0:04

Okay, so I want to ask before we

0:06

get into it, raise your hand

0:08

if you've listened to the Ford

0:10

Guidance podcast ever. Just curious, who's

0:12

in here? Nice. Okay, so you got

0:15

some listeners, wicked. Well, we'll spare ourselves

0:17

too much of an introduction in that

0:19

case, but you know, we'll spare ourselves

0:22

too much of an introduction in that

0:24

case, but you know, we do have

0:26

the live-stream, so we will introduce ourselves

0:29

anyway, but my name is Felix, I'm

0:31

the host of the host, good to

0:33

be here. Quinn Thompson, founder and CEO

0:36

of Lucker Capital. We are a global

0:38

discretionary macro hedge fund with

0:40

an outsized focus on crypto and

0:42

digital assets. Hey everyone, my name is

0:45

Mike I believe. I'm one of the

0:47

co-founders of Blockworks and a avid listener

0:49

of the Forward Guidance Podcast. Whenever they

0:51

have me on, I'll yap with you

0:53

guys too. Yeah, occasional participant and a

0:56

leader of the guys' emporium. In that

0:58

respect, at least, cultrilly. We need Tyler

1:00

here for the full guys' emporium. You

1:02

know, reunion, rip. I know, I know, he

1:05

missed that guy a lot, but he's off

1:07

doing some big things right now. Okay, so

1:09

we are recording this a couple hours after

1:11

the FOMC meeting, and there's a lot to

1:14

unpack there. So we're going to start the

1:16

conversation by just level setting on what's going

1:18

on. So going into it, obviously the expectation

1:20

was for them to not really do anything.

1:23

They're going to pause, there's no expectations of

1:25

a rate cut, no expectations of rate hike,

1:27

that wasn't the news. What was the news

1:29

is trying to get an understanding is how

1:32

is the Fed and Jerome Powell thinking

1:34

about what's going on on the fiscal

1:36

side of things, obviously tariffs and those

1:38

different policies. So with that, we got the SEP

1:41

data today, the dot plot, and that provided

1:43

an interesting line of sight into gauging. How

1:45

are they thinking about inflation risks? How are

1:47

they thinking about growth risks? And how does

1:49

that all come together into what is their

1:52

perspective for implementing monetary policies? I'm going to

1:54

keep it simple here and just go through

1:56

a couple data points to understand how are

1:58

they thinking about it. So. For the growth

2:00

forecast, for 2025, they're expecting it to

2:02

come down from 2.1 to 1.7. From

2:05

there, they see that level setting out

2:07

and seeing it is so much like

2:09

a short-term growth risk. Now, what's interesting

2:11

is it's the complete opposite in terms

2:13

of inflation risks. From there, they're looking

2:15

at core PC for 2025 to go

2:17

from 2.5 to 2.8, and then eventually

2:19

trickling them back down to 2. Overall,

2:21

in terms of the rate cuts that

2:23

they expect, it's actually quite similar to

2:26

the December meeting, which is the last

2:28

time we had the SVP data, and

2:30

that's two cuts, which is pretty close

2:32

to where the market's at. So... There's

2:34

a lot of different mixed points in

2:36

there. And then we also got some

2:38

updates on the bound sheet and liquidity

2:40

in what's going on there. So we

2:42

got quantitative tightening updates heading into it.

2:44

You know, we saw from the FOMC

2:47

meeting minutes that there was going to

2:49

be some talk of pausing it, having

2:51

to be some talk of pausing it,

2:53

having to do with the debt ceiling

2:55

dynamics. So we'll get into that. But

2:57

interestingly, they only tapered the Treasury component

2:59

of QT. So they brought that down

3:01

from 25 to five to five billion.

3:03

is key we can get into this

3:05

but they want to get those MBS

3:08

off their book and you know they

3:10

are not interested in slowing that down

3:12

by any means. So there's a lot

3:14

to unpack there. Quinn you've been pretty

3:16

quick to the trigger here in calling

3:18

it hawkish despite markets rallying so I

3:20

want to pass it to you to

3:22

get an understanding of what did you

3:24

see there and how are you thinking

3:26

about in terms of the FOMC? Yeah

3:29

so I like to look at the

3:31

meeting over meeting change and... Obviously the

3:33

statement and rhetoric and press conference, but

3:36

also the the dot plots which only

3:38

come out quarterly and When you compare

3:40

the two obviously we had growth expectations

3:43

down with GDP lower unemployment rate higher

3:45

and inflation expectations higher which is

3:47

very state inflationary With the median or

3:49

mean interest rate projection cuts the same

3:52

however under the surface the distribution moved

3:54

to a much more hawkish stance. You

3:56

had the number of participants expecting one

3:59

or fewer cuts go from four to

4:01

eight and expecting three or more go

4:03

from five to two. So it was

4:06

a very meaningful shift in kind of

4:08

the mean of the group. And I

4:10

think I understand the Dovish interpretation as

4:13

well they marked up inflation expectations, but

4:15

they didn't. introduce potential for hikes or

4:17

something worse for risk assets. However, it's

4:20

not good news. There's nothing here for

4:22

me to really celebrate, particularly in a

4:24

backdrop of the first time since COVID,

4:27

even pre probably, that fiscal has been,

4:29

is a negative impulse on asset markets

4:31

with doge efforts and immigration being effectively.

