0:00

Welcome back to the

0:02

breakdown with me and LW.

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It's a daily podcast on

0:06

macro, Bitcoin, and the big

0:08

picture power shifts remaking our

0:11

world. What's going on guys?

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It is Monday, April 7th

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and today we are

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talking fallout, fallout, fallout, fallout

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of the tariffs of course.

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Same thing that everyone in

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the markets is talking about.

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But of course, coming at

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it from a Bitcoin angle. Before

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we get into that, however, if you are

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enjoying the breakdown, please go subscribe to it,

0:35

give it a rating, give it a review,

0:37

or if you want to dive deeper into

0:40

the conversation, come join us on the Breakers

0:42

Discord. You can find a link in the Show

0:44

Notes or get a bit.li slash breakdown pod. Well,

0:46

friends, it is day three of absolute mayhem

0:48

in the tariff economy. In fact,

0:50

just before recording this, I saw

0:53

Bloomberg's, I saw Bloomberg's Joe Eisenthal

0:55

tweet that this. Not surprisingly, the

0:57

introduction of these sweeping tariffs continues to

0:59

be the biggest story so far during

1:01

the Trump presidency. Nationwide protests of varying

1:03

sizes were held on Saturday to oppose

1:05

the Trump agenda, tariffs and everything else.

1:08

Meanwhile, the stock market suffered its worst

1:10

two-day plunge since March 2020 to end last

1:12

week. Five trillion in value was wiped off the

1:14

S&P 500 in a 10% drawdown. And for

1:16

a time amid the turmoil, Bitcoin was

1:19

actually looking relatively sturdy. It sold off

1:21

by 7% during Wednesday's announcement, but traded

1:23

relatively flat throughout the rest of the

1:25

week at around $83,000. With both major

1:27

indices down more than 4% on Friday,

1:30

Bitcoin was actually solidly in the green,

1:32

up 2%. This led many to believe that Bitcoin

1:34

was actually solidly in the green, up

1:36

2%. This led many to believe that

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Bitcoin was acting as a global

1:40

hedge asset, and finally decoupling from stocks.

1:42

To end the week Standard Chartered, published

1:45

a note saying over the last 36 hours,

1:47

I think we can without additional pain. Gemini

1:49

co-ce CEO Tyler Winklebos tweeted, for the first

1:52

time in history, Bitcoin is not moving in

1:54

lockstep with the stock market. It's now behaving

1:56

like a hedge to geopolitical uncertainty. When the

1:58

stock market plunged during COVID... Bitcoin. And this

2:01

was always the case over the last

2:03

10 plus years. But not this time.

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Despite the market nose diving in response

2:07

to tariffs, Bitcoin is holding steady at

2:10

80K. It's starting to look less and

2:12

less like a risk on asset. We

2:14

are in new territory. Just cosmically,

2:16

what would happen next? We are

2:18

in new territory. Just cosmically, what

2:20

would happen next? What would you

2:22

think? That's correct. As soon as Tyler hitsend,

2:25

Bitcoin began selling off, plunging 6% to

2:27

a low of 77 by the evening.

2:29

But then on Sunday revisited the takes

2:31

commenting, boy, this didn't age well. That

2:33

said, the hundreds of replies saying,

2:35

altter already oversold or crypto front

2:37

ran equities didn't hold up. Lesson, crypto

2:39

is weird, but it's mostly correlated

2:41

to optimism and risk appetite. That

2:44

optimism is crumbling under Trump's

2:46

silence. Travis Kling of IKEI Capital noted

2:48

that however bad it feels at this

2:50

moment, things can always get worse, tweeting.

2:52

Just as a reminder for the first cyclers, we

2:54

did it down 50% in 24 hours for COVID.

