Banking Crisis & Crypto Adoption | Macro Monday With Dave Weisberger & Mike McGlone

Language: English - Introduction

The speaker introduces the topic of discussion and mentions the current market crisis.

Market Crisis Looming

• Politicians may be playing politics, but a crisis is looming.

• CPI and Binance halting withdrawals are happening this week.

• Regional Banks are bouncing all over the place like meme coins.

• There is an unbelievable amount of information and news flying around at all times.

Language: English - Macro Monday Discussion

The speakers discuss macro events happening in the market.

Difficulty Understanding Signal Through Noise

• The speaker is having an increasingly difficult time understanding what is signaled through all of this noise.

• Dave and Mike help to parse everything that's going on.

Key Events This Week

• Bloomberg's morning market rap includes a long list of key events this week.

• It's hard to differentiate between noise and signal with so much happening.

Inflation Day Matters Most

• PPI, CPI, import price indexes, etc. are mostly just noise.

• Inflation day matters most this week.

Bear Markets Make You Feel Safe Until They Don't

• Bear markets make you feel safe and calm with massive rallies until they flip over and go down hard and stay down.

• Cryptos are starting to show signs of a bear market with Bitcoin at 30k level and Ethereum at 2k level saying no thank you.

Sell Everything

• Speaker wants to sell everything as he anticipates significant economic reset kicking in soon.

• Cryptos are fastest horse in the race; they went up the most, they're in a speculative boom, they're going down the most.

Language: English - Formula One Race Discussion

The speakers discuss their experiences attending Formula One races.

Formula One Race Experience

• Dave attended a Formula One race for the first time and was amazed by the speed of the cars and the ability of the drivers.

• Scott missed out on Grand Prix in Miami while attending Kentucky Derby.

Language: English - PPI Discussion

The speakers discuss PPI (Producer Price Index).

PPI as an Indicator

• PPI is a good indicator, but Fed doesn't watch it; they watch CPI like X food and energy, pce, employment costs index.

• It's rare for S&P 500 to be up this much and then KBW index Bank index be down this much.

Deflation Significance

• PPI is below fed funds right now, and by July, it may be minus 10 percent if you subtract outfit funds.

• By June or July, ppis will be minus five percent based on normal things that happen in commodities.

• This signifies significant deflation.

Language: English - Market Discussion

The speakers continue their discussion about markets.

Cryptos as Key Indicators

• Cryptos are key indicators since they're fastest horse in the race; they went up the most; they're in a speculative boom; they're going down the most.

• When cryptos go down everywhere else goes down too.

Sell Everything Continues

• Speaker wants to sell everything as he anticipates significant economic reset kicking in soon.

• Cryptos are fastest horse in the race; they went up the most, they're in a speculative boom, they're going down the most.

Language: English - Conclusion

The speakers conclude their discussion about markets.

Rare Occurrence

• It's rare for S&P 500 to be up this much and then KBW index Bank index be down this much.

Final Thoughts

• The speakers discuss their final thoughts on the market situation.

• They encourage viewers not to miss out on future discussions.

Fed Funds Futures and Political Leaders

In this section, the speaker discusses how fed funds futures are priced to drop 69 basis points by the end of the year. The speaker also talks about the likelihood of political leaders and economic leaders of the fed and people and treasury being gutless.

Fed Funds Futures

• Fed funds futures are priced to drop 69 basis points by the end of the year.

• Everyone knows that they're done, but they're trying to nuance it like there's a good reason for it.

• The speaker believes that a simple way for this to happen is if the stock market goes down.

Political Leaders

• The Wild Card is how gutless our political leaders and economic leaders of the fed and people and treasury are.

• If McCarthy and Republicans in Congress blink, then we'll probably have yet another shutdown.

• Without Yellen in the administration, people who are actually running this country will almost certainly do the mint platinum coin gambit or threaten to do so directly with Republicans.

