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FIGHTING INFLATION AND CURRENCY DEBASEMENT $BTGD
Recorded: May 21, 2025 Duration: 2:17:24Space Recording
Short Summary
In a recent discussion, experts analyzed the evolving landscape of Bitcoin and gold as stores of value amidst rising inflation concerns. They highlighted Bitcoin's potential breakout and its growing correlation with traditional markets, indicating a trend towards increased institutional adoption and recognition of crypto assets as viable hedges against economic uncertainty.
Full Transcription
Music Oh, sorry about that.
My internet went out.
You know how space this is when you lose
Wi-Fi and then it
reconnects back uh yeah i don't know how far we got into that we'll get wolfie back up here
evan i got you know this is you just kicked me off for no particular reason you guys are mad
at me for market tanking that's it i'm. Close them. No, it's, yeah, my whole internet just went out.
But, like, by the time I was trying to disconnect from Wi-Fi, it came back.
So I just couldn't hear anything for, like, two minutes, and then it was toast.
It's too bad it doesn't transfer it over to another co-host.
That would make so much better.
I wish.
or give you a five-minute window to reconnect or something.
Or, like, give you a five-minute window to reconnect or something.
I don't know.
I don't know.
Yeah.
Yeah.
But either way, we'll let everyone trail back in here real fast,
get restarted up here.
Evan, boom.
All right.
Wolfie, who was – I couldn't hear anything that was going on, by the way,
for the last, like, four minutes.
You're good.
Wolfie was talking.
I will say, I put out a tweet last night.
You know, even when this moved down,
I'd imagine we're still less than 5% away from all-time highs in both S&P 500 and NASDAQ. was talking i will say i put out a tweet last night you know even with this move down i'd
imagine we're still less than five percent away from all-time highs in both s&p 500 and nasdaq
bitcoin hit new all-time highs this morning so no you'll see and this was a definitely was this
did it did we move off that bond auction is that what it was i was a little distracted i saw apple
like 30 seconds it was like 30 seconds within the bond auction. It was the Bond auction.
Apple also knifed us, and I saw that.
That was different.
That was before that. This was the Bond auction.
Yeah.
So, I don't know.
Well, Wolfie, please continue.
I don't know where it left off but
effectively um I like the the question I I've said for the last several days is where do you
try to like hedge right where do you find where do you where do you try to in this Trump environment? What's like the fair price for a VIX? Right. And pre-Trump, we had 10 to 12.
And I said that, like, you know, here in the teens, you know, 15 to 18 is where I want to start buying protection or buying the VIX hedging in any way, shape or form.
But beyond that, I just think that there's like a real,
like the market will eventually have a real math problem to deal with.
You know, I think the 5-2 on the 30 is where we peaked. Let me just check that real quick.
And so like, if you get above that, that's like really problematic. Outside of that, like just for like a real economy standpoint, mortgage rates at 7% and, you know, housing prices pretty much across the board haven't really come in at all.
So that kind of eventually, if it stays higher for longer or whatnot, it will kind of lock some of that stuff up.
And then if inflation kind of creeps up in certain spots, it doesn't have to be persistent. But if it just creeps up for like a couple quarters,
it's going to put Powell at bay, because I don't think that he's going to, quote unquote,
run the risk of his legacy in his final year, just to kind of appease Trump.
So if the Fed's at bay and there's not really a cut because of inflation, I don't know what
a fair price for risk assets is.
And I think that's the math problem that the market's going to do.
And I think, again, when things are getting aggressive to the upside and you're seeing
the headlines of like up 30% 27 days, that's when you start to get a little bit defensive,
in my opinion. And then the inverse is true. When you see these aggressive 20% sell-offs and
people talking about how we're going to zero tomorrow, that's maybe where you start to nibble against
proper levels. The Bitcoin thing is interesting because it basically just double topped, right?
So if it breaks out in the next couple of days, then it's no longer double topped. But currently
as it stands, it's pretty to the penny double topped it's also interesting because bitcoin's supposed to be
you know the the hard money you know in fiat hedge right and so it's it's interesting that it's
effectively and i you know we all know this but effectively it's been a uh proxy for risk. So, you know, just see how things shake out.
I mean, has it been
this cycle? Has it been what?
Bitcoin, a proxy for risk in this cycle.
Yeah, it's
lead.
When you say risk,
I kind of took it as
the NASDAQ.
Yeah, I'm saying
when Bitcoin starts to go,
it goes before it's like when it started to move upwards.
Generally, it's moved upwards like, you know,
before the NASDAQ did.
You can go down to like, what was it?
April 20th, where it broke out of a downtrend.
And then you can just mirror that with, you know,
where the NASDAQ kind of bottomed, right?
NASDAQ bottoms, it bottomed on the 7th, but then it also made a higher low on that 20th.
That coincides with the breakout or 21st, that coincides with the breakout of Bitcoin, right?
And I just think that it's kind of led, when you see Bitcoin ripping for a few sessions,
that's been like a tell for risk assets, risk back on the table.
And then when Bitcoin's kind of topped out and sold off it's been,
you know, NASDAQs type stocks,
risk type stocks have done the same so far this year. It doesn't,
it hasn't been, you know, bitcoin up tech down yet right which is
it's supposed to because it's supposed to be like some sort of you know risk hedge
but it does trade more of like a beta a risk beta thing um whereas gold has this year traded as
you know the risk catch right so gold while we were 20 up 27% in 30% in 27 days on the QQQ, gold was selling into
its 50-day, right?
And so the inverse has happened in the last couple of sessions, bounced off the 50-day
while we stalled out here.
So that's kind of like the point I was making about Bitcoin.
At some point, I don't know if it will, you know, disconnect from that
relationship. If it does, then it probably will give people another avenue. It will like bolster
the case for, you know, the Bitcoin bull story, right? The, hey, this is a currency hedge, this
is a market, like a, this is a store a store of value whatever whatever thing you want to use
to there um but beyond that i just i i think want to see from a technical perspective want to see
you get back in the 200 down the queues on the on the s&p um that's where a lot of bulls are waiting
and it's to me it's gonna that would be interesting because you know it would it would
effectively get us back on queues.
It would get us back to like $4.95, give or take.
We're at $5.15.
It's a nice little sell-off.
Not bad.
And in a situation like that, let's see if the risk appetite, you know, that bid that we've got the last couple sessions, let's see how aggressive it is.
And, you know, I'd welcome an aggressive bid because that would fill the gap and be a good sport.
But that's kind of like the push pull there um and ahead of a long weekend probably in no man's land and i just don't
want to like try to catch a flying knife but um you know i bramble got disconnected so i'll stop
there appreciate the pro tip if you take if you take Friday off today
you get four days off
you know who was it yesterday
who was it yesterday
that gave you you know permission to take
that would be me
yeah you should
we should have just all fucking listened
valid point for sure.
Logical.
But what's your reaction to all this going on?
One thing I want to push back on what Wolfie said a little bit.
Bitcoin has been acting a lot better than just a typical risk asset this cycle.
It's held up a lot better through the drawdown.
And some people were actually starting to compare it to a gold-like asset. So I think that was what crypto investors
have been fighting for for a long time. And in past cycles, it has just been a higher beta NASDAQ,
if that's even possible. But I think this cycle, it held up a lot better than other risk assets.
I think this cycle, it held up a lot better than other risk assets.
Yeah, I'm not talking about it holding up.
I'm saying that when it started to sell, it started to sell kind of like lead, right?
And then where it holds up and how it performs, I'm not getting into that part.
I'm just getting into generally it's been Bitcoin bottoms before the NASDAQ, NASDAQ follows.
I'm just picking on the NASDAQ here or risk stocks, whatever.
And then Bitcoin starts to sell off before they do and then they follow.
I don't know the percent correlation, how it's done, all that stuff.
Probably has performed better.
I'm not going to disagree.
But yeah, I'm saying the second leg would be if it just completely broke away from that relationship and started to hold more.
That comment that you just made, it would cause a lot more teeth
and I think it would probably have more momentum.
Anyways, so today's bond yield is obviously not good.
It looks like 10-year yield wants to push even higher, over 4.6 at this point.
Something will break.
Question is, what will break?
I think a lot of things will probably break.
It's crazy because this morning I saw a big options flow
coming in to put cells on the KRE,
which is a regional bank index,
and call spread buys with those proceeds.
And typically, I feel like in a bullish signal,
put cells are much more bullish than call buys, because that means that somebody is actually
willing to go long. So I thought that was pretty interesting. Obviously, right before that bond
auction, obviously, KRE is going to hurt if yields stay high. So I'd imagine we start seeing some regional banks
get killed. The question will be which one falls first. I mean, there's like 4,000 banks or
something. So your guess is as good as mine. I'm not like a banking expert. I did see some
death puts come in on Arbor Realty Trust, ABR. That's a name that short sellers have been going
after for some time now um it seems
like maybe those days are numbered but they've been saying that for years who knows i i joined
with some lotto size full disclosure um yeah i i think the fed is in a tough spot what are they
gonna do i don't know i think they need to do some sort of easing. I think financial conditions are probably too tight. And they're likely behind the ball at this point. But they've been behind the ball
most of the time because they've been data dependent. Even when it came to inflation
and raising rates, they were too late. And that's why inflation got way too out of hand.
And obviously, a lot of that could be supply shocks due to high demand from fiscal stimulus and all that stuff. And, you know, they don't want to opine
on what fiscal policy can end up doing. We're just going to wait for the data, which is what
they're saying now. But that's what they said back then as well. And then we got 9% inflation. So
it's just, you know, it doesn't take a genius to realize that they're going to be
late again. So, you know, what are you going to do? They're going to be late. I think what is
probably the most likely at this point is something breaks and they come out to support it again.
That's what the Fed has been doing. They wait, something breaks, and then they come out with
some sort of emergency over the weekend after a bank collapses,
just like that happened in March 2023, where three or four banks collapsed.
Silvergate Bank, Signature Bank, First Republic.
I forgot what else.
So, yeah, there's probably some upside-down balance sheets.
And if the Fed doesn't pivot, then there's probably going to be a lot of money to
be made on I don't know I don't want to say I don't want to encourage people to short American
banks because it feels unpatriotic but you know I think there's probably a decent chance that
there's someone there's probably some impending implosions somewhere in the market. And I feel like we'll probably find out soon.
So, yeah, I mean, that's my thought is,
are they going to wait until that implosion happens first
and then pivot?
You know, what's it going to take for this Fed
to just start easing?
Maybe cut rates, maybe start buying bonds.
They need to stabilize the yields for sure.
Because if anything, today is basically saying nobody, you know, there's less demand for our
bonds. So you need to stabilize yields to, you know, make it feel a little bit more confident
for investors. Anyways, yeah, that's my thought is we are obviously, I think anyone could have
said, hey, this rally went went pretty far we could use a bit
of a pullback um so that's not i mean that was pretty obvious especially as you start seeing
you know some momentum losing i think yesterday we had an intraday dump um that's when i lightened
up about 20 exposure i think you know and then it started bouncing and people probably, you know, are
thinking, oh, we're fine. But I just don't like when we have an intraday dump, that there's enough
liquidity in that cell that can just kill the market in like two seconds. Like that is kind of
a red flag to me. So, and then, you know, we come into today and obviously, you know, maybe those are people de-risking or, you know, de-grossing before the bond auction, just kind of hedge.
And then you get a sell-off like this.
So, yeah, I mean, we've been talking about it.
elephant in the room because that was the entire purpose of you know donald trump's chess 4.0 or
4d chess whatever he played uh which he lost by the way so yeah i mean are we gonna get yields
down because we do need that so what's scott percent doing i have no idea uh i think they're
probably uh a little paranoid right now i would be I mean, now we're kind of like above the rates
in which Trump, we had the Trump pivot on Liberation Day,
which was April 9th, where he paused,
did a 90-day pause on tariffs.
So, yeah, I think it's more likely that something breaks
and then they step in.
Because I don't even know if the uh
i haven't checked the cme fed watch tool but i assume that the the rate cut odds have not gone
any higher um 94 of a no cut yeah exactly there you go that's it this morning yeah um you know
like what are we doing here you're just gonna let the the bond market you know panic i guess
uh a bank's gonna go under and then we
don't even have you know funds at the fdic anymore because we we use the ton of those funds in march
2023 to bail out uh not really bail out the banks but uh bail out the depositors at those banks
so it's like i i don't know man like it's so funny to me because there's so many situations where our government could
just put like, let's say a disaster would cost us, I don't know, a hundred billion dollars.
There's so many scenarios where they could do like a 10% proactive approach to that
and then not have to deal with the hundred billion dollar fallout after the fact.
And we just don't have any sort of proactive
kind of nature. It's just, oh, let's just wait until something breaks and then we'll be in further debt. So that doesn't make any sense to me. Let me ask you a question. I mean,
I agree with you, the Fed has been slow. I said the Fed were slow to start easing right back a
couple of years ago. But why does the Fed have to always step in?
The Fed is becoming too much of a backstop, I think, in the world. So, I mean, for me, I hear you, but maybe it's time for them to take a step back
and keep reducing the balance sheet and try not to prop everything up.
