Fed Embraces "Run It Hot" For Powell's Final Months | Weekly Roundup

She admitted throughout the conference so that there is no new information gathered effectively, right? But then explain the 180-degree stone cold pivot from the October meeting. I still think like the 2026 Fed Funds curve is under price in terms of the amount of cuts we're gonna get. Like to your point, Quinn, about how dovish-power he is, and then he threw a asset in his replacement, like it's just gonna be insane. Republicans need to work on quote-unquote affordability, whether that's just giving more money to people. But whatever they got to do, they're gonna do it. Like they are really lagging for those midterms and they want to win them. So, you know, we're gonna get more fiscal. You have to own hard assets because they're gonna run a hot next year. This episode is brought to you by Grace Gill, your trusted gateway to more than 30 different crypto investment products. You'll hear more about them later in the episode. Nothing said on four guidance is a recommendation to buy or sell any investment score products. This podcast is for informational purposes only, and the views expressed by anyone on the show or solely their opinions, not financial advice, or necessarily the views of block works. Our hosts, guests, and the block works team may hold positions in the company's funds or projects discussed. All right, everybody. Welcome back to another episode of Ford Guidance, and we are recording on a Wednesday, right after FOMC Day, the most important FOMC meeting of our lifetimes, until the next one. I think I said that last time too. I have a question, is Quinn going on a safari or something? Look at that. The best thing is you gave me this from Chubby Rob. I did. So, I'm just a self-host. You just self-hosted this. The best part is for people, let's see. We didn't even apply this, but Tyler gifted me a bunch of apparel items out of his closet. I actually probably like last year now. It's like, I saw this, it was cleaning up, and I was like, I'm going to wear this and see if you remember. I didn't even remember. I was like, well, you know, I think I have something similar. That's a good look, man. I love it. Yeah, guys, we're recording after FOMC meeting, if I cut rates, and we'll get into the semantics and the details in a second, but we're just laughing off camera about how the theme is just, you know, Powell's just trying to coast until the end, I think, and it just reminded me of this clip from SuperBad, so I just want to play it. What are you making? I'm just drilling holes. Blosset two weeks. Fuck it. Oh, is that Powell? That was Powell. Yeah. That's our guy. He said at the end of the movie, yeah, he's like, I'm going to just make it so, you know, where we have a good jobs market and inflation is low for the next Fed governor, and that's what I'm hoping for. Yeah, that's the best that's the best that I can do. And by the way, I'm going to, I'm going to add 40 billion to the T bills too, and create a true Ponzi two minutes. Okay, let's, let's start with that for me. So I'm going to, I'm going to get two minutes in. Let's, let's recap a few of these, these points here. So, all right, we've been talking about the liquidity current trust. We're going on in bank reserves. Obviously, we had the end of QT at the last meeting in that end of December, and we started to hit the hiccup zone where we started to see a lot of uptake for the standing repo facility. We started to see us getting to that, that hiccupy level of bank reserves, and any QT was just not enough. Like David tapering QT for ages, so in reality, the end of QT was only like five billion dollars a month of difference. We needed to see more happen. And I think a lot of people are expecting them today to announce plans to start just in January. And I don't think many people expected this amount of bills that they've tried to buy. So here's what we got. So in the statement regarding reserve management purchase operations, you can see in the highlighted area just says with a total amount of RMPs reserve management purchases of approximately $40 billion in treasury bills purchases will start on December 12th. The desk anticipates that the pace of RMPs will remain elevated for a few months to offset expected large increases in non-reserve liabilities in April. So this was part of the the inspiration for me at least to ring up that super bad clip, which is just it's it's pretty funny to think that the timing of of rip in this just ends right when Paul ends his term and we move into the next phase. So yeah, I want to start there and just get you guys to take at least on the acronym factory being spun up again here. I guess I would start high level. First off is she admitted at the beginning of the or throughout the conference so that there is no new information gathered effectively right but then explain the 180 degree stone cold pivot from the October meeting right so like first of all just at a high level like it's just a big reminder that that they have no clue. So when he said in October we need to slow down because it's foggy out and we don't have data like that's their status quo of operating they they have they have no consensus or direction or conviction in any of these views I think so this is just we were reminded of that frequently with how often they pivot but this was another reminder of them point blank saying basically not anything new came through but yet we're now predicting inflation to roll over next year we're now you know seeing much greater weakness in the labor market