1
00:00:00,800 --> 00:00:09,840
Hey, welcome, everybody. This is episode something, Wednesday, January 21st of MSTR True North.

2
00:00:10,580 --> 00:00:15,220
Tonight, you just have the three of us considering Ben and Jeff are off on important business.

3
00:00:15,220 --> 00:00:20,160
So we're going to try to hold down the fort and give you the best information over the last week

4
00:00:20,160 --> 00:00:26,960
with regards to macroeconomic events, digital credit, Bitcoin, the equitization of Bitcoin,

5
00:00:26,960 --> 00:00:32,260
and then the digitization of credit.

6
00:00:32,500 --> 00:00:38,040
So before further ado, we're going to have a little message from Tim.

7
00:00:39,880 --> 00:00:44,560
Ladies and gentlemen, what you're about to hear may be amazing,

8
00:00:44,560 --> 00:00:46,600
but it is not financial advice.

9
00:00:46,780 --> 00:00:49,900
It's for informational and educational purposes only.

10
00:00:50,280 --> 00:00:50,440
Jeff.

11
00:00:55,280 --> 00:00:56,340
Back to us.

12
00:00:56,340 --> 00:01:01,620
back to us dan so solei mike what's going on what are you guys thinking uh let me just quickly go

13
00:01:01,620 --> 00:01:05,700
over our agenda for everyone watching we're going to keep this short to about an hour and 20 minutes

14
00:01:05,700 --> 00:01:11,700
we have a slide deck some things uh some events we want to cover grain has some macroeconomic and

15
00:01:12,340 --> 00:01:18,100
takes he has about his posts he's been he's been doing so i'm going to go over kind of last week

16
00:01:18,100 --> 00:01:23,940
we're going to talk about the big accumulation both mstr common and strc we're going to talk a

17
00:01:23,940 --> 00:01:29,140
little bit about 2026 digital credit how that landscape's shaping up what's the macro tailwinds

18
00:01:29,140 --> 00:01:35,540
and head headwinds with regards to japan greenland the metals blowing out ray dalio still saying the

19
00:01:35,540 --> 00:01:40,660
same thing credit spreads at all time tights in the iran situation and then finally we're going

20
00:01:40,660 --> 00:01:44,820
to talk a little bit about structure finance how these credit instruments integrate into the broader

21
00:01:45,460 --> 00:01:51,860
fixed income markets and then the bad bond of the week i have a right aid bond that will be of note

22
00:01:51,860 --> 00:01:57,540
to people because you can get similar you can literally get similar yields on a bond of a

23
00:01:57,540 --> 00:02:04,100
corporation going through bankruptcy proceedings as you can on strd strategies you know junk rated

24
00:02:04,100 --> 00:02:09,700
credit instrument that's 3x over collateralized by bitcoin so very interesting alpha still left

25
00:02:09,700 --> 00:02:14,580
in the market so grain so what are you guys thinking what's the word i mean the big news is

26
00:02:15,220 --> 00:02:21,220
the uh the big smash stretch by right i think so i think so i think stretch has been training like

27
00:02:21,220 --> 00:02:25,140
a real pristine instrument so that's something really interesting and you know the statistic

28
00:02:25,140 --> 00:02:31,380
i've been looking at is that stretch stretch is traded within a 10 range even during that

29
00:02:31,380 --> 00:02:38,580
that dpeg to like 92 dollars whereas bitcoin's traded down by 33 percent uh from peak to trough

30
00:02:38,580 --> 00:02:44,340
down to 80k so like that's significant volatility reduction in that instrument it's performing as it

31
00:02:44,340 --> 00:02:49,940
should during what we can consider a bear market especially for strategy yeah they paid the dividend

32
00:02:49,940 --> 00:02:55,620
and bitcoin went down strategy went down and stretch was just fine yeah maybe people are

33
00:02:55,620 --> 00:02:59,140
starting to think like these dividends will get paid green what's what's new with you what are

34
00:02:59,140 --> 00:03:04,420
you thinking look look look stretch is awesome you know and i i saw a couple things that people

35
00:03:04,420 --> 00:03:10,980
didn't realize about stretch and i posted and i talked about this uh stretches has a target range

36
00:03:10,980 --> 00:03:17,060
of 99 to 101 dollars it is not based upon the price of bitcoin and so what happens is there's

37
00:03:17,060 --> 00:03:22,300
There's a slide from the strategy deck I keep on reposting about the VWAP of the last week of the month.

38
00:03:22,720 --> 00:03:33,580
So if Stretch trades below $100 or below $99, then they have to raise the rate up on it in order to keep the peg.

39
00:03:33,580 --> 00:03:39,760
On the flip side, if it starts trading above $101, then they could lower the rate.

40
00:03:39,900 --> 00:03:41,860
What I think they're going to do is the sweet spot.

41
00:03:42,480 --> 00:03:43,720
Now, what do I think the sweet spot is?

42
00:03:43,760 --> 00:03:44,940
I think it's a tighter range.

43
00:03:45,080 --> 00:03:46,220
And this is my analysis.

44
00:03:46,220 --> 00:03:52,500
I think it's going to trade between $99 and $0.25 and $1.25.

45
00:03:53,400 --> 00:03:57,720
Sorry, $100 and $0.25 or $100 and $0.50.

46
00:03:58,160 --> 00:04:01,640
And that'll be the part where we're all seeing, can they ATM it?

47
00:04:01,900 --> 00:04:08,720
And it's in their best interest to keep that above $100 because then they can ATM it.

48
00:04:08,720 --> 00:04:16,620
So I think that this is one of the biggest important changes in the Bitcoin space, literally in months.

49
00:04:16,720 --> 00:04:19,080
I mean, if not, you know, for the past year.

50
00:04:19,820 --> 00:04:20,840
No, I completely agree, Gray.

51
00:04:20,900 --> 00:04:26,000
And I think the new regimen that we're seeing now is that not only are the ATMing stretch,

52
00:04:26,360 --> 00:04:30,520
but they're expanding their balance sheet at 1x MNAV with the common equity issuance,

53
00:04:30,920 --> 00:04:35,360
which essentially creates it such that there's no cap on the amount of stretch they can issue.

54
00:04:35,360 --> 00:04:40,180
as long as they expand their collateral and expand stretch with it as long as there's demand for

55
00:04:40,180 --> 00:04:45,820
stretch which i made a just recent post about like there is plenty of demand for an 11 short

56
00:04:45,820 --> 00:04:49,520
duration credit instrument as long as there's demand for that instrument they're going to

57
00:04:49,520 --> 00:04:53,480
continue to have a bid underlying bitcoin for the foreseeable future and it's a pretty incredible

58
00:04:53,480 --> 00:04:58,780
product so we can go into that we can go into some price models just how big these buys can get

59
00:04:58,780 --> 00:05:04,060
over time i think you know this puts the s p out of business and that's how i think about it stretch

60
00:05:04,060 --> 00:05:08,020
puts the S&P out of business. So when you have a short duration credit instrument that outperforms

61
00:05:08,020 --> 00:05:12,360
the S&P, what do you mean? Yeah, I'm glad you said that, Dan, because people were asking me like,

62
00:05:12,420 --> 00:05:17,340
hey, can you talk about this tonight? And I kind of, when I first read it, I was immediately

63
00:05:17,340 --> 00:05:22,320
impressed. But then I have to admit, I kind of hated it for a second because I was like,

64
00:05:22,900 --> 00:05:27,820
holy crap, 300 million of stretch. And if they had just announced that alone,

65
00:05:28,720 --> 00:05:31,900
then it would have been like, I don't know, it felt like it would have been a bigger flex.

66
00:05:31,900 --> 00:05:35,140
and I'm like, why even ATM all of this MSTR?

67
00:05:35,620 --> 00:05:37,420
But I saw your interview on OneChair

68
00:05:37,420 --> 00:05:39,400
and I think I kind of got there.

69
00:05:39,460 --> 00:05:41,040
I was like, okay, well, maybe they just need

70
00:05:41,040 --> 00:05:45,000
to build a bigger base for the preferreds.

71
00:05:45,940 --> 00:05:48,280
As their ATMing stretch,

72
00:05:48,380 --> 00:05:51,240
they got to build a bigger base of Bitcoin stack

73
00:05:51,240 --> 00:05:52,040
on top of it.

74
00:05:52,280 --> 00:05:53,720
But you explained it a hell of a lot better

75
00:05:53,720 --> 00:05:56,140
and I guess it came to you a lot easier.

76
00:05:56,760 --> 00:05:58,680
So you did a hell of a job on the OneChair.

77
00:05:59,420 --> 00:05:59,840
Thank you.

78
00:06:00,000 --> 00:06:00,400
Thank you.

79
00:06:00,400 --> 00:06:01,880
Mike, were you going to say that?

80
00:06:02,420 --> 00:06:02,700
Yeah.

81
00:06:02,920 --> 00:06:07,120
You know, look, stretch, I think, is fundamentally different.

82
00:06:07,260 --> 00:06:10,440
I'm going to share something on my desktop, and I want to talk about the article I wrote

83
00:06:10,440 --> 00:06:12,920
and explain why something has fundamentally changed.

84
00:06:13,020 --> 00:06:14,200
And this got a lot of traction.

85
00:06:14,420 --> 00:06:15,120
So let me see.

86
00:06:15,780 --> 00:06:16,460
Share window.

87
00:06:16,580 --> 00:06:17,780
Let me see if I get this right.

88
00:06:18,420 --> 00:06:18,740
Okay.

89
00:06:18,840 --> 00:06:19,700
Share this window.

90
00:06:21,280 --> 00:06:22,480
So let me know when you guys –

91
00:06:22,480 --> 00:06:23,560
Let me pull it up.

92
00:06:24,140 --> 00:06:24,940
It's in the window.

93
00:06:25,120 --> 00:06:25,900
You are gravy.

94
00:06:26,020 --> 00:06:26,340
Here we go.

95
00:06:27,060 --> 00:06:27,320
Yeah.

96
00:06:27,320 --> 00:06:27,980
So it's working.

97
00:06:28,260 --> 00:06:29,140
So hiding in plans.

98
00:06:29,140 --> 00:06:30,320
Ferrari, Lambo, McLaren.

99
00:06:30,400 --> 00:06:39,920
mclaren x every every everybody can see now what i look at on a daily basis uh um i had to make

100
00:06:39,920 --> 00:06:46,940
sure there wasn't anything crazy up there um so so so so keep they keep my desktop did it fade off

101
00:06:46,940 --> 00:06:53,060
my desktop uh i'll switch it back yeah switch it back it's okay so look hiding in plain sight

102
00:06:53,060 --> 00:06:59,600
december 1st 2025 strategy puts out this picture of the of the rocket ship and a lot of people a

103
00:06:59,600 --> 00:07:05,160
lot of people like to blast sailor for a particular reason. Oh, he, these are metaphors. I don't

104
00:07:05,160 --> 00:07:09,760
understand what he's talking. And they're like, he's trying to talk about things where people just

105
00:07:09,760 --> 00:07:17,800
don't get what he's talking about. And what you're seeing here is that there's, there's the three

106
00:07:17,800 --> 00:07:22,960
engines, which is the derivatives market, the equity market and so forth. And then you see that

107
00:07:22,960 --> 00:07:27,060
there's actually, there's, there's three fuel tanks. What are the three fuel tanks? And this

108
00:07:27,060 --> 00:07:32,180
what's written in the article now i wrote this article in i it's less than a thousand words it

109
00:07:32,180 --> 00:07:36,740
takes three minutes to read it if you read it twice probably less than five minutes so what are

110
00:07:36,740 --> 00:07:43,460
the three fuel tanks you've got bitcoin bitcoin is the base of everything and mstr stock i'm very

111
00:07:43,460 --> 00:07:49,940
specific about mstr about that stock is that that that's what gives you the most volatility for the

112
00:07:49,940 --> 00:07:55,380
stock the most amplification now what you have here is you have the other the other two fuel tanks

113
00:07:55,380 --> 00:07:58,420
and on December 1st when they announced this,

114
00:07:58,480 --> 00:08:00,900
they announced $1.4 billion in cash

115
00:08:00,900 --> 00:08:03,040
and people were like, oh, cash is terrible,

116
00:08:03,220 --> 00:08:04,900
cash is trash, cash is melting.

117
00:08:05,860 --> 00:08:07,780
No, guys, this was another lever.

118
00:08:07,920 --> 00:08:10,340
Now it's $2.25 billion in cash

119
00:08:10,340 --> 00:08:12,500
and you're like, why did he get cash?