I don't know.
But you're right.
The bond market is definitely saying it's worried.
Yeah.
I mean, Mike, I agree with you generally that should happen.
But if that did happen, we'd probably have like an 80% fall in equity markets over the next couple of years.
I think this is all kind of the follow up to Mike's thing, though.
So they it's not. So first of all, they have like limited control for the long end.
Right. And 30 years is really pressing.
And Mike just said it.
He said quantitative tightening.
So the problem with using your ammo here is, you know,
they cut in September on the back of like this jobs number potential.
And the 10-year went from 3 and three eight to four whatever you want
to say so it's not it's not just an input output function anymore we have like a real spending
issue and we can cut it they can try to cut but i don't think that them cutting is going to yield black no pun intended lower rates
it's on the on the 10 and 30 it's gonna go up you could do yield cool you could do yield uh
curve control though right like you could stop selling i mean you could stop you could you could
try no no you could stop selling bonds they still are running off bonds from their balance sheet
you could start buying they're in a qt cycle yeah balance sheet. You could start buying their QT cycle.
Yeah.
Yeah.
So exactly.
So you could stop the QT cycle.
That's already going to help.
It's already slowing.
Sure.
It's already slowing.
Sure.
But then you have to go into QE where you have to buy bonds back and then you have to
start building that demand for bonds.
I hear you.
But if the...
And another thing, if you cut short-term rates, then they look less attractive, which means that people who still want to park their money are maybe not going to be as happy with 3% rates on T-bills.
And maybe they'll be more willing to lend at 4, 4.5% on a longer-term bond, right?
So it is still going to make those bonds on the longer term look
more attractive. No, I don't think so. I think maybe down the line, yeah, but currently no,
because we still have a spending problem. And that's the point, right? As soon as that spending
problem slows down, or we have this necessitative emergency, because if you cut it, you're going to create more inflation.
And that is going to run counter to a lot of things.
It's going to run counter to your population, for starters.
And so I'm not saying that there's not going to be a QE cycle.
There's not going to be cutting.
It's not going to be any of that stuff.
But I'm with Mike on this one. I think that sitting pat currently is probably the right move. And then, you know,
over time, as things start to unfold, if you want to be more aggressive, you can be more aggressive.
Go back to like 20, I think it was 2018, 2019. They started to raise rates, got barked at by Trump, and in like
two weeks, December into January, flipped it. And then a year later, we had, you know, the COVID
thing where they needed to print, but they're printing off of a lower base. It wasn't like
they were printing off of like four or 5%. I remember where it was, but they're printing off
of a lower base, which gave them a lot less ammo.
And so I think currently,
you know, if you know
what's going to come down the pike
and, you know,
you don't think you're going to have
like a major recession in the short run.
And I don't think that's,
that's going to happen in the short run.
And I think giving yourself
a little bit more slack.
I'm with Mike on that one.
That backstop,
just give it a little bit more slack. You might, you might one that backstop just give it a little bit more slack you might you might actually get the right outcome would your tune change if three
to five banks collapsed in the next two weeks i don't think any of the major banks are going to
collapse no no one said the major banks but okay i don't think i don't think a rage i don't think a
regional bank you know it depends i mean if you're talking about like pnc maybe i mean first
republic was a pretty big deal yeah but i don't i don't think that these are i don't think that
these are they had over 100 billion in deposits i i i hear you were any of those collapses a big deal
i don't think so that's what i'm getting at i don't think that these are it was a big deal to
our fed though fdic was a big deal to the markets of though. FDIC was out of funds. Was it a big deal to the markets of any kind, bond or equity markets?
Did they care at all?
No, but it's going to cause more.
You're going to end up paying more in damages to save those depositors.
I think it's actually going to produce liquidity.
But emergency response when it comes to economics is actually quite complicated.
People try to simplify it and they just say like, okay, you know, bad things happen.
Liquidity gets added.
Good things happen.
Liquidity gets taken away.
That's fair, generally speaking.
And if you were explaining it to like a fifth grader, I would use that explanation.
You know, liquidity follows pain.
That's a pretty good way to expect macro.
But I think with respect to what you guys are talking about,
I think you're both kind of right in different ways.
The bank crisis, I'll put that in air quotes, that we had,
the regional bank crisis that we had with First Republic
and Silicon Valley and those names,
wasn't really a big deal.
And the reason why is because A, depositors didn't lose any money.
B, any depositors that were at those banks were banked at other banks or the same banks that have been acquired within 30 to 50 days.
Like it didn't take long for those customers to be repatriated to another bank.
There wasn't any loss of capital,
either for the depositors or the acquirers.
I believe even debt holders got most of what they wanted
out of the proceedings for Silicon Valley.
So there just wasn't a real economic impact from what happened with regional banks at that time.
So I'd hesitate to be like, that's going to be the crux, unless 50 regional banks go under,
which is obviously, I don't know if that's what you're implying, but if 50 or 60 regional banks
went under and one fell swoop, then yeah, it's a problem.
But if two or three go under, I mean, not really.
It just creates a really small vacuum that gets easily absorbed by the major U.S. banks.
Yes, I'm not saying that it's going to be the end of the world.
I'm just saying that you're going to have unnecessarily banks imploding.
But is it unnecessarily?
Number one.
And number two, if they imploded and get acquired by like or absorbed,
like do they really fail?
And just I want to add into this.
Do you don't think that most of these banks have already gotten the warning
and took corrective action that Fed has looked at them?
I don't know.
I just wonder if we're going to get more implosions.
I just don't think that's easily going to happen.
I mean, I think the implosion risk that Silicon Valley and First Republic face,
like the deposit flight risk, I don't think it's easily replicatable.
I think what happened with Silicon Valley Bank we i mean i know it's been
a long time since we've talked about it obviously a couple years since it happened but
the the deposit flight the overnight deposit flight that happened with like 42 billion dollars
in in capital that was requested from the bank like that's a pretty almost a rare scenario but
like a lot of stars have to align for that to happen with a bank of that size.
And, you know, what proceeded to happen with First Republic as well, it follows a similar line of thinking that it's sort of this episodic attitude from consumers that there's a fear about regional banks.
And I mean, let's be honest, it expired pretty quickly.
Like that attitude about the safety of U.S. banks lasted like a month.
And everyone was like, fuck it.
Like, no, I didn't even hear anyone.
Let's remember what started this was these banks, especially the regional ones,
weren't hedging despite the Fed saying they were going to start moving rates.
And that's what started.
And then the panic started, to your point, with the withdrawals.
But they were sitting on huge losses because they didn't hedge.
I have to think they've recovered that and changed that by now.
Yeah, that was the point of fear, though, right?
Like, their lack of hedging isn't what put them under.
Their lack of hedging is what created the fear that the bank was at risk.
They were going to fail because, yes, because of the lack of hedging, yes.
Of the deposit flight, right?
Had the deposit flight, had the $40 billion in withdrawal requests not hit in a 24-hour period,
the bank would have been fine, regardless of failing to hedge their treasury risk, right?
Bank of America's unrealized treasury risk
is enormous, right?
We don't sit around here saying
Bank of America might go under,
although there are some people
that think that that's a risk.
But like, I don't think any reasonable people are like,
yeah, Bank of America is going under.
Or even if they were gonna at some point
hit some sort of liquidity problem
that the government wouldn't step in,
Bank of America is the second biggest bank in the world.
So, like, I do agree that there is a treasury exposure risk for major U.S. banks,
but I think major U.S. banks are too big to fail.
That's point A.
Point B, that treasury risk also extends to regional banks,
but I think commercial real estate exposure
is a much bigger problem for regional banks than treasury exposure. And that's an entirely
separate conversation. But rates do need to come down to lessen that pain as well. So net net,
I agree with logical point that rates need to come down that I'm on I'm on that page.
I don't think a couple more regional banks going out would be the catalyst to like unwind everything that's happened but I do
actually think if I'm not advocating for a regional bank to go out of business
here but I do think that if one or two regional banks were to hit some sort of
liquidity problems and and potentially go out business, that it could be the impetus for the Fed to cut rates.
Yeah, and that's the thing right there.
I have a quick question for you, though.
What do you think is an issue with rates being so high at this point?
I think the issue with rates being high at this point
is just that inflation has come down pretty dramatically.
What was the year-over-year print on the last CPI?
Does anyone have that on top of their head?
It's like 2.4 or something.
Yeah.
And the 10 years at 4.68 today, I don't even look at it until the end of the day, but whatever it's at, it's above 4.5.
end of the day, but whatever it's at, it's above four or five. You have, to me, a major disconnect
in where liquidity is headed. In other words, I think we're headed for a natural tightening
in liquidity in the organic economy, if you will, versus where the Fed stands from a liquidity
allowance standpoint. And you guys were talking about QE, QT earlier,
this idea of like, okay, well, the Fed should just stop QT altogether.
I agree with that as well.
They've begun tapering their QE.
Sorry, they've begun tapering their QT.
So they're getting closer to the QE benchmark.
But I think rates need to come down, frankly, materially.
I'd like to see 50 basis points and cuts by the end of the year.
I'm not saying that's what's going to happen.
I know the markets are not pricing that.
But I would like to see 50 basis points and cuts by the end of the year and at least another 50 basis points next year.
That would bring us down to, in my view, a normalized rate
that this economy can function on. Because I think the problem that the Fed is having,
and I think the problem that a lot of onlookers are having, is that people are thinking of the
neutral rate, neutral interest rates, the way that we did in the 20 years prior to COVID.
did in the 20 years prior to COVID. And the reality is, is the fiscal situation
of most governments globally has changed a lot in the last 10 years. In fact, just post COVID,
the fiscal viability of the debt pools of a lot of sovereign nations has changed in just a five
year period, even for the United States,
right? And we like to think of ourselves as better than the rest, and we are, but
even our debt and deficit situation has changed materially in the past five years.
So there is a growing sovereign debt problem globally that will be softened by lower rates.
that will be softened by lower rates.
And to me, that's the biggest monkey in the room
is this idea of, you know, like, hey,
at some point the rubber's going to meet the road, right?
We all say that.
Like, we don't know when it's going to happen.
We were talking about this last week.
But at some point the rubber's going to meet the road
and there's going to be a clearing event.
In order to delay or kick the can down the road
as much as possible, I think you need lower
rates. I think it's going to help with the government debt problem. I think it's going to
help with companies who are trying to manage really a brand new global trade system. Even
though tariffs have been reduced, there's still a dramatic amount of adaptation that's going to
happen in the next few months. And companies need capital to do that. They need capital to make
those adjustments. Like they're building factories in the United States, you need capital to do that.
Do you want to do that at 7% rates or do you want to do that at 3% rates? Like it's more so about
allowing or I should say accelerating what's happening in the macro backdrop of tariffs,
accelerating the adaptation to that for individual companies.
Lower rates will help that.
Facing the global sovereign debt problem, lower rates will help that.
And on top of it all, if there is an economic slowdown coming naturally, end cycle economic slowdown like we normally see,
then you could preeminently raise, sorry, lower rates in advance of that to prevent that slowdown like we normally see, then you could preeminently raise, sorry, lower rates in
advance of that to prevent that slowdown.
So I think for those three reasons, rates need to come down.
Now, are there other reasons?
Yeah.
I mean, if you want to get really micro about it, there's probably other industry-specific
reasons you could bring up why rates need to come down.
But it's time.
And, you know, Powell is going to fight the urge to do it because he doesn't want to bring the inflation boogeyman back.
I don't think that's a concern anymore.
I mean, I could be wrong, but as of the last couple of prints, I feel pretty, pretty good about the idea that we can keep inflation between two and two and a half percent, at least headline inflation over the
next 12 months. And if you can keep it in that two to two and a half percent bubble, then you
should bring rates down to three, three and a half percent in my view. So StockDoc, do you think that
markets just sold off here very aggressively on this bond auction? More so, like, is it because
of a, like, growing, is it a growth issue now that, you know, we're so tight?
Because we're up eight days in a row.
I mean, like.
Yeah, but again, we did fall because of a catalyst today.
Maybe that is an excuse.
We fell because of a pretty soft bond auction, right?
We had a 1.2 basis point tail.
Yeah, kind of a fat tail.
But all things considered, like, is it a brutal auction?
The S&P 500 was down 1.5% today.
Okay, we punched through the 9 EMA.
We're still above the 21 EMA, still above the 200-day moving average.
The technical structure isn't broken yet.
Yeah, people wanted to see us hold that 35 level into the close that we didn't.
Okay, like, I'm not really that granular when it comes to my technical outlook.
We are above the 200-day moving average.
That could change tomorrow.
That could change next week.
At that point, my technical view on the markets,
my tactical view on the markets is the way I'll put it, will change.
It always changes when the technical structure changes.
So for now, I'm not worried about it.
It's a one-day sell-off.
I was literally talking yesterday.
