0:05

All right, welcome back to another episode

0:07

of Ford guidance and joining me today

0:09

is Mel Madison, who is an author,

0:12

investor, FinTech executive. He was on the

0:14

show a couple times back when Jack

0:16

Farley was running this joint and it's

0:18

been wildly overdue to get him on

0:21

under my hosting of Ford guidance now.

0:23

So yeah, Mel, it's great to have

0:25

you on the show. How you been?

0:27

I've been doing great and it's great

0:30

to be here on. with you Felix,

0:32

there's definitely been some events transpiring since

0:34

my last appearance. Yeah, yeah, to say the

0:36

least. So in the preparation of

0:38

this interview, I went back and

0:40

listened to a year on a

0:43

podcast about I think just over

0:45

a month ago, and you're making

0:47

some pretty bold calls about expecting

0:49

a 15 to 20% major market

0:51

correction that was largely derived through what

0:53

you characterize I believe as Trump, you know,

0:55

for learning a lot of pain first and

0:57

for some good things to come later on.

0:59

And that's happened. And I've noticed now that

1:01

you're actually also wildly bullish. So first

1:04

off, I want to give you props on

1:06

that call. It's not easy to make such

1:08

a such a meaningful call with the time

1:10

frame. and a specific price target and all

1:12

for that that have resolved within a month.

1:15

So prosper that. So I want to, you

1:17

know, have you walk us through how you

1:19

were thinking about things back then, how did

1:21

they transpire, and then what has made you

1:24

do the main flip into being a bullish

1:26

bias now? Yeah, well, I appreciate that. And

1:28

I think, you know, you need to be

1:30

humble in this business because, you know, crazy

1:32

stuff happens. But I would point out. It's

1:35

not like I was making that. you know,

1:37

15 20% correction call like two

1:39

weeks ago. I was making it

1:41

in December and January. So coming

1:43

into the year, I mean, I

1:46

just saw everybody so bullish. Like

1:48

everybody's like, oh, Trump's going to

1:50

initiate, you know, just, you

1:52

know, he's going to wave a

1:55

magic wand and we're going to

1:57

have low inflation, we're going to

2:00

have amazing emanation. activity and then

2:02

I combine that with like a

2:04

fundamental understanding of like wow equities

2:07

are overpriced and so in

2:09

December and January you

2:11

know I was like look we probably

2:13

need to correct a 15-20% correction

2:16

down to 51-50 was my call

2:18

in December we got a little bit

2:20

below that I said 5150 maybe lower

2:23

in the first half and then from

2:25

there we're gonna bounce up. and

2:27

we're going to have a nice

2:29

year, it's going to be a

2:31

plus 15% year, and close out

2:34

somewhere around 7,000 on the S&P.

2:36

And I have not drifted

2:38

from that premise one bit

2:40

from three or four months

2:42

ago. So far, fingers crossed,

2:44

like what I was doing

2:46

back then, I was selling

2:48

equities, I was raising cash,

2:50

I was buying puts when

2:52

Vol was 14, I was

2:54

buying gold, I was buying

2:56

gold. And I was saying, hey, we're

2:58

going to sell off and then get

3:00

ready to back up the truck

3:02

because we're heading into an inflationary

3:05

boom. And I think that's the

3:07

point that we're at right now.

3:09

So, you know, what I see

3:11

happening and what I saw back

3:13

then was number one, regardless

3:15

of the flip out about

3:18

tariffs, which I really think is

3:20

more of a catalyst to correct

3:22

really overpriced valuations and also

3:25

really over US allocated global

3:27

portfolios. So we came into

3:29

the year with everybody, US

3:32

exceptionalism, like, you know, massive

3:34

amounts of total global equity

3:36

value in US stocks, Max

3:39

7 stocks. I mean, if

3:41

you look right now as

3:43

we're recording this, I mean,

3:46

the Dow is down less

3:48

than 5% year to date. You know,

3:50

the equal weight, I think is down

3:52

5 or 6% year to date. So

3:54

there has not been any

3:56

big sell off in Europe

3:59

as a... up, you know, daxes up,

4:01

emerging markets are flat. So if

4:04

you look at global equities,

4:06

like from the beginning of

4:08

the year, they're basically flat

4:10

or up, except for like big

4:13

cap tech, all that stuff. But

4:15

because they've been so much a

4:17

part of these indexes, and so

4:19

this pullback, my expectation was

4:22

like 5150, which was like the

4:24

August lows, I'm like, we'll get

4:26

down to 5150, maybe 48100,

4:28

which is the 20. January 2022

4:30

high, like that just makes sense

4:33

totally from evaluation perspective.

4:35

Nothing to do with tariffs, nothing

4:37

to do with anything else. We're due

4:39

for something like this. So to see

4:42

that happen makes total sense. And what

4:44

I see now and what I think

4:46

everybody's flipping out about like, oh, well,

4:48

the dollars down. Yeah, you know why?

4:50

Because there's global portfolios that

4:52

are way over. allocated to

4:54

U.S. that need to go

4:57

into Europe emerging markets, which

4:59

was one of my also 2025

5:01

predictions I made in December,

5:03

which was EEM outperformed spy.

5:06

You know, nobody saw that

5:08

coming. Well, maybe some people

5:10

did. I don't want to

5:12

get too cocky. But, you

5:15

know, I'm like, look, U.S.

5:17

is everybody's talking U.S. exceptions.

5:19

And like, let's pull U.S.

5:21

equities in. Let's take a

5:24

that's reallocated around

5:26

the world. And then, you know,

5:28

I believe we're going higher and

5:30

I believe it's based off like

5:33

a three scenario case like there's

5:35

like a what I would call

5:37

best case scenario, a

5:40

less than best, and then,

5:42

you know, a worst case.

5:44

And I think the first

5:46

two are probably like 80%

5:48

probabilities of happening. and they're

5:51

inflationary and I think

5:53

they're positive equities,

5:55

more positive gold, more

5:58

positive, more positive. you

6:00

know, rest of world. And then, you

6:02

know, I think that that bear case

6:05

scenario is kind of like a depression

6:07

collapse scenario, which I don't want to

6:09

discount as zero. But I think it's

6:11

very, very unlikely. And I think the

6:14

most likely result is going to be

6:16

another inflationary bubble that's just getting started.

6:18

And, you know, we can get into

6:21

the details of all of in why

6:23

I think that's going to happen, but

6:25

I mean that's basically where I've been

6:28

at and where I'm seeing things going.

6:30

Cool. Yeah I would love for you

6:32

to walk me through the key macro

6:35

drivers that were occurring during this pickup

6:37

market crash moment that we've seen recently

6:39

because you know it's yes stocks are

6:42

expensive but you know in my opinion

6:44

just shortly because of that as a

6:46

losing game like you need some sort

6:49

of catalyst to occur because. they can

6:51

just get more expensive. It's a highly

6:53

reflexive dynamic. So yes, it provided the

6:56

environment to see such pullback because they

6:58

were expensive. I don't think anybody would

7:00

argue with that. But I'm curious, like,

7:03

bring us up to speed on how

7:05

you were thinking about the fiscal dynamics

7:07

and the monetary policy dynamics and even

7:10

the liquidity dynamics. Like, where was the

7:12

cross-currents of all three of those? And

7:14

how are you thinking, have they shifted

7:17

now? Is that providing further tail one

7:19

to your bull bias? Is it because?

7:21

you're a fader of the doge idea

7:24

and fiscal deficits will still keep increasing.

7:26

Where's the fed at? Like what were

7:28

these key macro drivers throughout this process?

7:30

Yeah, definitely. And I also want to

7:33

admit, like I got faked out too,

7:35

because I was I was buying puts

7:37

and thinking like we're overvalued ready for

7:40

a pullback in December and January. And

7:42

then I started seeing the deep seek

7:44

and we had that drawdown in January.