and all of these things are there in October at when they like decidedly market said we don't know about December and and really you know put a damper and it goes to show that I think it's pretty obvious they just want to take some air out of the balloon. The other thing is probably my favorite probably the most succinct summary if you to listen to just like a two minute clip was from the woman who asked so mr. Paul when you're thinking about rate cuts here you know what change from from last meeting where you said December was uncertain and you know we'll see and he basically said well inflate what did he say he said inflation is at she said because inflation is at 3% it's been running above target for xyz period of time and kind of called him on and in he goes we're committed to 3% you know we're gonna get it there but did you do you see the labor market it's weakening like so she basically is like hey look are you basically admitting that 3% is fine and he's like no we're committed but look at the labor market you know then he pulled the 60 k jobs number which is probably true in terms of like nfp subtract 60 from nfp and that's the real number but he never like really talks about the labor market in those terms if you use that in October would have been the same problem like anyways it's just a cluster but the moral of the story is this is pal imagine when we get to trumps guy and that's four months away he even said like for example on the reserves 40 billion a month and then we'll taper it after April he's like he's that's when he leaves it's like we're gonna run it 40 billion you know elevated into when I leave and then we'll see what the next guy does and we know what's gonna happen it's just it's just kind of anyways there's a long rant there but there's just so many inconsistencies but you have to own hard assets because they're gonna run a hot next year I'm I'm with that I also think we're seeing a rotation go to the slide 37 you can kind of see this ratio between small caps and large cap tech and what was really fascinating to me was in November where I was saying you know now it's not the time to be a hero at the lows in iwm we saw the credits more credit stress and regional banks etc I think that was the flag to the fed that we need to start doing something with liquidity because if they didn't do anything then I think we could have probably had the credit crisis that's why I was a little bit nervous is they might actually let this thing roll over and of course you know they don't because they have to call the vol controllers came in yeah and they really did they came in and they already started buying you know some some treasury bonds and at that point just to kind of stole to buy the volatility it's it's centrally planned economy and from that point at that low in November iwm and regional banks have been up in a straight line and that's really what what's fascinating to me is like now we're seeing the rotation in a small caps because the fed has the markets back and then if you go to the the previous slide you can kind of see look at this motion in iwm that sell off in November was so vicious to absolutely pivot and go to new highs and now we're in you know we're we're making new highs all time highs in iwm which is this is probably a good thing for the lower and middle income buckets now which is you're seeing the rotation into smaller cap stocks so it's not just hopefully it's not just this central large cap tech dystopia so that's that's actually a good thing in my opinion is you know maybe in the next six months we'll see money go to different pockets of the economy and we're seeing doubt transports are kind of rallying iwm's rallying and then we got Oracle after the bell which is you know down I think it's like down seven percent right now maybe maybe some of that AI money goes and flows into different parts of the economy here so the the leadership is changing off the backs of this and we'll we'll see how it shakes out from here this is the problem they're going to run into and there's I've seen a number of things about inflation probably comes down next year in the first first part of the year which I I'm sure you know these forecasters are directly accurate but inflation is a very psychological thing and self fulfilling thing and when the prevailing narrative everywhere is run at hot print like you start to get consumer and institutional behavior that resembles that and I think one of the things we should talk about is the long and bond yield everyone's like wait what's going on there like it's just randomly selling off and you know there's attractive growth comps for for the first half of next year is these you know tariff and immigration thing one time effects roll off but when you start signaling to the market like as sort of aggressively as you know even maybe this meeting was starting to do and in terms of supporting not worrying about inflation anymore and then what probably will happen there's a very psychological effect that you know people start saying well I need to I want a borrow because this is going to depreciate and I want long-term debt they invest that money they buy hard assets they're behave consumer behavior changes and that's why inflation is so kind of self reinforcing and psychological and it doesn't show up right away but you know maybe they just keep getting oil prices lower and lower but that's the thing to look out for I'd say yeah I mean like my line of thinking is it feels like we went through at many a very short data recession but we got it papered over