We're like seven days green in the index. I was like, we probably need a red day. Okay,
cool. We got one today. I feel like people lose their marbles when inflections of the market
happens because everyone wants to assign probable cause. Everyone wants to be like,
well, the markets are down today because of this. And could that identified problem become a bigger
problem? That whatever the game everyone
wants to play when we have moments like this but i don't you know i don't feel the need to do that
until the price action is repeatedly telling me something for six or seven sessions in a row
then i'll get cautious if we punch back through the 200 day then it'll look a lot like early 22
you know you go pull up your charts scroll back to. You'll see when the sell-off started in 2022, we pulled below all the moving averages.
Then we had a pretty strong recovery that brought us back above the 200-day, back above the 9 and 21 EMAs.
A week and a half later, we were back below all the moving averages.
So there was a really convincing fake-out rally in 2022 at the beginning of the year.
Could this be one as well?
We'll find out.
But you're not going to know that until the indexes start breaking down again.
People are going to want to make early calls.
People like speculating because then if they're right, you make some money.
You can look cool.
That's awesome.
I'm not as much in that camp.
I like to just go based off of the technical structure that's in front of me.
Right now, today looks like an orderly pullback after a parabolic move in the indexes.
That's all it looks like to me.
If somebody were to say, take, like, let's say I didn't know the news, right?
Like, if somebody were to take my news feeds away from me and just show me the chart,
from me and just show me the chart i'd have been like okay cool you had like the sp500 went from
I'd have been like, okay, cool.
509 a couple of weeks ago to 595 and we had a 1.5 pullback okay like that's what i that's what i
would say if somebody showed me the chart from today without telling me about the bond auction
now i know that the bond auction was bad so So yeah, you can assign some cause there and say, okay, it's because of the bond auction today. Is it a world-ending apocalyptic bond auction? No, not even close. We've had one basis point tails multiple times through the cycle.
granted, but it's very rarely been a multi-day reaction, usually just contained intraday action.
And I mean, all in all, considering how stubborn the bond markets would be, I would not expect
equities to be this high and have recovered so nicely. So clearly there's some sort of
narrative playing in the back of the market where either the equity market's calling bluff
on the bond market or vice versa. And maybe the government put around the bond market is what the
equity market is leaning on. This idea that, yeah, the bond market is really, really stubborn right
now. The 10-year yield's inching higher. But if we get to a moment where we peak back above the yearly highs, then maybe percent
will step in again and try to make something happen. That could be what the equity markets
are thinking. I'm just speculating. But the equity markets could be operating under that belief that
there is a U.S. Treasury put that is somewhere in that area of the 10-year yield because last time we were there
percent came out and basically revamped their entire outlook on trade policy so
we'll see we'll see but for now the technical structure is fine in the indexes you know again
we're still above the 200-day moving average. When that changes, my tune will change.
Yeah, I was just going to end on that saying,
dude, I'm still very, obviously, this didn't turn me bearish.
If anything, I added to some of my longs today that I think are absolutely way too cheap.
And I think I've been following a lot of call flow
and options flow in general,
and people have just been slamming calls the last couple of days.
And maybe we just got a little bit too overheated,
too overbought, too many chasers. and it's just a matter of positioning at this point and then as
soon as you unload some of those calls on any sort of thing then that's going to cause a massive
unwind and positioning so if anything i would kind of maybe view this as you know what would be great
to see is uh a small pullback gets bought from people who are potentially still offsides and
want to get long and then you kind of put in a handle this ends up being a cup and handle situation i don't know that that would
be pretty constructive but i agree with you like losing the 200 day i'd get a little bit i'd probably
lighten up some exposure and then if we were to like rally back to the 200 day and fail and and
then that's when i'd really lighten up exposure it's a really good defensive, but I, you know, some puts too, right? Like, yeah, exactly. So that's the thing is like,
people want to know what's going to happen before it happens. Right.
But look, if my, I post my performance on Twitter,
just like logical does, we post screenshots of our brokerage accounts.
If my performance is any Testament, you do not need to make it that complicated.
Okay. You really do not need to make it that complicated. Okay?
You really do not need to make it that complicated.
You have some short-term exposure on the table.
Cool.
Market pulls back below the 200-day.
You lighten up on the short-term exposure.
Maybe you add some hedges and some puts.
Market holds the 200-day.
Great.
You buy the dip on some of your favorite names.
Like, it doesn't have to be rocket science.
You just look at the basic technical structure in the indexes. You pay attention to a basket of names that you
like for whatever reason, whether you like them thematically, technically, fundamentally,
all three. Great. You have a basket of names you focus on. You watch the indexes for technical
structure to give you an idea of what the backdrop looks like. And you play the game.
And like, look, none of us know what's going to happen.
Could this sell-off continue into the end of the week?
Sure.
Could we see a massive rebound tomorrow?
Sure.
Could we get good economic data into next week that leads to, you know, buyers stepping back into the market?
Sure.
Could we get bad economic data next week that leads to buyers stepping out of the market?
Sure.
Like all of these things can happen. The idea that especially new
traders want to identify which of those scenarios is going to play out and want to be prepared for
it before it happens, that's a losing game. You're not going to be consistently profitable playing
speculator in chief and just tossing your money around on whims of what you think might happen.
speculator in chief, and just tossing your money around on whims of what you think might happen.
Pay attention to the data that's given to you. You have two data sets in which to operate in
this environment. You have the charts and you have the economic data. Whether you want to lean
on one or the other before one or the other is fine. Whichever one you want to prioritize,
that's fine, whatever works for you. But if you look at the balance of the data on a day-to-day basis and just take a sober point of view about where you are in
terms of risk, margin exposure, short-term options exposure, the types of stocks you're exposed to,
what your cost basis advantages are on those names. If you bought a name last week and the
markets start turning over,
that's probably a name you should cut because you're going to very quickly be in the red on that position. On the contrary, if you bought a name two years ago and you're up 375% on the
equity and the market turns over, you probably shouldn't sell that name. You probably shouldn't
let the market shake you out of that name so like again it it's not rocket science
it's really really not and to be honest the people that perform the most poorly in this environment
are the people who do treat it like rocket science who do treat it like you know a speculators game
where they just guess what's going to happen put a bunch of exposure and risk on the table and hope
that it plays out um that's going to bite you in a bunch of exposure and risk on the table and hope that it plays out.
That's going to bite you in the ass if you operate like that in this market, in my opinion.
You know, trending markets, you can do that.
You know, last year, you can do that.
Last year, you just bought calls at the start of the year and went to sleep.
Same thing with 2023.
And those markets are easy.
Trending markets are easy.
This is not a trending market, right?
This is a very, very volatile market.
I mean, recently it's been trending to the upside, but, you know, we had a pretty significant downtrend earlier in the year as well.
So take it day by day.
Take a sober point of view.
Stick to the stocks you want to own.
Continually monitor the major indexes for areas of support and just keep on keeping on.
Stock talk real quick.
I just wanted to give a little bit of words on what I was basically doing.
Yesterday, I said there was a little bit of a jitter and we had a little dump.
And we recovered most by the end of the day.
But that to me, that type of, oh crap, okay, are we going to head into any sort of volatility?
I love to have and
like a bunch of trades on when things are working and but whenever we start getting into a bit of
volatility the first thing i cut are my lowest conviction names names that i'm like
like they're just trades smaller positions i mean yesterday i probably at some point yesterday i
had probably 30 positions and I cut 10 of them.
And that's just kind of what I've been doing is like I have like 20 core positions.
That's kind of how I run my portfolio.
And then I'll have, you know, I'll add on new names if I'm like, I like the setup.
The chart looks good. Fundamentals make sense.
There might be a catalyst, blah, blah, blah.
But if I don't start to get that move very quickly and then i start noticing hey
maybe there's going to be a little bit of turbulence in the market uh first thing i'm
going to do is cut those lower conviction names and and try to consolidate and concentrate on like
my highest conviction because i know i can hold those through volatility i can you know um i can
justify holding them from the fundamentals or whatever yeah you want to make sure yeah go for
it i was gonna say i want to make sure we get around to the rest of the panel and uh get some Yeah, yeah. I'm kind of in Stock Talks camp in the sense of, you know, looking at today's action, it's like, how many days in a row now. It's just been a really massive rally.
For me, I don't want to really overthink it or overreact to just the day-to-day action.
I think if people just zoom out and look at where markets have been, we had this in the S&P.
It was like 20%, 22%.
We came off the high down to that April 7th low, that Monday low.
And it's been, you know, pretty much the same size rally on the way up.
So it's like, you know, you really don't have to hit every little up and down and catch the highs and lows.
You really just are trying to hit that chunk in the middle or, you know, a lot of us are just trying to hit the chunk in the middle.
You don't have to be precision perfect with the
entries and the exits for me. Um, you know, I, I remain pretty constructive on things. Um,
it's really weird. I was, you know, I was out all last week. So it's like you miss a week in this
market. Sometimes it feels like you have six months of things to catch up on. So, uh, it's
been a busy couple days
just trying to get my head around everything that's been going on and trying to detach
in the week prior. So I'm really just trying to make up ground in that sense. But in the same
light, my opinion going into that week was I'm constructive on the markets. My opinion right now is still fairly constructive.
Obviously, there's risks present, and that hasn't changed a whole lot this year.
I think investors have realized we kind of have this new, not new, I guess, but this
different dynamic where we have more headline risk, where things can kind of change quickly.
The market got what it wanted when global trade tensions kind of cooled down.
And we went through earnings season and realized the world wasn't ending.
A lot of positive commentary out there going through the conference calls,
specifically regarding consumer spending.
And I mean, if you listen to Visa's conference call,
it sounds like we're in a strong economy as you can ask for. Obviously,
I kind of take that with a grain of salt and listen to other calls alongside it. But
at the end of the day, the US, so much of it's driven by consumer spending and the jobs market.
And right now, both are holding up. We have inflation continuing to kind of trickle lower.
So we're kind of in that. I think everyone was expecting something a lot worse to come out of these developments. And so far, we're not seeing
it. And I say so far, just in the sense of it's possible things deteriorate moving forward. I
think, you know, Jamie Dimon was talking earlier this week about how we're going to see, you know,
earnings estimates come in over the next few quarters.
And that's probably true.
So I don't know that we necessarily have an easy ride going forward.
I mean, we got to remember even zooming out further than these last few months.
I mean, these last few years, we have backed back 20% years.
So I'm constructive, but in the same breath, I'm not pounding the table for all-time highs and a big, huge breakout through them as well.
I think we've had a big trading range over the last few months, both on the upside and the downside.
I don't think it'd be weird to give some of these gains back.
It's all really how the price action handles itself going forward when we do have a correction, whether that correction is now and we are going to go into a, you know, multi-day, multi-week pullback.
Or if it's, you know, we buy or step in in the next day or two and push it higher and we have that pullback, you know, in June.
You know, I don't know which one it's going to be.
And, you know, to me, it's going to be more important to see how it handles itself, how the market handles itself when we do have that pullback.
For me personally, I'm net long.
I've been net long for most of the year.
I'm not typically one.
I'm not a short seller for the most part.
The exception of a trade or two here or there, I'm generally net long, possibly hedged.
Right now, I don't have any real active hedges on.
I have some covered calls that I sold at the end of last week.
So mostly treaded water on those until today,
but nothing too special on those.
Just kind of trying to take a little bit of advantage
to protect some longer term positions after a big move.
But yeah, that's kind of where I'm at.
I think, you know, I generally look at things constructively,
try not to make too much out of one day.
Like today, obviously they have the 20-year auction
as sort of the catalyst for the correction
after what was a pretty promising start to the day elsewhere
in crypto and in tech.
But yeah, overall, I think the market still looks pretty solid.
Appreciate that take, Brett.
Chris, let me swing over to you next, please, sir.
So I'm not going to try to say like, oh, we should be buying or selling.
Because I mean, I think at this point, everyone's an independent investor.
They can see how to do it themselves.
I think for me, one of the things I wanted to highlight to people is that with this current administration, they are making moves that they think are right. And they are not opposed to
readjusting when market data shows contrary to their plans. I firmly believe one of the goals that the administration had when
they came in was just scare the crap out of the markets, get more people to buy bonds, and
basically get that 10-year down. Scott Bessent has said it multiple times that ultimately the
goal is to get that 10-year down. Now, of course, that didn't work out, mainly because the tariff policy was executed
in a very haphazard way. And that actually caused more of a stress on the bond market,
because a lot of people are now expecting tariffs to cause inflation. So I think
that has slowly been reversed now. And I think that's why...
Chris, I apologize to interrupt. Zoom and Snowflake earnings out. Snowflake initial And I think that's why the record is... So back to what I was saying, basically, the equity markets kind of shrugged it off as the tariff policy was kind of pulled back a little bit to more sensible ranges.
The challenge that we're having right now is that, you know, with regards to like Japan, you know, their their yield control, their pullback from yield control is starting to impact them.
They're starting to get like all sorts of second and third order magnitude effects.
And then our administration has kind of like come up against this.
