Mel, can you feel the fall winds blowing into town?
Just ever so slightly down here in North Carolina,
but it is cooling off a little bit.
Here in the Northeast, we've got a nice brisk chill in the morning,
which I welcome.
I like the fall.
It feels good.
But summer's over.
Summer doldrum's over.
Jackson Hole's over.
We caught up.
I believe in July or late June.
And when we last caught up, we said, hey, let's catch up after Labor Day.
Here we are three days after Labor Day.
And it seems like the world is not any less chaotic than it was the last time we talked.
Maybe in a good way.
You've got a lot of thoughts about what's going on.
Well, I do remember the last time we talked.
Let me just check right now.
It's funny because I think like the closing words were, I'm optimistic.
There's a lot of stuff going on.
There's going to be ups and downs.
But when we talk three months later, we're going to have like S&P 100 somewhere around
63, 6400.
And here we are, S&P 6448.
So, I mean, it's like there's so much noise right now.
But like when you step back, there are these major trends, like whether it's fiat debasement,
whatever it is that are just in place. And people are really going nuts about different things or
Fed independence or long ends are crashing and all this stuff. And it's like at the end of the day,
you know, I'll make the prediction again right now. And three months from now, we'll come back
and it'll be, you know, Bitcoin will be like, I've hit 140 and, you know, SPX will be at 6,800. And,
And these longer term trends are going on and there's so much noise, which is interesting,
and you can profit from it.
But at the end of the day, I think there's just this general fiat debasement trade in
place, which is long gold, long Bitcoin, beneficial for equities.
I think the new Fed dynamic that's going on is actually bullish bonds, which is a little
anti-consensus right now.
And I think that we've got a president and an administration that is hell-bent on creating an economic boom come hell or high water.
He wants housing to soar.
He wants lower rates.
He wants higher equities.
And he is going to push, push, push.
And I think a lot of people are raising their hands in the air saying this is all going to collapse.
And I'm not saying that's not impossible.
but my bet is that it's actually going to happen and that you know a year from now we're going to
be at an S&P over 7,000 we're going to be at Bitcoin over 150 we're going to be at gold over
4,000 we're going to have a 10-year with a three handle on it and the economy is going to be booming
and I mean I just that's what I see coming and we can get into all of the details of how that works
out and all the intrigues. And I'm just really excited to be here and talk about it with you
because I love our conversations. And that's generally where I think see things going. So
short term, there's going to be bumps in the road, but long term, I think the trends continue.
Well, I guess let's break it down piece by piece, starting with the Fed. As I mentioned earlier,
we had Jackson Hole a couple of weeks ago. I think it was the first time that we've seen some
dovish comments come out of Jerome Powell's mouth, uh, really moving from focusing on inflation to
focusing, focusing on the jobs market at the same time in parallel behind the scenes, you have
Trump, uh, firing, uh, a fed, uh, a fed governor, uh, because of some mortgage, uh, fraud that may
have been going on. And I think the thesis that you laid out in December of last year,
when we did predictions for 2025, one of which was that you're going to see this sort of merging
of the Treasury and the Fed. And it seems like the moves that have been made, particularly
the saber rattling with Jerome Powell and Donald Trump and then Trump firing this Fed governor
is signaling that this may be happening in real time. Yeah, exactly. And I think,
on net, if you look at the history of the United States, for the most part, we have not had an
independent central bank. It's kind of an anomaly. And multiple times in the 20th century,
we didn't have an independent central bank. For most of the 19th century, the 1800s,
we did not have a central bank at all. So I think people really need to just chill out about this
whole Fed thing. Like it reminds me of almost talking about Jerome Powell, like a Pope or what
I really think he is, is it's more of a Wizard of Oz character. And the Wizard of Oz is an amazing
allegory. I mean, the yellow brick road is the gold standard. In the book, Dorothy doesn't have
ruby slippers. She has silver slippers and the silver slippers get her home. The modern day
equivalent might be Bitcoin. I mean, like, I guess if L. Frank Baum was writing the Wizard of Oz now,
Dorothy would be wearing orange slippers. No doubt about it. That she thinks, you know,
and it wouldn't be a yellow brick road. She'd be following like the emerald brick road,
you know, the dollar. And then she'd get to Oz and then she'd find out that Jerome Powell and
the Federal Reserve governors are all a bunch of crooks behind the curtain.
And I'm not saying Powell's a crook. I mean, don't get me wrong. I'm not trying to impugn
anyone's character. But what I am saying is that there is a massive political, either
conscious or unconscious bias within the Fed. It is an inherently political organization in the same
way that the Supreme Court is an inherently political organization because they are all
political appointees. I mean, if you take a bunch of politicians and you have them appoint people
into important positions, I mean, it's almost like a transformative law of like geometric,
you know, doing proofs like, you know, like you're going to get politics. And I could guarantee you
that if we were in this situation and the data was coming in the way it was and Kamala Harris
was president, I can guarantee you Lisa Cook would be voting for cuts. I could I mean,
there's no question in my mind. And so there is an inherent bias in the Fed. It's never been
independent. It never will be independent. It is under the control ultimately of the treasury.
It always has been. Whenever the US government needs to do something on monetary policy,
they tell the Fed what to do and the Fed does it. This happened in World War II. It happened in the
50s. It's just the way it works. The central bank is a servant of the government. It was created in
1694, William III, Bank of England, we're going to fund a war with France. It's there to serve
the sovereign. That's what it's there for. And at the end of the day, I don't care if it's AOC
or J.D. Vance as president in 2029, they're going to keep pushing rates lower. Elizabeth Warren was
writing letters to Jerome Powell last year saying, you must lower. This is not political. This isn't
about Trump. This is about the U.S. fiscal situation. We cannot afford to keep rates this
high. Our interest expense is blowing up. We were at 132% debt to GDP in 2020, and our interest
expense as a percent of GDP was 1.49%. We reduced our debt to GDP after the COVID GDP drop ended
to 120%. So we dropped debt to GDP by 12%, and interest expense as a percent of GDP more than
doubled from 1.49% to over 3%. In other words, we're raising these interest rates. We have so
much debt. And this is not only for the United States. This is for Europe. This is for Japan.
This is what you're seeing in England. And all of these central bankers, they're going to get
together in Basel, Switzerland at the Bank for International Settlements every two months like
they always do. And they're going to say, we need to keep rates lower for longer. And the bond market
is starting to sniff that out. And I think we recently had perhaps a peak in the long end for
especially the US and maybe, you know, guilts and booms. But I think interest rates are going down.
And like I said, I think we're going to see a three handle on the 10 year. If not by the end
of the year, early next year. And we're going to have gold up, Bitcoin up, stock market up,
bonds up. Like I'm bullish, everything. Well, I think particularly as it pertains to
treasury yields, that is a bit contrarian, but we were chatting for a bit before we hit record.
And I guess let's just dive into the long end of the yield curve. I'll pull up the 10-year yield,
the 30-year yield, and then the chart that you're focused on right now, which is
the December futures contract for the 30 year.
So as you can see here, getting a 2025 10 year began the year around 4.8.
So currently at 4.19 got the 30 year.
The way this is sharing is a bit awkward, but if we go to the 30 year,
we'll see it's right at 4.87 right now peaked at 5.09 in may of this year and then here's the chart
that you really want to look at which is the december futures contract for the 30 year um
and you're saying that despite what's happening on the yield curve of the 30 year the futures
contract is really where the signal is. Yeah. So for people that don't, you know, trade bonds,
right? I don't want to insult any listeners that this is like 101, but there might be some people
listening that don't understand this. So bonds, when bonds rally, what we mean is their price goes
up, which actually means the yield goes down. So that can be a little confusing. So you have to
kind of wrap your head around that. So if yields go up, price goes down. And the way most people
that are active in trading make bets on the bond market is they do it through futures contracts.
And this contract here, ZBZ25, ZB, that means long bond. Z stands for December. That's the month for
expiration, 25 the year. So this is basically the, it's not necessarily the front month,
but it's the active month. So futures traders tend to pick a contract and then that's the one that's
active and that's where the volume is and liquidity. So right now, if you're a trader
and you're trading the long end of US bonds, you're trading ZBZ25. And if you look at this chart,
It is up and to the right. It's got higher highs and higher lows. And this goes back to May, right? So as you might remember, in the beginning of the year, there was this other big freakout and the U.S. was going to have a list trust moment.