Bitcoin Decoupling from Risk Assets

In this section, the speaker talks about how decoupling Bitcoin from risk assets has a trade like a much faster version of gold. He also mentions that Bitcoin's use case is all about confidence in institutions.

Decoupling Bitcoin from Risk Assets

• Decoupling Bitcoin from risk assets has a trade like a much faster version of gold.

• The event that he's looking for is when they threaten to do so directly with Republicans.

• This will signal that decouples Bitcoin from risk assets.

Use Case for Bitcoin

• Bitcoin's use case is all about confidence in institutions.

• Absent Biden Administration saying that 2022 spending isn't that bad, he doesn't see any version of the world where this doesn't end in a mess.

Regional Bank Crisis

In this section, the speaker talks about how regional bank crisis is a big deal because banks have been paying below-market interest rates for a long time. He also mentions that bank lending going down is a serious problem for the real economy.

Regional Bank Crisis

• Regional bank crisis is a big deal because banks have been paying below-market interest rates for a long time.

• The smaller banks are the engine of economic growth in the country.

• If you end up with a world where it's only JP Morgan and Citigroup, small businesses throughout the United States are going to be deprived of capital.

Bank Lending

• Bank lending going down is a serious problem for the real economy.

• This is where the political pain point will be.

Debt Ceiling and Market Forces

The speakers discuss the debt ceiling and how it may impact the market. They also talk about how markets will force politicians to come to the table.

Debt Ceiling and Politics

• The speakers discuss whether politics are more broken now than in the past, but agree that the debt ceiling is likely just a "dog and pony show" that will get resolved.

• However, they note that if Americans start losing money, it could force politicians to come to the table.

Market Forces

• The speakers believe that market forces will be what ultimately forces politicians to act on the debt ceiling.

• They predict that if there is a significant drop in the stock market or signs of economic contraction, politicians will be forced to act.

• They also note that Bitcoin and other cryptocurrencies are still very much risk assets, despite predictions that they will trade more like gold someday.

Crypto Coins and Meme Season

The speakers discuss crypto coins and how meme season may indicate a local top in the market.

Crypto Coins

• The speakers previously discussed tens of thousands of crypto coins as a sign that the market needed to go down further.

• However, they note that since then, meme season has begun with Dogecoin and Elon Musk's appearance on Saturday Night Live causing hype around cryptocurrency.

• They caution against getting too bullish on risk assets during this time.

Meme Season

• The speakers note that historically, meme season can indicate a local top in the market.

• They find it ironic that while many in the crypto community rail against money printing, they themselves engage in pumping and dumping cryptocurrencies.

Bitcoin and Range-Bound Trading

In this section, the speakers discuss the current state of the cryptocurrency market, particularly Bitcoin and Ethereum. They also talk about range-bound trading and how it affects investors.

Historic Value of Bitcoin

• The speakers agree that from a historic value perspective, Bitcoin is a big deal.

• They note that animal spirits are driving the market, with people chasing hot money rather than investing in more stable assets.

• The speakers compare the current market to range-bound trading and suggest that investors are looking for ways to manufacture money.

Pathology of Trading Ranges

• The speakers draw parallels between the current cryptocurrency market and the internet bubble of 2000.

• They note that while there is still foolishness in crypto Twitter, there is not as much money in the system as before.

• Liquidations have been relatively small despite recent price movements.

Breaking Out of Trading Ranges

• While they do not see any signs of breaking out of the trading range yet, news events could cause it to happen.

• Every leg up in Bitcoin takes one or two end investors to start DCA'ing into it because they want it to be part of their portfolio.

• People tend to look for new things when models stop working during range-bound trading.

Gold vs. Bitcoin Ratio

• One speaker predicts that gold will eventually lose value relative to Bitcoin due to its strong foundation.

The Future of Gold and Cryptocurrency

In this section, the speaker discusses the current state of the market and predicts that a bear market will resume for cryptocurrencies while gold prices will continue to rise due to deflationary signals.