7:47

And actually some of the puts that

7:49

I had bought. you know, at the

7:51

beginning of the year, I pulled out

7:54

of as we went to new highs

7:56

in February. Otherwise, you know, I literally

7:58

would have had like the most amazing

8:01

year ever. I had, I've been having

8:03

a great year so far. But I

8:05

was like, okay, I need to pull

8:08

back from some of my short positions,

8:10

like maybe this isn't happening. So, you

8:12

know, this is tricky markets, right? I

8:15

mean, nobody has a crystal ball and

8:17

plays it perfectly. And when you're managing

8:19

positions and you're moving things around and

8:22

you're doing things, I mean, look, sometimes

8:24

you make mistakes. But my general call,

8:26

which was like pulling cash, go on

8:29

gold, buy some puts, do that like

8:31

so far, it's been working out so

8:33

good. just kind of stuck to my

8:36

guns through that February rally, I'd, you

8:38

know, just nailed it even beyond my

8:40

wildest dreams, but I still have been

8:43

doing very well this year and am

8:45

up. But I mean, I think the

8:47

macro driver really is just taking a

8:49

step back from the narrative that there's

8:52

this preoccupation with Donald Trump, that he

8:54

has this amazing way of pulling global

8:56

leaders, investors. I mean, you name it

8:59

into his like, you know, apprentice reality

9:01

TV world. And like you need to

9:03

take a step back from that and

9:06

you need to think about what are

9:08

the real long term strategic interests of

9:10

the different parties involved and what makes

9:13

sense as an outcome. Because if you

9:15

just try to trade off of every

9:17

headline and every tweet. I think you're

9:20

losing that. And so while people were

9:22

kind of going nuts about these tariffs,

9:24

I was looking at it and saying,

9:27

there's no way. Like, like, okay, two

9:29

things. Number one, there's no way does

9:31

just cutting one or two trillion from

9:34

the budget. You had Howard Ludnick out

9:36

there talking about balanced budgets. Give me

9:38

a break. Like I do so much

9:41

budget analysis every time and it was

9:43

just last week you know the monthly

9:45

treasury statement comes out and you look

9:48

at outlays and government spending and where

9:50

we're at and it's like government spending

9:52

is up deficits are up like there's

9:55

no in the fiscal impulse is huge

9:57

right so so. some percentages. Government spending

9:59

as a percentage of GDP, it's like

10:02

24% right? It's like 7 trillion in

10:04

like a 30 trillion dollar economy running

10:06

two trillion dollar in deficits. If we

10:08

pull back to balance budgets with tax

10:11

cuts and everything, we would be pulling

10:13

like three, four trillion out of the

10:15

US economy. That's disastrous. investors were getting

10:18

worried about that i'm saying to myself

10:20

there's no way that's happening like like

10:22

it's it's just not realistic because when

10:25

you look at those figures you look

10:27

at social security you look at entitlements

10:29

you look at veterans benefits which are

10:32

like political no touches at least right

10:34

now i think eventually they need to

10:36

be touched but at least right now

10:39

they're no touch you look at interest

10:41

on the debt, you know, you look

10:43

at these things, defense spending, Pete Hexeth

10:46

and Trump just announced first ever trillion

10:48

dollar defense budget. Like, we're heading for

10:50

blowout spending and blowout deficits. Like, that's

10:53

what the numbers say. And not only

10:55

are we gonna do that, but like

10:57

we're doing that right now underneath the

11:00

debt ceiling. I mean, this is, this

11:02

is perhaps like one of the most

11:04

underreported stories I've ever heard. I follow

11:07

the, like I said the MTS, the

11:09

monthly treasury treasury treasury statement. Only two

11:11

billion dollars in new net issuance of

11:14

treasuries last month if you go back

11:16

to like October like we normally issue

11:18

new net issuance is normally like a

11:21

quarter trillion dollars a month and and

11:23

like it goes like October November it's

11:25

like 200 billion to something and then

11:27

you go like January and these are

11:30

on my Twitter feeds but it's like

11:32

then you go to January February March

11:34

and it's like we've issued no new

11:37

debt because of the debt ceiling we're

11:39

drawing down the TGA. We're going to

11:41

get bailed out and be able to

11:44

draw down the TGA a little bit

11:46

more because it's April 15th as we

11:48

record this tax date. We're going to

11:51

get the taxes in and that's going

11:53

to give us a very little time

11:55

and then there's going to be a

11:58

massive need to issue debt. And so

12:00

where are we heading towards? What

12:02

are we heading towards? We're

12:04

heading towards massive spending,

12:06

massive debt issuance, essentially

12:09

status quo, which is inflationary,

12:11

which does not necessarily mean

12:13

a strong economy. It doesn't necessarily

12:15

mean. real growth and I think

12:18

during the Biden administration we basically

12:20

had no real growth. I think

12:22

CPI numbers are BS and if

12:24

you look at like, you know,

12:26

CPI numbers and you add like

12:28

two or three percent to it,

12:30

that takes away all your real

12:32

GDP growth. So what we've been

12:35

doing is we've been growing nominal

12:37

GDP. Nominal GDP has

12:39

been growing. There's been very

12:41

little real growth in the US

12:44

economy for years. And I think that's

12:46

only going to continue. I think

12:48

there's a path forward. We can get

12:50

into all this about this happening.

12:52

But here's the thing. Equity earnings

12:54

are priced in nominal numbers, right?

12:56

So, and then now you've got a

12:59

deflating dollar. What's that going to do

13:01

to overseas revenues, right? Like 50%

13:03

of S&P revenues are overseas. Yes,

13:05

terrorists and everything's going to affect

13:08

that. So you're going to have

13:10

nominal GDP growth, perhaps not real

13:12

growth, but nominal due to inflation.

13:14

you're going to have a

13:16

depreciating dollar, it's going to jack

13:19

up earnings growth, and you know

13:21

equity prices should go up in

13:23

real terms? No, in gold terms?

13:25

No. In nominal terms, yes, and

13:27

what have we been seeing? You know,

13:29

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13:33

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that's on-dough-finance, apply. Now what I