2:56

So that'd be like going and seeing 40K for lunch

2:59

tomorrow. Have fun. What's more, the weekend featured no

3:01

signs that the president would back down

3:03

from his aggressive policy. Inerspersed with videos of

3:05

his golf swing, Trump posted, we have massive

3:07

financial deficits with China, the European Union, and

3:09

many others. The only way this problem can

3:11

be cured is with tariffs, which are now

3:13

bringing tens of billions of dollars into the

3:15

US. They are already in effect in a beautiful

3:17

thing to behold. Administration officials claim over 50

3:19

countries have reached out to the White House

3:22

to the White House to negotiate terms. But

3:24

there's little indication that modifications are being actively

3:26

considered ahead of reciprocal tariffs going into force

3:28

on Tuesday night. Speaking to reporters at Board Air

3:30

Force One on Sunday, Trump said, I don't want

3:32

anything to go down, but sometimes you have to

3:34

take medicine to fix something. He added that

3:36

he spoken with several world leaders commenting, they're

3:39

dying. He added that he spoken with several

3:41

world leaders commenting, they're dying to make a

3:43

deal. And I said we're not going to

3:45

have deficits with your country. We're not going to do

3:47

that because to me, a deficit is a deficit

3:49

or deficit as a loss. He seems to want

3:51

foreign leaders to close the trade deficit by proclamation

3:53

before him make a deal. Hedge fund billionaire Bill

3:55

Ackman urged pause writing on Sunday by

3:57

placing massive and disproportionate tariffs on our

3:59

friends. and our enemies alike, and thereby launching a

4:01

global economic war against the whole world at once,

4:03

we're in the process of destroying confidence in our

4:05

country as a trading partner, as a place to

4:08

do business, and as a market to invest

4:10

capital. The president has an opportunity to

4:12

call a 90-day timeout, negotiate, and resolve

4:14

unfair asymmetric tariff deals, and induce trillions

4:16

of dollars of new investment in our country. If,

4:18

on April 9th, we launch economic nuclear war

4:20

on every country in the world, business investment

4:22

will grind to a halt. Consumers will close

4:24

their wallets and pocketbooks, and we will severely

4:26

damage our reputation with the rest of the

4:29

world that will take years and potentially decades

4:31

to rehabilitate. Ackman later called out Commerce

4:33

Secretary Howard Lutnik for being long bonds, claiming

4:35

he profits when the economy implodes. It's a

4:37

bad idea to pick a Secretary of Commerce

4:40

whose firm is levered long-fixed income. It's an

4:42

irreconcilable conflict of interest. Felix Jovan of

4:44

the Forward Guidance podcast wrote, the bill

4:46

Ackman crash-out is a very important sequence

4:48

in bare-market lore. referring to the fact

4:50

that Ackman marked the bottom of every drawdown

4:52

in the last three years with an epic

4:55

Twitter rant. He also made a tearful

4:57

plea for Fed intervention right at the bottom

4:59

of the COVID crash. Over on Wall Street,

5:01

the mood ranges from dire to apocalyptic.

5:03

Jim Kramer was calling for a

5:05

repeat of Black Monday, the mood

5:07

ranges from dire to apocalyptic. Jim Kramer

5:09

was calling for a repeat of Black Monday. The

5:12

1987 crash that I saw these last few days,

5:14

I'm not going to be constructive here. I will

5:16

contain my anger, but only because I lived through

5:18

87 and in the end I came out okay.

5:20

Kramer did note that changes in circuit breaker

5:22

rules mean it's impossible to see a repeat

5:24

a Black Monday. If stock indices drop by

5:26

13%, level 2 circuit bakers are triggered leading

5:29

to a 15-minute timeout. 20% drop triggers level

5:31

3, ending trading for the day. Nothing above

5:33

level 1 circuit breakers which trigger at 7% have

5:35

ever been used. Now, it's always tempting to fade

5:37

to fade Kramer, but the international bloodbath

5:39

and stocks and stocks makes that a

5:41

difficult call. Overnight in the Asia session,

5:44

circuit breakers were hit in Hong Kong,

5:46

Taiwan, Japan, Australia, Singapore, and in the

5:48

US for the Russell 2000 Small Cap

5:50

futures. S&P futures came perilously close

5:52

to hitting their limit and ended

5:54

trading until the morning, and Japan

5:57

turned off trading in Nikai Futures after

5:59

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6:54

Over the weekend, Treasury Secretary Scott Bessent was

6:56

in front of the media to defend the

6:58

policy. He made a long-form appearance on the

7:00

Tucker Carlson podcast and followed up on Sunday

7:02

on Meet the Press. Bessen said, Everyone wants

7:05

to look at the Stock Market going down.