120
00:08:12,600 --> 00:08:13,420
Cash is terrible.

121
00:08:13,920 --> 00:08:14,340
No, no, no.

122
00:08:14,340 --> 00:08:17,460
This is when the MSCI FUD came out.

123
00:08:17,860 --> 00:08:19,220
This was in December 1st.

124
00:08:19,220 --> 00:08:20,620
The FUD came out in November

125
00:08:20,620 --> 00:08:23,840
and so what they wanted to signal is we now have cash.

126
00:08:24,500 --> 00:08:30,240
Now what's happened is, is that stretch STRC has maintained the peg.

127
00:08:30,380 --> 00:08:33,660
And that happened on January 7th of this year.

128
00:08:33,860 --> 00:08:34,720
So think about the timing.

129
00:08:35,160 --> 00:08:36,800
December 1st, right?

130
00:08:36,900 --> 00:08:38,360
This image comes out.

131
00:08:39,020 --> 00:08:43,060
Stretch, you know, MSCI stretch hits on January 7th.

132
00:08:43,080 --> 00:08:44,160
It maintains the peg.

133
00:08:44,360 --> 00:08:48,280
So now strategy has three levers, right?

134
00:08:48,420 --> 00:08:52,800
We all look at the AK when it comes out and we see they did a $2 billion buy or a billion

135
00:08:52,800 --> 00:08:58,560
dollar buy three billion dollars worth of mstr buys of bitcoin but what we saw was the 300 sorry

136
00:08:58,560 --> 00:09:05,260
the uh 200 million sorry 300 million dollars worth worth of strc that happened on monday wow it was

137
00:09:05,260 --> 00:09:12,040
only monday or tuesday today's wednesday yeah so because monday was a holiday so so what happens

138
00:09:12,040 --> 00:09:18,880
what we're seeing here is that strc is the iphone moment because and somebody else said this it's

139
00:09:18,880 --> 00:09:24,880
like a stable stock. It's not a stable coin. It's equitized Bitcoin in the form of a pref.

140
00:09:25,400 --> 00:09:30,740
And so it's designed to have this target range, which I keep on showing, is the prices between

141
00:09:30,740 --> 00:09:38,640
$99 and $101. So this article right here basically goes through these three pieces and the cash,

142
00:09:38,780 --> 00:09:44,980
digital credit, equity, and what the market is trying to talk about. And so I think this is the

143
00:09:44,980 --> 00:09:52,340
critical part that people are missing is that now strategy has three levers to pull. Because stretch

144
00:09:52,340 --> 00:09:59,220
is a variable dividend, whereas all the other preps are fixed dividends. They're 8%, right?

145
00:09:59,700 --> 00:10:07,080
Or there's a conversion on STRK. But stretch has a variable dividend rate in order to keep that peg.

146
00:10:07,080 --> 00:10:13,220
The other ones have floating prices. This one has a floating price, but it's between $99 or $101.

147
00:10:13,960 --> 00:10:16,140
So it's really designed to have this peg.

148
00:10:16,480 --> 00:10:17,520
That's what's different.

149
00:10:18,200 --> 00:10:22,740
So now strategy has a way, you know, just like a central bank.

150
00:10:22,960 --> 00:10:27,880
They can do yield curve control, but it's programmatic that they built into this.

151
00:10:28,240 --> 00:10:32,320
So I think that's the key part that I'm talking about is that people have to look at it holistically.

152
00:10:32,800 --> 00:10:34,400
They have to look at it as a system.

153
00:10:34,400 --> 00:10:39,020
It's just not, oh, tell me about every PREF for a three-hour call and in detail.

154
00:10:39,420 --> 00:10:43,200
No, it's how are the PREFs related specifically also with STRC?

155
00:10:43,220 --> 00:10:46,000
How is it related to the accumulation of Bitcoin?

156
00:10:46,180 --> 00:10:48,240
And how is it related to the cash?

157
00:10:48,620 --> 00:10:49,960
There's three parts of this.

158
00:10:50,120 --> 00:10:54,780
And that's where I think the company is fundamentally different, that people aren't seeing it.

159
00:10:55,140 --> 00:10:59,800
So this rocket ship, right, that people didn't get, right?

160
00:11:00,000 --> 00:11:01,160
You got to study this.

161
00:11:01,300 --> 00:11:05,320
This rocket ship with the three different fuel tanks is really great.

162
00:11:05,680 --> 00:11:07,420
Now, I want to give one last minute.

163
00:11:07,960 --> 00:11:08,620
Go jump right in.

164
00:11:08,620 --> 00:11:12,360
Yeah, I want to jump in there because, you know, what people don't understand is like,

165
00:11:12,360 --> 00:11:15,640
oh, but there's plenty of preferred equities out there in the market. There's plenty of

166
00:11:15,640 --> 00:11:18,980
bonds out there. How is this any different? People are thinking that I might, no, no,

167
00:11:19,060 --> 00:11:22,940
stretch is fundamentally different. And that's because it's the only prep that's been able to be

168
00:11:22,940 --> 00:11:27,380
created such that it's a stable equity, like Grant's saying. The reason is it's because it's

169
00:11:27,380 --> 00:11:32,320
the first preferred equity, which is a yield bearing instrument that has an ATM registration

170
00:11:32,320 --> 00:11:39,060
on top of it. The only way to keep it stable at this $100 price peg is one, the short duration to

171
00:11:39,060 --> 00:11:44,000
to change the interest rate, the dividend interest rate on a monthly basis. So that helps adjust the

172
00:11:44,000 --> 00:11:50,920
price. But you also need to be able to cap the price via equity issuance at $100 or more. So

173
00:11:50,920 --> 00:11:57,280
this, again, is the first PREF in the history of financial markets to have an ATM shelf registration

174
00:11:57,280 --> 00:12:01,900
on it. So if it weren't for that innovation, this product would not be possible. And therefore,

175
00:12:02,000 --> 00:12:06,020
this is the first product of its kind in all of financial markets to create what is effectively

176
00:12:06,020 --> 00:12:10,740
an equitized stable coin backed by strategist bitcoin in the equities market this was not

177
00:12:10,740 --> 00:12:15,540
possible before and so people i think people don't understand that this is actually a new product

178
00:12:15,540 --> 00:12:20,240
yeah i thought there's no way they're going to keep this under 100. i was like i don't know how

179
00:12:20,240 --> 00:12:24,440
they're going to be able to atm this enough to keep it under 100 and then they had a little bit

180
00:12:24,440 --> 00:12:28,120
of growing pains but i think they're going to start running into that problem which is i guess

181
00:12:28,120 --> 00:12:35,920
is a good problem to have but uh yeah i'm i'm just super super stoked about it yeah and and i keep

182
00:12:35,920 --> 00:12:41,120
on pulling up this slide you know if somebody you know when i show the slide it's like oh stretch can

183
00:12:41,120 --> 00:12:49,440
go to 150 no it can't strategy will sell everything above 101 to keep it lower right i think they're

184
00:12:49,440 --> 00:12:54,640
going to try and keep it at 11 at least for the next six months right i don't see any especially

185
00:12:54,640 --> 00:12:59,120
if you believe in sailor's bitcoin model or the power law bitcoin model bitcoin has a higher kager

186
00:12:59,120 --> 00:13:03,440
for the next five years than the following five years there's no reason not to generate massive

187
00:13:03,440 --> 00:13:08,720
amounts of demand with 11 yield versus a 10 this is all a marginal difference and you go if you

188
00:13:08,720 --> 00:13:14,000
believe in the trajectory of bitcoin regardless so i think i totally agree 11 is pretty much on i

189
00:13:14,000 --> 00:13:18,720
don't think they're going to lower it i don't think they'll lower it unless unless the demand

190
00:13:18,720 --> 00:13:24,080
is so insatiable that they they bump up against that amplification ratio and they need to stop

191
00:13:24,720 --> 00:13:30,640
people from buying strc to keep the price from running up i look i hope i hope that's the problem

192
00:13:30,640 --> 00:13:35,280
you know one of the weird things about this is that we are going to get a new fed chair

193
00:13:35,280 --> 00:13:41,200
in may well jerome powell expires in may dan we've talked about this before there'll be a new

194
00:13:41,200 --> 00:13:45,840
person that's going to come in whoever that is it's going to be somebody that that the

195
00:13:45,840 --> 00:13:50,160
administration wants to lower interest rates and you know what we're going into an election

196
00:13:50,160 --> 00:13:55,920
lower interest rates okay that benefits the whole economy put it on boil who cares about if there's

197
00:13:55,920 --> 00:14:02,420
inflation, right? So they lower interest rates. Now think about it. If STRC, if stretches at 11%,

198
00:14:02,420 --> 00:14:08,820
we lower interest rates, the spread between those two becomes greater. This is the opposite of

199
00:14:08,820 --> 00:14:16,960
what's happening in Japan. In Japan, rates have gone basically up 6X basically in about 18 months.

200
00:14:17,480 --> 00:14:23,500
And so in Japan, rates are going up from a zero interest rate environment. It's been going up.

201
00:14:23,500 --> 00:14:28,340
So there it's a much different situation in the US.

202
00:14:28,800 --> 00:14:30,600
Anywhere where rates are going to drop,

203
00:14:30,780 --> 00:14:32,680
Stretch is going to look fundamentally better.

204
00:14:33,220 --> 00:14:36,100
So this is a product, when it came out, the iPhone,

205
00:14:36,240 --> 00:14:39,120
I think my disappointment was everybody else,

206
00:14:39,200 --> 00:14:40,220
it was a big IPO.

207
00:14:41,040 --> 00:14:42,380
And what happened was there might've been

208
00:14:42,380 --> 00:14:43,960
a little bit of overhang, right?

209
00:14:44,000 --> 00:14:45,780
So initially it was $2.5 billion.

210
00:14:46,180 --> 00:14:47,800
And now it's only about 3 billion.

211
00:14:47,920 --> 00:14:49,320
So it's only added 500 million.

212
00:14:49,640 --> 00:14:51,400
That's still a 20% increase.

213
00:14:51,400 --> 00:14:57,800
But what happens is when you do an IPO, that market maker doesn't dump all the shares in the market on the first day.

214
00:14:58,160 --> 00:15:01,680
They've got to let those shares come out over time.

215
00:15:02,160 --> 00:15:15,440
And so now that that's settled out, I think that this $300 million, if it goes to $500 million and it's per week, that's $25 billion a year.

216
00:15:15,820 --> 00:15:20,320
Let's just say it stays at $250 million per week.

217
00:15:20,320 --> 00:15:27,340
right that's a billion dollars a month it's still 12 billion dollars a year so i i think that's the

218
00:15:27,340 --> 00:15:34,580
way i look at it oh wow are you guys seeing um yeah we can see that that's cool we're seeing

219
00:15:34,580 --> 00:15:40,560
spreadsheets yeah okay so true north side event grain can you give us a little rundown on this

220
00:15:40,560 --> 00:15:47,460
just so everyone's watching yeah look uh the true north inside event at strategy world uh our first

221
00:15:47,460 --> 00:15:54,700
one was last year. And it, from what I could tell, I think we've already sold out. I think

222
00:15:54,700 --> 00:15:59,960
we've already sold out almost the second 50 tickets. So the price is going up. So these are

223
00:15:59,960 --> 00:16:06,960
going fast. Also the hotel, if you book this and we recommend that everybody should go also to

224
00:16:06,960 --> 00:16:11,680
strategy world, the hotel at the wind, it's relatively inexpensive, you know, for the wind,

225
00:16:11,680 --> 00:16:18,760
I think it's 319 a night. And so I, I, I'm going to both events. I'll be there. I'm staying at the

226
00:16:18,760 --> 00:16:22,480
Wynn hotel, come and meet us in person. The important thing to realize is that we're not

227
00:16:22,480 --> 00:16:27,140
going to live stream this. There's not going to be any, any video that's going to be done there.