14:01

find really interesting is I've seen a theme

14:03

over the last basically since 2022 where guys

14:05

like you that dig into the Treasury data

14:07

have been on the right side of the

14:10

economy. People that have been considering to adopt

14:12

this idea of looking at What is what

14:14

is the Fed doing? What is monetary policy

14:16

doing on the short rate? Which, you know,

14:19

no one even really borrows that much on

14:21

the short rate. Like it's it's been really

14:23

interesting to see that that folks like you

14:25

that have been on the side of like

14:28

digging into the Treasury data and saying, hey,

14:30

look, you know, we're actually. You know not

14:32

only is Doge doing nothing but there's there's

14:34

a pretty clear pathway to even further increased

14:37

deficits and then you bring it to the

14:39

fold what we're starting to hear from the

14:41

Treasury now in terms of policy you know

14:43

I saw you're treating about this yesterday too

14:46

we had a Scott Besson interview where he

14:48

was talking about you know what are some

14:50

of the tools that are available if the

14:52

long the long bond starts to get more

14:55

unruly and you know this is this idea

14:57

of Treasury buybacks where. Often what they'll do

14:59

is, you know, typically historically, it's duration matched,

15:01

where they'll basically buy off their own bonds

15:04

that are illiquid and just swap them with

15:06

on their own bonds, but the duration is

15:08

the same. But if they started to shift

15:10

towards issuing bills to fund those off their

15:13

own bonds on the long bond, that starts

15:15

to get really interesting. And then you see

15:17

furthermore, you know, the first QRA meeting that

15:19

we had with with Treasury Secretary Secretary Scott

15:22

Bessent, he basically kept the same guidance towards

15:24

a preference for bills. Are you of the

15:26

mind that we're just going back to how

15:28

things were at the start of 2022? And

15:31

if so, are people a lot of people

15:33

offside here thinking about depression and recession? Because

15:35

if we're just going to blow up nominal

15:37

GDP growth, like it seems like we might

15:40

be going through the repeat of this. Yeah,

15:42

that's what I think. That's why we get

15:44

to 7,000 or thereabouts, you know, call it

15:46

in. by the end of the year maybe

15:49

I'm off on that you know I'm not

15:51

perfect like maybe it takes 12 or 18

15:53

months to get there but yeah I mean

15:55

that's why I think that's where we go

15:58

but is that going to be real S&P

16:00

growth or is that going to be nominal

16:02

growth, but I think for investors, it's important

16:04

to take a step back and say, you

16:07

know, how do equity markets work? How

16:09

are they priced? And I think the

16:11

gold market is telling you this. I

16:13

mean, like, I keep waiting for a

16:15

pullback in gold. I do a lot

16:18

of gold work. I sent a chart

16:20

over on some Fibonacci numbers like. 3238

16:22

on futures, which is basically where we're

16:25

trading as we're recording this as a

16:27

key level, was expecting a pullback, you

16:29

know, as we hit this and like,

16:31

at least as we're recording this, we're

16:34

not seeing it. And what we're seeing

16:36

is like. gold like March higher

16:38

and when we do get pullbacks in

16:40

gold it's like it happens in like

16:42

an hour like it it drops 50-60

16:45

bucks in an hour and then an

16:47

hour later is so so it's testing

16:49

the key levels that I watch but

16:52

it's not testing them for days or

16:54

even hours it's like testing them for

16:56

like minutes and and then it's moving

16:59

higher and so like To me, I

17:01

mean, you know, 1971, right, gold is

17:03

$35 an ounce. You know, 11 years

17:05

later, it's over 800. That's a

17:08

25x increase in gold. A

17:10

25x increase in gold from where

17:12

we were a couple years ago,

17:15

like this called 2000, that's

17:17

$50,000 gold. Do I think

17:19

we're going to $50,000 gold

17:21

in the next 10 years?

17:23

Honestly, maybe. Maybe. Like,

17:26

like, you know, I think twice

17:28

in history, the gold price has

17:30

been higher than the Dow. I

17:32

think you got to go back

17:34

to the depression. I think it

17:36

was. And I think it happened,

17:39

uh, it happened like one

17:41

other time where we're literally one

17:43

ounce of gold. The dollar amount

17:45

was higher than the Dow. We're

17:48

at a Dow. 41,000 right now.

17:50

So I think that's that's kind

17:52

of ridiculous. Like. $50,000 gold in

17:55

10 years. I think it's possible.

17:57

But even if that's

17:59

completely. way off base. Let's

18:01

just say I'm way off

18:04

base on that and that's

18:06

absolutely ridiculous. You know, $10,000

18:09

gold, you know, that's

18:11

pretty amazing. That's like

18:13

a two, three X move

18:15

from here over the next

18:17

10 years. And I like to

18:20

me, like that is the world

18:22

that we're heading into that

18:24

world because there is no

18:26

way. to get ourselves out of this

18:29

other than great depression,

18:31

economic collapse, or inflation.

18:33

Like, I mean, we can get

18:36

into the details of what

18:38

that means, but I honestly

18:40

believe that policy makers will

18:42

eventually think all this through,

18:44

as I've been doing for years

18:46

and years, and realize that

18:48

there's only two choices. It's

18:50

do you want to collapse

18:53

the economy and maintain the

18:55

value of your currency? Or do

18:57

you want to inflate it away?

18:59

And to be clear, one of the

19:01

things I sent in the outline

19:03

is why does this work? Because

19:05

it's not just the US. It's a

19:07

global phenomenon. Italy has hired debt

19:09

to GDP than the US. Japan

19:12

has hired debt to GDP than

19:14

US. Spain has hired debt to

19:16

GDP than US. France, like we

19:18

can go on and on and

19:20

on about these, this is a

19:22

sovereign debt bubble. And you can

19:25

only get through it one or

19:27

two, one of two ways. You

19:29

can let it all collapse and

19:31

let the system blow up, which

19:33

is going to be absolutely, you

19:36

know, 1929 out all over again,

19:38

or you can't have flayed it

19:40

away. But, and this is key. And

19:42

I also sent over a note of

19:44

an IMF paper about how the US

19:46

got out of GDP to deficits in

19:48

1920. So this is a really good

19:51

IMF paper. It was looking back and

19:53

said, did the US really grow itself

19:55

out of its World War II debt?

19:57

And it went back and analyzed the

19:59

situation. And it did all this statistical

20:01

stuff and all this IMF, PhD, regression type

20:03

stuff. And basically at the end of the

20:06

day, they said, no, they didn't grow themselves

20:08

out. They inflated their ways out through surprise

20:10

inflation and surprise is a key word and,

20:13

you know, yield curve manipulation. And I think

20:15

that's what's coming. Surprise inflation. They're going to

20:17

try to talk down inflation. It's not coming.

20:19

Fed is resolute. you know, we're going to

20:22

keep a lid on it. But I think

20:24

when like Besson and Powell have their breakfast

20:26

and all this stuff happens, like they're gonna

20:28

they're gonna be like, okay, look, we're between

20:31

a rock and a hard place. And the

20:33

best out is sustained substantial surprise inflation. Like

20:35

I'm talking five, six percent annualized. for the

20:37

next three to seven years. I'm not talking

20:40

about hyperinflation or 10% or the dollars gonna

20:42

become, you know, the Zimbabwe currency or whatever,

20:44

like that's not I'm talking about. But what

20:46

I'm talking about is that we're gonna have

20:49

a, and that's what the bond market is

20:51

sniffing out. And that's why yields keep going

20:53

up because they're saying, look, you know, the

20:56

bond market is the one who gets killed

20:58

in this scenario. What does well, equities, You

21:00

know, I think real estate ultimately will do

21:02

well as well. Basically anything price and dollar

21:05

terms does well. It's all the same trade,

21:07

anti dollar trade. Long assets, short bonds. Yeah,

21:09

Mel, I want to ask you. So it

21:11

feels like the narrative as everybody's trying to

21:14

figure out what's been going on. What's been

21:16

driving gold hire? And I've seen some takes

21:18

where it's a losing of faith in... the

21:20

US dollar in the institutions in the US,

21:23

you know, catalyzed by this global trade war

21:25

that we're going for. So are you saying

21:27

that rather it's just the reflection of the

21:29

market? keying into the fact that nothing has

21:32

actually changed and we're about to go through

21:34

the next upswing cyclical upswing in inflation and

21:36

that is being reflected in the gold price

21:39

that is being reflected in higher bond yields.

21:41

Exactly. I mean I I don't usually when

21:43

I go in pocket, like I wrote a

21:45

book, it's called Quas, it's a financial thriller,

21:48

and it's basically like a fictional narrative of

21:50

a financial collapse, and it involves a lot

21:52

of intrigue and corrupt central bankers, and there's

21:54

a guy named Hausong, who's like the head

21:57

of the People's Bank of China, and he

21:59

starts selling, you know, US Treasury Holdings into

22:01

the market, and there's a market collapse, and

22:03

everybody starts flipping out in the book. because

22:06

unlike in other collapses the dollars not going

22:08

up in bonds yields are going up and

22:10

it's like you know that's literally like the

22:12

the climax of the book I don't want

22:15

to give too much away if you want

22:17

to buy it but look so I understand

22:19

these dynamics I mean I wrote that book

22:22

in 2022 years ago and and then people

22:24

talking about all this stuff happening now but

22:26

basically I've thought through this so much for

22:28

so long. I mean, like, I think the

22:31

first time I came on forward guidance with

22:33

Jack, like I was talking like, this is

22:35

work. I think the title of it was

22:37

final straw in the US dollar debt spiral.

22:40

And I was talking like, we are in

22:42

an unsustainable path. Like, like people need to

22:44

realize like this cannot go on. And I

22:46

talked about a 2027 2028 time frame for

22:49

when the, you know, what hits to fan.