4:34

halted from a percent plus growth of

4:36

population every year since Biden became president

4:38

to zero overnight from the southern border.

4:41

So I just think that the overarching

4:43

backdrop for the economy growth and what

4:45

I expect to eventually show up in

4:48

corporate earnings for the first time since

4:50

we've had all these market pullbacks is

4:52

kind of deterioration with no positive impulse

4:55

on the liquidity side. Yes, okay, they're

4:57

not hiking. the QT reduction is positive,

4:59

but it doesn't, you know, give an

5:02

impetus. So we can chop around here,

5:04

but it just, it doesn't make me

5:06

excited. Yeah, I think, I think that

5:09

it wasn't particularly good or particularly bad.

5:11

There was another interview that went live

5:13

today with Treasury Secretary Scott Besson, where

5:16

he outlined in quite a bit of

5:18

detail. how Treasury and honestly this administration

5:20

is thinking about growth and inflation. and

5:23

etc. over the course of the next

5:25

couple of years. And I think if

5:27

you just look at this, I think

5:30

this administration and politics is in the

5:32

driver's seat at the moment, much more

5:34

so than inflation or the Fed. And

5:37

so if you look at this administration,

5:39

they are very, very focused on balancing

5:41

the budget. We know that debt is

5:44

something that they care about for the

5:46

first time in a long time. And

5:48

during this interview, Scott Besson sort of

5:51

went through how they think about alleviating

5:53

the situation. You can try to grow

5:55

your way out of the situation. You

5:58

can do financial oppression. Politically, financial oppression

6:00

is not going to work, I think,

6:02

with this president in particular. He's very

6:05

sensitive to the common man. And so

6:07

I don't think that's a great option.

6:09

Scott Besson was very against austerity or

6:12

severe austerity because that negatively impacts your

6:14

ability to grow your way out of

6:16

it. And so growth seems like the

6:19

priority. And so when you look at.

6:21

kind of the three big components that

6:23

they've thrown out so far. There's tariffs,

6:26

which is negative growth, but then there

6:28

are tax cuts, and there's also deregulation.

6:30

And so what he outlined in his

6:33

speech was they started with tariffs first,

6:35

which is obviously... not good for growth

6:37

and you've seen markets throw a little

6:40

bit of a hissy fit for the

6:42

course of the last month. But what

6:44

they have in their back pockets and

6:47

what they're counting on is deregulation to

6:49

drive growth and tax cuts to drive

6:51

growth. And obviously spending is going to

6:54

be a lever that they can pull

6:56

how much they really end up cutting

6:58

on how much they really end up

7:01

cutting on the doge side of things.

7:03

And so I think markets are pricing

7:06

in tariffs because that's what's actually going

7:08

to do in terms of... generating growth

7:10

in the real economy. So I think

7:13

that's what's, yeah, it's very choppy in

7:15

the midterm, but I think later on

7:17

towards the end of this year, you

7:20

have things to look forward to. Yeah,

7:22

I think that's the good point to

7:24

bring up is the direction and sort

7:27

of who's moving the pieces on monetary

7:29

and fiscal policy. don't account for how

7:31

closely intertwined Fed and Treasury policy actually

7:34

is. It's been very obvious the last

7:36

number of years and I don't think

7:38

it's changed in in the new administration.

7:41

In fact I think Powell much probably

7:43

against what consensus view is of this

7:45

tension between the Trump White House and

7:48

Powell is actually much more aligned interests

7:50

this go around at least now. You

7:52

know if we go through a big

7:55

deep cut of doge and growth gets

7:57

hit and we tip into a recession

7:59

later in the year and they have

8:02

to start stimulating pre-midterms 2026 and inflation

8:04

is not down yet, there might be

8:06

tensions. But in this point in time,

8:09

I view very aligned interests and incentives

8:11

between the two camps and I can

8:13

kind of feel that from Powell where

8:16

they're very comfortable waiting and I think

8:18

they're being assured of that from Besson

8:20

and team. So that's a bit different

8:23

dynamic than prior. you know, at least

8:25

last year where it's like, hey, we

8:27

got an election to win, you got

8:30

to juice these markets. So. Yeah, I

8:32

think that's such a good way of

8:34

framing things because I think a lot

8:37

of people are getting it wrong right

8:39

now on that interplay between Scott Besson

8:41

and Cherie Powell. I've seen a lot

8:44

of takes where they say, look, Besson

8:46

and Trump are trying to tank the

8:48

economy to force the Fed to cut

8:51

rates and I don't think that's the

8:53

way to think about it for the

8:55

past. five years now since COVID basically,

8:58

which is a couple things. You know,

9:00

he's trying to get a handle on

9:02

inflation and with the tools that the

9:05

Fed has, they're limited for a number

9:07

of reasons. We've talked about them before.

9:09

But overall, he's been going, you know,

9:12

you always have to think about the

9:14

economy through the lens of fiscal and

9:16

monetary and the interplay between those two.