228
00:16:27,200 --> 00:16:32,040
So this is only going to be an in-person event. It will not be live streamed. And what we learned

229
00:16:32,040 --> 00:16:37,180
from last year is that some people will feel more comfortable just being able to talk without having

230
00:16:37,180 --> 00:16:42,780
any form of video so exactly that's one exactly yeah it's important for us that it's an in-person

231
00:16:42,780 --> 00:16:48,140
only you know personalized experience for everyone involved that's our focus hope to see you all there

232
00:16:48,860 --> 00:16:53,500
the links are here if you need it um so i mean we're going to talk a little bit about kind of

233
00:16:53,500 --> 00:17:07,414
just the general picture and you know this episode is very highly focused on strc the reason we focus so heavily on strc is because it ultimately the answer I think to a lot of the credit problems in the US for retail and institutional investors

234
00:17:08,134 --> 00:17:12,734
And a couple of interesting parallels here is like, you know, we talk a lot about, you know,

235
00:17:12,834 --> 00:17:18,514
fiscal responsibility and the fiscal deficit in the United States. And, you know, there's a lot

236
00:17:18,514 --> 00:17:23,474
of macro doom or bears saying we're going to have this crazy pullback equity markets that leads to

237
00:17:23,474 --> 00:17:29,034
a deflationary bust and we're going to see a collapse like never before. But we're in this

238
00:17:29,034 --> 00:17:35,494
situation where austerity isn't even a dream. There's no world in which fiscal austerity

239
00:17:35,494 --> 00:17:41,994
is even remotely possible with the current debt to GDP numbers and especially with midterms coming up

240
00:17:41,994 --> 00:17:47,934
and the way that Republicans want to run the economy hot into 2026 and beyond. So, you know,

241
00:17:47,934 --> 00:17:55,834
So here's the – we're actually running a fiscal surplus during 1998 or 2001 right up to the pricking of the dot-com bubble.

242
00:17:55,934 --> 00:17:58,414
And I'd let Grayen speak to that a little bit.

243
00:17:58,494 --> 00:18:09,514
But the situation we're in now is much, much different with regards to the money printer and having to kind of grow our way out with negative real interest rates for the foreseeable future.

244
00:18:09,514 --> 00:18:14,174
So, Grayen, any historical parallels there considering you're the resident historian?

245
00:18:14,834 --> 00:18:17,054
Yeah. Thanks for being the resident historian.

246
00:18:17,054 --> 00:18:21,394
So I wrote another 600-word article, and I'm going to share it.

247
00:18:21,414 --> 00:18:24,274
Give me one second here to share it.

248
00:18:25,114 --> 00:18:27,594
And because people will be like, share this window.

249
00:18:28,334 --> 00:18:29,534
So let me give you one second.

250
00:18:30,394 --> 00:18:30,714
Okay.

251
00:18:31,434 --> 00:18:33,374
Let me know when it should be sharing now.

252
00:18:34,674 --> 00:18:35,594
Yeah, but we got infinite.

253
00:18:36,474 --> 00:18:37,234
Yeah, give it a second.

254
00:18:37,274 --> 00:18:37,554
There we go.

255
00:18:37,654 --> 00:18:38,834
So there's this one.

256
00:18:39,334 --> 00:18:40,754
So it's my pinned tweet.

257
00:18:41,174 --> 00:18:43,094
You know, is the Federal Reserve evil?

258
00:18:43,474 --> 00:18:45,674
People love to say it's evil.

259
00:18:45,674 --> 00:18:50,674
Um, what's interesting is that the, the two circular, and let me blow this up here.

260
00:18:50,794 --> 00:18:51,754
So it's easier to see.

261
00:18:54,794 --> 00:18:59,254
So I went to the, uh, federal reserve, uh, uh, website, right.

262
00:18:59,274 --> 00:19:01,474
And you see this picture that's right here.

263
00:19:01,474 --> 00:19:02,794
So now it's nice and big.

264
00:19:03,474 --> 00:19:08,274
Um, all they had was they had the left, they had the revenue $4.9 trillion.

265
00:19:08,954 --> 00:19:13,474
And then they have, which is the revenue coming in and the outlay 6.8 trillion going out.

266
00:19:13,474 --> 00:19:15,894
they had this on the Federal Reserve site.

267
00:19:16,434 --> 00:19:21,254
The part that they left out was that the part in the red on the right,

268
00:19:21,894 --> 00:19:27,554
the fact that you have a $1.9 trillion deficit every year, every year,

269
00:19:27,674 --> 00:19:29,894
that's where the $38 trillion debt comes.

270
00:19:30,434 --> 00:19:34,734
I'm like, how could the person write this article and leave out the $2 trillion?

271
00:19:34,734 --> 00:19:41,174
That's like saying, oh, I make $490,000 a year.

272
00:19:41,174 --> 00:19:45,114
you know, I make $500,000 a year. Like, Oh, that's a lot of money. And you're like,

273
00:19:45,454 --> 00:19:51,034
yeah, but I spend $700,000 a year. So I have a net, I'm using 200 grand a year on my credit card.

274
00:19:51,134 --> 00:19:57,234
They're like, that would be an important part not to, you know, not to leave out. So, you know,

275
00:19:57,234 --> 00:20:02,914
when I wrote about this and this article is 600 words, um, I explained about there's, there's two

276
00:20:02,914 --> 00:20:08,054
things and this is important to take two minutes on this. Look, there, there's, there's two groups,

277
00:20:08,054 --> 00:20:10,674
two entities that control money in the U.S.

278
00:20:10,854 --> 00:20:11,094
Okay?

279
00:20:11,734 --> 00:20:19,054
And what I mean by this is that you have, I say right here, you have monetary policy.

280
00:20:19,194 --> 00:20:20,794
Let me go to this first part over here.

281
00:20:22,114 --> 00:20:23,034
Fiscal policy.

282
00:20:23,574 --> 00:20:23,754
Okay.

283
00:20:25,194 --> 00:20:26,634
I found this on the web.

284
00:20:27,194 --> 00:20:27,834
Stop that.

285
00:20:27,934 --> 00:20:28,794
Syria just jumped in.

286
00:20:28,914 --> 00:20:29,554
Okay, listen to me.

287
00:20:29,934 --> 00:20:33,294
So what happens is Congress decides the budget.

288
00:20:34,194 --> 00:20:37,134
House of Reps, Senate, they come with the budget, they give it to the president.

289
00:20:37,134 --> 00:20:41,694
president signs off on it that's the budget right whether it's Republican

290
00:20:41,694 --> 00:20:45,294
Democrat doesn't matter that's the budget the Fed has no control over that

291
00:20:45,294 --> 00:20:49,834
so I also posted a link to Milton Freeman and when he said every budget is

292
00:20:49,834 --> 00:20:53,954
balanced you're like when I heard that I'm like what do you mean every budget

293
00:20:53,954 --> 00:20:59,214
is balanced because the Fed has to make up for the two trillion dollars that's

294
00:20:59,214 --> 00:21:04,694
at the top so this right over here this missing 1.9 trillion dollars that's what

295
00:21:04,694 --> 00:21:09,434
the Fed prints. And everybody's like, ah, the Fed, they're scumbags. Jerome Powell will just

296
00:21:09,434 --> 00:21:14,654
print in the money. He doesn't have a choice. There's no choice here. They need to finance

297
00:21:14,654 --> 00:21:19,154
the deficit. They need to finance the fiscal. They've got to finance the fiscal deficit. Now,

298
00:21:19,214 --> 00:21:22,854
if we were on the gold standard, then you probably wouldn't need Bitcoin, right? It would be a

299
00:21:22,854 --> 00:21:27,134
different world, but that's not where we are. So that's the part that we saw about the World

300
00:21:27,134 --> 00:21:32,394
Economic Forum that happened was the guy that was talking is like, oh, well, I would rather have

301
00:21:32,394 --> 00:21:39,334
more faith in a democratic controlled central bank and brian armstrong says but we can't rely

302
00:21:39,334 --> 00:21:44,774
on them not to have fiscal deficits he says that it doesn't matter who's in power it doesn't matter

303
00:21:44,774 --> 00:21:49,514
deficits will prevail we've seen that over the past 10 years right and let me show you why it

304
00:21:49,514 --> 00:21:54,194
doesn't matter this is this is what happens so people like to get all tricky and everything

305
00:21:54,194 --> 00:21:59,994
so what you see here in this this chart i'll blow this up so people can see it and it's in here

306
00:21:59,994 --> 00:22:16,254
This is really simple. The green line, right, is the monetary supply. And it starts, the Fed only tracks it from 1980 the way it's calculated. But what you'll see here is the red line is that that's the federal surplus or deficit.

307
00:22:16,254 --> 00:22:23,614
it so we actually we we had under clinton we we had a surplus right but after 2000 it's always

308
00:22:23,614 --> 00:22:30,174
been negative every year and the big drop was during covid over here right so everybody's like

309
00:22:30,174 --> 00:22:35,614
well what's the now just look at the total number now somebody's like okay every year we have this

310
00:22:35,614 --> 00:22:43,374
so so what happens this is the last chart that i have and there's this one again the red line is

311
00:22:43,374 --> 00:22:50,894
still the same the red line is still every every year we have we have a uh a deficit the green line

312
00:22:50,894 --> 00:22:55,374
green can you explain exactly what the deficit is for people sitting at home so the deficit

313
00:22:55,374 --> 00:23:00,014
is obviously the difference between outlays and government revenue correct right so like like i

314
00:23:00,014 --> 00:23:05,214
just said so it's the amount the debt increases year by year right so the deficit isn't the debt

315
00:23:05,214 --> 00:23:10,414
the deficit is the amount that the debt is increasing or decreasing on a yearly basis

316
00:23:10,414 --> 00:23:34,034
Right. So let me give the exact examples that are here. They use trillions of dollars. We'll just say, assume you make $50,000 a year. You're like, okay, I'm making $50,000 a year. But you're spending $70,000 a year. And somebody's like, well, how is that possible? Well, you're putting $20,000 a year on your credit card. So each year you're going $20,000 a year into debt.

317
00:23:34,034 --> 00:23:38,394
So you have a $20,000 a year deficit, right?

318
00:23:38,474 --> 00:23:38,674
Right.

319
00:23:38,674 --> 00:23:39,074
Personal deficit.

320
00:23:39,074 --> 00:23:39,734
You have a $20,000.

321
00:23:40,034 --> 00:23:45,254
So after five years, you now have 100 grand in debt.

322
00:23:45,734 --> 00:23:46,754
Hold on a second.

323
00:23:47,274 --> 00:23:50,174
You have to pay interest on that debt.

324
00:23:50,274 --> 00:23:53,034
Like everybody knows there's a credit card, right?

325
00:23:53,234 --> 00:23:57,154
So you're borrowing 20 grand a year, right?

326
00:23:57,254 --> 00:23:59,014
And it compounds over time.

327
00:23:59,094 --> 00:24:00,414
Just like I said, it compounds.

328
00:24:00,414 --> 00:24:07,414
You know, I have more if I make 20 percent year over year over year in three years, my money doubles.

329
00:24:08,954 --> 00:24:10,734
It's actually about three and a half years.

330
00:24:10,734 --> 00:24:12,274
Same thing with the credit card debt.

331
00:24:12,474 --> 00:24:13,594
Same thing with the credit card debt.

332
00:24:13,934 --> 00:24:15,014
And this is exactly what happened.

333
00:24:15,014 --> 00:24:18,334
You can see reflected in the exponential growth of the federal debt, right?

334
00:24:18,454 --> 00:24:18,694
Right.

335
00:24:18,774 --> 00:24:20,754
So the green line is the federal debt.

336
00:24:20,894 --> 00:24:22,334
And you look right around.

337
00:24:22,474 --> 00:24:25,414
It was manageable at four trillion dollars.

338
00:24:25,534 --> 00:24:27,654
And people like to talk, oh, what's the percentage of GDP?

339
00:24:27,974 --> 00:24:29,014
No, no, they're skipping it.

340
00:24:29,014 --> 00:24:35,234
It's now $38 trillion and it's allowed because of the big, beautiful bill to go to $41 trillion.

341
00:24:36,094 --> 00:24:37,454
There's no way around this.

342
00:24:37,514 --> 00:24:39,734
It doesn't matter whether you're Democrat or Republican.

343
00:24:40,074 --> 00:24:42,054
The problem is only getting worse.

344
00:24:42,514 --> 00:24:49,414
And if you were to make the budget at least no deficit, you still got to pay the interest on the $38 trillion.

345
00:24:50,254 --> 00:24:55,054
So pretty much the takeaway, right, if I'm getting it right, there's no fiscal austerity.

346
00:24:55,374 --> 00:24:58,074
There is no sign of fiscal austerity in the future.

347
00:24:58,654 --> 00:25:00,374
So that's the framework we have to operate on.

348
00:25:00,854 --> 00:25:01,034
Yeah.

349
00:25:01,134 --> 00:25:05,514
And so the last part here, and I'll stop sharing my desktop, is this.