22:51

because that happens to coincide with like Social

22:53

Security and Social Security that that cannot be

22:55

understated the Social Security impact of what's happening

22:58

with Medicare and Social Security because we literally

23:00

and I go through again I go through

23:02

the Treasury data the CBO data like we

23:05

literally peaked. in the Social Security Trust Fund

23:07

in like 2020 and we started drawing that

23:09

down. That has a couple of effects. Number

23:11

one, if you look at like total government

23:14

debt like 37 trillion, a lot of it

23:16

is intergovernmental and you know where it is,

23:18

it's to the Social Security Trust Fund. We

23:20

were growing the Social Security Trust Fund basically

23:23

from the 80s until 2020 because, you know,

23:25

more was being paid in that we were

23:27

paying out. We started drawing that down. in

23:29

2020. We're now drawing down the Social Security

23:32

Trust Fund, which is actually a reduction of

23:34

Treasury expenses because the Social Security Trust Fund

23:36

for those that don't know, it is invested

23:38

in a unique type of Treasury bond, a

23:41

non-public Treasury bond. It's basically a bond that

23:43

the Treasury issues that only the Social Security

23:45

Trust Fund can buy, and they get an

23:47

interest rate on that. And that goes into

23:50

government accounting and deficits and everything. As the

23:52

Social Security Trust Fund gets drawn down, that

23:54

actually means the Treasury has less interest to

23:57

pay to the Social Security Trust Fund. So

23:59

it's actually like bullish on U.S. government accounting.

24:01

But in reality, what's happening is we're going

24:03

to head to zero around the end of

24:06

this decade on the Social Security Trust Fund.

24:08

And at that point, like, it's a cliff.

24:10

And a couple things to remember. Number one,

24:12

Social Security can only be paid for by

24:15

paid in Social Security according to law. which

24:17

is different. So they can't monetize like the

24:19

fact they can't monetize it. No. And the

24:21

Treasury can't just say we're gonna we're gonna

24:24

pay it and like it needs a congressional

24:26

action to change it, which is different than

24:28

Medicare. And so all this stuff is going

24:30

on and I'm looking at all this stuff.

24:33

I really, you know, for people that don't

24:35

know me. So I've worked 25 years in

24:37

financial services, graduated college. in the

24:40

late 90s. I know

24:42

I don't look it.

24:44

I'm a young handsome

24:46

guy. I actually turned

24:49

50 years old this

24:51

year. But I've been

24:53

through some markets, right?

24:55

I've been through the.com.

24:58

I've been through GFC,

25:00

I've been through this.

25:02

And I was sitting

25:04

at home during the

25:07

pandemic and I started

25:09

like getting into this

25:11

and I started looking

25:13

at the expansion of

25:16

the Fed balance sheet.

25:18

And I started saying,

25:20

look, pre -GFC were

25:23

like a $800 billion

25:25

Fed balance sheet. Post -GFC,

25:27

okay, we're up to

25:29

a couple trillion. Pandemic

25:32

happens, we go up

25:34

to nine trillion. I'm

25:36

like, this is... And

25:38

I'm like, what are

25:41

these obligations? I'm like,

25:43

what really are they?

25:45

Not like, I know

25:47

they're big. Let me

25:50

actually go to the

25:52

websites, go to the

25:54

documents, research it, figure

25:56

out what's really going

25:59

on here. And I'm

26:01

like, we're heading for

26:03

trouble, man. I mean,

26:06

there's no easy way

26:08

out of this. And

26:10

so there really is

26:12

a big problem that's

26:15

occurring here. And that

26:17

goes back to my,

26:19

you know, there's three

26:21

scenarios. There's a scenario

26:24

where we start to

26:26

address it and we

26:28

get through it. There's

26:30

a scenario where we

26:33

don't address it. And

26:35

I think we still

26:37

have a few years

26:39

of this inflationary stuff.

26:42

And then there's a

26:44

scenario where we just,

26:46

you know, don't address

26:49

it or try to

26:51

do austerity or something

26:53

like that. And then

26:55

we collapse. But I

26:58

think both of those

27:00

first two are bullish

27:02

equities in the short

27:04

term. One of them

27:07

is bullish equities long

27:09

term. The other one

27:11

is actually Uber bearish

27:13

in the medium term,

27:16

which is like a

27:18

2027, 2028, you know,

27:20

60, 70, 80 %

27:22

equity collapse. So I

27:25

don't know which direction

27:27

we're gonna go, but

27:29

I think those first

27:31

two all point to

27:34

we still need to

27:36

inflate. We still got

27:38

some balance sheet room.

27:41

The entitlements aren't coming

27:43

due yet. We've got

27:45

a few years on

27:47

that. And what we

27:50

need to do is

27:52

we need to spend,

27:54

spend, spend, but at

27:56

the same... same time

27:59

put in a way

28:01

out of this mess

28:03

during this short window

28:05

that we have. And

28:08

we will see what happens, but

28:10

as long as those first two

28:12

occur, at least for the time

28:14

being, we're positive. In a year,

28:16

I'll look back and say, okay,

28:18

did we just brush it off

28:20

and then I see a big

28:22

collapse coming? Or did we actually

28:24

make some movement on the manufacturing

28:26

needs of National Defense on addressing

28:28

the budget deficit, stuff that goes

28:31

back to Triffin's Dilemma, Bretton Woods,

28:33

all that stuff. Like did we

28:35

actually make some headway on that

28:37

that can be fixed over the

28:39

next 10 to 12 years? Or

28:41

did we just push it off,

28:43

in which case we're really heading

28:45

for trouble? So that's where I

28:47

see things at right now. It

28:49

feels to me like we're starting

28:51

to craft this theme that nothing,

28:53

the tangibles that got us to

28:55

this point, none of them were

28:57

actively changing as much as the

28:59

narrative might be in the mainstream,

29:01

which is obviously the restructuring of

29:03

the global trade order, the attempt

29:05

to wrangle in fiscal largesse. And

29:07

if you dig into the data

29:09

like you have, it's obviously that

29:11

we're still running a higher deficit

29:13

than we did last year. There's

29:17

fiscal bills, especially in the Senate

29:19

side, that look at increasing deficits

29:21

quite substantially. There's talk of, obviously,

29:23

extending the existing tax cuts, but

29:25

then even adding further tax cuts

29:27

onto that. And then you bring

29:30

forth the interplay of tariffs and

29:32

what's going on there is, the

29:34

idea is that, or at least

29:36

how they're pitching it, is that

29:38

tariffs will bridge the gap of

29:40

that missing revenue from the tax

29:42

cuts. But then it's like, okay,

29:45

well, we've seen, obviously on Liberation

29:47

Day, we got to what is

29:49

the worst outcome, which is the

29:51

30 % effective tariff rate. We've

29:53

seen this this continuous ratcheting down

29:55

so far, where we have some

29:57

exemptions. We have a 90 day

29:59

pause. We're roughly, you know, I've seen is,

30:02

you know, we're roughly like a 24% expected tariff rate now. Within

30:04

that, a lot of it is between China

30:06

and the US and effectively we're at a

30:08

point where we basically have like a trade

30:10

embargo between the two biggest countries of over

30:13

100% tariffs on each country, you know, just

30:15

no trade is going to happen. So for

30:17

your thesis to continue to play out,

30:19

do you have to discount and fade

30:21

the tariff narrative that it's just going

30:23

to keep ratcheting downward and we're going

30:25

to end up at maybe 10 percent

30:28

or something like that? Or how do

30:30

you think about the Taylorists involved

30:32

with what if these 100% tariffs

30:34

on the two biggest world economies

30:36

stay resilient? Yeah. Well, I mean, we didn't

30:38

get into what I see as like the

30:41

Trump grand agenda. And I think in some

30:43

way, like the plan is blowing up a

30:45

little bit. But at the other hand, I

30:47

kind of see that, you know, I've called

30:50

it different things. I've called it fire

30:52

ice. I've called it salsa sour cream.

30:54

I've called it different things like, like,

30:56

like, like, you know, you know, you know,

30:59

There are hot components to the

31:01

agenda and there are cool components.