7:07

You know what else went down? Oil prices

7:09

went down almost 15% in two days, which

7:11

impacts working Americans much more than the stock

7:13

market than the stock market does. Interest. Pushing

7:15

back on the idea that tariffs would increase

7:17

prices, he recalled the 2018 tariff stating, household

7:20

saw real net wages go up. Interestingly, though,

7:22

while Besson has been thrust into the limelight

7:24

as the face of this policy, reports suggest

7:26

he's dissatisfied with playing this role. CNC contributor

7:28

Stephanie Rule said, my sources say that Scott

7:30

Besson is kind of the odd man out

7:32

here, and in the inner circle that Trump

7:34

has, he's not even close to Scott Besson

7:37

or listening to him. Some have said to

7:39

me, he's looking for an exit door to

7:41

try to try to get himself to get

7:43

himself to the fed. because in the last

7:45

few days he's really hurting his own credibility

7:47

and history in the markets. Michael Green of

7:49

Simplified Asset Management wrote, if it's being reported

7:51

that Besson wants out, then it's the first

7:54

bullish fundamental sign. Besson's reputation on Wall Street

7:56

is definitely already suffering. With Jay Hatfield, the

7:58

CEO of infrastructure capital advisor, stating, this is

8:00

unambiguously stupid. It's a five alarm fire. There's

8:02

no argument for creating a trade war whatsoever.

8:04

I thought Besson was better than this. It's

8:06

very disappointing. We also got a little more

8:09

background on the fuzzy math that dictated absurdly

8:11

high reciprocal tariffs based on the trade deficit.

8:13

The Washington Post wrote that in the wake

8:15

of the inauguration, multiple government agencies developed tariff

8:17

packages, continuing... After weeks of work, AIDS from

8:19

several government agencies produced a menu of options

8:21

meant to account for a wide range of

8:23

trading practices, according to three people familiar with

8:26

the matter. Instead, Trump personally selected a formula

8:28

that was based on two simple variables. The

8:30

trade deficit with each country, the trade deficit

8:32

with each country and the trade deficit with

8:34

each country and the total value of its

8:36

U.S. exports. The newspaper noted this calculation was

8:38

based on two simple variables. The trade deficit

8:41

with each country and the total of the

8:43

view on Trump's view on the view doesn't

8:45

give an F. He's going to do what

8:47

he's going to do. He's going to do

8:49

what he promised to do on the campaign

8:51

trail. Still, some in the crypto space are

8:53

starting to look for the bounce. Real Visions

8:55

Row Paul commented, Ah, the delicious smell of

8:58

peak fear on Sunday and Monday and Max

9:00

Noise on X. This too shall pass. I

9:02

hope you are ready to look for spare

9:04

cash under the COFA to add very, very

9:06

soon. In a bullmarket, such opportunities are a

9:08

gift. In a string of tweets after the

9:10

Sunday night flush, Lecker, Lecker capital C. C.

9:13

C. C. C. C. C. C. C. C.

9:15

C. C. C. C. C. C. C. C.

9:17

C. C. C. C. C. C. C. C.

9:19

C. C. C. C. C. C. C. I

9:21

can't help but chuckle at the idea of

9:23

Trump cutting 50 deals next week to lower

9:25

trade barriers for U.S. companies and doing more

9:27

for American workers in the first hundred days

9:30

than any president in the last decade. How

9:32

many straight limit up days with the S&P

9:34

500C? Thompson added, the time to panic panic

9:36

was the S&P 500C. Thompson added, the time

9:38

to panic was weeks ago. Now is not

9:40

the time to panic was weeks ago. Now

9:42

is not the time to panic was weeks

9:44

concerned. Mandrict, I'm not going anywhere. Markets can't

9:47

scare me. Now, even with our most all-word

9:49

attitudes, there are consequences to this market instability.