At that point in time, this was not the front month contract, but people were already trading the December contract.
And that was when they took this down below 110 to like 109.
And it's currently at 114.27 on my charts.
I just look to the right of mine.
So we've basically gone up, you know, I don't know, called four or five percent.
In bonds, that's not bad, but it's up again.
It's up and to the right.
It's a bullish chart. And so if you look at absolute yields and you say, oh, well, absolute yields, you know, we're approaching the highs around five.
Yes, that's true. But if you look at the way practitioners playing the long bond traded, you know, it's actually the lows were all the way back in May.
and then we hit a low in July.
And then if you actually drew that line,
you drew Marty based on kind of closing prices
instead of intra,
I mean, you'd see like we touched it to the perfection, right?
Like it basically, we tapped right down to where we,
yeah, look at that.
Yeah.
Go down a little bit more.
Yeah.
Like it runs right through those closes,
which are, you know, where those,
sideways lines are. So like on Tuesday, when everybody was flipping out, I literally was on
Twitter and I was buying TLT calls for like 11 cents, 86 calls. These were, I bought like a
hundred in an account. I forgot I bought about it. I forgot, I forgot I bought it. You know,
I spent like a thousand dollars for me. That's not a big play. I'm like, okay, I'm going to,
I'm going to put a thousand bet down on 186 TLT calls for tomorrow expiry, yesterday expiry.
They're up 700% yesterday. I mean, like it was literally like, and I hadn't forgotten about it.
And then I, cause I trade a lot of accounts and I went into this account. I'm like, oh my God,
why is this account up so much? I'm like, oh yeah, I'm up five grand on my TLT calls that I bet a
grand on yesterday. And it's like people were flipping out about bonds. And I'm like, this is
a bullish chart. This is an up and to the right chart. And Lisa Bromowitz and all these people on
Bloomberg, they're like, oh, my God. And guilts are collapsing. And I'm just so sick of these
talking heads on TV getting everything wrong. Tariffs are going to collapse the stock market.
Inflation is going to go out of control.
And the latest thing that I think is starting to fall apart is these people have been pushing
this narrative that there's no problems in the job market.
So this could be a whole nother switch into a different.
I think there are issues in the job market.
I think that the job market is weaker than people realize.
And this is a big deal.
And I think that we are literally not just going to get five or six cuts.
I think we could get as many as 10 cuts in the next 12 months.
Would that be 10, 25 basis point cuts?
So down to a half percent, down to around 2%?
Yeah.
That's that far?
Yeah.
I pulling it up I trying to pull it up right now But initial jobs claims Jobless claims came out today 237 was the print
Expected was 230,000, so more initial jobless claims than expected.
Continuing claims, a bit lower than expected, but what was the other?
ADP private payrolls.
I think this is the big one, the big miss that people were looking at.
uh 54 000 was the print expected was 68 000 the last was 106k so i think this adp private payrolls
is probably more signal that takes out the government jobs um is well below expectations
and well below the last print now before revisions and yesterday what helped drive that bond move i
think a lot of it was technicals i think i think we're going to bounce on the long end anyways
but but a big driver that moved yesterday was the jolts report which showed that for the first time
in the last four years there are more people seeking a job than there are jobs so if people
remember like there is a point during the pandemic the great resignation people could leave get a job
next week 20 percent more that's gone now um we we were at one point i think like two two and a
half times job openings relative to unemployed. Look, there's a table that I'm going to be
watching very carefully in the next unemployment report, which comes out this Friday. It's table
A7 in the BLS report. And what it is, is it breaks down foreign born versus native born workers.
And this has nothing to do with politics or anything like that. I just personally believe
that they're on the foreign born side, there's a lot of noise right now, which is a lot of people
who are pouring across the border, filling those types of jobs that foreign born do,
were flooding the market. And so you had a high, a relatively high unemployment rate of foreign
born. And this is how the BOS breaks it down. If nobody's ever like looked up the PDF report that
the BLS puts out, it's called the Employment Situation Report. They have a table A7, and it
doesn't break down illegal versus legal or anything like that. It breaks down foreign-born versus
native-born. If you look at foreign-born, because the border's been closed, the unemployment rate
has been plummeting on foreign-born. If you look at native-born, the unemployment rate
has been really going up. And those two have been canceling themselves out. And so what you're
seeing when they report the overall unemployment rate is, you know, 4.2, you know, pay no attention
to the man behind the curtain. There's nothing to see here. But the truth of the matter is,
is that I think looking at the native born is the way to look at it because it cancels out all the
noise in the foreign born. It takes away the noise that's going on with visas. It takes away the noise
with immigration. If you want to read on what's the real unemployment report, a rate on Friday,
go to the BLS, pull up the report, scroll down to table A7, look at the native-born unemployment
and see what's happening. And it's going up. It was like 3.8 or something like that, 3.7,
you know, a year or two ago. And now it's like 4.8. Like it's going up significantly.
and we're seeing young people having a harder time get a job and where we're really seeing the
unemployment because they also break down foreign born native born and then they do men versus women
and i i love to focus on native born women because they tend to be more college educated they tend to
be more in non-manufacturing non-construction so they're a better read on the white collar
The unemployment rate of native-born women is skyrocketing in this country.
And so what that's telling me, and you see it in anecdotal data about layoffs and everything
else and AI efficiencies.
Jordy Visser does a great job showing like MAG-7 is like growing revenues and earnings
like crazy and they're not adding any headcount.
Like we have so many deflationary forces going on right now that I think eventually once
Trump gets his Fed board in place, like I said, eight to 10 cuts in the next 12 months. I mean,
I don't think anybody's saying that, but I pride myself on making outrageous calls that come true,
like in December saying emerging markets were going to crush, you know, SPY, EEM was going to
crush SPY. Right now, SPY is up about 10%, emerging markets are up over 20%. You know,
I called for a 15, 20% crash in the first half of the year.
I was going to have a quick rebound to 7,000.
I called for the DXY to crash below 100 very quick.
I mean, every call I've made, and I made this kind of tongue-in-cheek post on Twitter the
other day, calling myself the goat.
I'm the best macro strategist on Twitter.
It was a total kind of joke.
But the point was to say, look, some of these calls are really dang good.
and and not many people know me because I didn't do anything until like a year ago when my book
got published so I'm kind of out of nowhere I don't have like a 10-year history I was never on
social media my whole life I never had a Facebook account Twitter account I mean I I actually hated
social media I didn't want to be a part of it it was like not part of my ethos I was almost a
troglodyte and and and then I I wrote a book and my publisher's like you should get on social media
And now I love coming on podcasts like this and sharing my views.
But all I am, I don't have a research firm.
I don't have clients.
I'm an investor.
Like I invest my own capital that I earned throughout my career.
Being a fintech executive, I'm doing very well.
And I like to share my views and help people.
And I'll tell you, some of these calls are really good.
And what what hurts me a lot is like there's just such this consensus out there that has been leading people astray, telling people markets are collapsing, bonds are collapsing.
You know, the truth of the matter is, is we've been in one of the greatest investment environments of my lifetime to be long.
And a lot of people have been scared because people feed a bunch of, you know, doom and gloom bullshit.
yeah it's uh and it's easy to see how it we touched on this last time we talked to it because
you have what's happening in financial markets and you have the real economy and as you mentioned
with unemployment it seems like many people are hurting and i mean that i'm sure you've seen the
memes of not only the memes tiktok videos of people in their car complaining about grocery
bills uh i think millennials younger millennials gen z coming to the realization that real estate
may be running away from them and i think a lot of those anecdotes and um the anecdotal data points
really drive this this dread and then the overarching emergence of ai uh everybody becoming
fearful that it's coming for their jobs but you mentioned jordy visser quite on the show a couple
months ago too and i think that i think that's something that we just have to deal with as
individuals, as a society, as an economy, is that we are living through this incredible
inflection point in many different ways with the multipolar world becoming more multipolar.
You have that crisis here or that situation here in the United States,
geopolitical strife globally with wars and all that. And then you throw AI in the mix. I think
people are just completely uncertain about what's going to happen in the future,
particularly with their jobs.
And so I guess they have this perceived fear that I'm going to lose my job
and I'm not going to have the ability to buy a house that the market has to tank.
No, I mean, it's look, I mean, there's some people talk about the fourth turning.
People talk about inflection points.