The bigger challenge, and I think the thing that keeps coming up on the news, I don't
know if people have been watching, but is the illiquidity of the private credit markets
and the private equity markets and how that could possibly end
up impacting the economy when it comes to like employment. So right now, as a lot of people here
may or may not know, but private equity stepped in to fill a lot of the roles that the banks were
fulfilling prior to the great financial crisis. So after the Great Financial Crisis,
there's a lot of regulatory changes that were put in place that limited how the big banks could
operate. And now a lot of these private equity and private credit folk, they stepped in and said,
look, we're going to be non-bank lenders to all these businesses. Now, the challenge here is that
they've bought into these businesses, but they're illiquid. So now what happens is when you're LP, so basically
your investors, they need to cash out. You need to have a liquidity event where you sell a business
and then you can provide that liquidity to them. So right now you're seeing Harvard,
you're seeing a lot of these sovereign wealth funds who have exposure to private equity
and private credit, they're starting to kind of like put up signals. Like today, or was it yesterday,
one of the people from the sovereign wealth fund in Qatar, they actually mentioned that too, that
private equity and private credit could have some trouble right now. So that illiquid market
is a major thing to watch out
for because ultimately what they're going to do is end up leaning on their portfolio companies
to cut back. So right now, they borrow money to buy these businesses or lend to them. And
now all of a sudden, the rates that they got these businesses for was much, much cheaper in the past. Now the cost of
capital is much higher. So a lot of them are going to say, look, I know that right now we've
lent you this money and we want to eventually get some of that money back. And a lot of firms have
been pretending and extending out a lot of loans and everything else, especially in commercial
real estate. At some point, these guys are going to say, hey, wait a second, we're in a little bit of a pickle.
So you need to lay off people at your level. So a lot of these companies that they bought into,
they're going to say, you need to make some cost cuts. And what that means is for the general
economy now, those cost cuts end up coming to the consumer side. So I think, and this is just me saying it out loud,
I think we could be seeing a lot more unemployment going forward. I've been seeing a lot more layoffs
in the news. And it's one of those things that I think will eventually get inflation down.
I don't know if this is what the administration is going for, which is let's weaken the economy,
put ourselves in a short-term
fever so that this way we can kind of get the consumer to pull back. And once the consumer
pulls back, we can force the Fed's hand to do multiple rate cuts for the rest of the time until
the midterms. This big, beautiful bill thing, I think is just a sideshow. It doesn't really, in my opinion,
does much stimulating. All it really does is extend what's already been cut in 2017. So some
people are thinking, well, this is a tax, you know, this is a new tax cut. It's like, not really.
It's kind of just extending what's out there. I mean, yeah, there are caveats here and there where some of the impact may be a little bit stimulatory, but this is just a continuation
of what we had in 2017 for the most part. There are some carve outs that like some of the Republican
House members have been able to get like, you know, like raising the salt caps dramatically
from like the 10,000 limits, I think like 40,000 or something. So there is some hard
ball being played in the background. But I think the real the real issue here is that the economy
itself underneath is starting to slow down housing prices, more homes are staying on the market,
they're staying longer, which, by the way, is a good thing. Because, you know, if we want to
control inflation, we need more inventory on the market and we need buyers to kind of stop paying outrageous amounts of money to get there.
Like it's one of those things that we need. It's sad to say this, but we need to control consumer spending.
And the only way you're going to do that is by keeping rates higher than normal. And I think that's what's happening right now.
And, um, and yeah, I, I just, I have a feeling though, that the, the, the fed is going to be in a really, really bad place if they let things get too far. And then you're going to have to come in with emergency rate cuts, which could theoretically destabilize things even further.
is doing everything in their power to weaken the consumer.
You've already got the student loans going into delinquency,
those delinquencies going into hitting credit reports.
So that's going to be a pullback, right?
You've got government spending.
All of those people that have been given severance by the federal government,
they're eventually going to run out of severance.
That is another segment of the population that's going to be losing out. All these nonprofits that were getting a ton of money from the federal government,
that those doge cuts will eventually hit them. And then they're going to start laying people off.
And then you've got the federal government kind of stepping away from the state and local budget
supplements that they've been doing for the last four years. And the state and local parts,
they're cutting back now. So the biggest drivers of employment over the last three to four years have been state and local governments
and federal government. If they all start pulling back at the same time, you've got yourself some
massive unemployment coming up. I mean, we could theoretically touch five by next year. And by that
time, I think, you know, you're in a, you're going to
see a cutting, a cutting, a cutting regime going into next year. At least that's what I think.
I think this year there may be a lot more pauses, but if the economy deteriorates,
especially if unemployment gets beyond that 4.5%, I think that's going to force the Fed's hand.
And I think, I think, like I said, the administration is doing everything in its
power to basically cut the consumer off at the knees to control inflation.
I don't know if anyone else has any opinion on that.
I assume Stock Talk was going to jump in on that.
It looks like he got rugged.
Chris, I really appreciate those thoughts. It's really interesting uh actually the the liquidity thing i've seen that mentioned
by a few people that uh liquidity is drying up here uh which is i'll comment though um chris the
one the one difference i kind of have with that is i think we might see, you know, it the tax increases on two and a half million.
trying to do things to kind of, you know, bolster that lower, mid to lower economic class.
And so I don't disagree with a lot of what you said, but I think that's the one kind of like pushback I'd have.
And I agree with that. I just think in the short to medium term, a lot of the tariffs, tariff issues,
they're not going to be able to bring a lot of those jobs
back instantaneously, right? So the thing is, and not to mention, even if you did want to do
scoring, you need capital to basically have that happen. So a lot of these businesses,
they have to build things. They have to actually make factories. They have to move supply chains
from A to B. So I think the goal is noble,
but the execution of it is lackluster. And I think a lot of businesses, like I said,
they don't have the capital to get the thing done, especially if they have to take on new capital
at 7%, 8%, maybe even 9%, depending on how their business looks credit-wise,
to basically move this stuff. And
I think that puts pressure on margins. So this is where, like I said, things are getting a little
bit complicated. And I think the administration, I don't think that they're the type that don't
have a plan. I think the silence from Besant lately, especially with the bond market, has been a little bit
jarring for me.
Like, I want to actually hear like, OK, what's the plan here, guys?
The 10-year spiking, the 30-year spiking, the 20-year spiking, long end of the curve
is really getting up there.
So what is going on?
Like, how are you guys going to deal with that?
Now, I do know that they have some mechanisms that they could pull.
Like, the three main ones that
I know that eventually are coming our way is number one, um, SLR ratios where they exclude,
um, exclude treasuries from, uh, banks, uh, banks, um, leverage ratios. So banks could theoretically
buy more treasuries. That's, that's one, one, um, solution. And that's kind of like already being
put into the ether with, uh with Mickey Bowman's confirmation.
I think it's supposed to be coming up soon.
So that's one thing.
Another thing is I'm not sure if they would want to, but they could theoretically sell a lot of their MBS holdings.
There's about $2 trillion of MBS holdings and just convert them to buy the long end of the curve and do yield curve control.
And that would technically be neutral on the inflation side.
Of course, the cost to get home might stay elevated, but who cares if you're controlling inflation?
That's actually not a bad, bad solution.
But I think there are mechanisms that could happen. Another thing is possibly requiring, you know, certain funds to own a portion in treasuries. That is another thing. Maybe during some of these trade negotiations, they could kind of like put that into the into the into the deals as well. Like, Hey, listen, you know, if you want tariff relief by the long end of our, of our treasury bonds,
But I think there are mechanisms that could happen.
and you know, we'll, we'll call it even, I mean,
I think that Japan's actually kind of kind of suggested that they'd be
willing to do something like that.
But I think eventually the administration is going to have to work on
controlling that, that the long end of the curve.
Otherwise they're going to have major problems coming up.
I feel like it's gonna be a major problem in general.
If we have to bribe people to buy our treasuries.
That'd be a big change.
I mean, isn't that what you did with Bretton Woods?
You know?
Yeah, I mean,
there's a big shift in U.S. policy in the last 25
years when everyone wanted to buy our debt
and now we have to, like, bribe them or
incentivize them to do it. That would not be
a great scenario.
By the way, this small stock, NVvts i don't know how much this partnership with nvidia is something but they just announced
like a little tingy and that stock's up 50 and after hours you don't want to read into it for
the people actually know about the stuff you can continue though stock talk just got booted again
well crystal but don't you um so the one i i again i agree for like 90 of it the one the one
uh like little thing that i that i can kind of foresee is this kind of sets that backdrop of
of trump having his having his uh basically like scapegoat bogey whatever whatever term you want to use
where it's like hey you know i want them to do xyz it even though it's even though like the people
that are in finance could look at it and be like that's not actually how it would work you know
for the layman like hey the fed's not helping me it's their fault kind of thing and then that could
kind of you know for the back half of this year, create that push pull between the Fed and the administration,
which kind of like opens the door for what you said on the 26 cuts and all that stuff.
I mean, the Trump Trump has always been like that kind of personality where he sees a problem. And what he does is he gets ahead of it by putting the onus on the other party to basically take responsibility, right? So he did that. He
does that with like the media where, you know, he'll be like, oh, the media is fake news. And
then when the media says something, you know, that's antithetical to what he's trying to do,
it's like, look, the media is biased. And see, I told you the media was biased. So it's kind of like the same thing with Powell. It's like, you know, one hand he's raising,
he puts this tariff thing onto the, onto the, you know, onto the mix. And then he sees things
going south. He's like, oh, the reason why you have problems is not because of my tariffs. It's
actually because of Jerome Powell. So now everyone's looking at Jerome Powell and Jerome Powell's like,
what? Like, no, my job is to make sure that the monetary policy is actually correct for what we're seeing.
The challenge here, and this is the part that sucks for Jerome Powell, is that he doesn't
actually know whether the tariffs are going to be inflationary or not, you know, and he has to go
with the more cautious approach. So it's one of those things that's just,
I guess, I don't know.
The president has a way of basically shifting things
to other parties to make his policies look better.
I mean, it's funny that we say this,
but it's like when the economy is bad,
that's Biden's economy.
When things go good, it's like,
this is the Trump economy.
We don't say it.
He literally said it.
He said the good parts are mine.
The bad parts are his.
Yeah, that's pretty much it.
Inflation is because of Jerome Powell, not because of me.
But then when you get like a jobs number that actually comes up positive, this is the Trump economy.
See what I did?
I created more jobs.
So it's like, oh oh it's hilarious dude look hey um evan so that nvts somebody went in and bought
3 000 contracts at 15 cents today um 45 000 for the outlay here and they just yeah it's
continuing moving up 100% after hours now.
They just made $495,000 off of that.
Almost a half a million dollars.
So far.
So far, if it holds.
It's probably going to hold.
I want to call out that Mystic from our Discord,
from StockTalksDiscord, called that this morning.
He had a big write-up on NBTS this morning.
It's freaking incredible.
All right.
StockTalksDiscord, getting investigated sec we know disgusting behavior is it more disgusting than gjt coin riding up
because the guy says i'm meetings with you i mean look if the sec is not going to do anything about
that this is not even like going to remotely register on their radar.
Kevin, can we get some more of your takes around today's action,
the bond market, everything that's going on?
Yeah.
So I think there was a space last night.
I thought it was a pretty decent space.
Frank had it.
We kind of talked about this stuff. Look, in my opinion, we were in a situation
where obviously we were consolidating for a bit. You had defensive sectors really outperforming
some of the risk on sectors for a very long time. I brought up volume on this space, I
think a couple of days ago, right? Volume continued to decline. So I mean, like it showed just
that we had a little bit of exhaustion. I think the Moody's downgrade itself. Yes, we saw a little bit of a fade there, but we saw some
buyers kind of stepping in. But, you know, sometimes markets want a reason to take profits.
And so we continue to see a little bit of consolidation. We actually had communication
services and IT doing pretty well earlier this morning. Google had a nice little pop, but it started to fade.
And you started seeing that rotation again back into defensives relative to risk on.
And then you have the option.
What I find very interesting about this whole thing, and maybe I'm wrong here,
but I started off with fixed income.
So I have some background in this. I've got a couple of licenses around it. 20-year auction
is not like the headline banger of auctions for the treasure. So it's already something
that's not really that popular. Is it a gauge? Obviously it's the first auction post Moody's,
which is kind of unfortunate,
but I wouldn't have this as the end all be all
as our benchmark metric for demand for treasuries
or in an auction sense, right?
Secondary market can do its own thing,
but from an auction standpoint,
I don't think it's the,
it should not be the end all be all.
It's gonna freak people out until we get another one, but-
So should people be the end-all be-all. It's going to freak people out until we get another one. So should people be drawing that parallel
between the Moody's downgrade and the lack of bids, I guess,
or is that connecting two dots that shouldn't be connected?
No, I don't think you should connect those at all.
Moody's, in my opinion, and somebody can correct me if I'm wrong,
if they have no more knowledge,
but once again, I kind of have experience in this space.
Moody's, I never really, how do I say this in a nice way?
Because Moody's does really good work, but they're not like the premium rating agency
for sovereigns.
They're not the Goldman.
Right.
So I wouldn't say Goldman.
Well, maybe Goldman for the equity front.
Goldman on commodities. Yeah, I'm't say Goldman. Well, maybe Goldman for the equity front. Goldman on commodities.
Yeah, I'm talking about that.
Okay. But yeah, so you can't, I mean, I'm sure there's people that are making this parallel, but trust me, if somebody is managing a portfolio right now, it's not sitting there and saying, damn, now we have to back off because Moody's downgraded, even though S&P downgraded 14 years ago or whatever.