31:03

Terrorists are definitely like a cooling

31:05

component on the economy. But there

31:07

are some real hot components. There's

31:09

some salsa components, right? We're getting

31:11

a lot of sour cream right

31:13

now, but the salsa I think

31:15

is yet to come. And I

31:17

think Trump is really... pushing things

31:19

because if he loses Congress because

31:21

it's so tight like like he's

31:23

not going to get those salsa

31:25

components through and I think this

31:27

90-day pause gives him that room and

31:29

you know get in a little you know

31:32

detailed stuff so Mike Johnson you know speaker

31:34

the house he was on I think it

31:36

was either Sunday morning futures or

31:38

something like that this weekend with

31:41

Maria Boca Romo and he was

31:43

talking like most people think the

31:45

debt ceiling the debt ceiling because

31:47

we're going to get a bunch of

31:49

tax revenues this month, we're going to

31:52

be able to go to July,

31:54

August, September. And he was saying, and

31:56

he's like, but maybe not, like maybe

31:58

it's June. So to me... The 90-day

32:00

interval is not random.

32:03

Like Trump wants to

32:05

get some of these salsa

32:07

items passed during that 90

32:09

days to free them up

32:11

on more of that tariff

32:13

sour cream stuff later. So

32:16

what we really need to see

32:18

for this whole thesis and

32:20

the bullmark, like in the

32:22

next three months, we need

32:25

to see some of these

32:27

salsa items really coming. into

32:29

fruition. We need to see

32:31

massive tax cuts. We need

32:34

to see no tax on

32:36

Social Security, tips, overtime. The

32:38

deregulation is ongoing. We've got

32:41

this new guy Pulte in charge

32:43

of the housing authority. I think

32:45

that's where you tap the money,

32:47

man. I mean, I look at

32:50

IMF tables of like debt and

32:52

it's like everything is like debt

32:54

going up, debt going up, debt

32:56

going up, and then you look

32:58

at US households. just been going

33:00

down. Like, like, like, if you

33:02

go back to 2007, like, we're

33:04

like 20, 30% household debt

33:06

reduction on a percentage basis

33:09

in the United States. Where

33:11

is all that money? It's in

33:13

houses. It is in homes. We

33:15

need to, like, I think Trump's going

33:18

to be like, we need to

33:20

find a way. And like, they

33:22

hinted at some of this stuff

33:24

under Biden, which was expanding.

33:27

Fannie Mae and Freddie

33:29

Mac guarantees on second

33:31

mortgages, right? So now

33:34

you've got these people, they're

33:36

sitting in houses at 2.8%,

33:38

the equity value is enormous,

33:41

like $13.14 trillion, but

33:43

they don't want to

33:45

access it because if you go

33:47

to do a heelock, you're at

33:49

like, you know, 3%... No, it's

33:52

not even that. It's like, it's

33:54

like, it's like 3-4% over like...

33:56

10 year. It's like eight, nine

33:58

percent, you know, Yeah, okay. Like,

34:00

if you go to a heelock right

34:03

now, you're not going to get five

34:05

or six percent. You're going to be

34:07

more like seven, eight, maybe nine. So,

34:09

so get those things down. Like, like,

34:12

there's all these, and this is the

34:14

thing, I mentioned this on Twitter,

34:16

someone, I said, one of the things

34:18

that I think I'm a little different

34:20

than some people is I actually

34:22

give a policymaker's credit

34:25

for being intelligent, creative,

34:27

and powerful. And don't underestimate

34:29

Treasury officials, central bankers, like,

34:31

like, you know, don't underestimate

34:34

what they can do. I've

34:36

been watching people for so

34:38

many years, guys like Peter Schiff

34:40

out there, every time the markets are

34:42

going down, if it's the collapse, and

34:44

then he's, and then he comes out

34:47

a few years later and he's like,

34:49

well, you know, in 2008, I never

34:51

imagined the Fed could blow up their

34:53

balance sheet to $9 trillion. It's like,

34:55

why not? Because you have no imagination.

34:57

That should be the baseline expectation. Yeah,

35:00

yeah, that should be the baseline. Like,

35:02

why can't the Fed blow up the

35:04

balance sheet to 25 trillion? Why not? And

35:06

people are going to say, oh, it's going

35:08

to be inflation. Well, I would be

35:10

a little bit careful on that because

35:12

we blew up the balance sheet after

35:14

GFC and we didn't get that huge

35:16

inflation that everybody thought. I think, I

35:19

think there are, I think there's a lot

35:21

more room on the Federal Reserve

35:23

balance sheet than people understand. that

35:25

is not even going to create

35:27

hyperinflation. It might create this four

35:29

or five percent inflation, which

35:31

I think is actually beneficial to reduce

35:33

the real value of debt to GDP.

35:36

But I think like in 10 years, we

35:38

could be sitting here with a $30 trillion

35:40

Fed balance sheet and people will say,

35:42

well, you know, the only reason we got

35:44

through that whole. crisis period was because I

35:46

never anticipated that the Fed could get

35:48

away with the 20 or 30 trillion

35:50

dollar balance sheet and I would say

35:52

why not why why didn't you anticipate

35:54

that? tokenization isn't just a buzzword it's

35:57

the most efficient way to reimagine how

35:59

financial assets are own traded and managed.

36:01

Ando is bringing traditional assets like

36:03

stocks and bonds on chain, unlocking

36:05

trillions in value and creating open

36:07

global financial markets. They're not just

36:09

dreaming big, they're building the platforms,

36:11

assets, and infrastructure to make it

36:13

happen. Head to Ando.finance, O-N-D-O-D-F-I-N-A-N-C-E and

36:15

see how they're bringing capital markets

36:18

on chain. Restriction supply. Restriction supply.

36:20

Yeah. So, okay, so that dynamic

36:22

read just mentioned. the 2.8% mortgage

36:24

rate versus the heelock that sits

36:26

at eight or nine percent. That

36:28

when you say that, I start

36:30

to think about what I've been

36:32

hearing from Scott Besson, which is

36:34

that, and also President Trump, which

36:36

is they want to get the

36:38

long bond yield down. They want

36:41

to get the 10-year yield down.

36:43

That starts to make sense to

36:45

me. But then you look at

36:47

the reaction to the bond market

36:49

throughout this whole dynamic, and we

36:51

have yields, you know, starting to,

36:53

starting to get a little yippy.

36:55

as President Trump said, and we're

36:57

starting to hit those 5%s. That's

36:59

going in the wrong direction. So

37:02

how do they deal with that?

37:04

How do they not lose the

37:06

bond market throughout this process? Well,

37:08

that's the problem is because the

37:10

bond market, okay, so my primary

37:12

way of looking at where the

37:14

tenure yield should be is looking

37:16

at it, and I'll give some

37:18

credit to George Robertson, who I

37:20

went on a forum for it,

37:23

like he nailed this. He's been

37:25

on it and and it's funny

37:27

because I'm generally a little bit

37:29

you know pro Trump and he's

37:31

not but like he's actually bullish

37:33

now and so am I because

37:35

he's looking like the fiscal spend

37:37

still continuing and he's you know

37:39

he posted something and something from

37:41

someone about like Trump's simulation 2.0

37:44

like like the market starting to

37:46

look through Trump like he like

37:48

they're starting to see the facade

37:50

or whatever and that's kind of

37:52

an anti- trump thing you know

37:54

I could paint it with a

37:56

positive thing I think all that

37:58

politics crap doesn't matter all I

38:00

want to do is make money

38:02

but What I'm talking about is,

38:05

you know, where I see things

38:07

going and even though... know, George

38:09

and I might be on different

38:11

sides of the political debate. We're

38:13

still seeing things heading the same

38:15

way, which is there's just no

38:17

way to kind of unravel this

38:19

thing with in like a way

38:21

that, I don't know, like, like

38:23

this, like, Lutnik, like, I mean,

38:25

that guy, I mean, he really

38:28

should go. I mean, he, like,

38:30

he comes out and talks about

38:32

balanced budgets, like, I mean, are

38:34

you, what crack are you smoking?

