreds don't have, they don't have to pay

506
00:43:03,286 --> 00:43:08,446
the principal back, right? So the, you know, one or $2 billion worth of Bitcoin that they bought

507
00:43:08,446 --> 00:43:16,386
at the initial offering, it's just on the balance sheet forever. And they don't ever have to just,

508
00:43:16,946 --> 00:43:19,986
you know, they have to pay the dividend, but they don't have to pay the principal back.

509
00:43:20,686 --> 00:43:23,826
Yeah, exactly. It's a perpetual short USD long BTC position.

510
00:43:24,406 --> 00:43:25,186
It's pretty incredible.

511
00:43:25,446 --> 00:43:29,006
If you're a real Bitcoin believer, then I mean, this is exactly,

512
00:43:29,186 --> 00:43:30,606
it's an infinite duration bond,

513
00:43:31,626 --> 00:43:34,366
which they're able to meet with kind of just the volume and the common.

514
00:43:34,506 --> 00:43:35,946
It's pretty crazy when you think about it.

515
00:43:36,366 --> 00:43:37,806
They're going to be a massive, massive company.

516
00:43:40,366 --> 00:43:46,006
And then, oh yeah, the, let me stop sharing and open up my last.

517
00:43:46,006 --> 00:43:55,226
i wanted to give people a sense of where kind of a overall pref market cap could be

518
00:43:55,226 --> 00:43:59,486
because it's hard to quantify like we're talking like oh press could be successful and people like

519
00:43:59,486 --> 00:44:04,446
okay cool like what does that even mean and but you got to put it in numbers i think and look out

520
00:44:04,446 --> 00:44:14,006
far so i've got a you know 40 decreasing to a 30 kegger in bdc assumption and an assumed constant

521
00:44:14,006 --> 00:44:20,806
mnav of one six these are just assumptions like don't don't you know nail me to a cross because

522
00:44:20,806 --> 00:44:29,046
of because i said one six i'm never whatever um assume bitcoin prices i have like a little bear

523
00:44:29,046 --> 00:44:35,206
market scenario i just did for myself in here but i say okay so based on your assumption of mnav and

524
00:44:35,206 --> 00:44:42,566
bitcoin price and you have this constant consistent running 300 million scaling up to

525
00:44:42,566 --> 00:44:50,026
a $6 billion monthly ATM usage, which isn't totally fine, but it's a monthly ATM percent

526
00:44:50,026 --> 00:44:53,986
of the market cap. I use conservative numbers historically, and that's how I set the common

527
00:44:53,986 --> 00:45:00,146
ATM usage. So common ATMs consisted throughout here. You've got Bitcoin price, Bitcoin amount

528
00:45:00,146 --> 00:45:05,326
of Bitcoins. The real thing is the target debt ratio. So right now, the target debt ratio

529
00:45:05,326 --> 00:45:11,286
is give or take at a 30% debt to equity ratio around $17 billion. Right now, these are all

530
00:45:11,286 --> 00:45:17,006
old numbers, we're sitting, you know, 14 billion, roughly, we're sitting in low teens of actual

531
00:45:17,006 --> 00:45:22,826
debt, that's both converts and prefs. But if you run this scenario out, and just keep the MNav

532
00:45:22,826 --> 00:45:27,886
constant, keep the ATM running, and you try to and you keep the Bitcoin price increasing, you try

533
00:45:27,886 --> 00:45:33,886
to meet this 30% debt threshold, how big does the preferred market cap get? That's the real question.

534
00:45:34,226 --> 00:45:39,646
How many of these preferreds are out there, if they can just continuously meet this 30% debt

535
00:45:39,646 --> 00:45:48,726
leverage ratio. And if you get out to 2031 and the price of Bitcoin is 500,000, 600,000, call it,

536
00:45:48,886 --> 00:45:56,726
let's just use here, 500,000 at the end of 2030. And that 30% leverage ratio is about 200,

537
00:45:57,286 --> 00:46:02,866
I think that's million. So you're looking at a potential market cap of all the outstanding

538
00:46:02,866 --> 00:46:11,666
perhaps if they maintain this leverage ratio of 175. Sorry, that's billion. So 175 billion, right?

539
00:46:12,226 --> 00:46:17,426
Like that's nuts. If the preferred market cap is 180 billion in 2030, these things were a smashing

540
00:46:17,426 --> 00:46:21,586
success. So it's just a matter of how quickly that could have developed across those products. But

541
00:46:22,226 --> 00:46:25,266
I mean, I don't think there's a reason why this couldn't happen. And this would

542
00:46:25,266 --> 00:46:32,466
drastically change the landscape for Bitcoin, for bonds, for US denominated, you know,

543
00:46:32,866 --> 00:46:36,046
for government-issued securities across the board.

544
00:46:36,226 --> 00:46:39,046
This is really a pretty crazy thought experiment,

545
00:46:39,626 --> 00:46:40,686
but also a reality.

546
00:46:42,066 --> 00:46:44,926
Yeah, and that's another thing that Pish mentioned

547
00:46:44,926 --> 00:46:49,486
was this market was, is it 100 trillion, 300 trillion?

548
00:46:49,946 --> 00:46:51,226
It's a bunch of trillions.