350
00:25:07,414 --> 00:25:11,894
There is no politician that's going to raise taxes.

351
00:25:12,374 --> 00:25:15,574
And there's no politician that really wants to cut spending.

352
00:25:16,314 --> 00:25:16,934
Just isn't.

353
00:25:17,254 --> 00:25:17,614
Just isn't.

354
00:25:18,014 --> 00:25:18,714
They won't get elected.

355
00:25:19,214 --> 00:25:19,574
Right.

356
00:25:19,634 --> 00:25:20,774
You won't get elected.

357
00:25:20,954 --> 00:25:22,134
You're unelectable either way.

358
00:25:22,394 --> 00:25:22,794
Right.

359
00:25:22,894 --> 00:25:23,634
You're unelectable either way.

360
00:25:23,634 --> 00:25:28,034
So what's going to happen is even if we were to get a balanced budget where there's no deficit spending,

361
00:25:28,074 --> 00:25:30,174
You still have to make the interest payments on $38 trillion.

362
00:25:30,674 --> 00:25:47,014
That's why when somebody says to me, Mike, why can't it be like in 1950, you know, when Sam came home to his housewife and they got all these groceries purchased and we're on the gold standard and there's a car in the garage.

363
00:25:47,274 --> 00:25:48,194
The guy bought a house.

364
00:25:48,274 --> 00:25:49,954
The world is great in the 1950s.

365
00:25:50,154 --> 00:25:51,214
Why can't we do it anymore?

366
00:25:51,474 --> 00:25:53,494
We didn't have $38 trillion in debt.

367
00:25:53,634 --> 00:25:56,154
And that's why I don't care what happened in the 50s.

368
00:25:56,794 --> 00:25:56,894
Right.

369
00:25:56,894 --> 00:25:57,034
Right.

370
00:25:57,034 --> 00:26:08,714
No, and that's totally accurate. And for people at home to understand what that means, what that means is interest rates need to be kept low, such that the government can continue financing this massive debt burden.

371
00:26:09,734 --> 00:26:18,654
However, to do this, they're going to have to debase the currency and increase the money supply by issuing new credit in the form of debt.

372
00:26:18,654 --> 00:26:34,114
So it's a self-perpetuating cycle where the only way to manage this debt is to debase the currency to bring the dollar weaker, while also keeping interest rates artificially low such that they can continue to fund deficit while it balloons exponentially out of control.

373
00:26:34,514 --> 00:26:45,214
So all it ends up being is monetary debasement of U.S. dollars in the form of very complicated yield curve control, quantitative easing, et cetera, et cetera.

374
00:26:46,094 --> 00:26:46,294
Yeah.

375
00:26:46,454 --> 00:26:50,454
And so, you know, I saw some of the comments from Alec talking about STRC.

376
00:26:50,894 --> 00:26:54,594
Look, on February 5th, strategy is going to come out with new guidance.

377
00:26:54,854 --> 00:26:56,274
Look, this is not a surprise.

378
00:26:56,474 --> 00:26:57,134
We already know this.

379
00:26:57,234 --> 00:27:00,114
Every year, every company comes out with their yearly guidance.

380
00:27:00,414 --> 00:27:02,394
They're going to say, this is what happened in 2025.

381
00:27:02,774 --> 00:27:07,554
We already know they're going to report whatever, a loss for the last quarter and for the year,

382
00:27:07,614 --> 00:27:11,614
which is fine because of the EPS, which doesn't matter because it's already priced in.

383
00:27:11,614 --> 00:27:14,454
because they said in the December 31st purchase,

384
00:27:15,014 --> 00:27:17,774
when we got that notification on whatever the first or the second,

385
00:27:18,054 --> 00:27:19,494
that was a footnote at the very end.

386
00:27:19,554 --> 00:27:20,374
So we already know this.

387
00:27:20,414 --> 00:27:21,234
There's no surprise there.

388
00:27:21,834 --> 00:27:24,414
What they're going to do is, and I don't know what they're going to do,

389
00:27:24,474 --> 00:27:25,734
but I'm going to tell you what they're going to do.

390
00:27:26,114 --> 00:27:29,074
They're going to announce what they're going to do for 2026 and say,

391
00:27:29,074 --> 00:27:34,814
we did 22.8% in BTC yield last year.

392
00:27:35,614 --> 00:27:35,894
Okay.

393
00:27:36,254 --> 00:27:37,914
This year, they're going to have new guidance.

394
00:27:38,094 --> 00:27:39,854
Whatever that guidance, it's going to be new guidance.

395
00:27:39,854 --> 00:27:45,874
and they're going to talk about, hey, they may come out with a new ATM on STRC and they may say,

396
00:27:45,974 --> 00:27:50,494
hey, look, we have whatever left on it, $2, $3 billion left on it. We're going to increase that

397
00:27:50,494 --> 00:27:55,434
to $8 billion. I don't know. And I think that's a great signal. I think, you know, something we've

398
00:27:55,434 --> 00:27:59,654
been caught off guard, I think over the course of the years, there've been different ATM levels on

399
00:27:59,654 --> 00:28:03,894
different preferred products. Some preferred products have had better product market fit

400
00:28:03,894 --> 00:28:08,534
than others. What we're seeing now is that STRC, in fact, has the best product market fit

401
00:28:08,534 --> 00:28:13,374
of any of the preferreds. And I think strategy is just reinforcing that. There's products being

402
00:28:13,374 --> 00:28:18,034
built. I'm working on Buck, which is built on top of STRC. So for all these reasons, I think

403
00:28:18,034 --> 00:28:23,214
Stretch is becoming more integrated. And I think the USD reserve shouldn't be overlooked in its

404
00:28:23,214 --> 00:28:30,794
impact on the volatility. Let me share this quick chart here of the volatility of Stretch.

405
00:28:31,654 --> 00:28:36,714
Because, yeah, here's the volatility on Stretch relative to the Bitcoin price. So Bitcoin

406
00:28:36,714 --> 00:28:45,214
peaked at 125K, fell 30% down to 80K. And we saw this stretches volatility over a period of time.

407
00:28:45,214 --> 00:28:52,734
And the volatility spiked to 50 vol during that crash to 92. This can't happen for a fixed income

408
00:28:52,734 --> 00:28:59,654
product. This cannot happen. So it was really kind of bad for the equity. However, we're seeing this

409
00:28:59,654 --> 00:29:04,874
collapse in volatility back and we've seen the real stabilization of price between 98 and 100.

410
00:29:04,874 --> 00:29:14,994
And I really do, although the USD reserve was introduced before this collapse, I think the effects of this USD reserve is this diminishing volatility that will only continue as strategy becomes a more seasoned issuer.

411
00:29:15,174 --> 00:29:20,394
So, you know, every month those dividends get paid is another month under strategy's belt.

412
00:29:20,714 --> 00:29:26,954
These aren't going to look risky after strategy's been paying the stretch dividend for five years, for six years, for seven years.

413
00:29:26,954 --> 00:29:29,314
And it's more over collateralized by Bitcoin, in my opinion.

414
00:29:29,314 --> 00:29:39,614
yeah i i think i think i think you're right about this and i you know go ahead i was gonna say

415
00:29:39,614 --> 00:29:44,894
before we move on from the uh from is the fed evil i do agree with you that the austerity is

416
00:29:44,894 --> 00:29:49,694
just out of out of out of the question um that would be admitting a hard default which would

417
00:29:49,694 --> 00:29:55,594
throw the entire world into chaos so that is that is not happening but um you know answering the

418
00:29:55,594 --> 00:30:03,734
question is the fed evil i i have to say i have to say resounding yes uh for me um and and i i see

419
00:30:03,734 --> 00:30:10,934
it as uh the enabling factor in uh like most of the world's like death and human suffering and

420
00:30:10,934 --> 00:30:17,574
the reason i say that is because the only reason that the that world war one world war two and all

421
00:30:17,574 --> 00:30:23,194
of the uh proxy wars that we've fought since have been able to proceed is because of the money

422
00:30:23,194 --> 00:30:30,334
printer. If actual individual citizens had to be hit up to fund war bonds, there wouldn't have been

423
00:30:30,334 --> 00:30:38,494
like half of the conflict. So I think I want to address what he said. So like, I think you're,

424
00:30:38,554 --> 00:30:44,994
you're, you're grabbing the tail instead of the dog. And let me tell you why. The, the Federal

425
00:30:44,994 --> 00:30:52,374
Reserve, right, is what allows the politicians to go to war, because it could be funded by the Fed.

426
00:30:52,374 --> 00:31:00,314
So you're letting the politicians that run the fiscal responsibility and blaming the guy that's got a plug.

427
00:31:00,534 --> 00:31:04,314
Look, do you blame Visa because you overspent?

428
00:31:04,414 --> 00:31:07,134
Everybody's like, oh, they're evil because they charge 25%.

429
00:31:07,134 --> 00:31:13,914
Look, do I think that they charge a very high rate on credit cards?

430
00:31:14,094 --> 00:31:14,714
Yes, I do.

431
00:31:15,374 --> 00:31:16,354
Do I think that that's fair?

432
00:31:16,694 --> 00:31:18,894
No, but that's their business, right?

433
00:31:18,894 --> 00:31:23,914
Do I blame Visa and MasterCard, right, for having those rates?

434
00:31:23,974 --> 00:31:28,474
Or do I blame a person that rent, you know, was beyond their means?

435
00:31:28,614 --> 00:31:29,934
And that's my question to you, Soleil.

436
00:31:30,194 --> 00:31:37,354
Is it the politicians that decided to go to war and the fact that they could run a deficit, aren't those the real cause?

437
00:31:37,714 --> 00:31:40,014
And the effect is that you're blaming the Fed?

438
00:31:40,994 --> 00:31:47,134
No, the difference between the government politicians and the Fed is fake.

439
00:31:47,134 --> 00:31:52,714
they're they're they're one in the same this is this is a a coordinated effort so i i blame them

440
00:31:52,714 --> 00:31:58,714
both equally that's fair i think that's a fair take i would i would say you know it is a real

441
00:31:58,714 --> 00:32:04,734
question of you know the you can weaponize federal deficits in a way that we've seen historically

442
00:32:04,734 --> 00:32:11,154
during you know past conflicts sometimes to the benefit of the united states and other times

443
00:32:11,154 --> 00:32:16,714
maybe used irresponsibly like during the vietnam war so that's definitely a difficult conversation

444
00:32:16,714 --> 00:32:25,694
I mean, and so what is stretch and Bitcoin and credit kind of what is what is its response to federal deficits?

445
00:32:25,874 --> 00:32:31,854
And so I think the thing we're talking about here, we're all kind of being around the bush of is that.

446
00:32:33,294 --> 00:32:43,334
With this fiscal responsibility, real interest rates, the interest you're going to get on your money market fund or your bond is not going to outpace inflation or monetary debasement over the long run.

447
00:32:43,334 --> 00:32:55,334
So as a private citizen or an institutional investor, there is no safe haven asset, no asset that gives you non duration liability like a fixed income bond or, you know, a corporate bond.

448
00:32:57,334 --> 00:33:09,894
That outpaces debasement. Stretch is a short term duration instrument that, in fact, can outpace inflation without corporate risk or without underlying business risk.

449
00:33:09,894 --> 00:33:19,674
It still has issuer risk from strategy, but it's backed by a currency that theoretically will continue to outperform U.S. dollars and reflect the productivity in society.

450
00:33:19,834 --> 00:33:37,954
So I think that's why this new yield curve backed by Bitcoin is a solution for savers, a stretch being a solution for savers who understand that you can't hide from monetary debasement within the tools used for monetary debasement like, you know, U.S. government debt.

451
00:33:39,894 --> 00:33:54,914
Yeah, I think it's a much more morally plausible to buy Stretch and have MSTR buy Bitcoin than to buy bonds and have the government do whatever the hell they're going to do with the money.

452
00:33:55,654 --> 00:34:11,268
So I think that a pretty good overview of where we are with Stretch and how it all I just want to show you one quick thing on Stretch because the comments looking at this I going to share my desktop here for this and share window share this share this window

453
00:34:12,168 --> 00:34:12,588
Okay.

454
00:34:12,968 --> 00:34:14,628
So you should be able to see this.

455
00:34:15,028 --> 00:34:21,108
So this comes out when they follow the 8K, strategies 8K.

456
00:34:21,468 --> 00:34:24,168
And this is the latest one for January 20th.