38:36

less than five trillion dollars a

38:38

year in receipts. If we took,

38:40

and we spend over seven trillion,

38:42

if we took US government spending

38:44

from like seven plus trillion to

38:46

four point eight trillion, I mean,

38:49

I mean, I mean, what are

38:51

you talking about? Like, Bessen is

38:53

the guy that understands it. And

38:55

that's why Bessen, I mean, Bessen

38:57

to me, I listen to the

38:59

Bessen interview guest show at Bloomberg,

39:01

I mean, that's more important to

39:03

me than listening to Trump or

39:05

Ludnick or Navarro or Navarroer. the

39:07

plan and and he spelled it

39:10

out perfectly. He said, okay, we

39:12

are going to get some, not

39:14

deals done because trade deals take

39:16

time, but we're gonna have like

39:18

agreements in principle and that's, you

39:20

know, that's what I think is

39:22

coming. So he's gonna say, we

39:24

met with the Japan delegation, we

39:26

need to work out the details,

39:28

but we now have an agreement

39:31

in principle with Japan. with the

39:33

EU, with etc, etc. etc. And

39:35

then you start getting those things

39:37

going and then I thought this

39:39

was huge was he said that

39:41

the Treasury has tons of tools

39:43

including the Treasury buyback program. So

39:45

you know we could talk about

39:47

that for a second for people

39:49

that don't know what that is,

39:52

how it's been getting ramped up

39:54

lately, you know, so I could

39:56

get into that a little bit

39:58

about what the Treasury buyback program

40:00

is and why that's important. I

40:02

think it'd be good. I think

40:04

it'd also be good to contextualize

40:06

it by, yeah, just like, what

40:08

is... Like, is some sort of

40:10

external force needed to manage this

40:12

bond market? Because to me, it

40:15

feels like yields going higher goes

40:17

against everything they're trying to do

40:19

here. So I want to understand,

40:21

do we need an external force

40:23

like ramped up Treasury buybacks, especially

40:25

ones where they funded with bills

40:27

and buy the long end, like,

40:29

do we need something like that?

40:31

Do we need something from the

40:33

Fed? Yeah, try to pay a

40:36

picture there. Yeah, oh yeah, not

40:38

to like hold the story. I

40:40

totally believe in what I call

40:42

YCD. which is not YCC, but

40:44

yield curve distortion that that they're

40:46

going to and they're already distorting

40:48

the curve. I sent over a

40:50

chart comparing tenure yields to the

40:52

30 year mortgage rate and the

40:54

spread. And again, this is a

40:57

George Roberts, where he's like, look,

40:59

mortgages are MBS. They're, they're guaranteed

41:01

more less by the federal government.

41:03

Why has that spread blown out

41:05

post COVID? And it's because there

41:07

is. distortion is occurring in the

41:09

curve. If you look at Treasury

41:11

curve, it is now very different

41:13

from what I would call in

41:15

economic parlance the risk-free curve. The

41:18

risk-free curve is much steeper and

41:20

much higher than the Treasury curve

41:22

right now because the Treasury curve

41:24

is distorted. And so if you

41:26

want to understand what's the real

41:28

like 10-year rate, which... is basically

41:30

a basket of nominal GDP expectations.

41:32

I would say you take a

41:34

look at the mortgage back rate,

41:36

which is 7.5 right now, like

41:39

the highest we've seen in a

41:41

long time. I think it's getting

41:43

close to 7.5 or 7.3. I

41:45

think you back out some cushion

41:47

in there because you have to

41:49

package the mortgages or whatever. Let's

41:51

call it 100. Let's be generous.

41:53

It's called 150 basis points. So

41:55

you go 7.5 minus 150, you're

41:57

at 6. And the reason why

41:59

you're comparing a 30-year mortgage to

42:02

a 10-year is because the duration

42:04

is similar, because of the prepayment

42:06

risk that's inherent in mortgages. So

42:08

you've got to, so you're really

42:10

at like, in my opinion, a

42:12

6% 10-year right now. A 6%

42:14

10-year risk-free rate. That's the market

42:16

risk-free 10-year rate, which is telling

42:18

you a basket of NGDP nominal

42:20

gross domestic product over the next

42:23

10 years is going to be

42:25

around 6%. Now how much of

42:27

that is going to be real

42:29

growth? I don't know. 1%? 2%?

42:31

0%. How much of that is

42:33

going to be in how much

42:35

that 6% is going to be

42:37

inflation? I would say 654. So

42:39

that's that's what I'm that's what

42:41

I see the market pricing into

42:44

the bond market. And that's why,

42:46

okay, the Trump terrorists come off

42:48

US yields, you know, go down

42:50

3.8 or not 3.8. But they

42:52

declined by like 2030 basis points,

42:54

and then they skyrocketed back up.

42:56

Why? market is realizing that inflation

42:58

dynamic, that NGBP, nominal gross domestic

43:00

product, is going to be like

43:02

sensationally positive in the coming years

43:05

because there's no way to get

43:07

away from this inflation dynamic. And

43:09

so that's driving up yields. Now,

43:11

why did the dollar go down

43:13

at the same time? Because you

43:15

look. I worked for a multi

43:17

hundred billion dollar asset managers after

43:19

I got my NBA from Duke.

43:21

I would be in the rooms

43:23

with people putting together portfolio allocations

43:26

for things. We would have something

43:28

we call a placemat. It was

43:30

basically every asset class in the

43:32

world and it was looking at

43:34

like, you know, correlations and expected

43:36

returns. And, you know, you run

43:38

it through a portfolio optimizer and

43:40

And you know if you did

43:42

that when I had graduated from

43:44

business school it basically told you

43:46

invest everything into emerging market equities

43:49

because emerging market equities you know

43:51

in the 2000s had just been

43:53

off the hook right it was

43:55

like the expected vol was low

43:57

they expect to return was super

43:59

high and what's happened and the

44:01

last 10 years is that that

44:03

placemat made it look like invest

44:05

everything in U.S. tech.

44:08

And global investors around

44:10

the world got way, way

44:12

over allocated to U.S. tech.

44:14

And we're seeing that trade

44:17

unwind. And that's why in

44:19

my 2025 predictions I

44:21

said EEM outperforms SPY.

44:23

Because I think people

44:26

have been under allocated

44:28

to EEM, FXI. EFA, you know,

44:30

develop market, global development market sex,

44:32

you know, all of that stuff.

44:35

And so what do they do

44:37

in this situation? Okay, what just

44:39

happened? Investors looking at it

44:41

and they're saying, okay, we're

44:43

going through an uncertainty period,

44:45

but at the end of it, it's

44:48

going to be inflationary. Do we want

44:50

to hide out in the 10 year?

44:52

Hell no. Because normally if a recession

44:54

is coming and the feds rushing into

44:57

cut rates, you know, Ten year is

44:59

a great place to hide out because

45:01

number one is US Treasury is quote

45:03

risk free Plus yields should essentially

45:05

you should forecast yields to be

45:07

coming down So you're not only

45:10

going to get that risk free

45:12

comfort You're going to get a

45:14

kicker of rates coming down and

45:16

price appreciation in the tenure investors

45:18

are saying that ain't happening this time.

45:21

And that's why Buffett's not hanging out

45:23

in the 10 year, or the five

45:25

year, he's hanging out in bills. And

45:27

if you looked at it, what happened

45:29

during this whole thing, it was a

45:32

steepening of the yield curve. And isn't

45:34

a steepening of the yield curve bullish?

45:36

Yeah. So, okay. So this is something

45:38

I've been trying to figure out is

45:40

within that dynamic of bond deals going

45:42

higher. break even rates as measured by

45:45

the market have not been going higher,

45:47

but inflation expectation survey data has been

45:49

going higher. So it's this really weird

45:51

moment where real yields are soaring because

45:53

the yields are going up, but then

45:56

break evens are staying flat, but then

45:58

like survey data is going up. I've

46:00

seen some smart like Danny Danes

46:02

who's on the show a lot.