Bear Market for Cryptos, Rise in Gold Prices

• The speaker predicts that a bear market will resume for cryptocurrencies while gold prices will continue to rise due to deflationary signals.

• Bitcoin and Ethereum are holding key levels but are starting to trickle down due to fundamental speculative reasons.

• This is the first recession for most crypto traders who have not lived through pure bear markets where they lose money and the FED wants them to lose money.

• The FED wants the stock market to go down, which is why they are raising rates into this environment.

• The speaker believes we will see a full moon for gold and a bear market for cryptos.

Political Climate and Leadership

In this section, the speaker discusses his prediction on how political leaders make decisions based on opinion polls rather than what's best for the country.

Opinion Poll-Based Decisions

• The speaker believes that people effectively running the country read opinion polls before making decisions, which is sad commentary on leadership.

• He thinks Powell feels like he's the only adult at the table sometimes because he's trying to battle inflationary expectations by doing everything he can.

• The speaker doesn't expect leaders to allow austerity to creep in as father time is inexorable and we have six months before the only thing people will be talking about is the 2024 election.

Serious Economic Problems

In this section, the speaker discusses serious economic problems such as regional banks having problems from bonds they hold in their balance sheets and corporate real estate having significantly impaired collateral due to low occupancy rates.

Economic Problems

• The speaker believes that we have a really serious situation with economic problems such as regional banks having problems from bonds they hold in their balance sheets.

• Corporate real estate has significantly impaired collateral due to low occupancy rates in every major city.

• The speaker agrees with Warren Buffet's statement that if the FED had not put the backstop in, an absolute cataclysm would have occurred.

Predictions for the Next President

In this section, the speaker predicts that the next president will be a young Republican due to an upcoming recession. The speaker also discusses how politics and economics are intertwined.

Young Republican as Next President

• The speaker predicts that the next president will be a young Republican due to an upcoming recession.

• The current incumbent may not win due to the recession.

• Politics and economics are intertwined.

Bitcoin vs Gold Ratio

In this section, the speaker talks about how he got into cryptocurrencies by watching the gold Bitcoin ratio. He explains how once Bitcoin went above the price of gold, it was a good indicator for where to look for assets.

Gold Bitcoin Ratio

• The speaker got into cryptocurrencies by watching the gold Bitcoin ratio.

• Once Bitcoin went above the price of gold, it was a good indicator for where to look for assets.

• Currently, the ratio is at 14 while in 2017 it was at 15.

Ban on Federal Reserve

In this section, the speaker discusses how there may be calls to ban the Federal Reserve due to their actions during a severe depression. He compares Mr. Volcker's actions in controlling inflation with Mr. Powell's actions during a banking crisis.

Calls to Ban Federal Reserve

• There may be calls to ban the Federal Reserve due to their actions during a severe depression.

• Mr. Volcker helped control inflation while Mr. Powell is blamed for creating a severe depression.

• The speaker believes that raising rates during a banking crisis is not advisable.

Corporate Real Estate and Liquidity

In this section, the speaker talks about how corporate real estate in multiple markets may be a big deal. He also discusses liquidity and how it affects the market.

Corporate Real Estate

• Corporate real estate in multiple markets may be a big deal.

• Nominal rates are at 5%, which is high for long-term investments.

• The pace of increase from where we were to where we are now is the fastest in history.

Liquidity

• The speaker believes that liquidity is what actually matters in the market.

• The speaker and another person may agree on what will happen between Congress, administration, and Federal Reserve but disagree on where the script will go.

Central Bank Gold Buying vs Bitcoin

In this section, the speaker discusses how central bank gold buying has fueled a rally and how it differs from Bitcoin.

Central Bank Gold Buying

• Central bank gold buying is fueling the current rally.

• No central banks have bought Bitcoin yet, except for El Salvador.

• If non-US central banks decide to hedge, gold will outperform.

• Many people in the gold community believe that paper derivative price suppression by central banks is preventing gold from reaching its true value.