So I think it's just, you know, obviously it's something that had to happen.
You saw a little bit of a blip on the radar here.
I think if you wanted to tie something in to the Moody's item here, you could make a case.
And I'm not like a tinfoil hat here, but you could make the case that maybe it was released to maybe influence the budgetary conversations I think that's actually a
stronger parallel to to that then this actual result that we had here now if
you look at indirect bidders it was a little bit it was a little bit soft for
indirect bidders so foreign van may be softening up a bit, but once again, I don't think that's
because of Moody's. I think we also kind of lose sight. We're normalizing a yield curve, guys.
So in a normal yield curve or anything that you are buying, the more duration or time
that you have for any asset, you deserve a higher premium, right? So we've been in
an inversion for a very long time. We're getting out of that inversion, but we're still going to
have a normalization here. So I think we have to also kind of step back and say, hey, like,
this is the part of the cycle, in my opinion, that it does get a little bit rough. And actually,
I applaud the equity market for not being as volatile, given the fact that we have this kind of readjustment happening on the longer end of
the curve, 10, 20s, and 30s, especially the 30s. 30s are doing some work here on the yield front,
right? But I think we still have a little bit of a normalization. We have to figure out what
the market rate is going to be for our debt, and then we just continue to move forward.
So I'm not really too concerned about it. That's one thing.
Because I know I'm going to get somebody DMing me and like, this is unsustainable.
What are we leaving for our children? And what are we doing? Look, the debt is all relative to
other nations. Do we need to handle it in a way? Yes, we do. But don't freak out about that. We've
been freaking out about debt in the United States since the 80s.
We had a little bit of a lull in the 90s and then we freaked out again. We continue to accelerate. And yes, is it a problem? Yes.
But you look at other sovereign countries out there, they're also ratcheting it up. Right.
So it's a relative scenario. I wouldn't get too concerned about it. I don't think people are bringing up, oh, is this a Liz Trust moment? No, not at all. That was a pension blow up for Liz Trust. That's
nowhere near where we're at right now. So are we seeing a gyration? Yes. Should it also provide a
little bit of volatility in equities? It should. It hasn't been. Maybe we're going to focus on it
a little bit more. We've been a little bit more resilient.
But we've seen these type of readjustments happening in the past.
This is a part of the cycle that I think we just need.
If we want to get out of this and you want to normalize, you've got to normalize the whole thing.
We can't like as soon as we see some weakness, we want to have people come in and it's captain save us.
I think we have to kind of go through a little some of some of these growing pains here in order to better adjust.
So that's kind of where I'm at with it.
Look, if you guys kind of just think about it, go back in your memory, right?
Do we have a debt conversation like every year or every two years?
Doesn't it seem like it comes up and it's a problem and then it just happens to go away
and then everything's all good and then it's a problem again and it just happens to go away this is a cycle that i haven't seen actually been taken serious since i've been following markets so i'm
not too concerned about it the the fact that we're putting so much weight now the equity market should
have readjusted for sure um they're way behind the curve when it comes to what's happening fixed
income but uh the fact that we're utilizing the 20 year as our only benchmark on auction performance when it's, you know, it's not really that popular.
I don't think it's I don't think that's a fair thing. So that's where I'm at with.
I think we deserve longer. Higher yields should be on longer in the curve. It's more duration.
We have not paid investors that buy treasuries any type of duration premium in a very long time. I'm 34 years old. I mean, 5%
30 year for me looks actually pretty attractive, right? Somebody will eventually step in there.
It just depends on where the level is. And that's what makes the market. And I'm not too concerned
about near-term volatility yes is the are we going
to shut off the lights in the united states tomorrow because of the no we're not we're
going to pass a deal we're going to move forward we're going to focus on the next thing like we do
every year every two years and we just continue to move forward if you're expecting washington
to come in and start slashing 30 20 even%, even 10% on spending,
you got another thing coming because that's not popular.
People want that as voters.
People would love, yeah, let's do it until it actually happens.
And they're like, whoa, whoa, whoa, you're touching my stuff.
Don't do it.
And so it's just how it is.
It's how the cycle is.
I wouldn't fret over this whole thing for real. I'll kick a it back I don't know if anybody else has any comments on it but yeah I got a comment
for you uh anyone who dm's you about what are we leaving for our children just uh hit them with
the mj f them kids meme yeah I mean and maybe I'm a little bit insensitive, but you know what I'm saying? Like, you get people that, you know, and I know it's a principle thing.
From a principle standpoint, yes, we should be getting our fiscal house in order for sure.
Right.
But practicality, practically, probably ain't going to happen.
And at the end of the day, other countries are ratcheting it up, too.
It's all relative. It's like looking at a currency. You don't look at a currency by its own right. The U.S. dollar is nothing without it being paired to something. Right.
on it. And so you got Germany about to ramp it up. Germany's about to go all US style and start
building out their defense infrastructure. Are we freaking out about that? No. I mean,
their yields did kind of blow out when that initial announcement came out, but over time,
you're going to be able to digest that. China, once again, the second largest economy in the
world, first largest, number one economy in the world, depending on what metric you benchmark it
at, I think it's still the United States or whatever, their debt
load is blown out.
They don't even, they don't value currency in the way that we do, right?
So they don't even look at it the way we do.
So I think it's all relative.
I think we're going to be all right.
People freak out about this stuff all the time.
And then we're going to get on to the next thing.
Let this thing normalize out.
And at the end of the day, we have puts in place.
Yields blew out and we completely changed and adjusted our tariff policy because of that.
If you think it's only because, oh, we had a good negotiator in chief, you got another thing coming.
It's because yields blew out. If they blow out again and there's a problem, guess what? We will
see an adjustment from either the White House or we will see an adjustment when it comes to the Fed. You don't want to talk about QE. Everybody hates QE. Everybody
hates QE until that liquidity actually hits and injects in the market. And QE is the best thing
when it comes to equity valuations, right? Maybe people hate it, but at the end of the day, look
at the correlation between QE and equity performance. Look at the correlation between
inflationary pressures to the upside and equity performance. Look at the correlation between inflationary pressures
to the upside and equity performance.
There's a reason why there's a correlation.
My Apple will take your QE and raise your share buybacks.
I don't want your.
I'm all for it.
I think one of the reasons why everyone,
I wouldn't say is freaking out about the credit markets
and why this time may be a little bit different
is that when you look at debt to GDP like 10, 15 years ago, we were still under that
100% threshold. And our GDP right now is still somewhat growing. It's just the pile of debt that
we have relative to our income is the major driver of all of this. So I think for equity investors,
the challenge is when fixed income is giving you such a great return that, you know, it's like
almost like five and a half, 6% return guaranteed without any risk. Now you're asking yourself,
well, should I be buying this equity that I have that basically is going to have to finance itself
with that higher interest debt? And now it's going to have a much harder time, a much higher hurdle to get over. So from a valuation standpoint,
it could compress things. I agree. Which is good. Overall, everyone is going to figure things out.
No, no. Everyone, look, the good thing about the US economy has always been that we're dynamic and
we've been able to innovate ourselves to that next level.
Like right now, we've got AI that's a huge productivity boost. And at the same time,
should be very, very disinflationary going forward, right? Like you're going to have huge
productivity boosts that are coming out. I feel like that's the best part about the US.
Anytime we have a crisis, we figure out how to get around the crisis, you know, and we we give
ourselves this huge boost through technology and through other things that get us over. The only
part that I think that sucks right now is that we have a tremendous amount of debt relative to our
GDP. If we didn't have that issue, I wouldn't even I wouldn't even be talking about it. Be like,
whatever. The Fed will just come in and they'll just, you know, like the government will come
in. They'll, if we do get like a massive recession or whatever, the government will just come in and
just, you know, just spend overspend and everything will be fine. I think we're,
we're at a point right now where we could have underperformance in the equity market for a
prolonged period of time, depending on which sector you're looking at.
I think tech is going to be fine, but there's other sectors that are a lot more reliant on
capital flows and debt that are going to have challenging time. They're the ones that I would
say people have to be careful with having a diversified portfolio, and then you're going
to see underperformance relative to other companies. So I think this is where, you know, you're looking at like, like, I think someone said,
I don't know who said it today. It was like, they were listing out all these industries and
they were complete garbage, like airlines, garbage, retail garbage. And I think, I think
out of like 20 industries, about 16 to 17 saw no real actual gains.
Everything has been technology, technology, and technology,
and technology has been leading us into the promised land.
And I think that trend is still going to be here to continue.
So that's why a lot of portfolio waiting on tech has actually been doing well.
But it's even more diversified.
You haven't been doing as well.
Yeah, well, I don't know what timeframe you're talking about as far as those returns.
But because we do have some sectors that are actually outperforming the S&P 500 just in general.
And some have been making new all-time highs right now.
I mean, like 10 years plus, like over a long period of time.
Like let's take a great financial crisis.
Like if you look from post-GFC to now and you look at the sectors that, you know, actual pop,
you know, positive turn. I don't think that's the case, but I know what you're talking about now.
So yes, have they been a major driver to equity performance on the index level? Yes,
I would agree. You know, I, you know, we go back and talk about the U.S. debt. There's a couple
areas I would be, you know, I'm more concerned about JGBs right now or Japanese bonds than I am with where we're at right now.
I'm more concerned about credit default swaps themselves and some of the underlying credit in high yield than I am with this whole situation now.
Now, they will have a relationship, right, because a lot of those are actually being benchmarked off the treasuries.
a relationship right because a lot of those are actually being benchmarked off the treasuries
but i think uh you know if there's going to be a crack i don't think the u.s treasury market's
going to be the one to like create that flush if anything it's probably gonna be the japanese
you know japanese economy and and and their uh their sovereign bonds because that they're at the
highest um give level on their 30s set the highest level ever right now um and i'm not sure if they
are able to service that debt just based on the economic growth that they're having.
So, I mean, there's definitely a couple of things of risk that are out there.
And once again, we've just seen, what, a 20, what is it, 22, 25% retracement off the lows, 20% retracement off the lows.
retracement off the lows, 20% retracement off the lows. If you're looking at the NDX,
in a span of five weeks, six weeks, a little bit of a pullback, I think is actually healthy. And I
think a lot of the things that the equity market has ignored is probably taking a little bit of,
is now kind of focusing their attention on some of these other economic factors now.
And I think that's kind of creating that pullback.
And then for the S&P 500, we'll see how this, I mean, dips have been bought before.
I believe that we are now at the point where we will fill at least that first gap on the S&P 500.
It looked actually pretty juicy for us to actually hit the upper end of that gap today at some point.
And I think that also is another level where technicians are kind of looking at.
You know, it's hard to commit capital when you've got two gaps to the downside that still need to be filled.
And you have a stalling out in price action and momentum.
Right. It's easier to press the sell button and then press the buy button right now in that type of environment.
So I just like to see pullbacks being very swift and quick.
If we're going to do it, let's do it and get it over with
and then kind of continue to reset and move forward.
But I think, once again, if it gets too out of hand on the Treasury side,
there is puts that are in place.
We've already seen what those puts look like on the tariff front.
And I think they will definitely react fairly quickly if the market's blowing out and it's not related to tariff news in general.
Right.
Kevin, I'm curious about your opinion on this on that topic.
So, you know, like the first time we had this overnight panic in bond markets post-China tariff escalation.
Then Basen came out the next morning, and we had a bunch of walkbacks, and markets cooled off,
and the bond market cooled off, and we kind of had the beginnings of this recovery rally.
At this point, now that yields are back up here, do you think anything can be done from a fiscal standpoint, from the White House's point of view, to tame this?
Or do you think this is entirely in the Fed's hands-in?
No, I think they can still jawbone, right?
That's what they're good at.
They're good at talking markets down when it comes to action.
I think it still remains to be seen.
It's still young in the administration.
I'm not saying that they're not going to.
I'm just saying that you have to give them at least a one-year leeway, in my opinion,
when it comes to certain actions from the White House.
I think they're going to at least jawbone and talk it down.
That'll be one.
Two, probably, just given the personality from the White House, you probably would also
see them kind of reaching out to maybe some of these big financial institutions to get
them to maybe put a little bit of support in.
Sounds unconventional, but it's been done in the past, so it wouldn't be surprising
that we do it in the future here.
I forgot what the law or that provision is. I think, Chris,
you were bringing that up too, where you're going to be able to expand the cap on treasury holdings
for financial institutions. That's not going to be the end all be all, but it'll be a supportive
measure. So I think there's a whole thesis out there like, oh man, they're just going to soak
up all this demand. I don't think that's gonna be the case,
but it will be another liquidity pool
in order for us to soak up supply.
I think that'll be the case.
And then I think this is actually gonna be kind of funny,
but I think percent goes on the shorter end of the curve
for these auctions moving forward, just like Yellen.
The reason why they wanted to do that long end and get the long end down is because they want
to finance in the long end and not on the short because they pretty much campaigned on that.