I mean, we're there.
I mean, look, in the 1860s, you had had a run up in essentially wealth inequality.
And you get these situations periodically throughout history.
And frankly, the way a lot of it gets resolved is you cut down on resource demand by killing people, right?
So you have a massive war in Europe and you kill tens of millions of people.
All of a sudden, that intense competition for resources gets a lot easier.
Right. So like this is not what we want to head into.
We don't want to have a situation where just this week we had Xi meeting with Putin, meeting with Kim Jong-un, you know, in China and Modi with India.
Like, like, we don't want to go down that path.
Like, like we've done it too many times as a species where you get one side, you get
the other side, they start getting competitive.
And then the resolution is essentially everybody goes batshit crazy and starts killing each
other.
Like, that's not a good outcome.
Right.
And so I think it's important to talk about it.
And I think social media, I think shows like this, like the population, like it's educated,
it's global.
And I think we have a shot of actually avoiding World War III.
I think some people are like, oh, this is inevitable.
We're going to have like a brick side begin to build up and it's going to be, you know,
the cornerstone will be Russia, India, China, and then there'll be the US.
Eventually, Western Europe will come onto our side because they realize that's where
they need to be.
Like, I really hope that's not the case because in history, it's surprising how stuff actually
like is completely clear to everybody.
Like in the 1930s, it was very clear Japan was building up their military empire.
Germany was building up.
It was very clear, like we were getting ready to head towards something.
And then we went over the cliff.
And I think right now we're in a similar situation where like China is building all these ships and new submarines and there's these new alliances.
And it's like, look, guys, you know, open your eyes.
We're heading towards something here, which is not a pretty picture.
so let's let's figure out a way not to kill each other you know what i mean
yeah i completely know what you mean that's why i wanted to bring this up outside of the
military parade that happened earlier this week i think um
like obviously you have the geopolitics and the kinetic side of things but then going back to the
monetary. That's why, as you're describing that, I want to bring up this chart, which is
what I wrote about last night in my newsletter. And I hadn't seen this chart until yesterday.
It sort of blew my mind. And so what we're looking at is the stock level of gold in China
on warrant. For those who are unfamiliar, what it means to be on warrant, essentially
the PBOC or banks at the behest of the CCP, financial institutions, the BS of the CCP,
have gone to the Shanghai Gold Vaults and basically registered their gold at the Shanghai Gold Exchange
be used as collateral or to provide liquidity to gold markets to make the Shanghai Gold Exchange more prominent in gold markets.
And I'm looking at this saying they're definitely prepping for something.
There's been these, we've all known, I've written about it, and I think people have been observing it for the last 15 years.
China's certainly been building up gold inventories at the PBOC.
And I think what we're seeing now is they're actually putting those inventories to work by registering them at the Shanghai Gold Exchange.
Well, here's the thing.
And forgive me for one second, but.
We have done so many shows.
I've never been a shameless promoter of my book, Quaz.
But this is so apropos.
So what you're showing there is you're showing like around 2,500 kilograms up to like 30 plus, right?
In gold.
In Quaz, this is like part one of the book, All That Glitters, I have an introduction.
And this is what it says.
According to official statistics, the largest holder of gold in the world is the United States at over 8,000 metric tons.
However, according to unofficial calculation, China holds not the 2,000 tons publicly reported, but closer to 32,000 tons.
As of 2007, China has replaced South Africa as the world's largest producer of gold.
I wrote that in 2023.
This was out there in gold circles.
people knew that China had so much more gold than they were reporting.
And they're using the Shanghai exchange.
Like this is what's going on.
Like China, the BRICS, I mean, they've obviously decided that holding U.S. treasuries is not
where they want to be.
Now, I want to counter this because the narrative is like, oh, my God, China doesn't want to
have treasuries.
That's a big problem.
It's not. Foreign holders of treasuries are like this. OK, the United States owns treasuries, mutual funds, own treasuries, pension funds, insurance funds, the Federal Reserve, intergovernmental debt.
if you look at the percentage, the actual percentage of U.S. treasuries are $36, $37 trillion outstanding
that's held by foreign governments, it's 20, 25% tops. The vast majority of U.S. treasuries are held
by U.S. individuals, institutions, the government. Okay. China owns like $700, $800 billion, right?
I mean, the Federal Reserve has rolled off over $2 trillion in treasuries. We could absorb all of
China and Russia's and we could absorb all those treasuries easily. So a lot of people talk about,
oh, well, China's going to sell. And I'll tell you another thing. If you look at the foreign
tick data of who owns treasuries, you see this really big, weird thing, which is like Cayman
Islands own tons of treasury. A lot of people assume two things. One, they think it's hedge
funds that are located there offshore. The other thing they assume is, and I've talked about this
before, is that the Kingdom of Saudi Arabia did not want everybody to know exactly how
much treasuries they held They worried about being deposed And so the King of Saudi Arabia put a lot of his treasuries in the Caymans to essentially keep that shielded should anything happen to his family and they need to go into exile
I think there's a third reason why the Caymans might own a lot of treasuries.
And I think it could be CIA front companies.
You know, in other words, Treasury, like I have a saying, all is fair in love, war and U.S. Treasury management.
So like like I wouldn't be surprised if there's a CIA front as hedge funds in the Caymans that they see treasuries get to a level they don't like and they buy it.
And it's like, you know, this is the CIA.
I mean, I mean, this is the federal government.
This is national security.
So this is all fiat.
This is not gold. There's no way to check it. Like if the president authorized the Department of Defense to do a secret DOD or CIA operation, feed in through front banks, you know, bogus balances on balance sheets.
So it looks like you have the currency in your zeros and ones on the computer and go out and support the treasury market.
Like who's to stop them from doing that?
So, I mean, I think I think there's so much stuff that goes on in finance that when people start predicting that we're heading for a collapse and yields are going to explode.
It's like, don't you think that maybe the CIA might have something to say about yields exploding?
Don't you think that's possible?
Or are you so naive that you think the U.S. government is just going to let the bond market trade freely?
Yeah.
Well, I mean, that's a great point.
And you've got to think the Pentagon's war gaming national security.
Part of that national security is financial security.
like going back to this chart and really pulling on the thread of the sort of fork in the road that
you were describing of we could go towards some very volatile kinetic war economic war whatever
may be or avoid world war three maybe that's what china is doing here just signaling like hey we
have the gold we're going to exert our influence over spot and futures gold markets by registering
our bullion at this Shanghai gold exchange and basically just as like a geopolitical signal,
like, hey, let's get to the table and negotiate like peaceful trade deals or something like that.
Yeah. I mean, I mean, what this is, and I credit guys like Luke Groman for being way ahead on this
is is like China says, OK, to Saudi Arabia, we want to buy gold. You want to buy some of our
we want to buy oil. You want to buy some of our stuff, but they have a closed capital account
on the yuan, their currency. So what they say is what we're going to do is we're going to buy,
let's say, $100 billion worth of oil. We'll send you $100 billion worth of yuan.
Now, over the course of the next year, you might want to buy $60 billion or $60 billion yuan or
whatever from China and you're left with these yuan that you don't want. What you can do is you
can go to the Shanghai Gold Exchange and you can take those yuan and you can get bullion and you
can bring it back to Riyadh. And this is what we did with Saudi Arabia in the 70s. Before 71,
we used to fly jet planes full of gold bullion into Riyadh every month to pay for our oil.
Like the Saudis wanted the gold, right?
And the USD was convertible by foreign central banks at $35 an ounce.
So we used to fly gold into Riyadh.
And now I think the Chinese are flying gold into Riyadh.
They're just not doing it through Beijing.
They're doing it through the Shanghai Gold Exchange.
Yeah.
Yeah, and then you have like, I told you before, my focus has been on China the last couple
days.
I'm actually recording with Peter Alexander tomorrow.
He's been living in China for a few decades and he's a Westerner living in China.
And his, I don't even know it's theory, he's just telling people that the whole perception of China, how it operates and what their ultimate goals are is completely wrong, particularly in Western circles with the pundits.
And so excited for that conversation.
But bringing it back.
what's the thrust of how the pundits are wrong um mainly just a misunderstanding of cultural
dynamics like what um what china's ultimate goal is like viewing china as a nation state um sort of
the show notes he sent me is like we're viewing china as a nation state when it's a society and
when you're trying to work within this western mental framework of nation state um sort of
negotiations. It's like, that's not how China abuse things. And I think that's how we end up
in these situations where it seems like we're speaking past each other. Um, yeah, many times.