Bitcoin vs Gold

• Unlike gold, physical settlement in Bitcoin can be demanded instantly.

• The ability to demand physical settlement in Bitcoin cannot be stopped.

• Bhutan and the Central Bank of Russia are mining Bitcoin, indicating a slight trend towards central banks buying it.

Metals Mining Conference

In this section, the speaker talks about his upcoming metals mining conference and diversification as an investment strategy.

Silver and Diversification

• The speaker gets asked a lot about silver at his metals mining conference.

• Some people in the space want silver to go up because they are long on it and talk their books.

• Not all ranks are buying silver; some are buying Bitcoin instead.

• Personal financial advice should always include diversification rather than trying to pick price levels.

Investing in Crypto

In this section, the speaker discusses the importance of having a long-term belief when investing in crypto. He advises against dollar-cost averaging into casino chips and coins that are not investments. The speaker also talks about the risks associated with investing in crypto and how to avoid being exit liquidity.

Long-Term Belief

• Having a long-term belief is important when investing in crypto.

• It is not advisable to dollar-cost average into casino chips or coins that are not investments.

Risks Associated with Investing in Crypto

• There are risks associated with investing in crypto, such as thousand percent moves and people trying to pump up holdings on social media.

• It is important not to be exit liquidity because you do not want smart money guys dumping on you.

Trading Markets Psychology

In this section, the speaker talks about trading markets psychology and how it has remained constant throughout history. He emphasizes the importance of dollar-cost averaging, diversification, and avoiding leverage when trading.

Trading Markets Psychology

• Trading markets psychology has remained constant throughout history.

• The key thing is to avoid being that person providing stops at the bottom.

• Young people who trade cryptos should learn from those who have made good money by listening to everything they say.

Dollar-Cost Averaging and Diversification

• Dollar-cost averaging is crucial when trading markets.

• Diversification is also important when trading markets.

• You cannot hold Bitcoin without Bitcoin.

Avoiding Leverage

• It is essential to avoid leverage when trading markets because it can lead to significant losses.

Facing Painful Times Ahead

In this section, the speaker talks about facing painful times ahead for young people who are doing their 401ks and investing in the equity market. He emphasizes the importance of dollar-cost averaging and diversification.

Facing Painful Times Ahead

• Young people who are doing their 401ks and investing in the equity market will face painful times ahead.

• Boomers have had a wonderful decade, but it is time for young people to learn from them.

• Those who put all their money in one place without dollar-cost averaging or diversifying will feel the pain.

Dollar-Cost Averaging and Diversification

• Dollar-cost averaging is crucial when trading markets.

• Diversification is also important when trading markets.

• You cannot hold Bitcoin without Bitcoin.

Regional Banking Crisis

In this section, the speakers discuss the current state of regional banks and their exposure to real estate. They also touch on the global implications of the US banking crisis.

Regional Banks and Real Estate

• Regional banks such as Pat West Corp and S&P Regional Banking ETF are trading like a penny stock.

• There is a lot of pain in real estate, which is traditionally the biggest source of collateral for regional banks, particularly on the commercial side.

• Anecdotal evidence suggests that commercial real estate is starting to suffer. A bidder was able to win a bid with cash because other bidders were leveraged and couldn't get loans.

Global Implications

• The situation in Argentina highlights how Bitcoin can be a lifeline for people when traditional assets like gold are hard to buy or sell.

• The US banking crisis will have major drags on parts of the economy. Policymakers will try to do everything they can to avoid waves of bankruptcies.

English Market Outlook and Lessons from History

In this section, the speaker discusses the possibility of a market crash and compares it to historical events. They also talk about the importance of learning from past mistakes.

Possibility of a Market Crash

• The speaker believes that there could be a significant market crash in the near future.

• They compare the current situation to historical events such as JP Morgan buying Bear Stearns in 2008.

• Without significant policy actions, there could be issues similar to those seen in previous crises.