457
00:34:24,168 --> 00:34:37,288
The reason why I like this is because what it shows you here is that not only does it tell you that the shares sold and the dollar amount, it tells you how much is remaining on the ATM.

458
00:34:38,748 --> 00:34:41,508
And so when you look at this for a stretch, you need to look at it.

459
00:34:41,968 --> 00:34:44,908
There's $3.6 billion left on it.

460
00:34:45,308 --> 00:34:48,208
On MSTR stock, there's only $8.4 billion.

461
00:34:48,588 --> 00:34:50,468
On STRK, there's $20 billion.

462
00:34:50,468 --> 00:34:55,388
So what I am guessing, I do not know this, right?

463
00:34:56,668 --> 00:35:03,308
What I'm guessing is going to happen on February 5th, they're going to come up with their new plan for 2026.

464
00:35:03,688 --> 00:35:07,428
And I think they're going to increase the ATM on STRC.

465
00:35:08,128 --> 00:35:08,848
Do I know what to do?

466
00:35:08,868 --> 00:35:09,668
Yeah, I agree.

467
00:35:09,828 --> 00:35:10,588
It's just going to be increased.

468
00:35:10,808 --> 00:35:11,328
21 billion.

469
00:35:11,908 --> 00:35:12,408
Yeah, I agree.

470
00:35:12,568 --> 00:35:13,128
They have to.

471
00:35:13,788 --> 00:35:14,088
Right.

472
00:35:14,288 --> 00:35:15,328
Same with MSCR Common.

473
00:35:15,588 --> 00:35:19,248
I think MSCR Common will get a 40 billion and STRC will get like a 20 billion.

474
00:35:19,248 --> 00:35:40,928
Yeah. And I think, you know, I've already done my calculation. I think that conservatively they could raise $21 billion this year at a average price of $125,000 per Bitcoin between now and the end of the year. I've calculated and I've already done a post on this and I said, I think they'll add, we'll get to about 830,000 Bitcoin by the end of the year. I think that's a conservative number.

475
00:35:41,568 --> 00:35:43,988
I agree. I agree. I think they can get to a million this year potentially.

476
00:35:43,988 --> 00:35:57,588
Yeah. And the other thing I'll say is what we've learned from this is that they can issue and raise money when they're at 3M NAV, when they're at 2M NAV, when they're at 1M NAV and actually below 1M NAV, they could raise money.

477
00:35:58,308 --> 00:36:03,528
And so anybody said, oh, you know, as soon as they go negative M NAV, they're dead in the water.

478
00:36:03,528 --> 00:36:08,768
That is not the case, if anything, because of the three fuel tanks, right?

479
00:36:09,248 --> 00:36:14,708
MSTR, which is really based on the global amount of Bitcoin that they have, the 709,000

480
00:36:14,708 --> 00:36:16,048
Bitcoins, right?

481
00:36:16,108 --> 00:36:21,968
You've got the PREFs, which we think stretch STRC is because it's pegged is the best one,

482
00:36:22,388 --> 00:36:25,648
you know, just in overall design because of the floating rate.

483
00:36:25,908 --> 00:36:29,208
And then the third part is the $2.25 billion in cash.

484
00:36:29,748 --> 00:36:32,928
Those three levers have fundamentally made it different than last year.

485
00:36:32,928 --> 00:36:34,888
And I think that's the part that we're seeing.

486
00:36:35,148 --> 00:36:35,968
So that's my takeaway.

487
00:36:36,268 --> 00:36:36,968
Totally agree, Rain.

488
00:36:37,088 --> 00:36:38,068
And think about it like this way.

489
00:36:38,188 --> 00:36:44,048
Like if MSTR temporarily raises at a discount to MNAV, which they have historically, they

490
00:36:44,048 --> 00:36:48,488
have raised a negative MNAVs in the 2022, 2023 bear market for people who weren't paying

491
00:36:48,488 --> 00:36:50,288
attention, just like weren't following along at that point.

492
00:36:50,368 --> 00:36:51,748
There is a precedent for this.

493
00:36:52,048 --> 00:36:55,728
It's equivalent to a company operating at a loss for a short period of time to fund operations.

494
00:36:56,288 --> 00:36:57,948
It's not the end of the world, in my opinion.

495
00:36:58,208 --> 00:37:01,988
So capital raised to pay preferred dividends during a Bitcoin bear market.

496
00:37:01,988 --> 00:37:03,308
I don't think it's that big a deal.

497
00:37:03,988 --> 00:37:09,368
And even if they traded at 0.9 MNAV forever, but at 50% amplification, they could still outperform Bitcoin, right?

498
00:37:09,628 --> 00:37:10,328
Yeah, completely.

499
00:37:10,568 --> 00:37:11,008
Completely.

500
00:37:11,448 --> 00:37:13,668
It's all about the leverage and capital structure, and they understand that.

501
00:37:14,068 --> 00:37:17,748
And so that's why I think we'll see up to a 40% amplification potentially in the future.

502
00:37:18,808 --> 00:37:25,128
So maybe we switch over, talk a little bit about the geopolitical issues going on.

503
00:37:25,188 --> 00:37:26,148
We'll cover that.

504
00:37:26,248 --> 00:37:27,728
Then we'll get into a little modeling.

505
00:37:27,728 --> 00:37:35,548
Why don't we bring up your model after this geopolitical section on how many Bitcoin strategy we'll acquire this year?

506
00:37:35,628 --> 00:37:38,828
I'll bring up my model. We'll compare notes and then we'll sign off for the evening.

507
00:37:38,948 --> 00:37:40,408
I think that'll be a pretty comprehensive overview.

508
00:37:40,588 --> 00:37:52,208
So the topics I did want to cover were specifically Japan, the Japan situation, Greenland situation, metals, what they're doing, Ray Dalio, his whole shtick.

509
00:37:53,808 --> 00:37:57,408
Maybe cover Davos 2026. I know that's been going on the news.

510
00:37:57,728 --> 00:38:03,248
and talk about junk credit spreads and how you know people are dumping their money into even you

511
00:38:03,248 --> 00:38:08,208
know high risk debt just to get any sort of return on it because of the current environment which has

512
00:38:08,208 --> 00:38:18,528
been tailwinds for bonds commodities and equities over the past year so in terms of the japan

513
00:38:18,528 --> 00:38:25,728
situation uh the boj policy has raised its benchmark rate by 25 basis points to 0.75

514
00:38:25,728 --> 00:38:32,048
percent. This is their highest level since 1995. And this is the kind of narrative for

515
00:38:32,048 --> 00:38:38,788
the yen carry trade unwind or the increase in interest rates from zero, the ZERP environment,

516
00:38:39,088 --> 00:38:45,328
to this kind of higher rate. And the reason this could potentially unwind the yen carry trade

517
00:38:45,328 --> 00:38:50,708
is a lot of traders and hedge fund investors, they go long the US dollar and short the yen

518
00:38:50,708 --> 00:38:54,648
in the form of the corresponding interest rate bonds.

519
00:38:55,108 --> 00:38:57,708
So when you're short the yen, if interest rates rise,

520
00:38:58,108 --> 00:39:00,228
that could theoretically make the yen strengthen

521
00:39:00,228 --> 00:39:02,728
and you'd lose money relative to your long position

522
00:39:02,728 --> 00:39:04,008
where you're long the US dollar.

523
00:39:04,148 --> 00:39:06,788
So you're borrowing yen at a very cheap interest rate

524
00:39:06,788 --> 00:39:08,728
and you're investing it into US dollars

525
00:39:08,728 --> 00:39:09,688
at a higher interest rate.

526
00:39:09,888 --> 00:39:12,628
But if the interest rate on yen goes up,

527
00:39:12,628 --> 00:39:15,908
then that spread that you're making goes down,

528
00:39:16,248 --> 00:39:17,108
your principal moves,

529
00:39:17,308 --> 00:39:18,768
and you could potentially get liquidated

530
00:39:18,768 --> 00:39:19,768
if you're levered up a lot.

531
00:39:19,768 --> 00:39:23,108
So that's a lot of the fear in the markets with regards to the yen carry trade.

532
00:39:23,728 --> 00:39:24,948
Gray, what are your thoughts?

533
00:39:24,988 --> 00:39:26,708
You've probably been seeing this on the news.

534
00:39:26,988 --> 00:39:28,608
Look, I've been seeing this on the news.

535
00:39:28,768 --> 00:39:31,228
A lot of this is just people making it.

536
00:39:31,628 --> 00:39:34,728
Is this a big deal for the firms that have done this?

537
00:39:35,068 --> 00:39:35,208
Sure.

538
00:39:35,348 --> 00:39:40,128
But I'm old enough to remember the yen carry trade of August of 2024.

539
00:39:40,928 --> 00:39:42,768
And you know what?

540
00:39:42,868 --> 00:39:47,708
The world got over it because the yen carry trade is done with overnight financing.

541
00:39:47,708 --> 00:39:49,448
And it's dynamically priced.

542
00:39:49,768 --> 00:39:54,688
And do I think that there are hedge funds or positions that can get blown out?

543
00:39:54,848 --> 00:39:55,068
Sure.

544
00:39:55,788 --> 00:39:56,048
Sure.

545
00:39:56,248 --> 00:39:59,188
But we've seen liquidations happen in the Bitcoin market.

546
00:39:59,268 --> 00:40:00,988
We've seen liquidations happen in every stock.

547
00:40:01,308 --> 00:40:02,768
It's not that this does not exist.

548
00:40:03,128 --> 00:40:07,168
So my view is, you know, you're getting this, oh, my God, the yen carry trade is blown up.

549
00:40:07,448 --> 00:40:09,448
Look, they talk about the lost generation.

550
00:40:09,448 --> 00:40:17,628
It took 35 years for the Japanese stock market to go from 1989 to 2025 to retake the all-time high.

551
00:40:18,108 --> 00:40:19,348
There's a lost generation.

552
00:40:19,768 --> 00:40:30,028
Look, if you were 25 years old in 1990, Dan, in 35 years from now, you'll be my age.

553
00:40:30,548 --> 00:40:33,528
And the stock market, assume that we're at the all-time high now.

554
00:40:33,648 --> 00:40:38,108
It dips, and then you get to my age, and it never retook the all-time high.

555
00:40:38,608 --> 00:40:39,368
In a world of hurt.

556
00:40:39,848 --> 00:40:41,228
It's the lost generation.

557
00:40:41,908 --> 00:40:44,168
We're seeing this right now here with you and me.

558
00:40:44,468 --> 00:40:45,568
That's the lost generation.

559
00:40:45,648 --> 00:40:48,228
When they say the lost generation in Japan, that's what it means.

560
00:40:48,228 --> 00:40:51,628
And so they speculated on real estate in the 80s.

561
00:40:52,248 --> 00:41:02,608
Back in the olden days, whatever it was, Japanese real estate people bought Lincoln Center in New York City for like $900 million.

562
00:41:03,108 --> 00:41:04,408
People are like, how could the Japanese?

563
00:41:04,568 --> 00:41:12,928
I'm like, look, if you own Lincoln Center right there in New York City, right?

564
00:41:13,108 --> 00:41:16,368
And they're going to give you $900 million and they're the biggest bidder.

565
00:41:16,548 --> 00:41:17,348
You take the money.

566
00:41:17,348 --> 00:41:18,548
They're giving it to you in dollars.

567
00:41:18,748 --> 00:41:19,788
I mean, why would you ever do it?

568
00:41:20,048 --> 00:41:21,728
People were upset about that in the old days.

569
00:41:22,108 --> 00:41:27,668
What happened was that all blew up with the zero interest rates, 300% of debt to GDP.

570
00:41:28,428 --> 00:41:30,028
People could not have kids.

571
00:41:30,648 --> 00:41:32,928
And Japan yet is a very advanced society.

572
00:41:33,128 --> 00:41:36,328
And people there, they don't like to finance things.

573
00:41:36,388 --> 00:41:38,028
They save and then they buy things for cash.

574
00:41:38,508 --> 00:41:39,888
So where are we today?

575
00:41:40,728 --> 00:41:43,008
I don't think the US ends up like Japan.

576
00:41:43,268 --> 00:41:45,848
Do I think that's something that we should look at and not do?

577
00:41:45,848 --> 00:41:46,268
Sure.