But at the end of the day you see what's happening right now. I think anybody that
that values the treasury position knows that funding on the long end is probably asinine
at this point because it would just put us in a worse position. And so they probably would have to fund on the short in order to get things
through for now. I think that would probably be, I don't even say it's a policy shift,
but it would be something that most likely they're going to have to take that type of action.
But I think that's as much as they're going to have to go. From a fiscal standpoint,
what are they going to do? There's too many things that there's too many promises that have been made. And I got to give Trump credit. He's been actually follow through following through on them. And some of them are not traditionally conservative, usually conservative measures that he's actually pushing through, which is also another reason why it's causing this imbalance
when it comes to this whole budget deal.
So once again, I think it's gonna be an issue
until it passes.
It's gonna pass, it's gonna go into effect,
and then we're gonna move forward.
I don't think that this is gonna be a longer term thing
that we're gonna be worried about.
I mean, I feel like we literally have this conversation
every two years. We worry about an auction. Some auction has a massive tail on yields.
Everybody talks about it. Everybody becomes an expert. We focus on the next auction. It goes
good. No one cares about auctions anymore, especially a damn near 20-year auction.
For me, I'm kind of throwing this one aside but that's just me look
and chris i know i think you were going to jump in the last thing that is kind of odd though
is that yes you did have the moody situation you would have thought that the scent would have
probably lined the ducks up to make sure this auction was strong as hell and that didn't happen
that's the only one that was kind of like yeah eh, you know, I, in my head, actually, that's
what I was thinking about today.
I was like, there's no way that they're going to let this thing tail off in the way that
it did.
And it did, uh, you know, that is the only thing that was kind of, uh, taking me back.
Maybe they're going to, you know, get a little bit of a better backstop because, you know,
that's the treasury's job is to sell our bonds.
I was thinking the same exact thing. I was like, they're going to have a lot of phone calls between now and then to dealers and primary gens saying, look, you better make sure you buy these buy these up.
So that's something I agree with.
Also, I'm glad you clarified the whole thing with Treasuries.
You know, a lot of people are freaking out.
They're like, oh, my God, there's like nine trillion dollars in Treasuries that are due this year. That's like a horrible thing. What's going to happen? It's like they'll just keep issuing short term stuff, man. They're not going to be like, oh, yeah, you know what? Let's let's issue nine trillion 30 year treasuries or nine trillion 10 year treasuries.
10-year treasuries, all they're going to do is they're going to do the same thing that Yellen
did. The only problem is, and this is where you got to look at Yellen and be like, what were you
doing, you dumbass? You had the option of doing 1% for 30 years. You should have been terming out
that debt during COVID as much as possible. But now we're in a more dire position. But yeah, I agree with you.
I think a lot of people are freaking out about treasury not being able to sell.
No, they'll just sell short.
And there's plenty of people willing to buy two-year treasury.
So I wouldn't even worry about that.
So yeah, I agree.
Or even on the bills front.
A lot of these treasuries, depending on your brokerage
house, you could buy treasuries and leverage them for just like cash, right? They'll give you
95% release on the capital that you have. So you have $100,000, you buy $100,000 with the
treasuries, they may release $95,000 for you to be able to trade, you still keep that yield. Now,
there's other intricacies for that. But yeah, so on the institutional front, at some point, these yields are going to get high enough
where somebody is going to want to step in. I don't believe they're going to get just completely
blown out. That would be very unique. And I don't think that would actually happen,
where they completely get blown out. I think there will be some buyers to really step in.
And I always have to go back and say, look, remember, we were inverted for a very long time,
a lot longer than normal. I think it was the second longest inversion in our history,
if I'm not mistaken. So there's also the normalization of everything happening
at the same time as well that we have to be mindful of. And usually during these
normalizations, I know Brett was up here. I don't know if he's still up here, but usually in these
normalizations, it does create a little bit of volatility. I'm just, like I said, I am more
concerned about other fixed income products, regardless of what treasury is doing. Treasury
will have an impact, right impact when it comes to benchmark,
but I'm concerned about a lot more other things on the fixed income space than Treasuries right now.
And that's how I kind of looked at it.
Just say CRE debt.
I'll even throw... Just say CRE debt.
I'm just saying I think there's a lot more concern, and not even that.
It's the collateralization of buy now, pay later.
I think that's the biggest risk that we have. I mean, it's completely oversold, lack of oversight as well.
Churn that's taking place, the reporting that we get through earnings, the fact that we have
write downs that are lower than Amex coming from a firm, which is Asinine. Some of that stuff just
does not add up for me, but I've been on that train.
How big is that market volume-wise, Kevin? I actually don't know. I'm just curious.
Dude, your guess is as good as mine, dude.
Yeah, it's all chattery.
I've always wondered about that. Last year, there were people talking about it as a risk
when we were entertaining all these things, like commercial real estate, student loans,
and we're going down the list and seeing what might not be a risk.
There were people that brought that up last year.
And I traded a firm a few times, but usually just off the technical structure.
I never like deep dived the company.
But I have read a little bit about like how much volume is picked up with BNPL
just over the past 12 months.
I've just never been able to find a good source of like what the total
exposure is to these BNPL programs.
So Affirm is doing $8.6 billion
worth a quarter
it looks like right now from the 2025
of total gross merchandise value. So GMV just a loan.
That's the problem, right? So GMV is what you're going to kind of map that on as far as the
notational issuance. But then they issue it out and then they sell it off. They issue it out and the company that they're partnering
with, like let's say a Walmart, this is just an example, right? I don't know the, but like,
let's say like Walmart takes 5%, 10% of the overall underwriting risk, right? For a lower rate
is like a whole different thing, but it's just a shadow. It's a shadow thing, in my opinion, that I feel like it just doesn't have the proper oversight for it.
And I'm not hating on a firm.
They're doing exactly what's legal for them to be able to do.
I just feel like some of the metrics, in my opinion, just don't add up.
So that's one of them.
Once again, Japanese bonds, another issue that I kind of am with.
The CRE situation is kind of a unique one because it's not all CRE.
It's really kind of like those double B properties.
Those properties that are literally sitting in the suburbs that used to have a corporation working in there for a small business that no longer is operating there.
That's the one. That's the valuation one.
It's not the ones that are in downtown new york or anything of that nature now there's there's a couple of properties in chicago
downtown chicago that have gotten sold for 80 like 20 cents 25 cents on the dollar that i find
a little bit unique but i'm not really too worried about that now uh ladies i'm kind of worried about
other things and in the treasury space but buy now, pay later, man.
There's a lot of money that's being moved through that.
Yeah, because I'm looking through right now, just peeking through some of the sources,
and the only thing I can find in terms of like officially registered data goes back to 2021.
So it's a bit old, but it says in 2021, 180 million individual BNPL loans were issued with a total value of $24.2 billion.
And then there's some other sources that are saying in 2023, that market was valued at roughly $30 billion annually.
So I don't know if that growth is accurate, but let's say it grew from 24 billion to 30 billion from 2021 to 2023. I mean, you know, maybe it's at 40 or 50 now, unless it's
accelerated way faster. I don't know, but it feels like that's not a huge amount of volume,
but I don't know what the second order impacts of it are, you know?
Right. Yeah. No. And that's what I'm saying. It's just unique. It's unique. Am I like,
uh, pulling on Michael Burry right now? No. Right. It's just of say it's just unique. It's unique. Am I like a clone of Michael Burry right now?
No, right?
It's just like, it's a unique situation
that I think is gonna be leveraged a lot more
if we do have any type of economic stress
being put on consumers,
especially the bottom 50% of earners here in the United States
that are already seeing stress
or already have credit utilization rates
that are very high on a historic basis
and at recession levels,
and all these things that I've always talked about, right? Like, it's just always the thing that's in the back of my mind uh once again is
that like your oh sell everything no absolutely not uh it's just a it's a concern for me that i
feel like it will you know you know show his ugly head eventually uh and and and we'll have to to
kind of deal with it um i wanted to say something else about the treasury though.
Yeah. From the auction standpoint, and we also have QE, which people aren't going to be,
I always, I want to go back to this. You also have the QE side, which initially will probably shock equity markets, but over time, QE is actually very conducive to equity valuations
over time. And so that's also another area too, right? We have foreign buyers,
we have domestic buyers, institution, primary dealers out there, and then you also have the Fed.
And the Fed is always going to backstop us as much as they possibly can. So I think, once again,
this is kind of a little bit of a normalization. I wouldn't get too bent out of shape on it for now.
I don't want to get too bent out of shape on it for now.
And oh, yeah, I was going to say TLT, look, it's going to sound absolutely crazy, right?
But I feel like it's not a recommendation, but if you look at the TLT right now, right?
And could it go lower?
It could go lower.
I think it might go lower, right?
But I think you go out and you buy
a year out, two years, three years out, you buy leaps on TLT right now, I think that thing will
pay out. At some point between now and three years from now, do you think that the 30-year
treasury is going to go higher than what it is right now and never actually see any type of
retracement? I don't think that's going to be the case. So I think if you go out and buy time in TLT and swing it just like at
the beginning of the year, I think Wolfie and I were kind of talking about that. I think it was
Wolf or Wolfie or if it was Amp, but one of those things that like, hey, it hits a depressed level,
go out, buy some time a little bit. Once it swings back up, take your profit and move.
time a little bit. Once it swings back up, take your profit and move. But I think the TLT is
actually looking pretty attractive for a longer term trade. If you're utilizing the option space
and the options aren't that expensive for trading the TLT, moves like today is actually fairly
aggressive for it. But I do believe that that's one thing to kind of keep on your radar. People
are going to continue to talk. They're going to talk bad about it.
They're going to continue to talk bad about just like they were talking bad
about it earlier this year. And then that thing ripped and had a nice little pop.
And you could have literally a four or five bagger on your hand.
So I think that's actually a pretty decent trade setup.
If you go out and buy a year out of, or even like the next nine months,
but maybe a year out, if we do like the next nine months, but maybe a year out if we do have this
kind of hire for longer environment. I think there's probably a decent trade there for the TLT.
Kevin, what about ABS? What do you call it with auto loans? I'm seeing a ton of repossessions
all over the place. That's another thing. And then also multifamily has been hitting,
getting some issues as well. So I think a lot of places,
they're turning up their occupancy levels as much as possible. So all this, like, Hey,
we're going to keep raising rents BS. All that stuff is going down in my opinion. So a lot of
people are like, they're trading up getting, you know, getting premium rent to making sure that
they have the highest occupancy levels possible. And I think that's why we're starting to see rents
come down in certain parts of the country as well.
So I think you're right about TLT.
I think the CPI is definitely going to be coming down.
And if the Fed even remotely hints at restarting QE,
you're going to see TLT rip.
And so I've been starting to position on getting some TLT exposure myself.
And so I've been starting to position on getting some TLT exposure myself.
$83 calls that are expiring January 2026 are going for $5 right now, $5.20.
TLT was trading at 90 spot 25.
What day was this?
What week was this?
Last week of April.
And just to let everyone know, with TLT, it works.
It has an effective duration of about 15, 15.5, something like that.
So essentially, the way that it would work is 100 basis points of move down in, let's
say, the 30-year yield would end up resulting in a $15 move in TLT, okay, based on today's price.
So you're looking at TLT jumping from like 85 to 100 if, let's say, rates were to move down by 100
basis points on the long end. And if you think about it, if the Fed is going to be cutting,
and especially cutting significantly towards the latter half of this
year and possibly some of next year, you've got at least 100 cuts coming our way.
So, like I said, long into the curve starts to come down in 100 base points.
You can see TLT rip from 83 to 100 very easily.
So that's an interesting one.
So I don't know. That's a decent setup in my opinion risk reward i mean i spend 500 i mean i i spend 500 on worse things um than that trade so that one's um you
know that's something that's out there uh you know people always talk about oh you buy fear
whatever you buy when everybody's fearful and i feel like that's kind of like the treasury environment right now.
Like no one wants to touch in,
and it kind of depends on your investment time horizon too.
Like if I'm like 60 or 70,
do I want to buy 30 year treasuries right now?
Actually,
I probably would if I could,
but,
but like,
would you want to do that?
Probably not.
Right. You probably would want shorter duration to have the cash stability, price stability.
But I mean, if you're 30 or 40 years old, 20 years old, I don't know, man.
I feel like a 5% 30-year is actually pretty attractive.
So I think that's a portfolio ad
for those that might be interested.
Hey guys, this is David from Quantified Funds.
I just wanted to jump in on the treasury talk
and say I kind of fully agree
on the short-term treasury trade here.
I think if stocks and bonds are very correlated, sometimes it's nice to think about what is
the downside in either.
As you said, at some point, the Fed has to step in if interest rates go way too high.
So look at the duration on the other side.
Like what's the worst case that the 30-year can do?
Maybe it goes to 6%.
So maybe that's
that 15 percent drop from here well if it's correlated with equities you know a 15 increase
or a one percent increase in treasury yields would probably rocket stock markets entirely so
if you're looking at just like downside of one versus downside of the other i completely agree
downside of one versus downside of the other i completely agree can you imagine six percent
there you do it maybe half my portfolio i'm gonna tell you honestly i mean uh yeah i just levered
high beta tech and like the rest of it i just go 50 treasuries and just high beta just call it a
day but a lot of people a lot of people gotta be thinking that right kevin at these levels
yeah that's what I'm saying.