because of the AI capex Ponzi that was going on because of the reversal in immigration flows that just kept like the break even rate of labor much more manageable but overall I feel like we're we're making our way through that now and you compare that to what we saw and I just want to pull up the the SCP data so this this fed meeting was also a summary of economic projections update so just want to go through a couple of points here just to look at how the the Fed is thinking about this this growth outlook and you can see it's it's it's a pretty Goldilocks outcome so we had real GDP forecast for 2026 that was revised up to 2.3 percent from 1.8 unemployment down core PC down and Fed funds consistent so just a few charts look at this and you can see so pretty constructive on growth into 2026 which is interesting and really no change to the unemployment rate and core PC a little bit more disinflation than what was expected so yeah to me it feels like we're coming through the other side of this and then if we get this continuation of rate cuts that we're getting and I still think like the 2026 Fed funds curve is under price in terms of the amount of cuts we're going to get like to your point Quinn about how dovish power he is and then he threw a asset in his replacement like it's just going to be insane yeah yeah I agree I think it might be stop start here for the next couple weeks potentially and it you know this this reserve management operation thing that's supposed to end when Paul leaves is or reduces is a joke so like that's that's going to maybe it's not QE I don't think it is but but it it's going to morph into something once he's out and the dot plot though is hawkish so if you get one sort of like hawkish data print here which I think inflation next week potentially could if it if it's another high print before the the roll over into early next year you know you might have some spooks along the way but the the other just thing I just can't stop thinking about is is I I believe asset selection is very important here because when I look at the screen even for today right it's like yeah you the the hysteria around of how dovish and how bullish and all these things and I look in it's like mag seven was flat their mag seven was up four bips and video was down small caps were ripped um metals all green pretty much gold silver copper and and obviously the dollar got smoked but but longer tail things not necessarily you know dick coin not not that great um so I think asset selection going into a year like next year where I think everybody largely agrees on the run at hot but I think where there's I would say some things floating out there that I don't really agree with as much as is you know how to be allocated for the the scenario and and which I think is going to become increasingly important you know headed into what's likely to be plenty of fits and starts but but directly a run at hot environment and and so we'll see because the big question I guess is when inflation starts to come back if it does maybe it's a second half you know um if we get some positive seasonality and stuff in the first half and then that that is true gold lead locks but I just think there's um certain assets that are performing way better if you're thinking about crypto investing but don't want to open a new account or manage keys and wallets check out grayscale grayscale has been offering trusted crypto investment products for over a decade with 30 in plus counting including single asset funds like Bitcoin and Ethereum the first five portfolios and thematic exposure to the broader digital assets space many of their products are available directly through your brokerage or IRA just like a stock or ETF investing of all risks including possible loss of principle more information and important disclosures visit grayscale.com as always investments and blockchain technology involved risk terms and conditions apply do your own research I don't know if we're going to get the super spike in inflation though go to um slide 34 this is tried China's trade performance and if you look at export growth on lower value add goods I mean this is which is heavily exposed to the US market this is from trivia um the export of toys slump 12.1% footwear 10.7% furniture fell 5.9% so the demand side is going down as you know the tariffs take you know uh they're definitely eating a brunt of the price impact for sure yeah and and maybe that's not the worst thing is like like crappy consumer goods don't lead our economy it's like hey maybe we'll invest in some real stuff and maybe that's what industrials are telling us here is but look at this these other numbers is are pretty are pretty nuts which is overall exports to the US declined 28.6% year-to-year while shipments to Africa searched 27.5% Latin America 14% EU grew 14% so they're still they've still massive trade uh balance in in their favor and then if you go to the next chart you can kind of see this on a chart export growth um is rising while import imports are going down so net net positive for China uh in this whole trade scheme yeah I saw a funny comment that was like uh trump managed to get a manufacturing boom to happen it's just to happen in China not in the US yeah it's it's kind of wild how you know you're trying to change 40 years of globalization and manufacturing on a dime and that the uh the beginning of the year and now oh this is a lot harder than we thought well I think yeah I I'm certainly I actually expect I mean oil still not it might be bottoming here but but it's not saying you know