578
00:41:46,268 --> 00:41:54,088
we're 125 percent of debt to gdp yeah so we're not structurally like that um people in the u.s

579
00:41:54,088 --> 00:42:01,468
love leasing cars right we like to borrow money in the u.s so we're in a we're in a different we

580
00:42:01,468 --> 00:42:06,748
just have fico scores and people have a lot of no you're totally right like japan is a completely

581
00:42:06,748 --> 00:42:12,608
different situation because the velocity of money never took hold so inflation never took root in

582
00:42:12,608 --> 00:42:19,748
Japan the way it would in the US. I mean, Japan was the first experiment in QE in 2001. In 2001,

583
00:42:20,308 --> 00:42:26,628
Japan tried quantitative easing, you know, purchasing government bonds and assets to

584
00:42:26,628 --> 00:42:31,208
juice their equities markets, and it didn't work. It actually wasn't. I mean, it was

585
00:42:31,208 --> 00:42:36,488
inflationary. It didn't rise asset prices. It didn't make asset prices rise.

586
00:42:36,488 --> 00:42:42,068
Right. But I don't know who said this today. I think it was probably Rohan that said this today.

587
00:42:42,608 --> 00:42:48,048
Um, it's the Michael Burry moment. It's not that the ZERP didn't work. The zero interest rate

588
00:42:48,048 --> 00:42:54,348
program did not work in Japan. The problem was the duration. They're like, Oh, the, the cure

589
00:42:54,348 --> 00:42:59,408
ended up being worse than the disease because it just pushed the duration. It pushed it out.

590
00:42:59,408 --> 00:43:05,588
So you didn't have an all time high in the stock market for 35 years. Right. And, and Dan,

591
00:43:05,668 --> 00:43:11,348
we've said this before, it kind of pains me that I've now become like a bond trader when I've net

592
00:43:11,348 --> 00:43:16,548
The only bond I've ever owned are strategy preps.

593
00:43:17,408 --> 00:43:18,588
It's not even a bond.

594
00:43:18,588 --> 00:43:25,388
That's the only thing that I've ever purchased as a bond is strategy preps.

595
00:43:26,088 --> 00:43:30,828
And because the market's trading sideways, hold your stack, the way I look at it.

596
00:43:30,948 --> 00:43:34,428
And then when volatility comes back the way I like it, then I lever back up again.

597
00:43:35,488 --> 00:43:37,948
The only thing I got to say is thank God for MetaPlanet.

598
00:43:37,948 --> 00:43:43,168
probably saving an entire generation from becoming a next, you know, second lost generation.

599
00:43:44,208 --> 00:43:48,888
You know, so that is a great insight. And let me tell you why I think it saves that generation.

600
00:43:49,188 --> 00:43:53,388
It's not because of just MetaPlanet. It's because the young people are like,

601
00:43:53,668 --> 00:43:57,348
wow, we could do something different. And that's the same thing that we see in the US. That's why

602
00:43:57,348 --> 00:44:03,408
Dan is on this call is like, look, I'm not going to be, I'm not a boomer. I'm an old Gen Xer.

603
00:44:03,408 --> 00:44:12,688
I'm not going to buy, you know, IBM and General Electric and Procter & Gamble and consumer goods and Philip Morris.

604
00:44:12,928 --> 00:44:14,368
I'm going to buy tech companies.

605
00:44:14,548 --> 00:44:15,648
Oh, that's not volatility.

606
00:44:16,128 --> 00:44:18,728
I'm going to buy this dude who we don't know who he is.

607
00:44:18,828 --> 00:44:22,748
Satoshi Nakamoto made this thing called magic internet money called Bitcoin.

608
00:44:23,568 --> 00:44:27,348
And it's just it's mined on computers.

609
00:44:27,688 --> 00:44:28,208
Right.

610
00:44:28,268 --> 00:44:31,768
And then you can't touch it, but you can send it anywhere in the world.

611
00:44:31,768 --> 00:44:33,908
and nobody sets the price like gold.

612
00:44:34,048 --> 00:44:37,168
And it's divisible into 100 million pieces.

613
00:44:37,788 --> 00:44:40,728
And people think that because you could do that

614
00:44:40,728 --> 00:44:43,128
with one pizza, we could feed the world.

615
00:44:44,388 --> 00:44:47,668
That's a thing I laid on because there's some PhD guys.

616
00:44:48,088 --> 00:44:49,588
But that's where we are today.

617
00:44:49,708 --> 00:44:51,168
And so we have the young people that are like,

618
00:44:51,508 --> 00:44:52,028
you know what?

619
00:44:52,328 --> 00:44:54,988
I'm going to bet on this dude, Satoshi Nakamoto,

620
00:44:54,988 --> 00:44:57,208
because I don't trust the central banks.

621
00:44:57,828 --> 00:44:58,528
And we're like, cool.

622
00:44:58,608 --> 00:45:01,388
And Michael Saylor, like, well, let's kind of like peg it,

623
00:45:01,388 --> 00:45:05,248
strip out all the volatility and pay you 11% a year.

624
00:45:05,328 --> 00:45:06,528
So you don't have to sell your Bitcoin.

625
00:45:06,688 --> 00:45:08,908
I'm like, wow, that's cool.

626
00:45:09,508 --> 00:45:10,568
It's a big idea.

627
00:45:10,748 --> 00:45:11,688
It's a big idea.

628
00:45:11,868 --> 00:45:12,228
It's a big idea.

629
00:45:12,288 --> 00:45:16,588
And I mean, I remember talking about this as a group over a year ago saying,

630
00:45:16,688 --> 00:45:19,928
you know, he could create a stable coin because we were talking about like the tether economics.

631
00:45:20,428 --> 00:45:21,168
That's what he did.

632
00:45:21,308 --> 00:45:22,168
So it's pretty amazing.

633
00:45:22,248 --> 00:45:27,408
I think maybe we hop right into the Ray Daly.

634
00:45:27,548 --> 00:45:29,888
So I don't even want to cover his stuff.

635
00:45:29,888 --> 00:45:34,888
We could talk a little bit about gold, but any final thoughts on macro environments?

636
00:45:35,008 --> 00:45:35,948
We can talk credit spreads.

637
00:45:36,048 --> 00:45:37,108
Let's just leave this one open.

638
00:45:37,268 --> 00:45:38,108
We can kind of riff on it.

639
00:45:38,568 --> 00:45:39,908
Let's talk about Ray Dalio for a minute.

640
00:45:40,108 --> 00:45:42,528
Look, he's done two videos on X.

641
00:45:42,608 --> 00:45:50,028
If you want to do four years of economics in 20 minutes, just type in Ray Dalio and one

642
00:45:50,028 --> 00:45:52,508
comes up with 58 million views.

643
00:45:52,688 --> 00:45:54,728
It's how the economic machine works.

644
00:45:54,788 --> 00:45:56,588
And then the other one's a changing world order.

645
00:45:56,588 --> 00:46:04,168
there is no economic professor that can make a video or make a PowerPoint presentation to do what

646
00:46:04,168 --> 00:46:10,408
he does in 20 minutes. Every year I rewatch both of those. You should, everybody should watch those.

647
00:46:10,728 --> 00:46:13,848
And if you were to show it to any economics professor, they'd be like,

648
00:46:14,408 --> 00:46:20,128
oh, I've been telling you this. No, you don't because you need four years of drivel in order

649
00:46:20,128 --> 00:46:25,448
for me to understand one 10th of what he said in 20 minutes. So Ray Dalio, highest respect for him.

650
00:46:25,448 --> 00:46:32,288
phenomenally wealthy guy. Bridgewater is one of the top hedge funds in the world. Awesome.

651
00:46:32,968 --> 00:46:38,328
I don't know why he really doesn't get Bitcoin. He kind of does, but doesn't. And it's like the

652
00:46:38,328 --> 00:46:44,068
weirdest thing. And my conversation with very smart people about this that have met him said,

653
00:46:44,368 --> 00:46:48,148
you know, and they look at me and they said, you know, it's really age related.

654
00:46:49,328 --> 00:46:54,668
He's probably 70 something years old. And it's not that he's not smart enough. It's just that

655
00:46:54,668 --> 00:46:56,988
He's not it's just not the product of his generation.

656
00:46:57,508 --> 00:47:01,988
So I'm about I know somebody always says my 85 year old grandpa got Bitcoin.

657
00:47:02,228 --> 00:47:03,888
That's that's one out of a million.

658
00:47:04,288 --> 00:47:05,528
There's 300 of them in America.

659
00:47:05,528 --> 00:47:07,408
Again, he's a big advocate of gold, right?

660
00:47:07,428 --> 00:47:11,028
As kind of the deflation hedge as the new monetary order.

661
00:47:11,128 --> 00:47:12,608
But that ship has sailed, in my opinion.

662
00:47:13,128 --> 00:47:20,448
I think to say the monetization of gold is the future is more so like people are flooding

663
00:47:20,448 --> 00:47:28,448
back to noah's ark amidst this currency debasement fiasco but i don't think you know we're looking at

664
00:47:28,448 --> 00:47:34,928
the monetization of a internet native digital currency that has the deflationary properties

665
00:47:34,928 --> 00:47:41,008
that align with kind of an ai native world so that's the upside and he does recommend a small

666
00:47:41,008 --> 00:47:45,568
portfolio allocation to bitcoin these days it sounds like so he's i mean he's listening to

667
00:47:45,568 --> 00:47:50,608
someone smart if he doesn't believe in himself i agree with you how good those videos are though

668
00:47:50,608 --> 00:47:56,608
uh grain because as soon as i saw change the world order i immediately saved it permanently in a

669
00:47:56,608 --> 00:48:01,968
folder you know i'm like okay if i want to watch this again you know i will um the only thing is

670
00:48:01,968 --> 00:48:11,488
like it kind of just tells you how the world has worked and explains pre-bitcoin and so it's good

671
00:48:11,488 --> 00:48:16,308
good to understand how that that's all working and kind of like makes Bitcoin necessary.

672
00:48:17,568 --> 00:48:22,008
You know, hopefully he does make, he makes me a little suspicious when he calls,

673
00:48:22,588 --> 00:48:26,348
when he starts talking about beautiful deleveraging, you know, trying to like,

674
00:48:26,468 --> 00:48:31,188
basically that's code for soft landing kind of thing. I hope we end up with a soft landing

675
00:48:31,188 --> 00:48:38,248
because the hard landings aren't pretty. But yeah, if he, if he starts to get Bitcoin,

676
00:48:38,248 --> 00:48:44,048
I hope he comes out with a new video and just gets bullish on Bitcoin or something.

677
00:48:44,148 --> 00:48:44,648
That would be awesome.

678
00:48:45,108 --> 00:48:45,568
I agree.

679
00:48:45,708 --> 00:48:57,248
And I think a lot of people like to take the extreme cases here that like either we're going to have this massive hard landing and debt crisis where, you know, auctions, bond auctions fail or we have hyperinflation.

680
00:48:57,248 --> 00:49:04,288
inflation. I mean, over the past 20 years, we've had this same debt crisis and federal deficit,

681
00:49:04,808 --> 00:49:09,868
fiscal deficit, and we've slowly debased the currency. I expect for the next 20 years,

682
00:49:09,908 --> 00:49:13,908
and this is kind of the case for stable coins and the case for a lot of things like stretch

683
00:49:13,908 --> 00:49:19,848
that are fiat Bitcoin hybrids, that monetary debasing is just going to continue exponentially,

684
00:49:19,848 --> 00:49:27,128
but at a relatively tame rate. And you have to be holding deflation hedges or inflation hedges

685
00:49:27,128 --> 00:49:31,148
during that period of time. So I think that's kind of my takeaway.

686
00:49:33,988 --> 00:49:40,828
So am I on mute? No, you're good. Okay. So I just posted the video, how the economic machine works,

687
00:49:40,848 --> 00:49:44,988
and then there's the other one, changing world order. Look, that explains the whole credit market

688
00:49:44,988 --> 00:49:51,128
and explains it if you want to go buy a beer in a bar, that the benefit is that you could buy more

689
00:49:51,128 --> 00:49:56,288
beer if there's credit. If there's only on cash, you got to wait till payday if you're out of money.

690
00:49:56,828 --> 00:49:58,988
Now, do I think that's necessarily a good idea?

691
00:49:59,548 --> 00:50:02,048
No, because in college I went to the bar, right?

692
00:50:02,228 --> 00:50:09,848
And so anyway, so with that said, look, what do I think about Bitcoin?

693
00:50:10,368 --> 00:50:13,648
In a Netflix world, I don't want to be blockbuster.

694
00:50:14,428 --> 00:50:17,748
And that's the difference between gold and Bitcoin.

695
00:50:18,128 --> 00:50:19,288
Bitcoin is Netflix.