I agree. And I do think there's a difference in China. I think China,
there is this Western Eastern divide. You know, I majored in philosophy as an undergrad and, you
know, their Western philosophy has a certain thrust to it. And Eastern philosophy is different.
The Eastern mind is different and it's sophisticated in its own way, as is the Western mind.
But it almost has different first principles.
And so sometimes when Western leaders look at China and try to analyze it through their
first principles, they kind of miss the boat because it's a little bit.
A lot of people think the Great Wall of China was built to keep invaders out.
It was built to keep the population in.
So China historically is actually, you know, essentially a fiefdom of dominated groups.
So it's not like one people ethnically.
And everybody knows there's two major languages, you know, Mandarin.
Like essentially there's an elite in China that has dominated different areas and brought them in under their empire.
and historically China has wanted to keep complete dominance over whatever that empire is.
And that was why they built the Great Wall was to say, look, we're really not interested in the
outside world. We want to have complete dominion over these internal groups that we dominate.
And so it is a little bit of a different mindset. It's not kind of like a British empire type
mindset. So I think that'll be a fascinating conversation I'd love to hear. I'm not a China
expert, but I know a little bit about China's history and how that country kind of came to be
and what it is. They also love precious metals, just like India does. And they love silver too.
At one point, silver traded one for one. There's this huge arbitrage, silver gold,
between like the Portuguese and Spanish, Europe, China. Like, you know, they'd mine silver in South
America, ship it to China, get it one for one for gold, move it back to South America and then back
over to Europe. And, you know, precious metals, I mean, they've just been a part of this for so
long. And it's like, I mean, people got to realize like this whole fiat thing, I was born in 75,
like 71 is when we went off of gold, right? Like, so basically you have from like,
long before Jesus Christ existed until a couple of years before I was born, gold and silver.
And then you have this short little period, essentially my lifespan, where gold and silver
aren't money. And what you're seeing is that gold and silver are money again. And that's just
happening. And that's why gold is going to blow out. I saw like somebody on CNBC yesterday showing
a chart, like maybe gold's hitting a peak because the copper gold ratio. Look, gold's going to go
up relative to every other commodity. Gold's going to go up relative to copper. It's going to go up
of the oil. It's going to go up to everything because it's becoming money again. Gold should
be the same as platinum. Gold should be less than platinum. Platinum is a rarer metal. Platinum is,
you know, a higher, denser metal. But gold is the monetary metal. So when people talk about Bitcoin,
and this is where gold and Bitcoin are the exact same, it's about the belief in a sense that this
his money. Because it's not like gold is some special metal. Like platinum, like I said,
it's less abundant in the earth's crust. There's been less platinum ever mined. Platinum is much
more rare than gold, yet it trades at less than half of the value. Most of gold's value
is this monetary premium that people assign to it. Bitcoin is the new gold in that sense,
But gold with a different set of stripes, different drivers of, you know, movements and different things.
It's kind of a next gen gold that, you know, could very well be in place for another thousand years.
I mean, we will see.
But I think that there's only two.
In my opinion, there's only two stores of value right now.
There's gold and there's Bitcoin.
And that's it.
And Ether can make its moves.
And, you know, but Ether ultimately, ultimately, the case for Ether, even that Tom Lee makes, is this is a utilitarian case that Ether is going to drive stuff.
You know, maybe it's Solana drives stuff better.
And then Ether is done.
The beauty of Bitcoin, the beauty of gold is the case is simply that this is money.
This is what is value.
It's not about how can we power the best, quickest transaction mechanisms.
I'd love to see Bitcoin more involved in transaction mechanisms, but that's not what's driving Bitcoin's value.
What's driving Bitcoin's value is it's the first, the ultimate, the decentralized, the cryptocurrency that represents store value in the same way that gold is the precious metal, even though it's less precious than platinum.
even though you know silver is more ubiquitous and easier to transact like all these things are
there to threaten gold but gold is gold bitcoin's bitcoin they're the two stores of value in the long
run like that's where you want to be that's the anchor of my portfolio and then i trade around it
with all these other viewpoints but like nothing's going to change to the fiat debasement narrative
yeah i think something you said there is very prescient something particularly americans
overlook is that china's been around for millennia the united states is a country we're about to have
our 250th birthday next year i think and not that i'm a china expert by any means but
where i can tell their culture as we described is very different and very seeped in like history
dynastic history specifically they think in centuries not quarters like we do over here
in the united states and so your point that china is just reverting to a monetary standard that
existed for most of its existence just makes sense yeah and i mean china i mean they have
what they call the century of humiliation which is essentially where they were dominated by the
british the opium i mean all this stuff they don't want to go back there i think you can look at
Germany and you see how Germany out of all major European countries, they have the lowest debt to
GDP. Like the German people are scarred by the Weimar Republic and the hyperinflation.
The Chinese people are scarred by this humiliation of, you know, being dominated by
some small island off the coast of Europe called Britain. And so they're scarred by that. And their
main thing is like, we're never going to let this happen again. And I actually think that the main
driver of Chinese military buildup is like, they just want to dominate their region. The thing is,
is that the United States does not want China to be an Asian hegemon. Like, after World War II,
we defeated the Japanese, we were the Asian hegemon, just like we were and still are the
European hegemon in charge of it, you know?
And so it took us a while in Europe because we had to overcome the Soviet
Union, but eventually we got there.
And in Asia, we've been the hegemon since 1945, since we dropped the bombs.
So we've been in charge of Asia.
And like, I think ultimately Americans can get comfortable with living in a
peaceful world, having a higher standard of living, but this might be heresy.
like let China be the Asian hegemon, you know, like, like, why do we need to control Asia? Like,
like, why do we need to be the dominant force in the Philippines and Indonesia? Like,
I know there are corporate interests that want that. But me as a personal, as an American,
like, I don't want that. I don't feel I need that. I don't feel I need America to be the Asian
hegemon. And I don't think that there's any threat to the United States from China. I don't think
like Red Dawn is going to happen, right? And then they're going to send over troops and invade,
you know, Tacoma. Like, we've got guns in every house. We've got like 10X nuclear weapons that
China has. Like, we've got an amazing Navy. Like, China's not going to invade and take over the
United States and neither is Russia. So who cares? Let Russia run Europe. What it threatens is the
the corporate elites. And I think like, to me, like, let's focus on America. Let's focus on
the Western Hemisphere. Let's actually bring more of these Latin countries, which Americans seem to
get along great with Latinos. I mean, I never mentioned this before, but personally, I speak
Spanish. My wife is a Colombian immigrant. I love South America. I love Latinos. I love Latin America.
Like, let's just make Western Hemisphere great again and let Russia worry and Britain and Germany and let China deal with Indonesia and Thailand.
I mean, who gives a damn?
Let's build up some Western Hemisphere, like, superpower that we have all the resources.
Europe and Asia are overcrowded.
We've got oil.
We've got gas.
Like, we've got people.
We've got everything that we need here.
Let forget about these old world Let forget about Europe Let forget about Asia And let just make the Americas great again would be my pitch if I was a politician And I would be like you know what I really don care what happens in Europe You know Germany Starmer you guys want to fight Russia Go ahead Ukraine you want to collapse Go ahead
China, like let's give up this American global empire dream because what we can do is we
can make the average life for the average American a lot better if we just focus on
making what we have here work a lot better.
and I don't think that's insane or contrarian at all I think that is what people MAGA specifically
voted for last November I mean that's a make America great again it's like let's focus on
the homeland and making sure that the average American has a higher quality of life because
it's certainly been on the the decline for for many decades now and I don't think that's insane
at all and it's something that i would like to see too like why do we need to be the global hegemon
it seems like in this state it's steve state foreign policy people at the state department
council foreign relations well at the end of the day it comes back to just simple information
systems and scaling like things you just can't you can't organize and coordinate things at that
scale it's literally impossible it's going to collapse in and of itself and it seems like that
may be happening and tying up this conversation on china and put up the uh gold on warrant chart
seems like they're making moves there to assert themselves like hey we have the gold we're going
to use it in in commerce and international trade um through the shanghai gold exchange but then you
have on the tech side like open source ai i think they're signaling over the last year specifically
like, hey, we can compete at the tech level now, too, at the software level with these open source models and really throw a wrench in the American Western sort of AI dominant players plans by launching these open source models that completely work their walled garden closed source models.