I mean, at the end of the day, people are like freaking out.
And I'm like, yeah, move a little bit higher because this is something that's – oh, Stock Talk, I'm going to piss you off real quick.
This is a generational buying opportunity.
Ooh, I know that pissed you off, right?
That might be appropriate.
But I believe maybe if it does go up another you know five and a
half but i mean a six percent 30 year are you talking about a five and a half percent 10
year uh i mean i you know i'm a millennial i don't remember yields in my investment career
that we're paying that um right we've always had to try to find other ways that equities or to sell
premium in order to kind of create a yield out there stable.
And now you might have something that comes out on the horizon here.
So do you get scared at a 6% treasury yield?
I wouldn't.
I would be like, back the truck up.
Let me get some of that.
But that's how I operate.
And I'll even go even a step further here.
Let's talk about a 5.5 half to 6% 30 year treasury.
What's munis paying out at that point? Because there's going to be a differential there.
What's munis paying at? And that's where it's like, okay, are you able to pick up a muni,
like a decent muni that's like a tax backed, the GO bonds, something that's actually paying out,
let's say a 7% yield tax, tax supported.
But that might be the exact thing
that causes the boomers to actually sell their equities
and buy bonds as we all expected them to
as they matured and got older,
but that just didn't happen, right?
True, true.
I'll be buying right there with them.
I'll be right there with them.
Are you buying a bunch of bonds right now
or are you still full port Bitcoin and gold?
Loading up the munis.
Ride the boat.
That's how it goes.
I will say
that whole new Starbase thing
or whatever, I was like, can we buy it?
Are they going to be selling muni bonds or something?
Tesla people would like to do that. All I'm saying is that people laugh at
the treasuries and fixed income, but you can actually still flip munis
like a G. You can actually make some pretty decent money off of them.
They sound boring, but there's still markets for them. They still
trade off price. Yields go lower,
you got something that's trading at 6%, yields go lower,
your prices go higher, you can still flip it. You don't have to hold it for the long time.
I think I want to kind of clarify my statement. Would I hold it for 30 years? Probably not,
but I feel like that would be an attractive because you're going to go through another cycle.
We will have expansionary cycles. We will have recessionary cycles again in my lifetime.
And it's one of those
things that you want to kind of buy those because you could actually flip them in a in a situation
where we do have aggressive cuts in rates or what have you risk on or risk off markets because of
geopolitical risk you can actually make a lot of money off of that so yeah i think you're the point
the broader point you made though is well taken and a good point, which is that, you know, as the bond market gets scarier to onlookers, it gets inherently more attractive to potential buyers.
And that's that's sort of the built in backstop. Right. The idea that, you know, as yields go higher, they become more attractive to buyers that might be waiting in the wings. And, you know, a lot of equity market traders, you know, might look at it as a concern.
But, yeah, I think that that dynamic is an organic one.
And, yeah, it makes sense.
It makes sense.
So hopefully that'll be what helps quell the panic here as we go higher in yields.
Beautiful. helps quell the panic here as we as we go higher in yields beautiful perfect uh this was great i love i'm coming in on this convo are you guys ready to
talk a little bit about fighting inflation currency debasement here how's it going by you david ready
to rock very cool awesome i'll roll this into the segment i think that this is super pertinent
to some of the stuff you guys were just talking about as well and with bitcoin hitting new all
time highs today what better time to have a discussion here so super excited to do this
appreciate everyone that's an audience let's roll into talking here bitcoin and gold two of the
definitely yeah as we're going to that you should make sure you're following all of the speakers up
here the last conversation was great this next conversation is going to be great.
Follow the host, follow that Quantified Funds account, follow everyone else up here who's
adding to that.
We'll prove your experience on this app for sure.
But yeah, Gov.
I would second that motion, make sure that you are following the speakers that are up
here.
And now to talk about pretty much the most pertinent topic right now, let's get into
So Bitcoin and gold have been roaring this year.
It's a currency debasement trade.
You have a Fed that's likely going to continue to print.
You also have a lot of issues coming in regards to the dollar itself.
And David can walk through some of those pieces.
We did a great live stream talking about this yesterday.
For context as to why I wanted to have David on here doing this, David Jukanski runs Quantify
Funds.
He's behind the account right now.
I've been working together with him for a while, getting the word out here on ETFs.
Really, the flagship ETF is this one, BTGD.
I'd encourage you, if you're in the audience, type that in.
Take a look at the performance real quick for me, and you will see why we're talking about it.
It's soared through new all-time highs today, and it's one of my favorite ETFs on the market right now.
It's up 35% year to date.
It's up 81% since they launched it.
It has just basically continued to move upwards.
And based on the current economic conditions, I really don't see what's slowing these down
right now.
I've been bullish Bitcoin for a while.
I got bullish gold early last year.
And so, David, maybe you can
kind of give people a little bit of the background thesis of why these two assets make sense right
now, what the investing opportunity is, and then how the ETF puts them together and makes this
work for people. Absolutely. Thank you guys so much for having me. As you alluded to, we launched the stacked 100% Bitcoin, 100% gold ETF ticker BTGD in the fall.
The concept was to offer a two-in-one currency debasement hedge wrapped up into one ETF
using a process called Portable Alpha that was initially brought to the 40X space by PIMCO
decades ago with funds called PIMCO Stock Plus.
And the concept is providing a leveraged ETF,
where instead of leveraging the same asset on top of each other,
you leverage two different assets on top of each other,
hopefully two assets that have correlation benefits
that allows you to rebalance within the leveraged ETF,
giving you less path dependency than a traditional leveraged ETF,
making this much more effective for buy and hold investors. We do not have a daily warning in our
perspectives that we're intended just for daily use. We market this as leverage for the long run.
And I think, you know, tying in directly to the conversation we were just having on treasuries,
why aren't treasuries moving independently of equities in the face of volatility?
Well, the debt problem is with our government this time.
It's not on the individual's balance sheets because of real estate single-family homes as in 2008.
It's not on the banks.
It's in the government's balance sheets.
And what we saw on Monday is it's not just in the U S balance sheets.
It's in the balance sheet of all developed nations around the world.
It wasn't just us treasuries that got hit hard on the downgrade on Monday.
It was all government debt around the world got absolutely demolished on Monday.
And that's where you're seeing Bitcoin and gold step in. The two make sense as a pair,
because there are two different forms of stores of value. And I know a lot of Bitcoin non-believers
have a hard time conceptualizing it as a store of value. But if I were to tell you this is an asset
that six, eight years ago, they were mining 15% new supply every single year.
Right now, they are mining less than 1%.
They are mining 0.86 basis points per year of new supply.
We're over 20 million into 20 million, 21 million total Bitcoin that will ever be mined.
The U.S. listed ETFfs that have been out for 15 months
own over a million of those michael saylor owns over a half a million of those
um as long as supply increases or demand increases by more than one percent a year over the long run
this is an asset that should go up um and while i fully you know obviously i'm drinking the juice
of the bitcoin and gold concept this has been our baby for a long time. I do fully believe that treasuries,
for example, at this point in time are a good hedge. But I think as we talked about on the last
call, regardless, that's still a trade. That's a trade because we will ultimately just continue
to print money to get out of our debt situation and our demographic situation that we find
ourselves in in the entire developed world.
So Bitcoin mining at less than 1% a year and gold mining at less than 2% a year are two
scarcity assets that will continue to be scarcity assets for the foreseeable future.
There you go.
And that's the key right there is the scarcity.
And so that just has a ton of value.
So let's talk about, you know, why not people go and buy double leverage Bitcoin? Why not buy
double leverage gold, this, that? How does ETF stack these together? What's that mechanism?
What does rebalancing look like? And why is that valuable?
Yeah, so we rebalance on drift in the CTF, generally right around a 5% drift.
Yeah, so we rebalance on drift in the CTF generally right around a 5% drift.
That tends to be three to four rebalances a week.
If you want to buy leverage ETS and you intend to rebalance those positions three to four times a week, tweaking and adding and cutting just to keep your actual expected overall leverage ratio intact, you can achieve your desired leverage ratio over time.
A lot of people look at like TQQQ and look at it for a 15-year period and see the asymmetric
upside if you just buy and hold. That's just in those examples of those asymmetric periods with
just significant volatility on one side of the coin. But choppy markets leveraged etfs can have a lot of path
dependency and you can see a lot of erosion from that path dependency so most simply we take the
the responsibility of doing the rebalance off of your plate and putting it onto ours
and for advisors who aren't built to have models that are trading multiple times per week.
This is something that one from a compliance perspective doesn't say only intended for daily
use and does some of that rebalancing prepackaged within this vehicle. And that's why our risk
reward is so much higher than either Bitcoin gold or leverage Bitcoin or leverage gold.
We have, you know, as we alluded to on the onset
of the call about an 80% return since our inception in mid-October and just a slightly higher risk
profile than just Bitcoin by itself yeah one of the things that we talked about is it's really
tough for people to rebalance right so somebody might somebody might go into this saying, hey, I'm going to put, you know,
X amount of money in gold, X amount of money in Bitcoin.
But as they start to rip, right, like in different directions.
So, for example, when gold was dripping earlier this year, you might have said, hey,
you know, the move is gold.
Let's stick with it throughout the year.
Bitcoin's underperforming.
Let's not roll there. Right.
But what you're doing is you're consistently
rebalancing. And so people, that's why when I just want people to look, there's a reason that BTGD
right now, it's up more this year than either Bitcoin or gold, because you're getting that
combined performance with the rebalancing. And we talked about why is that so important? It's just
human psychology. We get emotional and we want to just stick with them. We don't want to rebalance the loser versus on the other side, right? If a fund manager is doing
it, they just are committed to a very specific strategy. It takes the emotion out of it. So
maybe you could speak to that a little bit. Yeah. I mean, when, when Bitcoin was ripping
to 108, gold was trending slightly down that whole period. And no one wanted to talk about gold.
The first three and a half months of the year was the exact opposite story and now vice versa. Everyone understands why a 60-40 in a normal environment
is a better portfolio when rebalancing is overlaid and it's the same concept here.
While there's some correlation between Bitcoin and gold, it tends to be about 4%
over long periods of time, kind of ranging from minus 35% to
positive 40%.
You know, if Bitcoin, most simply is supposed to be the risk on asset of choice, and gold
is a risk off asset of choice, you can see why taking advantage of the extreme volatility
moments and rebalancing without emotion can be very, very helpful.
You know, it was really hard to be trimming Bitcoin on the way up to 108,000. And it was really hard to be trimming gold this year when gold was roaring and nothing else seemed to be
working. Bitcoin was, you know, touched below 80,000 at one point. And, you know, no one had
full knowledge that this one was coming. But again, we have confidence in it just because longer term, it just comes down to supply and demand.
Well put. All right. We've set the table pretty well here.
I want to bring in Stock Talk as well as Evan. Get some thoughts here.
Stock Talk, I don't know if you've looked at BTGD too much.
It's definitely been one that I've really liked. I've shared this with a
lot of friends. It just makes sense to me. I'm curious your thoughts when you look at it. I know
you're not a big Bitcoiner, but I know you own some Bitcoin, and I think you own some physical
gold. So curious your thoughts here. That was over to Mr. Stock Talk, Mr. Talk, but I will give him a minute and bring it over to Evan instead.
Evan, you were on that live stream with me yesterday, so you probably have a lot of your answers,
but curious if you have any other thoughts here.
For a second there, I wanted to just not say anything and hit you with the 0 for 2, I thought.
But no, I won't do that to you.
Yeah, no, so I'm very interested in both of these assets.
I pretty much have zero exposure to gold.
It's never been something that's really interesting for me.
And I'm starting to learn more about it.
And obviously, as it's been running to new all-time highs pretty aggressively,
especially as everything kind of started to pull back,
you maybe start to look into things.
So gold's been one that I'm more in the learning phase
and really just starting to look into it.
I did humble brag here.
I got my first little bit of gold
with the Robinhood solid gold credit card.
So I got $1,100, maybe even like $1,200 worth of gold now,
which is cool.
But Bitcoin's one that I've held for a while
and I've enjoyed watching and obviously both of those names have performed really well
it seems like the type of market that you know that overall theme is going to play into so
I'm not surprised yeah I honestly that gives me confidence I think there's a lot of people who
think this gold run could totally be over and i'm not saying gold is going to continue with no downside
volatility but i think there's many people whose portfolios have very little representation in gold
and i think you kind of have to choose do you want to diversify your u.s dollar risk your risk in
just u.s dollar weighted assets in the s&p 500 to either something like international
equities or something like gold um and again i'm not saying you should do it to take down your
overall equity exposure but that's the beauty of structural leverage everyone hears leverage and
thinks it's just total blow up risk every institution on the planet runs their portfolio
with some semblance of leverage usually even the conservative ones at 115 to 130% total exposure.
And what they're looking for is that diversified asset.
So for example, in BTGD, like gold doesn't actually have to go up
that much to do well, it just has to go up higher than the cost of leverage.
If that makes sense.