screaming inflation so my base case is that inflation does come down and you know that's why in October I thought they pivoted hawkish at the exact worst time but um the thing I guess my bigger argument is just like large cap tack which is you know we know the whole s&b 500 at this point like doesn't really have much much room to go higher outside of earnings growth it's kind of reached like what would probably be a ceiling multiple and so you know if you're if you're playing to outperform that you have to be geared towards some of these other sectors I think that are more attractive cyclical main street type things that to your point title like small caps relative to to to that probably this should kind of set the tone assuming uh no more hawkish pivots between now and April you know what else is interesting is if you go to slide uh 38 and when you touched on this last week this is normally when the fed starts cutting long-term interest rates also decline there's room torsden slock at Apollo he's always got good charts um but you can see when the fed funds rate is lowered the 10-year yield normally goes down but you know what's happened since 2024 is the 10-year yields risen and you you brought that up how the long end is is going higher and I think that's why banks you know if you make the if you print 40 40 billion dollars on the front end and banks have more money to lend this is really going to be a lending driven market which is what I think small caps are kind of telling us right now main street has been crushed no demand like that's what spreads have been so tight because of a of a high-yield supply issue like you know record capital flows to private credit and and these fixed income funds with with you know finally we're getting this big boost in M&A activity and and more paper and and next year that's that's probably something to watch is you know when you do stimulate the economy like this and you have such high expectations of M&A and other financing activities as a result uh spreads you know yields go up here and and spreads might might also be going out because of of increased supply and my fit another I guess my second favorite line if my first favorite line of the week was from Powell saying yeah we're committed to getting inflation back to two but did you see the labor market it's like yeah my other favorite line was Hassett saying we now have more room to to stimulate fiscally and I was like and I pulled up I was like wait am I see the fiscal deficit to GDP still like five and a half percent I was like and then there's just the CBO budget release last week or two weeks ago that they updated they're like oh since the administration didn't follow through with azurconian tariffs were actually reducing the amount we're bringing in so the budget deficit's worse it has like what room is he talking about I wanted to bring that up I was just thinking about it and it's just yeah it's such a great lesson and um you know you see all these people over the past few months do all this like obsessive quantitative analysis on fiscal impulses and it's like oh the the train is stopping you know and then all it takes is one one guy to just drop the hammer and say oh look we're doing another reconciliation bill in 2026 and it's like well time to go reset all your priors and the fact of the matter is is that they admit terms to win and they are doing terrible right now like Republicans need to work on quote unquote affordability whether that's just giving more money to people um but whatever they got to do they're gonna do it like they are really lagging for those midterms and they want to win them um so you know we're gonna get more fiscal that's just the name of the game at this age that is the name of the game we're in uh the old centrally planned boomerpons gotta love it the easiest trade is is just following what the government does at this point and although I will say we might take a little hiccup here in the AI trade depending on uh we'll see how Oracle trades tomorrow but it's uh it's uh it's uh uh might take a little breather what what makes you say that I don't know i just we're seeing this rotation into small cast multi small gaps are breaking out higher and you probably have you know if you look at EPS Ford EPS the growth rates a lot of that stuff is actually going up while you're taking on this giant capex uh in large cap tech on on the on the debt side of things so you usually get the our arbitrage jurors when you issue a lot of debt they short your stock there's a lot of supply there so maybe we'll see that rotation one one interesting thing on the inflation point uh Tony Pascarola had put this chart out slide 29 uh Queen's talked about this before but this is the 24 month rolling volatility of us core CPI inflation month over month and this is really what I think the vault controllers look at at the end of the day is they do not want this inflation to spike because you can really you can really put patches on the boat that's sinking if this volatility of CPI stays lower and you can you can even though it might not actually track like actual inflation it's what policy makers can keep the balance sheet intact with so as long as I'm gonna be watching this but as long as the vault of the CPI kind of stays low they can this systematic constant reinvestment of of passive flows I think still still happens but this is what really breaks the back when you see a spike in CPI vault this is such a good chart Tyler and great point um this is what allows this chart is why like every macro strategist is is right on a