And I think one way to read both those things, the gold on war and sort of launching deep seek and investing heavily in tech advancement is, hey, we're here to compete and not necessarily in a nefarious way, but like, let's just build things and cooperate with each other.
Let us dominate our part of the world or steward our part of the world.
I think that's a better word.
And you guys steward your part of the world and let's engage in trade when it makes sense.
Yeah, no, definitely.
And I think, you know, there was a there's a guy, Brent Johnson, who's known for his like dollar milkshake theory.
And I saw something, you know, he was talking about the other day.
And it's just basically like, you know, we are in the midst of a little bit of a fourth turning.
And I don't think that we need to kind of go over the edge.
But what he said was a lot of people think the fourth turning means we're going to turn the chapter and we're going to break through to something new.
And he said his dark fear is we're going to break through to something worse.
I don't know if it's like a fascism, authoritarianism, whatever.
But essentially, I think we're at a pivotal point where it's like, do we want to essentially
go down a path where America tries with 330 million people to desperately hold on to some
sort of global hegemony over 7 billion that will, in my opinion, and I think this was
Brent's worry, could lead to an authoritarian or basically it was equating the collapse of
the Roman Republic that was then replaced by the Roman Empire, right?
So for people that don't know, like before Julius Caesar, like Roman was a republic,
it was run by the Senate, and eventually it was run by an emperor.
And it lasted for like 400 years, you know?
So as a whole, it wasn't a short time.
And then maybe America could be the republic is falling and we're heading into a period
of empire.
And that's what I think people, the narrative is on the left.
Like Donald Trump's the beginning of this.
I think that's bullshit.
I don't think that's going to happen.
That was the same narrative, by the way, in the 1830s with Andrew Jackson.
Andrew Jackson was the country's first populist president.
He was populist or he's president, seventh president in the 1830s, had a huge fight with
the nation's central bank at the time, which is called the second bank of the United States.
His whole election, everything was dominated by a fight between Andrew Jackson and the central bank.
Andrew Jackson hated the central bank. It was run by a guy named Nicholas Biddle.
Jackson called him Tsar Nicholas because he lorded over interest rates. And Jackson said,
you're keeping interest rates too high. You're killing small business. You need to lower interest
rates and I'm going to get rid of you as a central bank. And because they had a 20 year charter
and that charter was not up until after Jackson's first term. Jackson's main political appointment,
main political enemy was a guy named Henry Clay in the U.S. Senate. Henry Clay said, you know what,
we're going to ruin Jackson. We're going to pass an amendment, a bill that renews the central bank
charter for another 20 years. If Jackson vetoes it, he's going to be dead. The Senate, which was
opposition controlled, as was the House, they pass a bill, new 20-year charter for the central bank.
They send it to Jackson's desk. Jackson vetoed it. Clay thinks, okay, we got him. He just vetoed
the central bank economy. It's going to collapse. We got him. People loved it, right? The people
wanted the central bank gone and the central bank was gone and Jackson was reelected. So these types
of things have happened many times in American history. And ultimately what happened was there
was economic difficulties after Jackson got rid of the second central bank, but state banks took
it up and it became more decentralized. And then we had a boom period. So there was no need to have
a central bank and there is no need to have a central bank. And in any discussion that there's
like, you know, oh, if you don't have an independent central bank, you can't have an efficient economy.
Well, the second largest economy in the world is China.
And by statute in Chinese law, the head of the PBOC reports to Xi Jinping.
So the second largest economy in the world has absolutely no independence.
Anybody that comes on CNBC or Bloomberg and tells you that if you don't have an independent central bank, you're doomed as a national economy is basically full of shit.
the second largest economy in the world is china no independence yeah it is it isn't saying that
that has been sort of psyoped into the mainstream acceptance that you that we need yeah it's just
it's all bs man i listen to it all day and i literally am like these people are nuts like
These people are just, they're such a propaganda machine.
It's ridiculous.
I mean, and I'm not saying they're even doing it consciously.
I'm not here to impugn people's characters.
I think that there is something embedded in the American psyche.
Maybe it's a non-understanding of history.
Maybe people think that the Federal Reserve existed since 1776 and has always been there.
And that's just the way that we need to be.
But we have a history of an evolving.
You know, in the 1970s, we did Humphrey Hawkins, and we literally passed a bill where we told the Fed what to do.
And we said, here's your target, 3% unemployment, 3% inflation.
The only inflation target Congress and the president have ever given to the Fed is 3%.
And within that bill, they said, if they come in conflict and you're struggling to get
unemployment down to 3%, disregard your inflation mandate and focus on employment.
And that was in the bill.
It was the 1978 Economic Growth Act or some name commonly known as Humphrey Hawkins.
People can look at my expos.
That's what Congress said.
3% unemployment, 3% inflation.
if they come in conflict, focus on unemployment. And it was put into law, but the problem was,
was they put a five-year sunset period on it so that that's gone. And then all of a sudden the
Fed says, oh, well, the Bank of New Zealand said 2% is the right inflation target, so we're going
to do that. Well, the last time Congress gave the Fed a mandate, it was 3% unemployment,
3% inflation, come in conflict, go with reducing unemployment. That's what the people have said.
that's democracy it's like time it's a flat circle because it's not explicit there's been no
their congressional act passed to mandate this but i think that implicitly behind the scenes is what
trump has been trying to do too late pal um not worried about inflation more worried about the
job market and then in jackson hole that was a big pivot from pal was sort of explicitly saying
um we're not going to worry about inflation as much as we are employment now
Matt, we need to worry about employment. I mean, what we need to do right now is like, and I think this is going to happen, is unemployment is weakening. We're recording this on Thursday at 10. I have no idea what the employment report is going to be tomorrow morning. It could surprise us all and be 200,000. I don't know.
the longer term trend in the data is there's some weakening in the unemployment, right?
And if you have that weak thing, like you're not going to get systemic inflation. Tariffs are not
inflation. Milton Friedman said inflation is always and everywhere a monetary phenomenon.
You know what tariffs are? They're baking into the price index as a tax. It's like,
how could you think that if a tire costs $100 and then next month that tire actually costs
95, but there's a 15% tax. So it's actually 110 to the consumer that tire prices went up.
That's not inflation. It's a one-time price increase. And these things like CPI and PPI,
they're not inflation reports. It's not consumer price inflation. The name of CPI is consumer price
index. It's an index of prices. And if prices go up because there's a tariff, which is basically
an embedded tax, that's not monetary inflation. I mean, Milton Friedman, no free market economist
is going to tell you that if the United States throws a 15% tax on tires and the price of tires
goes up, we're experiencing inflation. We're experiencing a one-time increase. This is what
Waller says. And all this junk from Powell, which is totally political because literally he comes out
in September last year, cut rate 50 basis points, October, cut rate 25, December, post-election,
we're cutting 25 but here's the message to the market we're done market tanks on december 18th
2024 three percent something like that when powell came out i mean it looks so political
whether it is or not i mean that just looks so political like the elections in november
he cuts 50 in september the next month in october he cuts 25 the next month in december almost to
kind of conceal the fact that he's political. He's like, I'm doing 25, but I'm coming out on
this presser hawkish as hell, market tanks. And he doesn't cut since then. I mean, this discussion
that the Fed is some independent, I mean, I think it's ridiculous. I think Powell, like people look
at him and I understand he looks like your nice grandpa. He looks like he's very focused on things,
but he's just not acting that way. He said last year, I'm data dependent. All the data was coming
in and he's like, I'm going to focus on that. Then all of a sudden Trump gets in office and he's like,
all the data is saying we should cut, but I'm forecasting that we're going to get inflation
in coming months because of tariffs. So therefore I'm not. No, if it wasn't for tariffs, I'd be
cutting. So now all of a sudden I'm not data dependent. Now all of a sudden I'm a great
forecaster. I'm the Wizard of Oz. I know that inflation is coming. Everything's telling me in
the data to cut, but I'm not because I think inflation, it's all bullshit. And people that
want to try to defend Lisa Cook, if she committed mortgage fraud, I'm sorry. I own investment houses.
You know damn well when you get a mortgage, what you're declaring that as. And you know,
you get a much better mortgage, a lower down payment, if you say it's a primary residence.
If she did that two or three times, she needs to be gone and she will be gone.