696
00:50:19,448 --> 00:50:20,348
You can transport it.

697
00:50:20,568 --> 00:50:22,368
People didn't stop watching movies.

698
00:50:22,888 --> 00:50:25,628
They just didn't want to go drive to a store to go get it.

699
00:50:25,628 --> 00:50:32,648
right and that's what happened and so um and you could have something stay like i believe

700
00:50:32,648 --> 00:50:36,688
netflix stopped shipping dvds like two years ago you're like what do you mean they're still

701
00:50:36,688 --> 00:50:41,988
shipping dvds right there are people that just didn't didn't want to download stuff or didn't

702
00:50:41,988 --> 00:50:46,448
want to buy a new tv or whatever it was they had a dvd player that worked fine so my takeaway with

703
00:50:46,448 --> 00:50:51,248
this i don't know why you know for us younger generation people we get technology and i'm a

704
00:50:51,248 --> 00:50:51,648
tech guy.

705
00:50:52,208 --> 00:50:53,568
What else is on the agenda?

706
00:50:54,528 --> 00:50:55,968
That's pretty much it for the macro.

707
00:50:56,088 --> 00:50:57,088
I think we have one more section.

708
00:50:57,188 --> 00:50:59,008
It's kind of the MSTR models we're all building.

709
00:50:59,728 --> 00:51:01,328
Grant, I really want to see yours as well.

710
00:51:01,648 --> 00:51:12,502
Do you want to share yours And I share mine and we can You muted You muted Grant Before I pull up my model let do the pitch again for us to all meet in Las Vegas

711
00:51:12,902 --> 00:51:13,622
Let's do it.

712
00:51:14,762 --> 00:51:16,702
We'll share the Luma invite.

713
00:51:17,362 --> 00:51:23,782
And look, we're over 100 people that are coming to this.

714
00:51:23,782 --> 00:51:25,582
We have a cap at 150.

715
00:51:26,962 --> 00:51:30,602
I think that there are going to be people there that have not been announced yet.

716
00:51:30,782 --> 00:51:32,102
That might be interesting.

717
00:51:32,362 --> 00:51:38,282
so i would tell you i can second that yeah i've heard yeah really really noteworthy

718
00:51:38,282 --> 00:51:45,402
we're hearing some rumblings and i would also say this is that um this is a key part look if you

719
00:51:45,402 --> 00:51:50,462
want to meet sailor and i've said this i think last week uh don't don't ask him a dumb question

720
00:51:50,462 --> 00:51:55,682
i mean you could it might not go well but um what i would say what i would say is that if you want

721
00:51:55,682 --> 00:52:02,222
to meet sailor i would say get out to las vegas show up there and i think most people get a chance

722
00:52:02,222 --> 00:52:06,662
to meet him and talk to him that come to the event and walk up and say hi you can take a picture with

723
00:52:06,662 --> 00:52:11,722
him you can tell him whatever you want so i think that's a big deal so i i would recommend coming

724
00:52:11,722 --> 00:52:18,002
uh how my calculation it's it's in my i'm going to share my desk share my my window

725
00:52:18,002 --> 00:52:30,162
share this window so let me blow this up so we can okay i'm sharing is it sharing yet

726
00:52:30,162 --> 00:52:33,042
that's it not yet

727
00:52:33,042 --> 00:52:42,082
it says stop sharing screen maybe it didn't work try again okay i'll try again

728
00:52:51,842 --> 00:52:54,522
while you're doing that i just want to say thank god for dan for

729
00:52:54,522 --> 00:52:58,162
bringing the uh age average under 40 for this podcast

730
00:52:58,162 --> 00:52:59,522
I appreciate that.

731
00:53:00,662 --> 00:53:01,262
Yeah.

732
00:53:01,642 --> 00:53:02,722
You got two old guys.

733
00:53:03,022 --> 00:53:05,922
So here's my calculation on equity.

734
00:53:06,682 --> 00:53:10,462
And let me stop in this window.

735
00:53:10,742 --> 00:53:14,162
I will make this smaller.

736
00:53:14,462 --> 00:53:15,022
Get rid of this.

737
00:53:15,222 --> 00:53:15,382
Okay.

738
00:53:16,382 --> 00:53:20,902
So right now they have 709,000 Bitcoin is the current moat.

739
00:53:21,242 --> 00:53:24,302
And they have 15 times the other competitors.

740
00:53:24,302 --> 00:53:33,882
At the end of the year, on December 31st, they had 672,500 Bitcoins.

741
00:53:34,442 --> 00:53:36,682
I said they're just going to increase it by 25%.

742
00:53:36,682 --> 00:53:39,102
That's not the real BTC yield.

743
00:53:39,462 --> 00:53:47,382
I just said conservatively, if they grow this at 25%, that means they'd have 840,000.

744
00:53:47,382 --> 00:53:59,822
The reason why I picked that number was I assumed that the average purchase price would be $125,000, which you see here, and $125,000 times 168,000.

745
00:54:00,482 --> 00:54:03,982
Bitcoin is $21 billion deployed.

746
00:54:04,402 --> 00:54:07,882
That was a complete stroke of luck that it worked out to be $21 billion.

747
00:54:08,502 --> 00:54:12,842
So I just said, what happens if they do 25% in acquisition?

748
00:54:13,062 --> 00:54:15,302
They'd have to raise $21 billion for the year.

749
00:54:15,302 --> 00:54:22,622
sailor likes 21 billion dollars i think that would be a conservative number so dan does that

750
00:54:22,622 --> 00:54:28,162
make sense so i think so too i think that's super in the ballpark especially because these

751
00:54:28,162 --> 00:54:34,702
these bitcoin numbers will get larger and larger and larger as they it's it's technically

752
00:54:34,702 --> 00:54:39,622
exponential like bitcoin yield per share is a decaying exponential the amount of bitcoin they

753
00:54:39,622 --> 00:54:45,182
own year over year with the bitcoin price constant is exponential but bitcoin's price

754
00:54:45,182 --> 00:54:50,142
go up so there's so many factors here to be weighed in the models i'm going to be a little

755
00:54:50,142 --> 00:54:58,462
more precise with what you just said even if the um if the percentage drops the nominal amounts in

756
00:54:58,462 --> 00:55:03,822
bitcoin keep on going up because the base is large so the percentage could drop a little bit that's

757
00:55:03,822 --> 00:55:08,302
where people like oh the diminishing returns set in that's one of the one of the things that we see

758
00:55:08,302 --> 00:55:15,102
all the time diminishing returns do i think that even if my 25 number is a little bit high it could

759
00:55:15,102 --> 00:55:22,142
drop down now i didn't say anything about mnav now if mnav goes positive this is where things get a

760
00:55:22,142 --> 00:55:28,782
little weird because that means bitcoin is probably running and that means that the average price of

761
00:55:28,782 --> 00:55:35,422
bitcoin goes up right so how did you model it i did pretty much very similarly grain so this is

762
00:55:35,422 --> 00:55:40,462
the model i've been working on for over a year now and you know we update it periodically it's got

763
00:55:40,462 --> 00:55:45,382
got the Bitcoin, the Bitcoin price, dollar capital raised total, convertible debt. So I just have

764
00:55:45,382 --> 00:55:50,222
that rolling off the balance sheet based on the X. Oh my God. We got to stop right there for a

765
00:55:50,222 --> 00:55:58,602
second. Strategy announced today that their prefs are larger in a dollar amount than the convert,

766
00:55:58,602 --> 00:56:03,702
than the converts. Great point. Yeah. Super good point. I knew that that was important,

767
00:56:03,822 --> 00:56:07,962
but I didn't know that they were going to announce that. When they announced that, I was like, oh,

768
00:56:07,962 --> 00:56:10,042
So I knew it was important.

769
00:56:10,382 --> 00:56:11,802
I knew that they probably knew it was important.

770
00:56:12,182 --> 00:56:13,722
But that was a big metric for them.

771
00:56:13,882 --> 00:56:17,822
I will guess here, and I want to hear what you're going to say, Dan, about this, because this is a good aside here.

772
00:56:18,222 --> 00:56:27,602
I think that when the prefs are equal to double the converts, that's where the converts really, the delta hedging on the converts really begins to fade away.

773
00:56:28,182 --> 00:56:34,342
I don't have any, because it becomes a much smaller percentage of the overall market cap.

774
00:56:34,462 --> 00:56:35,262
That's my idea.

775
00:56:35,342 --> 00:56:35,842
What do you think?

776
00:56:36,242 --> 00:56:37,442
Yeah, I totally agree.

777
00:56:37,442 --> 00:56:41,042
I mean, I think we learned those dynamics the hard way last year.

778
00:56:41,742 --> 00:56:50,422
But to me, it seems like as long as there's demand for stretch, these converts will scale aggressively over the next year.

779
00:56:50,502 --> 00:56:53,602
Sorry, these prefs will scale aggressively over the next year.

780
00:56:53,702 --> 00:56:59,082
This is the target debt that I use broadly as just the 30% amplification ratio.

781
00:56:59,382 --> 00:57:00,242
This is the actual debt.

782
00:57:00,362 --> 00:57:04,482
So you have to include the converts so long as they're still in the balance sheet as part of the amplification ratio.

783
00:57:05,002 --> 00:57:06,262
But then these are the outstanding prefs.

784
00:57:06,262 --> 00:57:13,262
So, you know, in this bull case, essentially power law of Bitcoin growth, we get to a million Bitcoin in 2034.

785
00:57:14,042 --> 00:57:16,222
Hold up a second here.

786
00:57:16,442 --> 00:57:20,442
Can you blow this up and go to December of 2026?

787
00:57:21,062 --> 00:57:21,402
Absolutely.

788
00:57:22,242 --> 00:57:25,022
So you're saying that they will go, they'll be at one.

789
00:57:25,122 --> 00:57:29,442
You're saying they're going to add from 700,000, right?

790
00:57:29,522 --> 00:57:30,922
Let's just say it was 700,000.

791
00:57:30,922 --> 00:57:35,542
So you're going to add 500,000 Bitcoins in 2026.

792
00:57:36,262 --> 00:57:41,862
I mean, I think that's a lot and I don't really see that happening because I have these low Bitcoin prices.

793
00:57:42,662 --> 00:57:44,622
So that's the thing about these models, right?

794
00:57:44,742 --> 00:57:46,962
You have like multiple independent variables.

795
00:57:47,962 --> 00:57:54,642
If the Bitcoin price is lower and they still are able to issue this amount of ATM.

796
00:57:55,142 --> 00:57:58,322
And so, Grant, let me add one more input for you.

797
00:57:58,322 --> 00:58:05,322
This is assuming the ATM $500 million a week in common equity for the next three years as well.

798
00:58:06,262 --> 00:58:06,542
Okay.

799
00:58:07,302 --> 00:58:08,662
So that's why these numbers are crazy.

800
00:58:09,062 --> 00:58:10,402
I just want to preface it with that.

801
00:58:10,522 --> 00:58:10,822
Yeah, yeah.

802
00:58:10,982 --> 00:58:21,662
So can you just do real quick, can you highlight column B, the BTC price, and can you just average that for 2026?

803
00:58:22,122 --> 00:58:25,002
Just the starting part and see if you can just get a quick average.

804
00:58:26,042 --> 00:58:27,062
Just say it's 100.

805
00:58:27,062 --> 00:58:27,882
It's 100,000.

806
00:58:27,882 --> 00:58:29,042
You're saying $100,000.

807
00:58:29,222 --> 00:58:32,922
So I think that's the difference between mine and yours.

808
00:58:33,042 --> 00:58:37,662
I'm saying that their average buy would be $125,000, assuming the price goes to $150,000.

809
00:58:37,962 --> 00:58:39,802
So I think you could be right.

810
00:58:39,922 --> 00:58:44,542
If the price of Bitcoin trades sideways for this whole year, which I hope doesn't happen, that's not my model.

811
00:58:45,382 --> 00:58:45,882
That's yours.

812
00:58:46,962 --> 00:58:53,562
I think that if Bitcoin retakes its all-time high, which I think it will, which is $126,000,

813
00:58:53,562 --> 00:58:58,702
And I think if it goes to 150 before the end of the year, I think that they could raise $21 billion.

814
00:58:59,882 --> 00:59:04,502
How many billions of dollars do you think that they could raise in?

815
00:59:07,482 --> 00:59:09,942
So these numbers are crazy, right?

816
00:59:10,042 --> 00:59:16,302
This is roughly $50 billion in 2026 because of-

817
00:59:16,302 --> 00:59:18,942
Okay, so you're about double me.