9:19

And on the fiscal side of things,

9:21

we've been running some of the loosest

9:23

fiscal regimes. you know we've been running

9:26

a recessionary playbook doing an expansion right

9:28

so you know we have huge deficits

9:30

we have stock prices at all-time high

9:33

all the time that's leading to this

9:35

further consumption of you know higher income

9:37

classes of society so you know I

9:40

think those are the two big reasons

9:42

why we haven't seen inflation return to

9:44

2% and now you have this administration

9:47

come up and go to Powell and

9:49

say hey look you know we're trying

9:51

to get the 10-year yield down we're

9:54

trying to get a handle on things

9:56

we're trying to pull back you know

9:58

fiscal retrenchment I think Powell's over the

10:01

moon. Yeah I mean the most clear

10:03

trade to me here is longing bonds

10:05

because you know you have the Fed

10:08

attempting to respect the value of the

10:10

dollar by not you know adding liquidity

10:12

in the regime and being very patient

10:15

on potential future cuts and my view

10:17

is that they're in a fairly hawkish

10:19

stance and then you have the same

10:22

thing on Besson. Besson knows there's a

10:24

big treasury supply issuance problem on the

10:26

horizon if they don't fix the deficit

10:29

and you know how do you fixed

10:31

if you're the largest bond salesman in

10:33

the world, and you want to tell

10:36

a good story about why your bonds

10:38

should be at lower yields, either can

10:40

get growth down, get inflation down, or

10:43

both. And there's another pillar to this,

10:45

which is energy. You've noticed how they

10:47

have been dead set on solving Russia

10:50

and Ukraine. Very, very obvious strategy to

10:52

lower oil prices. The deal with the

10:54

Saudis that I don't think got enough

10:57

attention, but... You know, that was monumental

10:59

in terms of trying to add more

11:01

supply. But on the other hand, they

11:04

do have things like bringing Iran from

11:06

1.5 million barrels to zero maximum pressure,

11:08

the potential that the Russian conflict doesn't

11:11

end so soon. So it's a tight

11:13

needle to thread, but the main point

11:15

for me is that the Trump admin

11:18

is willing to go through pain. We

11:20

have not seen an administration. in a

11:22

long time willing to do that, and

11:25

they seem very willing. So I'll take

11:27

them at their word as long as

11:29

their actions corroborate, which they have. Yeah,

11:32

Mike, I wanna ask you because you

11:34

know, you are a student of history.

11:36

That's one of those traits that I

11:39

feel like. It's a nice way of

11:41

calling me a nerd, but okay. Look,

11:43

so you know, they're playing with fire

11:46

here. You know, if you're trying to

11:48

do what they're trying to do, which

11:50

is to get, you know, gross load

11:53

and pull things back and actually pull

11:55

it off without diving into recession because

11:57

I'm still not in that camp. But

12:00

you know, when you look at history.

12:02

of these moments where you go through

12:04

these cycles of, you know, decrease in

12:07

liquidity, decrease in growth, and then, you

12:09

know, swooping underneath and trying to catch

12:11

it, you know, basically a soft landing,

12:14

but from a fiscal side, and not

12:16

letting go to a hard landing. When

12:18

you look at previous crises during history,

12:21

like... What's your perspective on how likely

12:23

this is for them to pull off

12:25

without it going too far? And then,

12:28

oh shit, now we have to run

12:30

up even greater fiscal deficits because we

12:32

went too far too low and now

12:35

we got to revitalize the economy because

12:37

we messed up and we're in a

12:39

recession. I think that the perspective from

12:42

this administration that I agree with is

12:44

that you need to grow your way

12:46

out of this, actually. I think that

12:49

there's sort of an incorrect view that

12:51

you can cut it. The actual... verbatim

12:53

phrase from Secretary Scott Besson was, we

12:56

don't have a revenue problem, we have

12:58

a spending problem. And so I think

13:00

his perspective, you know, you often hear

13:03

that you can't look at a government

13:05

like household financing or startup, and I

13:07

think in a lot of ways you

13:10

can't, but I think in this one

13:12

way you can. There are definite revenues

13:14

and there are definite costs. And if

13:17

you were looking at a company or

13:19

a startup here, there's not a massive...

13:21

problem. We've gotten out ahead of our

13:24

skis, but we still have the most

13:26

robust economy on earth. It's growing in

13:28

a very organic and steady way. And

13:31

so I think you can largely look

13:33

at Doge as a way of just

13:35

raining our costs in or running in

13:38

a more break-even rate. And I think

13:40

a pretty decent framework for looking at

13:42

the economy right now is over the

13:45

course of the last two years, we

13:47

had a spending problem. And most of

13:49

the job growth is being driven by

13:52

government, and I think there is an

13:54

attempt to shift to shift growth onto

13:56

private sector through deregulation and tax cuts.

13:59

And I think it's a good plan.

14:01

I don't really see a path here

14:03

where everyone tightens their belts and you

14:06

know we take huge cuts and I

14:08

just don't see it without a massive

14:10

crisis. So I think this administration's perspective

14:13

is we're going to move the impetus

14:15

of growth from the public sector in

14:17

government and giving away a bunch of

14:20

jobs like that into the private sector

14:22

and we're going to try to incentivize

14:24

job growth. And I think alongside that.

14:27

They're very sensitive about honestly terming out

14:29

our debt. So there have been some,

14:31

I think, critical, there's a lot of

14:34

question marks around Janet Yellen's shift in

14:36

terms of how she ran bond auctions

14:38

for a little while moving much more

14:41

toward shorter debt dated bills as opposed

14:43

to longer dated treasuries. And I think

14:45

that... And I think that they're going

14:48

to change that moving forward with, they

14:50

can mess with things like the SLR

14:52

for banks. And actually, Besson's quote was,

14:55

he thinks that they can reduce BIP's

14:57

70 basis points alone with just that

14:59

lever. Yeah, something that's, I want to

15:02

pull into this discussion here and I'll

15:04

ask you Quinn in a second here.