If Lisa Cook is still on the board of governors a year from now, I mean, I'll shave my head.
Well, whether or not she should be there in the first place was a whole other discussion.
I think the sluice did a lot of digging and it doesn't seem like her resume is as stellar as it may need to be if you're going to be a Federal Reserve board governor.
Well, look, now we start to get into all kinds of other stuff about Biden and what he did and how he literally had lists that were restricted to black women for the Supreme Court, for the federal.
I did this gets in a whole other political stuff. But like, regardless of all that, if she lied on her mortgages and she's literally on the board of governors of the largest bank regulator in the United States and people are saying.
this shouldn't be happening. I mean, she needs to be gone. I mean, there's no question about it.
And I'll tell you what, if she's not gone, and we'll see what the courts say,
you know, they make this point that if Powell doesn't do something about it,
that he could be fired for cause. And I think that there's a part of the Trump administration,
this is another kind of contrarian view. There's a part of the Trump administration that wants to
ruin Fed independence, that wants to just expose them as this big political organization because
they don't want to deal with them anymore. Other people have talked about this too, Darius Dale,
Brent Johnson, like emerging of Fed and Treasury. I've been talking about it for over a year.
Like this is the ultimate goal. This is going back to the wartime footing because in my mind,
Trump sees us on a wartime footing. He sees us on a wartime footing with China. It's in my book
I say it's not a cold war, it's a gold war.
And I think that we're on this wartime footing economically with the other major powers.
And I think any time in history where they're talking about Abraham Lincoln, George Washington, Ulysses S. Grant, FDR, Democrat, Republican, Whig, whatever,
when presidents feel they're in a wartime footing and national defense is at stake, they will do whatever is necessary.
Andrew Jackson, when he was fighting the central bank, the Supreme Court came out against it and said, Andrew Jackson's response, well, the Supreme Court has ruled. Let them see if they can enforce it.
And so this is the history in the United States. The executive has immense power. This is what Steve Bannon talks about, where we're heading towards a constitutional crisis, because there is an element in the MAGA party that truly believes the executive has immense power.
The executive is the only person in the Constitution that is named.
The president is the executive.
And Lincoln did this.
All these other presidents did it.
And so there's a lot of American historical precedent for incredible presidential power.
And a lot of people feel Trump is looking to push these boundaries.
And they're going to be national garden cities.
And this is what we talked about a year ago.
I said markets are not going to like everything that Trump does.
I said, Trump's going to be more extreme than markets realize.
And so just to bring this all back to the markets, I do think that there's potential
for volatility and big drops and that the Trump administration could pull some stuff
that people think they wouldn't dare.
And I think they will dare.
Like, I think there's some crazy stuff these guys could pull in the next three years.
What are a couple examples or one example?
Well, OK.
maybe things don't work out the way they want Lisa Cook,
he goes after Jerome Powell.
Maybe with the National Guard in Chicago,
he starts having pushback on that
and starts deploying the military in a larger way nationwide.
When it comes to terrorists, we've seen him go big,
but then back off.
I think on the side of the Federal Reserve and the essentially the monetary control, if he makes an attack at Jerome Powell, perhaps purposely, even before his term is up, because Jerome Powell holds a Trump card and Trump doesn't like that.
Jerome Powell's Trump card is that his term as governor is not up until 2028.
And so Jerome Powell can threaten Trump and say, if you keep pushing so hard against the Federal Reserve, I'm not going to resign when my term is governed as chair is up and you're not going to be able to replace me.
And there's only one other Federal Reserve chairman.
Who did not resign after his term.
So what happens is, is people get appointed governors.
then they get appointed chair. Their chair terms end before their governor terms. Governor terms
are 14 years. They're long terms. And so Powell's term as a governor goes until 2028, to like the
end of the Trump presidency. So he doesn't have to leave the board of governors in May. He could
say, I'm going to stay. And this could turn into a huge fight where basically Trump says,
okay, Jerome, you want to stay? I'm going to fire you from the Board of Governors because you let
Lisa Cook continue to have access to the Eccles building. And that was my point. The only other
Fed chairman who stayed on as governor after he lost his chairmanship was Eccles, which is the
name of the headquarters building that is in the news these days regarding the Federal Reserve.
So I think we could have like really like out and out dogfights at the Federal Reserve,
like governors back and forth, fights over presidents, like just turn it into a clown show
and essentially ruin the reputation. And this is, I think, Mohammed Al-Aryan's point where he says,
Jerome, just resign. Because if you keep trying to fight Trump, he's not going to back down.
And what you're going to wind up doing is you're actually going to be wind up destroying the Fed's
integrity. There were people that know Mohammed Al-Aryan, famous analyst. He basically came out
and said, Jerome Powell, you should resign because if you keep trying to, you know, stay
independent and fight Trump, like you're only going to degrade the Fed's independence.
And I think a part of the Trump administration wants to degrade Fed independence.
Yeah, I think that's pretty obvious.
And one person we haven't mentioned yet, but we should probably touch on is Scott Bessent.
What do you think?
He's the key.
Yeah, he's the key.
I mean, it was three months ago.
I said, come with the hour, come with the man.
I said Scott Besson is and he totally took over from Lutnik and Navarro on the tariff stuff and Trump really trusts him.
I think Trump would love to appoint him as Fed chair, but I think he wants to stay in Treasury.
I think there's even a small chance that he appoints him as Fed chair, but does not remove him from Treasury, which would be the true merge.
Right. Like like let's say that this gets so crazy between the battle between the administration, like an Andrew Jackson type battle, like it was between Tsar Nicholas Biddle at the Second Bank of the United States.
And they called him King Andrew. So it was the same stuff where where the the opposition called the president a king.
They called him King Andrew, Andrew Jackson.
So if we get back into that type of a situation, an 1830s type situation, yeah, I mean, Besson
is, to me, he has this unique ability to be firm with kind of MAGA policies, but not
come off as a jerk, not come off as insensitive, not come off as bombastic.
I think a lot of Trump's lieutenants, the mistake they make is they think that if they
act like Trump, Trump will respect them. I don't think Trump wants people to act like Trump. I
think Trump wants people to get results. Besant gets results. Navarro and Lutnik come out there
and they talk bombastically like Trump does, but they don't get results. They just hurt the matter.
Besant comes out there. He's very considered. He's well thought. He understands markets.
And he's running the show. So Besant is extremely important. And I think the Treasury
is with the treasury buyback programs are increasing.
The treasury has control over the dollar.
They have different funds available to them explicitly.
They might have hidden funds in the Caymans,
as we talked about earlier.
I think the treasury is going to continue
to exert their influence
because one last thing,
and I know I'm rambling a little,
but I remember seeing a Scott Besson interview
right after he got sworn in with Brett Baer.
He was on Fox News.
Brad Bear was at the Office of the Treasury.
And Scott Besson said, you know, one thing I'm really surprised at as Treasury Secretary is how much this role involves national security.
And so there is a huge, and again, Luke Ruhmann, I mentioned, there's a huge national security component to everything this administration is doing.
And that's why I honestly believe, like I said earlier, I don't care if it's J.D. Vance or AOC or whoever is president in 2029.
They're going to continue these policies, low interest rates, keep interest expense down, tariffs.
Like this is all being driven by the national security fiscal situation.
And everybody trying to put this political spin on it And I think it the same thing where Biden comes into office and doesn get rid of the Trump tariffs on China And it going to be the same thing
If a Democrat comes into office in 2029, you think they're going to be trying to appoint governors that want to raise rates?
Yeah. Oh, yeah. I just became president. Let's raise interest rates.
No, that's not.
Yeah. And it seems like. Like digging into percent, too, it seems like he's perfectly suited for the role, considering.
Things happening outside the U.S. to I think positioning the United States versus China, Russia and getting into these trade negotiations,
getting his getting pulling his sleeves up and getting his hands dirty with the trade negotiations directly is is really important.
He's really impressive.
That's basically all I'll say about that is I think I'm not big on politics.
I don't like intervention in markets from the Fed or the Treasury specifically,
but you're handed a shit sandwich and you've got to deal with it.
And I think he's the right man to deal with these particular problems that we're facing.
Yeah.
And none of the comments that I've made, I don't think this whole time,
are really like what I think should happen or like in my ideal world.
Like all I'm trying to do is like paint the picture of what I see happening.
Right.