818
00:59:19,042 --> 00:59:20,942
I said 21 and you said 56.

819
00:59:21,142 --> 00:59:22,822
Well, maybe closer, you're triple.

820
00:59:22,822 --> 00:59:23,302
Okay.

821
00:59:24,042 --> 00:59:30,042
you said tony one yeah i'm about 50. so i'm about 50. about double okay so that that's fair enough

822
00:59:30,042 --> 00:59:35,482
so you got so the only limiting factor like that's what this comes down to now and i wrote a little

823
00:59:35,482 --> 00:59:40,362
article about this it's like so the only limiting factor on the amount of capital they can raise

824
00:59:41,162 --> 00:59:46,122
based on this new model where they're able to issue mstr common at 1xm nav is how much demand

825
00:59:46,122 --> 00:59:51,242
there is for stretch because what we're observing in real time over the past few weeks is that so

826
00:59:51,242 --> 00:59:55,962
long as there's demand for stretch they will sell both the stretch to people and they will expand

827
00:59:55,962 --> 01:00:00,442
their balance sheet to accommodate the stretch on the balance sheet right the stretch liability

828
01:00:00,442 --> 01:00:05,002
so as long as people are going to be buying stretch and i don't see any reason why the demand for an

829
01:00:05,002 --> 01:00:10,922
11 yielding short duration perpetual fixed income product would diminish i think it will only

830
01:00:10,922 --> 01:00:15,722
increase over time there seems to be an unlimited amount of capital that could flow into stretch

831
01:00:16,362 --> 01:00:17,562
Like that's the bull case here.

832
01:00:19,742 --> 01:00:24,842
I think they're going to have to announce an 8282 plan on February 5th.

833
01:00:25,122 --> 01:00:27,182
And let me just get down to these crazy numbers here.

834
01:00:27,242 --> 01:00:27,922
Or something similar.

835
01:00:28,362 --> 01:00:31,222
So this is December of 2035.

836
01:00:32,222 --> 01:00:34,302
My assumed Bitcoin price is 1.5 million.

837
01:00:35,002 --> 01:00:38,462
So that's obviously that's 10 years from now.

838
01:00:38,522 --> 01:00:39,162
That's a long time.

839
01:00:39,162 --> 01:00:46,702
And in this model, I'm saying that strategy has acquired 4.8 million Bitcoins, right?

840
01:00:47,282 --> 01:00:56,142
That is an insane number relative to the circulating supply of Bitcoin, which estimates are around 16.5 million of active coins, right?

841
01:00:57,142 --> 01:01:04,722
I think this strategy model, this exponential growth in both stretch and the underlying MSTR, equity buying Bitcoin,

842
01:01:04,722 --> 01:01:09,322
could be the thing that bootstraps Bitcoin into this kind of exponential territory.

843
01:01:09,862 --> 01:01:13,522
And I think there's a real bull case for Bitcoin being higher than 1.5 billion in 2035

844
01:01:13,522 --> 01:01:20,022
because of the demand stretch creates for Bitcoin. And I think that's kind of my new thinking with

845
01:01:20,022 --> 01:01:25,442
regards to how this market evolves. And if we just continue on this trajectory, you know,

846
01:01:25,442 --> 01:01:35,042
the market caps in 2035 are uh two trillion in prefs two trillion in prefs five trillion

847
01:01:35,042 --> 01:01:41,842
in mstr common are the numbers i get to which are insane right can you imagine we had a trillion

848
01:01:41,842 --> 01:01:50,202
dollar pref market cap like that that's beyond me you know look do i think that's possible sure i

849
01:01:50,202 --> 01:01:58,842
I mean, the shit that I've seen in eight years being on my own Bitcoin standard is crazy.

850
01:01:58,842 --> 01:02:07,662
So, look, I think that what I can tell you is that I'm not betting on the old stuff.

851
01:02:08,462 --> 01:02:11,382
You're not making better than 10% a year.

852
01:02:12,102 --> 01:02:13,702
Not good, right?

853
01:02:14,082 --> 01:02:15,102
And so, stretch.

854
01:02:15,102 --> 01:02:19,942
If you can't out trade 11%, right?

855
01:02:20,062 --> 01:02:21,822
That's the new hurdle rate, right?

856
01:02:21,862 --> 01:02:23,102
And that's paid monthly.

857
01:02:23,802 --> 01:02:24,122
Exactly.

858
01:02:24,402 --> 01:02:24,522
Right.

859
01:02:24,582 --> 01:02:28,542
And the other thing is they now posted on the strategy website,

860
01:02:28,682 --> 01:02:32,682
they just posted each dividend, the date and how much it paid.

861
01:02:33,442 --> 01:02:37,622
And so I was looking at it started like 89 cents, 90 cents, whatever it is.

862
01:02:37,902 --> 01:02:39,742
You're like, oh, it's 95 cents per share.

863
01:02:40,042 --> 01:02:42,702
Yeah, but the share is only a hundred bucks, right?

864
01:02:42,702 --> 01:02:47,402
So I think that's the part where people are not, you just multiply it out by how many shares you have.

865
01:02:47,822 --> 01:02:50,962
So I think that that's the interesting thing.

866
01:02:51,402 --> 01:03:02,582
So anyway, with that said, I hope that I'm right with how many shares, how many Bitcoin strategy gets, because that means the price of Bitcoin goes up.

867
01:03:02,582 --> 01:03:05,102
And I don't think that we know yet.

868
01:03:05,102 --> 01:03:15,342
But the MNAV, I think that once that gets repriced, I think that we could see 1.5, 2x, 3x.

869
01:03:15,522 --> 01:03:20,562
I don't think we go to a crazy multiple, but there's no reason why that can't go higher.

870
01:03:21,002 --> 01:03:25,982
I think that everybody will be gun shy if the multiple goes above 1.5x, right?

871
01:03:26,022 --> 01:03:28,742
Because he'll probably want an ATM and buy more Bitcoin.

872
01:03:29,342 --> 01:03:31,882
But he does have a hard factor here on the converts.

873
01:03:31,882 --> 01:03:38,222
the converts do have maturity dates and conversion prices and from that perspective he does have to

874
01:03:38,222 --> 01:03:42,602
get the stock price out that's well known we've talked about this before it's on their website

875
01:03:42,602 --> 01:03:51,622
they do have a 672 number i believe in 2028 is that a you know a while off sure but um

876
01:03:51,622 --> 01:04:01,122
i'll pull it up real quick here debt yeah so the 672 sorry is converts in uh the maturity date is

877
01:04:01,122 --> 01:04:10,502
December 1st of 2029 of 672. So that stock price, and by the way, if it's a 50 vol stock,

878
01:04:11,002 --> 01:04:17,122
you want the stock to be at 1200 bucks. You don't want it to be, oh, the convert price is 672. Oh,

879
01:04:17,122 --> 01:04:22,522
we got the thing to 673. No, you want to have plenty of buffer in there for it to be

880
01:04:22,522 --> 01:04:27,682
double that in case it melts down a little bit, you know, three months before that happens.

881
01:04:27,682 --> 01:04:31,942
and so i think that's where we see it happening but i think we covered a lot of ground tonight

882
01:04:31,942 --> 01:04:37,482
oh yeah i totally agree you guys want to do final thoughts just on the

883
01:04:37,482 --> 01:04:42,362
broader markets the bickle and credit markets anything else and then sign off for the evening

884
01:04:42,362 --> 01:04:44,662
i guess our stamina is not the same without jeff here

885
01:04:44,662 --> 01:04:54,082
yeah i mean i'll give my final thoughts look uh i think that things have fundamentally changed

886
01:04:54,082 --> 01:04:59,302
on strategy. And it goes back to the three fuel tanks. It's the Bitcoin, it's the prefs, which is

887
01:04:59,302 --> 01:05:04,862
STRC, and it's the cash. And if people are like, whoa, whoa, whoa, you know, Grain or Mike, whatever

888
01:05:04,862 --> 01:05:09,682
the hell your name is, you keep on changing your view on strategy. Like, yeah, because they keep

889
01:05:09,682 --> 01:05:15,382
on doing different stuff. What's the different stuff? December 1st, we found out about $1.4

890
01:05:15,382 --> 01:05:23,402
billion. Now it's $2.25 billion in cash. Seven weeks old. STRC, January 7th, that's when it

891
01:05:23,402 --> 01:05:30,102
maintain the peg, right, of above 100 bucks. So why do I look at things differently? Because the

892
01:05:30,102 --> 01:05:38,142
information is fundamentally changed, right? And I think that's where we are. And I, you know,

893
01:05:38,362 --> 01:05:42,922
look, people are going to, I'll predict the future. I haven't checked on it. But you know,

894
01:05:43,042 --> 01:05:49,882
we're going to go to another government shutdown. Don't tell Congress, right? They kicked the can

895
01:05:49,882 --> 01:05:54,282
down the road. I don't think they fixed that. So anyway, we're going to have the same thing

896
01:05:54,282 --> 01:05:59,982
repeat over again. So I don't, I, so like, do I think that all politicians suck? Yeah, I do. I

897
01:05:59,982 --> 01:06:08,462
agree with you. High five. Anyway, that's my final thought. So yeah, for me, um, you know,

898
01:06:08,462 --> 01:06:14,022
I'm always, I'm always bullish and I think there are tons of reasons to be bullish for 2026,

899
01:06:14,222 --> 01:06:19,342
but in the short term, I'm going to, I'm going to customize this quote to apply to Bitcoin. I heard

900
01:06:19,342 --> 01:06:26,762
somebody in TradFi say it, but there's two kinds of short-term price action predictions

901
01:06:26,762 --> 01:06:28,722
with respect to Bitcoin.

902
01:06:29,162 --> 01:06:33,842
There are those who don't know what the price will do, and there are people who don't know

903
01:06:33,842 --> 01:06:34,662
that they don't know.

904
01:06:35,562 --> 01:06:41,002
So Bitcoin can go up, it can go down, it can do whatever the heck it wants to do, but long

905
01:06:41,002 --> 01:06:46,902
term we know it's going up forever, and everything for 2026 is aligned to be what we had hoped

906
01:06:46,902 --> 01:06:48,242
2025 would be.

907
01:06:49,342 --> 01:06:58,722
Well said, Sol. I totally agree. I think the macro looks fine. If nothing else, it's tough

908
01:06:58,722 --> 01:07:02,522
to say. I think a lot of people are making calls in both directions without full information.

909
01:07:03,182 --> 01:07:06,142
In terms of the Bitcoin credit market, I think Stretch is stronger than ever. I think it's

910
01:07:06,142 --> 01:07:10,902
quite remarkable that the MSTR is traded off 70%, but Stretch is maintaining its peg.

911
01:07:11,382 --> 01:07:15,422
So clearly the people buying these preferred instruments are confident in the collateral

912
01:07:15,422 --> 01:07:20,122
assets that strategy holds on their balance sheet. So that provides kind of reinsurance.

913
01:07:20,122 --> 01:07:24,622
And I think that the model is being proven out in real time that Suresh can, in fact,

914
01:07:24,702 --> 01:07:32,242
be a low volatility, sort of stable yield bearing asset. And I think it's really easy to lose

915
01:07:32,242 --> 01:07:37,762
focus and understand these things compound forever, right? Like these are perpetual preferred

916
01:07:37,762 --> 01:07:42,682
products, the key word being perpetual, and Bitcoin's a perpetual digital store of value.

917
01:07:42,682 --> 01:07:46,622
So, you know, two years, three years, four years, five years, six years.

918
01:07:46,862 --> 01:07:48,162
What's the market cap of these instruments?

919
01:07:48,722 --> 01:07:51,162
What is the bid, the perpetual bid on Bitcoin?

920
01:07:51,702 --> 01:07:55,802
And, you know, how do these markets evolve and how much money flows into them?

921
01:07:55,822 --> 01:07:58,122
So I think it's definitely an interesting thought experiment.

922
01:07:58,282 --> 01:08:00,362
And I'm super excited for the future.

923
01:08:00,762 --> 01:08:01,522
Thanks for watching, guys.

924
01:08:03,902 --> 01:08:05,382
Hey, thanks, everybody, for joining.

925
01:08:05,462 --> 01:08:06,382
Really appreciate it.

926
01:08:06,702 --> 01:08:07,142
Bye, guys.

927
01:08:07,582 --> 01:08:07,922
Good night.

928
01:08:08,062 --> 01:08:08,222
Bye.