five year view but wrong on a on a six month view because when vault is so low like this and it just creeps up creeps up and we're just seeing this this k-shape economy lasting for four years where main street is drowning like 80 that tweet I put out this week I was shocked by this data 83% of new NFP jobs this year were healthcare services yeah Felix if you go to slide 21 this so copy had that feudalism piece and it got me thinking about some like because I also saw that torsense lock you know the largest ever percentage of wealth owned by Americans over 70 and then I ran the data of NFP and it's been increasing from 3% of new jobs in 21 to 83% of new jobs just straight line and so basically the economy is at a standstill and there's also the reports right earlier in the year like GDP growth would be zero if it wasn't for AI so just like boomers like healthcare services for boomers and and then basically keeping the asset bubble Ponzi going is is the sole driver of the economy everybody else is underwater and and then but because the volatility of inflation is so low yeah Trump can go on a press conference and say this affordability things nonsense what are you talking about affordability and then everyone's like dude don't say that you can't say that yeah like so we're just becoming less and less dynamic with pockets of stories like story sectors of the economy that potentially could grow out of help GDP grow but largely we're you know there's no man there's really no manufacturing base relative to China we we can't produce things now AI's gutting our tech base yeah and it's it's really kind of it's really just so be there then and then you're just pushing more and more people to health care and to take care of the boomers it's story sector is your nice way of saying grifting the you know Trump family's pockets basically yeah pretty much I love your pivot on Trump I just I just call you call he's calling balls and strikes yeah I when they do good shit I say it's good shit when they do dumb shit it's it's like I was like that last year too and and then but you know everyone gets so heated and it's like I I think best since a rock star but I also think he's gonna have a absolute hell of a time in 26 I think assets a brilliant economic advisor he's gonna be under the shotgun pressure at the Fed like there's so much you you have to hold so many truths in your mind at once and like you know Trump has done a lot of good things I do think long-term we need to rebalance away from China secure more resources all these things but you know politics is hard man yeah and the it's gonna be it's gonna be hard what happens in the Fed next year too like maybe that's what the curve is is sniffing out is that it's gonna be hard to get consensus next year and that's why we haven't priced enough cuts in but like you look at today's meeting and you had distance on both sides you had moron dissenting for 50 bips on on the dove side then he had ghoulsby and forget who the other person was shmit shmit at both dissent and you know the ghoulsby he was rather than till the election he was one of the biggest dubs ever like throughout the whole wave of inflation he was talking about cuts basically like the dumbest of dubs and now suddenly he's grown a backbone and he's talking about dissenting and and and being hawkish and yeah I think that's gonna continue and maybe that's why they're trying to do gain gain control of the Fed presidents like you know seems like there's a lot of different approaches that they're speculating and dropping nuisance to right now like the most recent one was trying me to comment this week about how he heard that some of the auto pen was used for some of the nomination of some of the Fed presidents and you can just kind of see it's like they're just they're just kicking the tires on how they can go about basically getting a majority vote of the F1C and it's just that's gonna be messy if you're thinking about buying crypto but don't want the headache of setting up wallets or new accounts grayscale makes it simple for over 10 years grayscale has helped investors gain secure regulated exposure to crypto without the hassle of self custody or opening new wallets with over 30 investment products from Bitcoin and Ethereum to diversified and thematic crypto baskets grayscale makes it easy to build a crypto allocation that fits your portfolio whether you're using a regular brokerage account or investing through an IRA many of grayscale's products are available right where you already invest investing evolves risk including possible loss of principle for more information and important disclosures visit grayscale.com as always investments and blockchain technology involve risk terms and conditions apply do your own research i think how i think about like sort of run it hot like so first off you need the fiscal policy to uh effectuate run it hot you need a change right obb the big beautiful bill has the tax incentives um for capex capital expenditure investments for for corporates and small businesses that is one thing we're probably starting to see a site uptick there you will see bank regulations relax which will allow them you know to do more in small business and mortgage sectors increase their balance sheets so you increase lending to main street effectively through those channels because those have been starved everybody large cap attack etc everyone's is that that stuff's fine um so it's really main street there and then the other big one uh and it is is just if there's a stimulus bill so you need the fiscal side to