549
00:46:52,446 --> 00:46:55,466
And it's usually, what is it going to be like,

550
00:46:55,526 --> 00:46:56,326
win or take most.

551
00:46:56,766 --> 00:46:58,266
And there's going to be a bunch of people

552
00:46:58,266 --> 00:47:00,026
that follow strategy into this market.

553
00:47:00,026 --> 00:47:05,746
but um you know strategy is the first mover and they're going to have the highest percentage

554
00:47:05,746 --> 00:47:12,166
of of whatever those however many trillions that is and by 2030 however many hundreds of

555
00:47:12,166 --> 00:47:16,846
trillions of dollars it is that'll probably double by then so it'll just be a the dominant

556
00:47:16,846 --> 00:47:25,266
slice of an even of an even bigger pie you're you're muted you're muted yeah completely i totally

557
00:47:25,266 --> 00:47:34,226
agree um totally agree yeah i think we i had it's strife it was in the uh it was in our thumbnail

558
00:47:34,226 --> 00:47:42,166
i want to let everyone know yeah i um i mean i'm i've got a bunch of chips on the table hoping for

559
00:47:42,166 --> 00:47:51,746
one more pump so um if it doesn't happen it'll be kind of brutal for my portfolio but i have the um

560
00:47:51,746 --> 00:47:56,186
at least I can console myself that all of the longs,

561
00:47:56,266 --> 00:48:00,966
all of the leverage that I purchased was funded by the short calls that I sold

562
00:48:00,966 --> 00:48:04,006
in the first place. So even if those all expire worthless,

563
00:48:04,366 --> 00:48:07,346
it was basically just all the money that I, uh,

564
00:48:07,346 --> 00:48:10,226
that I made for myself on the, on the covered calls to begin with.

565
00:48:10,266 --> 00:48:12,126
So it'll just be a breakeven moment for me.

566
00:48:13,786 --> 00:48:17,926
Completely. Yeah. No, I mean, it's, it's really hard to know right now.

567
00:48:18,026 --> 00:48:20,866
It's not 2022, 2023, 2024 anymore.

568
00:48:20,866 --> 00:48:28,266
so it's the end of 2025 yeah and the and bitcoin loves to like okie doke you like as soon as you

569
00:48:28,266 --> 00:48:33,906
think you see a pattern and it's like oh yeah i see the i see the code in the matrix it's like okay

570
00:48:33,906 --> 00:48:38,646
for your cycles and then everybody thinks there's they're real you could say that it's a self-fulfilling

571
00:48:38,646 --> 00:48:44,326
prophecy but then maybe everybody gets surprised and maybe we get the super cycle that everybody

572
00:48:44,326 --> 00:48:51,866
wants or maybe we get an early bear market and who knows maybe the fed screws up the whole situation

573
00:48:51,866 --> 00:48:56,766
but i don't see that happening it seems like rates got to come down and that's just bullish

574
00:48:56,766 --> 00:49:05,306
yeah yeah i agree but uh you know who knows could be priced in here so i think you gotta

575
00:49:05,306 --> 00:49:11,306
tread lightly but carry a big stick yeah we um we covered everything on your agenda

576
00:49:11,306 --> 00:49:15,586
anything else you want to get off your chest that you just couldn't wait three more weeks for?

577
00:49:16,446 --> 00:49:21,646
No, I'm glad we did that. There's important stuff going on. I know it's end of August, but

578
00:49:21,646 --> 00:49:24,266
it's important to keep momentum through the fall, whatever happens.

579
00:49:24,946 --> 00:49:30,566
Oh, yeah. And I mentioned that, you know, the whole point of this is to try to get some signal

580
00:49:30,566 --> 00:49:36,026
for investors because, you know, Jeff saw what happened with the GameStop trade and how

581
00:49:36,026 --> 00:49:38,406
much just bad information was out there.

582
00:49:39,286 --> 00:49:40,286
And so there's that.

583
00:49:40,366 --> 00:49:42,506
But then I think we're also kind of like

584
00:49:42,506 --> 00:49:44,826
a little bit of a litmus test

585
00:49:44,826 --> 00:49:47,346
for Bitcoin treasury companies themselves.

586
00:49:47,346 --> 00:49:49,566
And we're going to be highlighting things

587
00:49:49,566 --> 00:49:50,506
that we think are good

588
00:49:50,506 --> 00:49:52,246
and things that we think

589
00:49:52,246 --> 00:49:55,426
are maybe Bitcoin treasury companies

590
00:49:55,426 --> 00:49:56,206
shouldn't be doing.

591
00:49:56,626 --> 00:49:58,166
So hopefully we'll be informative

592
00:49:58,166 --> 00:50:00,346
for the BTCTCs themselves.

593
00:50:00,346 --> 00:50:09,486
you got any final thoughts or should we uh should we wrap it up i mean let's wrap it up

594
00:50:09,486 --> 00:50:17,306
hell yeah thanks everybody for jumping in on our impromptu session and thanks to dan for

595
00:50:17,306 --> 00:50:22,846
just being in the lab and pumping out a bunch of research for us and making us not wait another

596
00:50:22,846 --> 00:50:26,466
three weeks thanks for listening guys that was good thank you guys y'all