Lessons from History

• The speaker emphasizes that history often repeats itself.

• They mention how banning short selling during the 2008 crisis caused problems and did not help.

• The threat of banning short selling is expected during bear markets, but it is not a good idea.

• Human nature does not change, and people tend to look back at past crises when comparing current situations.

Importance of Learning from Past Mistakes

• The speaker believes that it is important to learn from past mistakes.

• They mention how giving money directly to people during a pandemic can increase wealth inequality and cause other issues.

• It is crucial to prioritize labor over capital in supply-constrained environments.

Overall, the speaker provides insights into potential market crashes and lessons learned from past crises.

M2 and Bitcoin

In this section, the speakers discuss M2 statistics and Bitcoin.

M2 Statistics

• M2 has had one of the biggest backups in history.

• Historically, when a statistic like this reaches its highest ever and goes down to its lowest ever, it is respected. Minus four percent is just the same as a bank index or deposits leaving banks.

• The key question is what did the FED do in that environment? The speaker believes that every lesson in history is all lined up right now, and the key thing is not to fight the FED.

Bitcoin

• Binance halted withdrawals twice in the last 24 hours due to network congestion and high fees.

• There are currently 400k unconfirmed transactions on Bitcoin's network, which is more than all of the 2021 bull market combined.

• People who are saying that it means Binance is insolvent don't understand that you can still sell your Bitcoin into another coin or USDT or something for financing withdrawal.

• People are jumping into Bitcoin ordinals and hoping for greater fool theory. This overwhelming demand for Bitcoin is similar to a gold rush.

Bitcoin Conference in Miami and Market Volatility

In this section, the speaker discusses the upcoming Bitcoin conference in Miami and how historically it has not been a good sign for buying on Euphoria. The speaker also talks about market volatility and how it is important to understand what's going on.

Bitcoin Conference in Miami

• Historically, the time of buying on Euphoria going into the Bitcoin conference is probably not a really good thing.

• We will hear a lot about ordinals over three days from people and the network.

• When he first starts seeing Bitcoin Maxis start yelling about you try to hijack our money, that will be interesting.

Market Volatility

• Expect volatility if you expect straight moves. Understand what's going on.

• When you've been around the bottom of a range and you look like you might break it, people panic. When you get to the top of the range, people are like declaring it, but neither are right almost always.

Binance as Part of Ongoing Trade

In this section, the speaker talks about Binance being part of an ongoing trade and how macro events matter more than individual stories.

Binance as Part of Ongoing Trade

• Remember that Binance is a tree in the forest; we wouldn't have had issues with FTX or Bear Stearns or Lehman off then if asset prices didn't go down; it's the macro that matters.

• It's still an ongoing trade that's going to continue and probably work in favor of Bitcoin.

Bitcoin Miami Conference as a Leading Indicator

In this section, the speaker talks about how the Bitcoin Miami conference is a leading indicator and how it is still a bear market.

Bitcoin Miami Conference as a Leading Indicator

• Markets like these often provide awesome opportunities. One example is what happened with GBTC this year.

• When did Bitcoin reach that recent high around 30,000? Right during consensus. What do we do in Bitcoin next week? What happens after Bitcoin Miami next week? This leading indicator has laid an indicator, and it's telling me that your bigger problem is the macro.

Still a Bear Market

• It's still a bear market, and it's a lofty one.

Twitter Spaces with Sandeep Nilwal from Polygon

In this section, the speaker thanks everyone for their participation and announces that the next day's Twitter Spaces will feature Sandeep Nilwal from Polygon. The conversation will focus on the importance of layer twos in light of congestion and increased prices.

Importance of Layer Twos

• The speaker emphasizes the importance of layer twos in addressing congestion and rising prices.

• The speaker thanks Mike Dave and bids farewell to everyone.

• Music plays as the session ends.

Conclusion

The speaker concludes by thanking everyone for their participation and announcing the next day's Twitter Spaces with Sandeep Nilwal from Polygon.