15:06

But, okay, so their goal is to

15:09

get the 10 year down. You know,

15:11

they've achieved, I think 50 BIPs so

15:13

far at the cost of a 12%

15:16

equity correction. That's a pretty large trade-off,

15:18

I would say. And then in the

15:20

same vein... I don't think they anticipated

15:23

such a fiscal reaction, especially from Europe.

15:25

I wonder, I'm curious on your guys'

15:27

takes, but did they expect for Germany

15:30

to unleash potentially 500 billion dollars in

15:32

defense investment and for them to actually

15:34

start running deficits again and taking off

15:37

the debt leash? Because that leads to

15:39

higher boon yields, that leads to a

15:41

higher euro, that leads to a weaker

15:44

dollar. That all leads to marginally also,

15:46

you know, just from the correlation of,

15:48

of, you know, if capital goes back

15:51

to Europe and chases those higher yields,

15:53

they're going to be selling mag seven,

15:55

they're going to be selling US bonds,

15:58

that leads to higher bond yields. Do

16:00

you think they expected that?

16:02

Because that to me is a

16:04

headwind against their goal of getting

16:07

the 10-year lower. If we got

16:09

every, you know, we got China

16:11

fiscal coming online too.

16:13

Those are negative headwinds

16:15

for bond yields. Do you think

16:18

Besson anticipated that? He's, I

16:20

love Besson. I want to

16:22

be Besson when I grow up,

16:24

but he definitely knows this. One

16:27

the trade after the trade here

16:29

that I don't think most

16:31

are speaking about is How you

16:33

point out out big of a headwind

16:35

that is for his? Objectives

16:38

to bring inflation down

16:40

and bring yields down because

16:42

it's all thus far. It's been

16:45

two months and You know for all

16:47

the progress or some people

16:49

view lack of progress that's been

16:51

made Things have gone quite smoothly,

16:54

right? We've cut the deal with

16:56

the Saudis to pump more oil.

16:59

We've, Russia and Ukraine have largely

17:01

fallen in line. All our other

17:03

trading partners have largely fallen in

17:06

line and tariffs. There hasn't been

17:08

a big breakout of global

17:10

conflict or trade war noise.

17:12

But mechanically, there are

17:14

things you can't control, and that

17:17

is the flows, which in this case,

17:19

lower growth. lower U.S.S. bond yields,

17:21

weakens a dollar, and by

17:23

definition strengthens rest of

17:25

world currencies. It makes, you know,

17:28

there's a reason we've had extreme

17:30

concentration in our large cap indices

17:32

in the MAG-7 because it's been

17:34

the safety trade when the rest

17:36

of the world wasn't growing, when

17:39

China was in recession, when Europe's

17:41

in recession and the U.S. is

17:43

propped up on fiscal largeness, but

17:46

that's reversing. the relative attractiveness of

17:48

non-U.S. assets, so the U.S. has

17:50

4% of the world's population, but

17:53

60% of the global equity market

17:55

cap. There's some mean reversion to

17:57

be had, making higher global buy.

18:00

bond yields, putting pressure on the

18:02

US bond yields. But the other

18:04

thing is the downward pressure on

18:06

the dollar also is importing of

18:08

inflation, where in the last three-ish

18:10

plus years we've been actually importing

18:12

deflation relatively or disinflation relative to

18:14

the rest of the world, because

18:16

we've had a strong dollar. And

18:18

so what that does is puts

18:21

a sort of a floor bid

18:23

under commodities structurally. That doesn't mean

18:25

commodities have to go up. You

18:27

know, they're doing other supply things.

18:29

hurting demand, so they're trying other

18:31

methods, but there's structural headwinds that

18:33

come in that make it more

18:35

difficult. You could even see a

18:37

situation where China, Europe, Japan, start

18:39

running so hot relative to what

18:42

Bessent needs to do to get

18:44

our yields down, that he just,

18:46

the global cost of capital is

18:48

rising. Inflation starts rising for no

18:50

reason of his. Where you could

18:52

even see a situation where for

18:54

him to achieve his goals he'd

18:56

have to say hey guys like

18:58

you got to tighten up the

19:00

belt like we are like you

19:03

know this is inflationary but I

19:05

don't know if that's going to

19:07

happen yet but so it's a

19:09

it's a very tight tight loop

19:11

to thread and I have to

19:13

at this moment be in the

19:15

skeptic camp if it can actually

19:17

fully get done without more pain

19:19

first for risk assets. I

19:22

don't know. I think, I mean, I

19:24

think that you can look at some

19:27

of the actions of this administration. I

19:29

mean, this administration does tell you exactly

19:31

how they think and what they want,

19:33

right? I mean, Trump has been super

19:36

consistent on this. You can find yields,

19:38

or interviews going back to the 80s,

19:40

or he thinks that the rest of

19:43

the world, especially Europe, does not pay

19:45

their fair share for defense. And he

19:47

said repeatedly, this is what I want.