And, you know, this happens to me on Twitter sometimes is where I'll post like,
oh, I think they're going to keep rates down.
And people are like, well, that's great that you want that to juice your portfolio by 2%.
I'm not posting that I think they're going to keep rates down because I want them to,
hey, that might happen, which would be great.
what I'm trying to do is just express my opinion on what I see happening, right? It's like,
here's what I see happening. I see an administration hellbent on controlling every aspect
of this economy, creating a massive boom ahead of the 2026 elections. I think the Federal Reserve
is not out of bounds. I think all this stuff is going on. That's what I see happening. I'm not
saying, you know, I'm cheering it on. I'm not raising the pom-poms, like let's destroy the Fed.
I'm just trying to paint the picture of what I see happening, you know, and where I see things going.
Yeah. And you were tweeting about it yesterday.
Probably something we should touch on as well as obviously.
Glossed over it earlier in the conversation, but the housing market seems to be top of mind for everybody, the administration, American citizens.
and you were tweeting, it seems like Bill Pulte has been sort of friptically sending messages to
the market that something may happen. This falls or pertains to the housing market and
the Trump administration's influence over it. What do you think's happening there?
Yeah. I mean, housing is huge. Housing is like 16, 20% of GDP, like directly or indirectly.
there is more untapped home equity right now. And people can argue and say, oh, these prices
shouldn't be where they are. But the facts are the facts. Like a bank's going to send out an
appraiser and they're going to look at a house. They're going to say this house is a million.
They're going to say you owe 300 grand on your mortgage. They're going to say you have 700
equity. They're going to say we can refinance you and cash you out. Like there's so much money
that could pour into this economy, juice this economy, if rates were lower.
And then there's also this big dissatisfaction with people that don't own homes, that want access.
So I think one way or another, I've talked about this months ago.
Like, I don't know what they're going to do.
I wouldn't be surprised if they came up with something called like a MAGA mortgage,
where they're like, we're going to, like, they've been talking about declaring a housing emergency.
And now what we're going to do is it's a housing emergency.
We want to get first time homebuyers in.
You know, you see a lot of people talk about how the homebuilders are doing well because
they're able to buy down mortgages.
We might get like a federal government, like buying down mortgages, like trying to get
people into homes.
We could get people, you know, they've talked about getting rid of capital gains on sales,
which would help people to be more open to selling their homes.
because if you own a home and it's an investment property, there's no deduction, right? I mean,
if you bought a home for 200 grand and it's worth 500 grand and it's an investment property and you
go to sell it now, you got a 300 grand gain. It's only your primary residence that gets an exclusion.
And there's a lot of people that bought their homes for 150 and now they're worth 800 and
they're past the exclusion, even if they're married couples. So there's a lot of people,
it's not only the high mortgage rates that they sell, but they're going to get a huge tax bill.
Right. And so the federal government is going to figure out a way around this. There was a post by
this guy, Centrini. He's kind of a guy on X talking about ways that the GSEs, which Bill Pulte
is the chairman of the board of, like could figure out ways to start buying MBS, which is essentially
be the treasury, the housing authority doing QE, you know, and buying mortgage-backed securities
to keep rates down. Because there is this really big spread, an unprecedented spread
between like the 10-year and the 30-year mortgage. And normally those are pretty close because,
you know, it's a 30-year mortgage, but there's prepayment. So the duration of a 30-year MBS is
similar to a duration of a 10 year. So those yields should be pretty similar because they're
both government guaranteed. And there's a big spread. I mean, we're at 4.2 or so about on the
10 year and a mortgages are like 200 basis points higher. Like that's a huge spread. That's not the
normal spread. So I think they're going to get the mortgage spread down. They're going to get rates
down. And I think people are going to, there's going to be somebody next year who gets a 4%
mortgage. Yeah. I mean, I think it's happening. Like people have said those days are gone.
And I'm not saying it's 4.0. I'm saying a four handle by the end of next year, there's going to
be an ability. It might just be limited to first time home buyers with a income amount or whatever,
FHA. But people are going to start getting mortgages with four handles again next year.
And this is going to unlock housing. And this is a huge amount of equity. And this is part of this boom that this president is trying to force through hell or high water. And I think people that bet against it, you know, I saw Darius Dale say, look, you want to argue against this on the golf course or at your cocktails, that's fine, but don't argue against it with your portfolio, right?
Like, I mean, if you want to just stand against all of this and stand against the Treasury and the Supreme Court, which is right leaning and you want to stand against all of it and say it's all wrong and ideologically I'm opposed to it.
And therefore, I'm going to place these bets in my portfolios aligned with this ideological view.
I mean, be my guest.
I think you're going to get slaughtered.
Yeah.
That's why I love talking to you.
Bring back sober analysis.
I find myself drifting in and out of doomerism, optimism, mainly optimism.
I think you have to be optimistic, too.
And it's just about positioning yourself correctly.
And I think you mentioned it.
Bitcoin, gold are going to be the winners in all this, because as they attempt to really open up the markets and and let people or enable people to buy houses and stoke the economy.
I mean, there will be probably some.
What the word I looking for Stimulus involved in one way or another some money printing involved in one way or another And inflation may have to go higher but I guess the hope is that
real wages go up and you fix the job market to a certain extent where people aren't as perturbed
by increasing prices as they were under the mine administration. The golden age, Marty. I mean,
Why not?
Like, why not, man?
I actually remember the 1980s.
I remember, well, Reagan was my president as a kid.
And I'm telling you, this country was not in a good place in the late 1970s.
This country was depressed.
This country felt we were getting killed by the Japanese.
This country felt the Soviets were going to take us over.
This was the era of Rocky III.
And they had the robotic guys that were going to kill us.
and like somehow we got through it and i'm not saying it's because we're americans and we're
the best and everything like that but like have a little faith in us like like like maybe we could
do like a lot of people they just want to talk about how amazing china is and or something and
it's like i don't know man i mean we've we've done pretty well and it's like have a little faith like
like maybe this could all work like if all these people on the left that hate donald trump would
just stop trying to fight him every step of the way so goddamn much. And if Donald Trump would
stop being so antagonistic, and I don't think he needs to be, and he hurts himself. I'm not a Trump
sycophant. He makes mistakes. I'll give an example. I think that we had a chance for Canada to come to
a right-leaning prime minister. And by him hammering on Trudeau and calling them the 51st
state, I think he drove the Canadian populace insane and they put in a, you know, a Trudeau
2.0.
Yeah, yeah, exactly.
And I think he ruins it.
Like, I think Trump makes mistakes.
He's a human being.
He has this, like, he's wired a certain way.
And one of those things he's wired for is not to, like, put his pride in his back pocket.
I remember one time I was, like, 11 years old.
I was on the South Side of Chicago.
and like I was doing something and some like young kid came up to me and I was doing it and
like I was almost going to get into a fight with somebody and the kid said don't do it with those
guys man sometimes you got to put your pride in the back pocket and I didn't get in a fight
and for some reason I've always remembered that my whole life is like sometimes you got to put
your pride in the back Trump doesn't have that in his DNA Trump doesn't know how to put his pride
in his back pocket sometimes for his own good and he gets himself into trouble sometimes we could
probably have canada with that conservative guy that was almost winning before trump yeah i mean
that would make us so much stronger like he makes mistakes i mean his family is involved in crypto
in many ways i mean i'm sure that's one of his biggest mistakes it's shady dealings there i mean
like like i'm not here to a lot of people think i'm like a maga like trump is god but no no no no
No, no, no, not at all.
Like Trump, his family, what he does, his personality.
Look, he's a leader we got.
I think he's a better leader than Kamala would have been for sure.
But he's not a saint and he's not perfect.
And, you know, let's root him on.
Let's hope he wins.
Let's not be like most of these people on the media that literally want to see the economy
collapse and the U.S. fail just so they can point the finger and say, see, we told you
not to vote that guy as president.
Yeah, it is crazy that we've come this far as a country.
It goes both ways, too.
I mean, when Biden was president, people were doing the same thing on the right, hoping that he would fail.
Not me.
I was bullish.
I'm like, his fiscal spending's good.
Like, market's good.
Like, we're not collapsing.
Like, yeah, people let their politics.
Sorry to interrupt you, but that's the point about my analysis.
I'm not political about it.
I wasn't like, oh, we're doomed because of, you know, leftist policies in 2023.