46:05

He's talked about he thinks that

46:07

the break even market is all

46:09

messed up right now. Are you

46:12

of that mind as well? Yeah,

46:14

I mean, I'm not an expert

46:16

in like the tips and the

46:19

break even market. I do think

46:21

though, even Powell in his last

46:23

speech, like he literally pointed this

46:25

out, he's like there's soft sentiment

46:28

data, we, we saw. Initially, if

46:30

you broke it down by political

46:32

party, the Democrats were forecasting high

46:35

inflation and people said, don't worry

46:37

about the Eumish. And then they

46:39

said, okay, now it's everybody. I

46:42

think at the end of the

46:44

day, it's sentiment survey data. And

46:46

I honestly, like, I trust more

46:49

in like a stick of gum

46:51

or something. As far as inflate,

46:53

I mean, inflation expectations from some

46:56

random survey of consumers or what

46:58

do they think inflate? I don't

47:00

think that's anything to pay attention

47:03

to. I think that the break-evens

47:05

and the tips markets are showing

47:07

lower inflation rates. And I think

47:09

there's partially a reason for that.

47:12

And that's because I do think

47:14

we're going to have a surprise

47:16

decrease in inflation in the very

47:19

short term. So that's something we

47:21

haven't talked about. We just saw

47:23

Canada inflation came out today, lower

47:26

than expected. And I think... The

47:28

number one primary driver, real economy

47:30

driver of inflation is oil. And

47:33

I think that this is very

47:35

deflationary. And so the tariffs haven't,

47:37

so I think we're going, and

47:40

this is why I think there's

47:42

going to be probably a hundred

47:44

basis points of rate cuts this

47:47

year, is because we're going to

47:49

have a surprise dip in inflation.

47:51

So, and this dip in inflation,

47:53

it's going to take away stagflation

47:56

fears. It's going to make people

47:58

feel comfortable. The Fed's going to

48:00

come in and cut. We're going

48:03

to get fiscal stimulus around

48:05

the globe. And then inflation is

48:07

going to start to ramp up.

48:09

And that's the bullish case, like I

48:11

said, on the equities. And by the

48:14

time, the Fed is just going to

48:16

be late again, wrong again. They're sitting

48:18

here like, oh, they're like, like some

48:21

of these Fed governments, like,

48:23

this is not a time for any

48:25

bold action. We need to be very

48:27

careful. They were dropping rates by 50

48:30

basis points in a single

48:32

meeting when inflation was much

48:34

higher. I mean, it's out

48:36

of control. And don't forget

48:38

that in 12 months from now,

48:40

we're going to get a new Fed

48:42

chair. And I believe there's a whole

48:44

nother. layer to this, which we haven't

48:46

even got into, I don't know if

48:49

you have time to, which is of

48:51

a monetary power grab by

48:53

the. I don't want to hear

48:55

about this. Yeah, because we haven't

48:58

even talked really about the Fed

49:00

action. You just mentioned 100 basis

49:02

point cuts, but to your point,

49:04

most of these dynamics have not

49:06

been related to the Fed. So

49:08

yeah, what is what is, what

49:11

is an instrument of the Treasury. Best

49:13

sent yesterday, he said, you know, we

49:15

didn't talk about it. So Treasury buybacks

49:17

is just one little example of it,

49:19

which is, you know, every month or

49:22

every quarter, there's a quarterly Treasury announcement.

49:24

You can go there. I think the

49:26

next one comes out first week of

49:28

May. So we'll have a new one.

49:31

They produce minutes of this

49:33

committee. It's like people, it's like

49:35

Treasury Secretary, it's, you know, people

49:37

from big banks and they talk

49:39

about things. And yesterday I went

49:41

back. and reread the minutes of

49:44

the latest Treasury Committee meeting and

49:46

what did they say about Treasury

49:48

Buyback program and it was very

49:50

vague. It's like a little paragraph

49:52

and it talks about like we

49:54

could do this in different ways,

49:56

we could expand it. And so

49:58

the Treasury Buyback... thing ostensibly the

50:01

rationale for it is there

50:03

are off-the-run treasuries

50:05

like weird issuances at weird

50:08

rates therefore they're not

50:10

very liquid and so to

50:12

create an orderly market we as

50:14

treasury we're going to go in

50:17

and we're going to buy these

50:19

kind of redhead stepchild treasury bonds

50:21

and and bring them back in

50:24

the treasury to And what Besson

50:26

mentioned yesterday when he said toolkit

50:29

was we have the Treasury buyback

50:31

program. And it's like this whole,

50:33

the whole idea of the Treasury buyback

50:35

program is just to smooth out

50:37

some of these really weird issuances.

50:40

Now he's not to change the

50:42

duration itself. Yeah, it's not to,

50:44

it's not to affect monetary policy

50:46

or be a financial stress toolkit,

50:48

you know, and so. I think if you

50:50

think like we're in a war, which I

50:53

think we are, I think we're in an

50:55

economic war, I think if it wasn't the

50:57

nuclear age, we'd already be in a kinetic

50:59

war with Russia, China, whatever, then you need

51:02

to go back to wartime thinking. You need

51:04

to think like FDR, you need to think

51:06

about Treasury Fed dynamics the way there were

51:08

in the 1940s, which was okay, Fed, you're

51:11

going to cap the 10 year or two

51:13

and a half, you're going to put the

51:15

short rate at three A. You're going to

51:17

buy whatever we issue, whatever we issue. You

51:20

know, you'll curve control. I mean,

51:22

and so I think, I think

51:24

this stuff, maybe even capital controls,

51:26

all this stuff, like, I think

51:28

this is coming down the pipe because

51:31

as you mentioned, like, you asked

51:33

me, like, Mel, how do you

51:35

reconcile everything you've just said

51:37

with the bond market not going

51:40

to an 8% tenure? And you can't, but

51:42

we can't go to an 8% 10 year.

51:44

It's not 97. Yeah, yeah. We're not 35%

51:46

debt to GDP like we were under Volk,

51:48

or where we could handle a 7 or

51:51

8% tenure. And so what you do is,

51:53

and this is part of that IMF article,

51:55

is it's not just inflation, it

51:57

needs to be kind of surprising. So

52:00

you publicly just talk down inflation,

52:02

nothing's going to happen. And then

52:04

behind the scenes, you're doing all

52:06

of these things to essentially manipulate

52:08

things, more bill issuance, the expansion

52:10

of the. the SLR, the strategic

52:12

leverage ratio, so that treasuries essentially

52:14

count zero percent against it. So

52:16

banks can absorb it. The Genius

52:19

Act, the stable coin bill, so

52:21

that you start, you know, you

52:23

add all of these things to

52:25

get the sovereign wealth fund is

52:27

another, you know, probably going to

52:29

be a point of this. And

52:31

so what you wind up getting

52:33

is you get this stealth QE,

52:35

stealth YCC, or YCD, yield curve

52:37

distortion. You get, and this is

52:40

how you keep real. like the

52:42

yields down and basically you create

52:44

negative real yields in the market

52:46

and negative real yields are bullish.

52:48

Okay so in the last few

52:50

minutes here I would love for

52:52

you to just rip through different

52:54

asset classes with this perspective and

52:56

I would love for you to

52:58

start with currencies actually because as

53:01

you mentioned there's this idea of

53:03

the anti-dollar trade and the way

53:05

I'm going to set this up

53:07

is that okay from 2022 till

53:09

six months ago we've mostly seen

53:11

The US do outsized fiscal deficits.