19:49

And then he sent Jady Vance to

19:52

Munich to Munich and he makes a

19:54

fiery, a 500 billion dollar fiscal investment

19:56

in to rearmament, right? I don't know,

19:58

I'm unclear if that's a good thing

20:01

for the rest of the world. Or

20:03

for all time, but that's I think

20:05

that's kind of the trend and that's

20:08

they made it very clear that that's

20:10

what they want Yeah, so another piece

20:12

of the puzzle here which is you

20:14

know related to the reason that we're

20:17

actually here today which is a digital

20:19

asset summit But there's a lot of

20:21

cross-currents between you know, what can we

20:23

what can the administration do with stable

20:26

coins as a marginal buyer of debt?

20:28

What can the administration do with a

20:30

Bitcoin strategic reserve and how does that

20:32

sit within the interplay of everything we're

20:35

talking about? I want to maybe start

20:37

with you, Mike, just, I'm not actually

20:39

sure where you stand right now on

20:42

the Bitcoin Strategic Reserve and all of

20:44

that, and how you think about that

20:46

for like the super high level macro

20:48

goals here of this administration and achieving

20:51

the goals that they're talking about, like,

20:53

where does that sit within it, and

20:55

then also stable coins in terms of

20:57

being the fastest growing marginal buyer of

21:00

that debt? On the Strategic Bitcoin Reserve.

21:02

I'm not sure if I get it.

21:04

I don't really like it, actually. I

21:07

think that the US still is in

21:09

this position of enormous privilege of being

21:11

the issuer of the global reserve currency.

21:13

The only thing better than having to

21:16

back your currency with high quality collateral

21:18

is not having to back it and

21:20

being the collateral. itself. And so I

21:22

just sort of wonder if you have

21:25

a strategic Bitcoin reserve. You're saying this

21:27

is strategic to my country for some

21:29

reason. Bitcoin doesn't exist in the real

21:32

world. We don't have liabilities denominated in

21:34

Bitcoin like we do with petroleum. And

21:36

so what is the message that you're

21:38

sending? The only thing that you could

21:41

be backstopping is your currency. To be

21:43

honest, I just I don't love it.

21:45

As part of the reason I've never

21:47

really loved it on corporate balance sheets

21:50

either, which I know people love in

21:52

this space. But yeah, so I'm not

21:54

a huge fan of the strategic Bitcoin

21:56

observer honestly the stockpile in general But

21:59

that's just my personal perspective On the

22:01

stable coin front. I think that's massive

22:03

for the United States And I think

22:06

it's not it's not an accident that

22:08

the only you know when you hear

22:10

about you know high like cabinet members

22:12

Or Scott Besson talking about anything related

22:15

to crypto. He's talking about stable coins

22:17

And actually Brian Moynihan, the CEO of

22:19

Bank of America, when he was talking

22:21

about Bank of America, potentially launching a

22:24

stable coin, I thought he phrased it

22:26

very interestingly. He's like, I don't see

22:28

the difference between this and bank deposits.

22:31

And I think if you squint at

22:33

it, it's kind of hard to see

22:35

what the difference is between that and

22:37

bank deposits. But there's certainly a large

22:40

buyer and already a very large owner

22:42

of US Treasuries. And so I think

22:44

Scott Bessonan is a guy who knows

22:46

monetary plumbing, monetary plumbing very deeply, very

22:49

deeply. Like I mentioned before, he's already

22:51

talking about messing with the SLR of

22:53

banks to allow them to be more

22:55

deregulated and buy more US bonds. I

22:58

think he sees this as an incremental

23:00

buyer of bonds. So I think it's

23:02

extremely, it's part of the reason why

23:05

it's one of these massive tailwinds, I

23:07

think, that exists for stable coins in

23:09

the US in general. Yeah, on the

23:11

strategic reserve, the best idea I've heard

23:14

is if the US has some stranded

23:16

power assets that they could, they could.

23:18

you know, used to mine Bitcoin with

23:20

excess energy. It's a not great business,

23:23

though. Hash price and revenue profitability for

23:25

miners is back to extreme lows, sort

23:27

of bare market lows, just given the

23:30

growth and hash rate and difficulty. But

23:32

when you zoom out and just take

23:34

off the like tinted goggles of being

23:36

a crypto fanatic, like you see the...

23:39

four countries that have Bitcoin reserves as

23:41

North Korea, El Salvador, Bhutan, and the

23:43

US. And like, I don't know, is

23:45

that like super exciting? If you're another

23:48

country, like it doesn't feel like there's

23:50

this global race to acquire Bitcoin to

23:52

me. And you know, we're a debtor

23:55

nation, we're running massive deficits, it's fungible,

23:57

right? Bessence like. we're talking about how

23:59

intelligent and logical and rational he is

24:01

and he's not going to just say

24:04

like oh well we could sell gold

24:06

to about like no it's all fungible

24:08

like debt deficit like if we spend

24:10

somewhere here we have to cut here

24:13

if we add here we, and he

24:15

gets that. So I just, I don't,

24:17

I think it's a fulfilled campaign promise

24:19

this far, and I don't really see

24:22

a lot of legs to it. But

24:24

on the stable coin front, you know,

24:26

two goals, right? Gate yields down, so

24:29

increased demand for your debt. He's the

24:31

largest bond salesman, US Treasury bond salesman.

24:33

And they, like I just mentioned, a

24:35

weaker dollar is a headwind, because it's

24:38

inflationary. And so he wants a higher

24:40

demand for US dollar. So both of

24:42

those things when. you see stable coins

24:44

go from non-existent to a top 20

24:47

holder of your national debt is pretty

24:49

inspiring and something I would be doing

24:51

everything possible to increase around the globe.