And I'm not being like, you know, we're doomed now because of Trump.
Yeah.
I'm just looking for one last chart.
I want to get your thoughts on just trying to steel man.
Our arguments here during this conversation today.
Is there.
What are like the biggest potential hiccups that could see?
yeah there are there are big hiccups yeah and one i'm just gonna pull up this chart while um
while we bring up this part of the conversation because this is something i read about the other
night too and it does tie into inflation but i think it's even more important than inflation
broadly but it's like electricity prices in the united states if you're looking at average
kilowatt per hour i don't know why this is zoomed in so much but um yeah maybe
if you look at this chart it's just i mean electricity energy is the base input of everything
we do in the economy and i knew electricity prices were um elevated but if you look at
sort of what's happening this trend here it's not looking great it looks like we're
going up into the right like do you see energy as a sector specifically being
a potential hurdle that needs to be overcome. Yeah, definitely. No, that's the perfect chart
to pull up because that's the problem. You know, energy drives inflation. I think in the pre-AI world,
the key factor for energy was looking at oil. I think in the AI world, the key factor for looking
at inflation as driven by energy is to look at electricity per kilowatt hour, just like you're
showing. And this is inflationary. This is not like tariffs. This isn't a one-time price increase
based on a tax. This is the input for everything is starting to go up, right? Because if you need
to spend more to heat or cool your retail stores, to run your manufacturing plants, to power your
factories, if everything is going up because of like, so this is massive. I mean, I'm bullish on
copper. I'm bullish on what we need to do to build out this grid and we need to do it. And I actually
think Trump is starting to backstep a little bit away from his anti-solar. I think he's anti-wind
all the way because wind really is kind of the worst, but I think he's going to come back into
solar a little bit, because you've got to look at what China does. They did the roadmap, right?
Huge solar, huge coal fields, nuclear, like we need to do it all, right? Maybe wind's not part
of it because it's just not very efficient, but solar, coal, nuclear, we need to get the grid up.
And that's the AI constraint. That's the big constraint. And I think, I mean, I think eventually
what's going to happen is there's going to be a very separate pricing for residential customers
and commercial customers on electricity, but that's still going to be inflationary. And,
and so, you know, we need to develop the grid. I mean, that, that, that's, that's a huge bump.
Um, I think other bumps on the road are that this AI thing, you know, hits the labor market a little
strong and that it starts to feed into itself.
And, you know, we see weakness in the labor market that makes people think my job's not
safe.
Therefore, I need to pull back on spending.
And we know we have a 70 percent you know consumer driven economy Maybe that trip to you know hike in the Sierras or you know up to Boston for the weekend I going to pull back on that because I don want to spend
that money because I'm worried about my job. So I do, I do think we're going to probably see
some weakness in the labor market, but I don't think it's going to fall off the cliff. I think
that's a threat. Electricity is a threat. But generally speaking, I think that these are bumps
on the road. And I don't think that they're going to collapse the overall narrative. Like
if at some point I turn truly bullish, I'll say I'm truly bullish. I think, hey, man, we've peaked.
Get out of risk assets. I just I just think that these are going to be obstacles that
could spring out of nowhere. And all of a sudden you get a three, four percent
decline in equities. You get a 10 percent drop in Bitcoin. You get a 10 percent drop in gold.
and it just happens.
And you're like, what the hell just happened?
And then the longer term trend continues.
So like we closed out the call last quarter
and I said, we'll be back in three months
and we'll probably be at SPX 6364, 100.
And right now we're at 6466.
I'm going to drop back and say,
we'll probably have this call in December
and we'll be somewhere 68, 6900,
knocking on 7,000.
And I think Bitcoin had a really good August.
I think a lot of people thought it wasn't, but it made a higher high.
It made a higher low.
It never broke below the July low.
It held in there.
I think September is going to be good.
And all year, my original, you know, forecast I made in December was we hit 150 by year end.
I wasn't like, you know, some crazy guy saying, you know, we're going to hit 500 grand this year.
And maybe, well, who knows?
But I've been steadfast with that 150, which is simply based on we hit 66 high in 2021 on a monthly close.
We dropped down to about 16.
There's like a $44,000 differential.
You added 44.
I don't know.
Excuse me.
62 was the monthly close and high in 2021.
62 plus 44 took you to 106,000.
106 was my initial target um uh last year we hit 108 we dropped back you add another 44 000 to that
106 you get 150 like i think 150 is the next stop on bitcoin and um you know the the potential is
unlimited but let's get to 150 first and and then i'll talk about a new price target but you know
that's been my end of year price target and i still think we're easily going to hit 150 by uh
by new years that might be you're very accurate with your calls and it seemed like i mean this
is somebody's been around bitcoin for 12 years um definitely could see it getting crazy this fall
but it does seem like we're in a different regime with the emergence of the etfs bitcoin treasury
replays and things seem much more um controlled in terms of volatility suppression i was i was
looking at bitcoin futures versus platinum futures platinum futures have higher volatility now than
bitcoin so you know bitcoin is becoming um a sorry to say it a trad fi security instrument
and it's getting trad five all and that that's just what's happening like it's it's ng you but
But it's no longer like a bunch of people with their own wallets.
Like you got options, you got futures, you got Ibit, you got the ETFs.
All of this is volatility suppressing.
And it's also return suppressing because there's a relationship between volatility and return.
If you think like, oh, people, oh, yeah, Bitcoin is going to go up 100% every year.
You know, no.
To me, when Bitcoin was 100 or less and I'm calling for it to be 150 by the end of the year and I'm like a 50% increase, I mean, that's massive.
That's huge.
Anybody that's disappointed in Bitcoin this year, I think just needs to reset what Bitcoin has become.
And you don't have to like it, but it is what it is.
Bitcoin is becoming a part of the financial infrastructure of the United States.
Bitcoin is going to be key to this whole Trump administration plan.
Part of what has happened is when you get these interest rates low by the Federal Reserve,
you create financial asset inflation.
And what's happened is that asset inflation has flowed into stocks and homes.
The problem with that is that stocks should have some sort of relative valuation to cash
flow and homes need to be affordable.
Gold and Bitcoin don't need to be affordable.
Gold and Bitcoin, because they're not used in the real economy to build houses, that's a feature, not a bug.
They can go to whatever price is necessary to be the release valve for the financial asset inflation that's coming from these hyper lower rates that I think are going to be put in place.
So I think that gold and Bitcoin are going to be the premier assets for the next decade.
Bitcoin is going to outperform gold over the next decade on a percentage basis.
with a bit more volatility, but they're both going to be doing exceptional.
And the stock market is going to do well too.
And this is what Bitcoin is.
I mean, they've talked about it.
It was either Trump or Besson who talked about Bitcoin's going to help us keep control of
inflation.
There's something that they talked about.
They know what Bitcoin's going to do.
Bitcoin's going to absorb wealth.
It's going to suck it up so that it doesn't all have to go into housing and stocks and
and drive those things to ridiculous levels so bitcoin's going to be the inflation release valve
and you know i i i just think you know for short periods of time utilitarian coins like ether or
solana can have their moments but in the long run there's only two stores of value in the world
right now and it's bitcoin and gold yeah this was an incredible conversation december let's let's
prep here maybe we do mid to late december maybe between christmas and new year's we do our 2026
predictions oh that's gonna be a fun one yeah i i want to really think about that one and maybe
we could come on and do do the whole thing and talk about what i got right what i got wrong with
2025 and what i see coming for 2026 and do a do a show something like that what do you think
Yeah, do a little retrospective and then a forward looking.
Yeah.
First half retrospective, second half.
What's coming next?
I like that.
Quick retrospective.
Just take a look what I got wrong, why I think I got it wrong, which could be informative.
And then more importantly, like what's coming.
Awesome.
Well, I can't wait for that.
Yeah.
I'm going to enjoy my fall.
Enjoy Christmas, Thanksgiving.
But then very much looking forward to the end of the year discussion, Mel.
yeah me too man i love our conversations i think because we've been doing them every quarter like
it's building on it and if there are listeners who like this there's one about every three months you
can go back and and see where we're coming from so uh really appreciate it thanks for having yeah
as we're building up the receipts now it's uh you can go you can go check the receipts freaks
they're out there.
We'll be back in December for a retrospective
on 2025 and
I look forward to 2026.
Mel, I hope you enjoy your day, sir.
Peace and love, freaks.