53:13

Their economies run hot. Normal GDP

53:15

has run hot. Equities have run

53:17

hot. Whereas every other country has

53:19

not done nearly the same size

53:22

as deficits. They've almost, you know,

53:24

if we just look at the

53:26

Germany industrial production the last couple

53:28

years, it's just been in the

53:30

weeds. It's just been awful. You

53:32

could maybe argue as they were

53:34

in a recession. Now we're getting

53:36

to this point where, okay, if

53:38

you're telling me through everything we

53:40

just said that it's going to

53:43

be. the same as it ever

53:45

was in the US in terms

53:47

of high fiscal deficits, and because

53:49

of the impact of other tariff,

53:51

you know, dynamics on these emerging

53:53

market economies and even like developed

53:55

like Europe, etc. If they're going

53:57

to run higher fiscal deficits at

53:59

the same time, that will run

54:01

the economy hot, bond yields up,

54:04

potentially equities up. So if you

54:06

have that all happening in every

54:08

country at the same time, that

54:10

to me tells, you know, lower

54:12

currencies across the board, but if

54:14

they're all going lower at the

54:16

same time, you don't get the

54:18

high Dixie like we've seen the

54:20

last couple years because it was

54:22

just the US there. So yeah,

54:25

take that and let me hear

54:27

about how you think about currencies

54:29

from here. Yeah, well, I mean,

54:31

the Dixie really, it's kind of,

54:33

you know, based on the major

54:35

developed currencies, right? I mean, I

54:37

would be bullish, you know, the

54:39

Colombian peso, you know, like, like,

54:41

think about it. If you go

54:43

to that IMF data tracker and

54:46

you look, which countries have low

54:48

debt to GDP, it's, you know,

54:50

Colombia, it's Mexico, like 40 percent,

54:52

Canada is not high, it's like

54:54

50 percent, Germany is like 50

54:56

percent. And then you, and then

54:58

you go around and then, and

55:00

then you start seeing, okay, it's

55:02

actually a lot higher pretty much.

55:04

everywhere else. So I think actually

55:07

emerging markets, which have not been

55:09

discussed that much this year at

55:11

all, and are basically flat on

55:13

the year, are setting up for

55:15

a potential massive run because of

55:17

developed market massive currency devaluation, like

55:19

generally across the board. And so,

55:21

you know, the problem with Germany

55:23

is they're in the EU, right?

55:25

So if they had their own

55:27

currency, I would be like, oh,

55:30

the German you know, mark is

55:32

going to be extremely strong because

55:34

they're like 45% debt to GDP,

55:36

but they're in the Eurozone with

55:38

Spain and Italy and France and,

55:40

you know, another country that has

55:42

very high debt to GDP is

55:44

UK, so the pound doesn't look

55:46

good to me. So like, when

55:48

I think about what currencies would

55:51

I be bullish on, I would

55:53

look at, you know, number one

55:55

debt to GDP and say, who's

55:57

low, who can do balance sheet

55:59

expansion expansion. without blowing out. you

56:01

know, these debt-to-GDP numbers, and most

56:03

of those countries, with the exception

56:05

I would say of basically Germany,

56:07

are, which doesn't have its own

56:09

currency, are, are EEM. So, like,

56:12

I think in the EEM, And

56:14

another part of this is that

56:16

real assets go up, right? Because

56:18

it's the anti-dollar trade and that's

56:20

very commodity bullish and a lot

56:22

of emerging markets are commodity markets.

56:24

And so, like to me, if

56:26

you combine those commodity markets with

56:28

potential for like EEM currency out

56:30

performance, I mean, you look at

56:33

the EEM and you think, wow,

56:35

forget EFA, forget spy, I want

56:37

to be in emerging markets. Now.

56:39

in financial tumult because of different,

56:41

you know, dots that are connected,

56:43

you know, a lot of times

56:45

investors get fearful of EEM. But

56:47

let's say we get through like

56:49

a tumultuous phase, the volatility dips

56:51

a little bit, and then this

56:54

path forward that I'm painting becomes

56:56

clear, I think then you just,

56:58

you know, look out for for

57:00

emerging markets. So I think on

57:02

a currency front, you know, the

57:04

dollar was like 120 at the

57:06

end of the end of the

57:08

90s. you know, another kind of

57:10

U.S. exceptionalism type period where everybody

57:12

wanted to be in U.S. equities.

57:15

And I believe it got all

57:17

the way down into the 70s.

57:19

So I think the dollar could

57:21

still have a way to go.

57:23

It was again, it was one

57:25

of my 2025 predictions was DXY

57:27

ends the year under 100. I'm

57:29

not saying we're getting to and

57:31

the problem with the DXY is

57:33

it's the again, it's the Europe.

57:36

So so so you're valuing it

57:38

against other. develop our currency so

57:40

I'm not saying it's going to

57:42

70 but you know I I

57:44

would just basically say emerging market

57:46

currencies over developed once this tumult

57:48

period clears seems to be a

57:50

pretty good bet to me. Yeah

57:52

and then you've already characterized bullish

57:54

equities bearish bonds I would love

57:57

for you to just finish up

57:59

here by just gold to Bitcoin

58:01

and how do you think about

58:03

the interplay between the two asset classes?

58:05

I mean those those have been

58:07

for a long time like what

58:09

I harp on and different stuff

58:11

and and I think gold has

58:13

the track record I think gold

58:15

is also being bought by central

58:17

banks which which which is a

58:19

huge huge shift like can't be

58:21

overstated I mean. you know the

58:23

bank of England all these central

58:25

banks they were selling gold after

58:27

the US went off the the

58:29

gold standard they were they were

58:32

essentially flooding the market with supply

58:34

and now central banks are buying and

58:36

I think you know gold is your

58:38

kind of keystone but I think

58:40

you know Bitcoin is in a

58:42

process I don't think it's there yet

58:44

but I think it's in a little

58:46

bit of a process of decoupling

58:48

from NASDAQ 100% correlation and The

58:51

reason why is, you know, Bitcoin

58:53

essentially, I mean, even by the

58:55

US, I mean, it's under the CFTC,

58:58

it's a commodity, like, and so it's a

59:00

supply demand type pricing structure.

59:02

It's not based on earnings.

59:04

It's not based on tariffs. It's

59:06

not, you know, and so I

59:08

think what investors will do is,

59:10

is they'll, and especially now that

59:12

it's becoming more and more and more

59:15

legitimized and regulatory things, you know,

59:17

I follow this. pretty closely and

59:19

especially Cynthia Lumis, the Wyoming Senator,

59:22

which is not a surprise she's

59:24

from Wyoming where there's a lot

59:26

of state chartered banks and different

59:28

things and trust companies and she's

59:31

big into promoting Bitcoin, but like

59:33

she's laid out a three-step strategy

59:35

which is, you know, the first thing we're

59:37

going to do is we're going to get

59:40

this, you know, stable coin bill passed. It

59:42

could be bipartisan. It's called the Genius

59:44

Act and then we're going to

59:46

move into like... regulatory clarity on

59:49

cryptos and then we're going to

59:51

talk about like BTC in sovereign

59:53

wealth fund and so on. So

59:56

I'm I'm generally you know very

59:58

bullish on golden Bitcoin. And then

1:00:00

after that equities with inequities,

1:00:03

emerging markets, developed markets, US

1:00:05

market, and then, you know,

1:00:08

going into. you know bonds

1:00:10

is basically where I think

1:00:13

you know the price gets

1:00:15

paid is the real purchasing

1:00:17

power of bonds because of

1:00:20

this yield curve distortion yield

1:00:22

curve control that's that's going

1:00:25

to prohibit bonds from getting

1:00:27

to where they really should

1:00:30

get which is seven eight percent

1:00:32

and it's going to stop them

1:00:34

from getting there and and that's where

1:00:36

you don't want to be. Working folks

1:00:39

go if they want to see more

1:00:41

of your work. Mel Madison won on

1:00:43

Twitter. You know, I don't have a

1:00:45

lot of followers, even though I do

1:00:47

a lot of good stuff. So I

1:00:49

really appreciate it if people would go

1:00:52

ahead and follow it. If they're interested

1:00:54

in a fictional financial thriller, Quas is

1:00:56

available, audiobook, Kindle, everything, you know, just

1:00:58

search that. And that would be about

1:01:00

it. But really, I just love coming

1:01:02

out and expressing my views. So appreciate

1:01:05

it. Felix, thanks for having

1:01:07

me. Yeah, yeah, likewise I enjoyed that a

1:01:09

lot. Thanks again.