24:54

So stable coins continue to be the

24:56

most obvious thing for them to focus

24:58

on within digital assets. I also want

25:00

to ask you, I would get your

25:03

opinion on this. sovereign wealth fund, US

25:05

sovereign wealth fund as well. This has

25:07

been, I'm torn between being excited about

25:09

it, thinking it's interesting and not 100%

25:12

understanding it. My understanding of sovereign wealth

25:14

funds is, you know, if you're a

25:16

country and you're generating surplus revenue that

25:18

you can't reinvest back into your own

25:21

domestic economy, then you move it mostly

25:23

into the United States. But we're a

25:25

debtor nation, so that makes less sense

25:28

for us, but. If you had done

25:30

that, if you had put one of

25:32

these together 50 years ago, you'd have

25:34

done extremely well. And Social Security might

25:37

not be underfunded. But on the stable

25:39

coin front, I also wonder if they

25:41

are looking at this as potential disruption

25:43

to the commercial banking system. Folks in

25:46

this room, has anyone heard the term

25:48

narrow banking before? My man. So narrow

25:50

banking was something that. has been tried

25:53

a couple times over the course of

25:55

the past decade, but there have been

25:57

pushes to allow different institutions or even

25:59

individuals to bank directly with the Federal

26:02

Reserve. So the advantage of this would

26:04

be there's zero risk. You have no

26:06

counterparty risk. The disadvantage of this would

26:08

be and why the Fed is always

26:11

pushed back against it is one, they

26:13

don't want to direct banking relationship with

26:15

everyone. also don't want to do is

26:18

undermine their own commercial banking system because

26:20

who would bank with JP Morgan if

26:22

you could bank directly with the Fed

26:24

and take absolutely no risk right so

26:27

it's undermining to them and so you

26:29

kind of have on the one hand

26:31

over here banking directly with the Fed.

26:33

On the other hand over here, you're

26:36

banking with a commercial bank which is

26:38

backed up by a pretty diverse set

26:40

of loans, right? Like different duration, treasuries,

26:42

you know, private credit, whatever it is.

26:45

And then there's this kind of middle

26:47

ground here, which is stable coins, which

26:49

are like global bank deposits, which are

26:52

just backed by very short dated government

26:54

debt. And sort of a low overhead

26:56

global from day one sort of bank

26:58

deposit, actually that looks maybe like a

27:01

new. form of banking and could actually

27:03

be pretty disruptive to commercial banking in

27:05

the US, not in one or two

27:07

years, but maybe in five or ten.

27:10

So I wonder if they're thinking like

27:12

that also. I'm the Sovereign Wealth Fund.

27:14

I think I'm probably only supportive if

27:17

Tim Wals is CIO and Nancy Pelosi's

27:19

run on the options book. I got

27:21

a one trader. I got some spicy

27:23

takes on the Sovereign Wealth Fund too.

27:26

To your point. The US is a

27:28

debtor nation. I almost said my country,

27:30

but I'm Canadian. 51. Maybe for now.

27:32

Already in slip? Already in slip? Yeah,

27:35

I don't. Yeah. Fence are. Look, if

27:37

you're a debtor nation and you want

27:39

to run a sovereign wealth fund, setting

27:41

aside all the fancy tricks that they're

27:44

talking about, like, you know, taking the

27:46

gold reserves and marking it the market

27:48

and put in there, or, you know,

27:51

the digital assets that they've already seized,

27:53

putting that, that, that's all great. But

27:55

if you get to the point where

27:57

you're like, okay, we want to actually

28:00

structurally run a sovereign wealth fund, but

28:02

we're a debtor country, you have to

28:04

start asking, where does that capital come

28:06

from? And it comes from the private

28:09

sector. It comes from taxpayers. So if

28:11

it's coming from taxpayers, if you're in

28:13

agreement with that, you're making the admission

28:16

that you are willing to allow. the

28:18

government to work as a pension fund

28:20

basically on your behalf. You know, I

28:22

myself, you know, I definitely lean more

28:25

libertarian. I'm not really interested in that

28:27

premise. I'm much more interested in deciding

28:29

myself what pension fund, what head fund.

28:31

I want to provide my capital towards.