Yeah, no, that does.
You know, my question is kind of around, like, why the pairing?
Why these two assets together?
Why even, like, we're talking about that,
but why even is, like, rebalancing important?
Why not just let it go for a little bit?
Like, what does that add in this type of portfolio?
Yeah, I mean, you could discuss there's different levels of rebalancing frequencies
you could do on different levels of drift.
But in general, any two assets you have
with correlation benefits,
if you rebalance them on some semblance of drift,
your overall return and risk profile
should be increased over time.
And again, we talked a little bit more in depth
on this yesterday.
Part of what I've done over the last 15 years has just always been on a hunt for assets that will hold the store of value
because of everything we're seeing right now. I think I'm not alone in that. A lot of people
have seen quantitative easing over the last 15 years, knew at some point this is an equation
that's going to break down and it's going to break down in the sense of us just having too
much debt on a government's balance sheet um and that is happening here and now and so again it's
just finding the two things that people deem the pure store of value out there and you know i think
bitcoin is more of a store of value in investors eyes than something like gold and gold is more of
a store of value than something like eth. We talked about that a little bit yesterday. Everyone blocks crypto into one big
block. I think you're seeing true division in the institutional world from Bitcoin adoption,
mainly because of the scarcity asset. They couldn't care less about the utility
and the blockchain. They're just looking for scarcity assets. If you're
a multi-billion dollar family office, the biggest risk to your capital is the loss of
value of the currency your assets are priced in. So finding ways to hedge currency debasement
is everything. And so what is there in this world besides for land uh you know residential
real estate bitcoin gold there's not that much that has fixed store supply that we've deemed
of value assets
perfect uh i'm going to go back over to stock Talk. Stock Talk, you want to jump in here? Any thoughts or questions?
standpoint on the hard assets?
Because there is still a debate
between the gold bulls and the Bitcoin bulls
on what is the better store of value,
what's going to function as a better store of value.
So for people, I guess,
who haven't made their mind up on that debate,
do you view this kind of as an option for those people?
Yeah, this is an option for the people in between.
This is also an option for the people who have never had Bitcoin and have only had gold and were proven right, and their option to diversify.
And vice versa, like Evan, who's more concentrated on the Bitcoin side, has not considered as much of the gold side.
Gold's drawdown when Bitcoin has a 15% drawdown over time is close to zero.
So you're not really getting much additional downside there.
You're really only getting a lot of that up capture.
And, you know, these are two assets that I've kind of just believed in significantly
over time and always allocated to them under the same concept of like store value
assets.
Like really, I'd love to have an openness conversation
because we're always on the whiteboard for new products but like what else is there is it diamonds
you know diamonds have only been a store value because de beers had a good marketing campaign
in the 30s um and then i've been losing their store value as of late because of synthetics
like what else out there is in this world i'm buying a fake diamond
no way they're getting me to the scam they got golf they're not getting me yeah no but i'm serious
like if you like in an open context what what do you have that's like your true store value that
you know you think you can hold and in 10 years will hold its value we talked about it on the
podcast yesterday you know the the house you own the suit you buy the
car you drive would cost you the exact same price in gold a hundred years ago as it does today like
what else has the potential to store that value outside of just bitcoin and gold
awesome well well put him well said there stock talk i want i want to hear his thoughts on that
because i i'm a i also want to hear stock talks updated thoughts on bitcoin too i can't lie
i know i've heard uh some spaces in the past where you know there was i don't know we've just
had some interesting thoughts through time but i wonder if you have any thoughts on, like, there's other assets
like that, but... Yeah, I mean,
I've always owned gold as well.
I mean, my parents
kind of put it in
me that it's good to... How do you own gold?
Huh? Do you actually own, like, the physical of it?
I own physical gold, yeah.
Gold bars, but... Do you have them safe in your
house, or is it somewhere else? No, I'm kidding.
I'm not going to tell you where they are, but... What would be the password if you didn't have them safe in your house or is it somewhere else? I'm not going to tell you where they are. What would be the password if you didn't have a safe
in your house? I like to convert cash into gold. I've always done that with some percentage of my
disposable cash for a long time, for as long as I've been making money. So, yeah, I've always found gold to be an attractive asset to me
because it has hundreds of years of history
to reinforce the idea that it's a store of value.
And I think that market history is the most compelling reason to own anything,
including individual stocks.
So, yeah, I lean a lot on the idea of things having proven over the course of decades
or even better centuries that they are what they say they are.
And gold has proven that for a long time.
So, yeah, I've always been a big fan of having some exposure to gold,
having some percentage of your net worth in gold.
I've always been in favor of.
Bitcoin, I've had a volatile opinion on over many years.
You know, I would say three, four years ago, I didn't understand it and didn't really,
you know, get the thesis behind it.
And obviously, it has gone up a lot over those years.
And, you know, what I think has mostly changed my opinion about Bitcoin is the network effect.
mostly changed my opinion about Bitcoin is the network effect. You know, at a certain point,
an asset gets big enough and has enough believers that it becomes a self-fulfilling prophecy and it
becomes what it is because the people who own it believe it is what it is. And that's basically
what happened with Bitcoin. It had, it captured this massive network effect and, you know, millions of people own it.
Thousands of major entities now own it outright, not indirectly, but outright.
Major banks, major technology companies, you know, billionaires, highly influential billionaires, people in government own it. So it's become a
pretty indisposable asset at this point. It's too big to fail, in my view. And I think that's
what's mostly changed my opinion about it in the last few years is that, look,
it's trillions of dollars of market cap. It's ingrained in you know this wide investor base and you know people believe
it is where it says it is or is what it reports to be and that's led to it being
a very well-performing asset so yeah I've warmed up to it purely from the idea
that it's become essential to the financial ecosystem much more so than it
was five years ago or even three years ago.
And so that does, you know, that changes the viability of the asset.
So, yeah, I've warmed up a lot to Bitcoin the last couple of years as a consequence
of that.
But I think this is an interesting vehicle.
I really do.
I think, you know, I think there are still people who are stuck between wanting to own
some gold and wanting to own some Bitcoin or not having
made their minds mind up on what is really the better store of value over a long period.
Because what I think people forget is not everyone wants their money to be in or all of their money,
I should say, to be in the best performing, highest beta asset at all times.
I know that sounds contrary, right?
People, like, especially new investors would be like, what do you mean?
You don't want to own the asset that's going to perform the best?
And the reality is, is once you have a lot of money, once, you know, you're an institution with billions of dollars,
or you're an individual with tens of millions or hundreds of
millions of dollars, you want a little bit of diversification so that your net worth doesn't
go up or down 20% on a given day. And those people are seeking actual stores of value, right?
And so a lot of those people are still torn between, hey, is Bitcoin, yeah, Bitcoin's certainly a better performing asset.
There's no question about that, right? Like on a five-year basis, what's gone up more on a
percentage basis. But, you know, is it a better store of value? That's an entirely separate
conversation. Does it offer you the day-to-day or month-to-month volatility or lack of volatility benefit that
a lot of people are looking for in a store of value. I would say not so much so as gold. So
there are people in the middle of the debate, and that's why I think that this is a really
interesting tool. But similarly, on that side, I would say look at it a little bit with less
emotion and say, I don't really care about finding the one thing with the most store of value,
because the likelihood that I pick that at the right time is low. I'm going to choose two options that I think that could be a store value. Hedge my bet,
diversify between the two. We talked earlier about treasuries. What happens if the long-term
treasury yields collapse? What is the one certainty that happens if long-term treasury yields collapse probably print money right either the market's destroyed everyone's use it as a
defensive asset there's no more growth left in the world we need to spur up more growth like in
the early 2010s and like print baby print right and And so like what I would say is, you know, like pick two stores of value, pick three, pick four and rebalance between them. These are the two that we believe in strongest for reasons that we outlined before.
I don't know, earnings could collapse because of tariffs and incomes could get hit, et cetera,
because of unemployment. All of a sudden, we're going to pump more money in the system.
Go find like, you know, find five stores of value. Maybe we'll try to stack them all up into the next
ETF. Kidding. But yeah, that's the concept is like you can never know which one exactly is the one.
So it's always best to emotion on emotionally
choose a couple and just rebalance between them
yeah well said well said m do you have any uh thoughts here
yeah it's super interesting i remember when this was first put on the radar and I continue
to watch it go up. I mean, great timing, of course, on the launch. But my question actually
would be, as an investor or somebody from Evan's age to my age, 20s to 30s, David, what are your
thoughts around portfolio construction with this?
If you are looking for maybe a store of value, maybe that anti-inflationary hedge, portfolio construction, Bitcoin, gold, obviously this product here.
But what's kind of your thoughts around how somebody should hedge against this inflation?
Yeah, obviously everyone should talk to their individual financial advisor about their own personal situation but we think an allocation of anywhere between two and ten percent in bitcoin
and two and ten percent in gold uh makes a lot of sense you could think of it as simple as like
you know hey you want a heavy heavy heavy equity centric portfolio let's figure out how to get in
today's market seven and a half percent of bitcoin
seven and a half percent gold maybe seven and a half percent in treasuries right and how do you
do addition without subtraction is you use leverage that could potentially diversify the rest of your
portfolio um you know that unique basket gets you to you know maybe 115 total exposure, you can still have a 93% equity profile, have a lot of the beta on the
upside, but at least have hedges that if things don't go very, very well in the next nine months,
you know, we still have this like monumental earnings growth priced into the mega caps,
to the small caps. Small caps haven't had earnings growth in years,
and we're still pricing in significant earnings growth this year and next year,
despite all the tariff talks, right? So there's a lot of things that need to go right for the
equity markets to continue at the level that they're at. And all that has to happen for
Bitcoin and gold is they don't find gold in outer space.
The technology for mining doesn't increase.
Bitcoin doesn't get hacked.
Like you said, I don't know if Bitcoin is going to be a store of value in 100 years.
But, you know, I spent 11 years at Tidal, one of the biggest ETF white labelers on the planet with lots of focus in the crypto space for, again, I was with them for 11 years.
focus in the crypto space for, again, I was with them for 11 years. We knew what would happen
when ETFs eventually got the green light on Bitcoin. Obviously, maybe not to this magnitude
so quickly, but we knew that it would surpass the increase in supply. And BlackRock is currently
telling people at the beginning of the year, you know, one to two percent allocation in Bitcoin is warranted.
Next year, it's going to be two to three or two to four.
Who's not who doesn't own Bitcoin?
The RIA space with big broker dealers that were terrified of the last administration and allowing those assets in discretionary accounts.
discretionary accounts. There's a whole lot of people you might ask yourself at some point,
There's a whole lot of people you might ask yourself at some point.
again, who cares about the store of value in 100 years, but there's a business risk
on the other end at some point of being at zero Bitcoin if you are an RA.
And eventually your firm opens up the ability to allocate to Bitcoin.
Now we're short on time, but one quick follow up to that.
A lot of people, you know, as they make gains in the market or as we get to maybe an area like we're at now in the market, you know, they like to have some cash on the sideline or even before this past dip, you know, a lot of us had some cash on the sideline.
What are your thoughts on maybe storing some of that, that dry powder just short term in gold or Bitcoin?
I mean, I think you can store a portion of it. I think, again, this vehicle will hold its sort of value over long term. It's definitely not
built without some volatility in the short term. But honestly, to tie in the last basis in this one,
if you want to hold cash, an interesting way to do it would be to take half of it and mix it with Bitcoin, gold and treasuries.
And that's probably a really good balanced portfolio right there.
So the three together actually might make some sense.
Perfect.
Hey, that brings us to the top of the 30 minutes.
But this was awesome.
And I still see it.
There's several hundred people in here.
I know there's a lot of interest in these assets. I really think that this is a unique product. There's not a whole lot else like this on the market like Stock Talk, you know, kind of mentioned there.
the bitcoin piece i'm pretty bullish on both these assets for this year so excited to see where it
goes obviously we work together with david and with quantify so you know take it take our work
with a grain of salt do your own due diligence right into these assets go to the web page look
through the details take a look at the expense ratio right look through the team uh be comfortable
with these things but i definitely think it's something for now, at least, you know, put on your watch list. It's outperforming 90% plus of ETFs this year. So certainly you could
do worse. David, any final comments? No, thank you so much for an amazing conversation. Please
give us a follow up Quantify Funds. Please go to our website and subscribe for our research. We
don't spam your inbox. We'll just put out an interesting piece every couple of months. So
again, quantify.funds.com. We'd love to boost
our subscriber list. So, and thank you all for having me. Thank you so much. I'll turn it back
over to you. Yeah, big shout out to David and the Quantify Funds team over there. We appreciate the
great conversation. Shout out to all the speakers that joined us today. Great, great space today.
Very interesting day coming up in the
market tomorrow. Of course, we'll be live on here 3 p.m. Eastern. We also, if you check out that
Wolf Financial pin tweet, you'll see our full schedule of spaces. Got a lot of things coming up
tomorrow. We'll be live first thing in the morning, 9 a.m. Eastern. Hope everyone has a great
rest of their Wednesday evening. We will see you guys bright
and early tomorrow. Take care, everyone. Thank you.