9:51

One of them, for example, the plunging stock

9:53

market seems to have put IPO plans on

9:55

the back burner. The brief IPO window appears

9:57

to be closing with Stubhub, Clarna, and Chime

9:59

delaying or canceling their plans. In the crypto

10:02

industry, the Wall Street Journal reports that Circle

10:04

is now watching anxiously before deciding what to

10:06

do. Circle had filed their paperwork last week

10:08

but was still months from going public. A

10:10

handful of other crypto firms were in the

10:12

earlier stages of IPO planning, including Krakin and

10:14

Gemini. Austin Campbell of WSPN payments said, all

10:16

of them will pull. You can't IPO into

10:19

a market collapsing like 2008. noted that Circle's

10:21

business model could also be in trouble, commenting,

10:23

there are many moving parts, including the threat

10:25

of falling interest rates hurting their profits. FinTech

10:27

commentator Jason Camula wrote, that sound, the IPO

10:29

window slamming shut. Now one question is, can

10:31

Fed Chair Jerome Powell step in and save?

10:34

Now one question is, can Fed Chair Jerome

10:36

Powell step in and save the day? Well,

10:38

in comments on Friday, Powell made it clear

10:40

the Fed is in no hurry to cut

10:42

rates. He added, our obligation is to keep

10:44

longer term inflation-inflation inflation problem. We're well positioned

10:46

to wait for greater clarity before considering any

10:48

adjustments to our policy stance. During the Q&A

10:51

session, Powell reiterated, quote, it feels like we

10:53

don't need to be in a hurry. One

10:55

member of the audience shouted out, really? With

10:57

Powell responding, yeah. We'll see if a terrible

10:59

Monday can change his tune, but for the

11:01

audience, with Powell responding, yeah. We'll see if

11:03

a terrible Monday can change, only had three

11:05

comparisons. And the COVID crash. Michelle said, This

11:08

is a historic period that would tell you

11:10

in the other three instances, the Fed stepped

11:12

in immediately and cut rates sizable. The Fed

11:14

can talk tough, but I don't know if

11:16

they can make it to the May meeting

11:18

before they start bringing rates down. This is

11:20

a serious moment. I do not think the

11:23

Fed can make it to the May meeting

11:25

before they start bringing rates down. This is

11:27

a serious moment. I do not think the

11:29

Fed can sit on the May meeting before

11:31

they start bringing rates down. This is a

11:33

serious moment. I do not think the Fed

11:35

can sit on Friday. I do not think

11:37

on Friday, I do not think on Friday.

11:40

On Friday. On Friday. On Friday, the Fed

11:42

can, the Fed can, the Fed can, the

11:44

Fed can, on Friday, on Friday, on Friday,

11:46

on Friday, on Friday, on Friday, on Friday,

11:48

on Friday, on Friday, on Friday, on Friday,

11:50

on Friday, on Friday, on Friday, on Friday,

11:52

on Friday, on Friday, on Friday, on Friday,

11:55

on Friday, on Friday Cut interest rates to

11:57

Rome and stop playing politics. Still Julia Coronado,

11:59

founder of research for Mac... macro policy perspectives

12:01

commented that the current situation is very different

12:03

to previous moments of distress, stating, the Fed

12:05

is in no position to offer the kind

12:07

of insurance to the economy that they did

12:09

in the 2018-2019 trade war, because inflation is

12:12

too high and it's above their target. Even

12:14

if they concluded that they need to cut

12:16

rates, they're likely to go later and slower

12:18

than they would otherwise, because we'll be in

12:20

the middle of an inflation impulse. The other

12:22

difference from other crises is that the Fed

12:24

usually only steps in during market dysfunction. So

12:26

far, we haven't a lot of distress in

12:29

treasury. It would also be highly unusual for

12:31

the Fed to respond to government policy rather

12:33

than an exogenous shock. Markets are currently pricing

12:35

in a 50-50 chance of a rate cut

12:37

in May, up from 14% at the beginning

12:39

of last week. An additional rate cut has

12:41

been priced in for the year, making five

12:44

cuts to the year, making five cuts to

12:46

the new base case, making five cuts to

12:48

the new base case. Commercial litigator Joe Carlosare

12:50

noted that the Fed can actually do much

12:52

to fix global trade grinding to a halt,

12:54

Even in the time I've been recording, stocks

12:56

have been whipsawing around up a little down

12:58

again. So I'm sure we will have much

13:01

more to talk about in the days to

13:03

come. For now, appreciate you listening as always

13:05

and until next time, be safe and take

13:07

care of each other. Peace.