28:34

I'm not really interested in taking it,

28:36

you know, in letting them take the

28:38

tax paying money and letting them take

28:41

the tax paying money and letting that

28:43

fund the sovereign wealth fund. So I

28:45

don't like, you know, the idea of

28:47

it is great because yes, they're going

28:50

to, you know, you know, infinite, you

28:52

know, people to lose these ideological beliefs

28:54

that they have. It's like, okay, well

28:56

if we're all like free market believers

28:59

and we're also excited about this idea

29:01

that we create like a tax funded

29:03

hedge fund, I'm just, I'm not on

29:05

board with that idea. I think there's

29:08

like an underlying, I agree with that,

29:10

it's more government, there's things that make

29:12

sense for governments to help incubate and

29:15

I think they do that already quite

29:17

a bit with all these other agencies

29:19

and things, but the underlying... thing that

29:21

maybe people don't talk about is if

29:24

you have a balanced budget responsible monetary

29:26

policy and People respecting the value of

29:28

Fiat You sort of don't need it

29:30

like you know, so that's I mean

29:33

I'm the long-run believer because I don't

29:35

think those things are going to be

29:37

achieved by governments globally in in perpetuity,

29:40

but that is the truth if if

29:42

Bitcoin was born and exists in as

29:44

a flight of safety store value and

29:46

protection of purchasing power. So if you

29:49

don't have those, which is what a

29:51

smart Treasury Secretary is attempting to do,

29:53

yeah, and then on the other side,

29:55

I think that doesn't get enough talk

29:58

is at least the possibility that the

30:00

US's strong state sponsorship of Bitcoin makes

30:02

it at least relatively less attractive. to

30:04

countries like Russia who just got hundreds

30:07

of millions of the reserves confiscated essentially

30:09

and sanctions and all these sorts of

30:11

things that like you said are the

30:14

ideological foundation of it being an outside

30:16

the system asset versus something that has

30:18

state sponsorship and embrace. Okay, Mike, I

30:20

want to get into with you about

30:23

what I felt like is the big

30:25

theme of this conference so far, which

30:27

is, you know, it's a lot of

30:29

an institutional audience and they are very

30:32

excited about the crypto industry right now.

30:34

It feels like, you know, finally the

30:36

regulatory unshackling is occurring. They can finally

30:39

start to allocate in ways and in

30:41

confidence. You know, we can have banks

30:43

start to actually custody digital assets. This

30:45

is like fantastic stuff. But then you

30:48

know you go on crypto Twitter, you

30:50

go and check out what retail is

30:52

feeling like right now, and it's just,

30:54

it's abysmal. It feels like a bare

30:57

market. There's just been the mean coin

30:59

market implosion. Like, what is going on?

31:01

Which side is right right now? Is

31:04

institutional just exit liquidity, and that's the

31:06

smart money, or is it the opposite?

31:08

Keep in mind, Bitcoin's been around for

31:10

17 years, right? It was the opposite

31:13

of a smooth run. And now it

31:15

looks so good, there's a strategic Bitcoin

31:17

reserve that the US has laid out.

31:19

Everyone knows what the narrative is, but

31:22

man, there were so many times when

31:24

it looked like it wasn't going to

31:26

make it. It took a long time

31:28

to get here. Everything else in crypto

31:31

is much, much newer than that. I

31:33

mean, even like the second most battle

31:35

tested ground here would be sort of

31:38

defy built on Ethereum. That's been around

31:40

for... six years, you know, if you're

31:42

being pretty generous. It just takes a

31:44

long time for these things ultimately to

31:47

get built out. And I think underneath

31:49

these undeniably positive headlines, there are still

31:51

big ideological... almost technical and frankly like

31:53

political challenges to deal with like one

31:56

of the big unanswered questions is how

31:58

has largely much less regulated and importantly

32:00

non-KYC defy going to interact with traditional

32:03

finance like that is still a very

32:05

open question that people don't have great

32:07

answers to. These are thorny questions but

32:09

they're not impossible questions and eventually they

32:12

will get answered. I would guess that

32:14

And the reason why none of the

32:16

crypto natives really like that is how

32:18

do you invest in a stable coin?

32:21

Is USD going to $5? There's nothing

32:23

to buy. I mean, it's a pretty

32:25

buyer-sell. And so it's not going to

32:27

be sexy, but there is going to

32:30

be a long build-out where you have

32:32

at the end of the day is

32:34

a better and very different financial system.

32:37

Only once that has been solved and

32:39

rolled out to enough people, can you

32:41

get businesses that wouldn't be able to

32:43

exist? Otherwise. And so I kind of

32:46

think we're in for a couple of

32:48

years. I think the other thing that's

32:50

going to be difficult for people to

32:52

wrangle with as well is, you know,

32:55

there have been different phases of builders

32:57

and investors in this space that have

32:59

done well. You know, if you got

33:02

here in the early days, I mean,

33:04

you were an ideologue. Like there was

33:06

no reason for you to be messing

33:08

around with Bitcoin in 2010 or 2011,

33:11

unless you were pretty libertarian and an

33:13

ideological reason for being here. And the

33:15

next phase was kind of, honestly, was

33:17

catalyzed mostly by Ethereum. And it's like,

33:20

hey, we can actually build stuff. And

33:22

you brought in these tinkers, these like

33:24

visionary founders who looked way into the

33:27

future and somehow, you know, willed what

33:29

we have today into existence. But now

33:31

what we need today is scalars and

33:33

operators. And so, you know, that's going

33:36

to be disappointing. It's going to be

33:38

actively disappointing to idealogues and tinkers who

33:40

don't want that to be the case.

33:42

while the hard stuff actually gets built

33:45

out. And so I see, you know,

33:47

I see a lot of optimism because

33:49

I think a lot of this stuff

33:51

is gonna finally start to work at

33:54

scale, but it's gonna actively upset the

33:56

group of people that are currently here,

33:58

is my bet. Okay,

34:00

we got about five minutes left

34:03

here, and I just want to

34:05

go through, I'll start with you,

34:07

Quinn, but I want to ask,

34:09

and I'll go last as well,

34:12

but what is your highest conviction

34:14

trade or bet for the next

34:16

four months? Yeah, for me, it's

34:18

longing, duration bonds, T-L-T-E-D-V type of

34:21

10 to 30-year, until the Fed

34:23

blinks and cuts, which is... at

34:25

least a couple months off. So,

34:27

or we get a further enough

34:30

correction in risk assets to elicit

34:32

a change in tone from the

34:34

administration and Treasury and Fed. So

34:36

other than that, you know, the

34:38

reason why the dip has worked

34:41

so well for stocks and risk

34:43

over the last two years is

34:45

because it never affected the economy

34:47

and earnings. So going back to

34:50

late summer issues last year with

34:52

the N, that was more kind

34:54

of nuanced technical deleveraging. It wasn't

34:56

an economic issue. The April real

34:59

yield scare of 24 with kind

35:01

of Middle East issues, again, sort

35:03

of an inflation scare, but not

35:05

an earnings thing. October 23, similar

35:08

deal, March banking crisis backstopped immediately,

35:10

but there was concerns. But this

35:12

is the first time where it's

35:14

like, oh, actually, no, there's actually.

35:17

downside earnings potential with everything that's

35:19

happening from the fiscal side and

35:21

no liquidity support from the Fed.

35:23

And that is what I think

35:26

drove such a steep deleveraging in

35:28

the equity markets and why I

35:30

maintain a bit more caution than

35:32

maybe the average person here. And

35:34

again, I just really until the

35:37

Treasury starts to do Until their

35:39

words and actions don't line up,

35:41

then I'll start to maybe question

35:43

it, but it's very clear to

35:46

me at this stage that and

35:48

we're so early right I mean

35:50

the correction was swift but it's

35:52

like one month like like 2022

35:55

is 12 or whatever 10 so

35:57

these things can last and there's

35:59

just really no reason for them

36:01

to if they reignite the economy

36:04

here yields go up and this

36:06

is very counterproductive and they have

36:08

plenty of time midterms is the

36:10

next stop you know, the stopgap,

36:13

and you work back a little

36:15

bit. We know how short people's

36:17

memories are. And so I kind

36:19

of think for the remainder of

36:22

the year, it's like, you can

36:24

imagine the administration is like selling

36:26

calls on the equity indices and

36:28

risk assets. Like they don't want

36:30

it to, you know, be ripping

36:33

face like yelling and Biden into

36:35

the election. So yeah, I think

36:37

selling. selling upside when on rallies

36:39

and being long bonds until they're

36:42

forced to pivot. Mike? I'm not

36:44

a trader, so you should not

36:46

listen to me. But I actually,

36:48

I kind of like Robin Hood

36:51

here as an individual stock. It's,

36:53

you know, there's an enormous amount

36:55

of attention that gets paid towards

36:57

coin bases and index bet on

37:00

crypto. Robin Hood's a very similar

37:02

business. They have more monthly active

37:04

users. They have an even more

37:06

retail user base and more valuable

37:09

order flow. They have a really

37:11

competent team in crypto. You can

37:13

see Vlad Tenive posting on Twitter

37:15

every other day about all the

37:18

stuff that they want to do.

37:20

They want to tokenize a bunch

37:22

of assets. There's a huge amount

37:24

there from launching an altitude to

37:26

doing a stable coin, basically just

37:29

running the playbook that coin bases

37:31

run. So, something to watch. Do

37:33

not, not investment advice, not trade.

37:35

You're believing the tech, that's for

37:38

sure. Long term, high time horizon.

37:40

Okay, my trade for this is

37:42

something that I've been shopping around,

37:44

I've been shopping around, still thinking

37:47

about, still thinking about, still thinking

37:49

about, but. I'm bearish Meg 7

37:51

generally speaking I think there's too

37:53

much capital in it versus what's

37:56

happening in the rest of the

37:58

world. So the thing is that,

38:00

you know, the rest of the

38:02

world, Europe equities, they've just been

38:05

going gangbusters and parabolic, so I

38:07

don't really want to touch that

38:09

either. And I've been thinking more

38:11

and more about short QQ, short

38:13

NASDAQ, long Bitcoin, and here's why.

38:16

Bitcoin is a global asset. that is

38:18

affected by liquidity. Yes, mostly U.S. liquidity,

38:20

but the fact is, is that when

38:22

you have what's happening in Europe on

38:24

the fiscal, when you have what's happening

38:27

in China on unleashing, you know, they've

38:29

been doing the monetary thing, but now

38:31

they're really coming in size on the

38:33

fiscal thing. I have a feeling that

38:35

as there's outflows out of NASDAQ 7

38:37

going back home, that... Bitcoin, well, you

38:40

know, this is always a debate, right?

38:42

Is that is Bitcoin just highly correlated

38:44

to NASDAQ? And I might see this

38:46

opportunity for a decoupling there, where just

38:48

the liquidity impulse from the rest of

38:50

the world starts to uplift it. So,

38:52

you know, obviously you want to match

38:54

the volatility or the delta there, but

38:56

I think short NASDAQ long Bitcoin is

38:58

interesting for that reason. Particularly as long

39:01

as gold keeps its ascent, I think

39:03

it's reasonable. If Bitcoin succeeds it

39:05

has to decouple from Longtail back at some

39:07

point. Yeah, there you go. All right, that's

39:09

all the time we had. Thank you all

39:11

so much for coming. Quick plug. We are

39:13

doing a forward guidance meet up in a

39:15

couple hours, so come buy for a beer.

39:17

We'll be there. It'll be fun. Yeah,

39:19

thanks for listening everybody. Cheers everyone.

39:22

Thanks.