come through um but at the end of the day like yeah with whoever's appointed fed like we know it's happening it's just it's just the dollar is going to probably sniff it out first and then you know it started from day actually you know it started rolling over first time ever the big question i have on the dollar is at what point if it really rolls over too hard too fast does the long end go does the carry trade online does the long end go and you know what what is the implications when this happens too far too fast and that's i don't think we see it in December just because it's such a low volatility holiday period but that's something in the first quarter we could probably run into yeah i think the most important correlation to track for that is whether if you're seeing equities us equities down bond yields up and dixie down that's like capital outflows and that's like that's you know the the fire alarm like that's what was the fire alarm in april so you gotta keep a track on that for sure the current fed estimate or like priced in market estimates of fed action is basically um it's basically on hold until april which for as dovish as like these reserve management operations etc um 40 billion a month through uh it whatever april tax day um if the like i don't think everything's hunky-dory for let's just say risk assets generally if if if they don't cut until april um i i think they will cut sooner so that's not a massively crazy or extreme bearish take but so to your point Tyler before we get you know actual fiscal policy change and and the the trump fed overtake i think i think that's why certain assets like metals and and gold particularly are doing well and and you're seeing some other risk your assets kind of floundering because there's still you know near-term hiccups potential and it's also not clear that the long-term benefits how can you steer like the whole point of next year and winning the election is steering money away from AI in mag seven like and so i'm actually short a basket of of things in the semis in mag seven area against long metals because i think i think that's sort of like you want to be long there's other versions of this trade you could be long carry which popped off today or anything that's tied to main street cyclicality i think is yeah that's been unloved not the stuff that's been super loved the hard part about that for me is you're you're you're betting against a rising tide of passive inflow where every 30 cents of a dollar goes to all those large captex and then then they buy back the stock two which five acts are still on till like i think December 19th as a good fall but if there's no new jobs so if job growth is actually negative is that like you it's just it's a weaker pace of that now like if if you were betting against that in 20 when the job market was printing two hundred games jobs every i think my green talks about this a little but like there comes a point where this reflexivity where it's like you actually can never have job losses of a true recession again because then that's the beginning of the passive online which like absolutely can't happen so i tell you the draconian scenarios of like if they actually do want to rebalance all of these things like it's just print they have to print there's printing now to keep things propped up imagine what they do with things aren't so rosy yeah the the first hint of a crisis and it's just yeah it's it's game on you want to see something kind of wild good thing this is a part of the the credit cycle still intact this is maybe the the previous one so this is high yields spreads you know we we sporadically show this this chart but the high yield yield to worst and high yield spread to worst so on the top chart this is the the red line is the spread to earth so you're at basically rock bottom high yield spreads which means a lot of these like crappier companies can finance themselves really well you're seeing a lot of short squeezes off crappier run companies and then the the actual yield is almost under seven percent let's see it's yes six point eight one percent yield to worst and high yield which is fantastic right you can has really crappily crappily run company you can issue debt at six percent you know that that's really great and you can do a lot of different things with it and then you can see the supply is actually dropping in how you'll bond issue it's into your end year that's the lower chart the gross and refinancing has dropped in December which you know if you have inflows and no supply that gets spreads he's coming even lower and then if you go to the next chart Felix you can kind of get a sense of the credit cycle is like when this one um spikes to the upside that means credit's getting better and when it rolls over the downside like it did in you know 2008 and in 2020 this is the upgraded downgrades of high yield if credit's getting worse we're basically just like putsing along here there's not a lot of upgrades not a lot of downgrades but everything's largely just just fine so not really a lot to report and I think on the credit side of things from that um from that standpoint and then the last thing I probably wanted to show was just in terms of the what happened today specifically on slide 41 this is more of a when you have nothing happening in credit and after the event risk of the Fed I've been kind of loud on Twitter about this but I watched like implied correlation just cave and this is a different time frame chart of implied correlation which is like fell it when when stocks are correlated correlation of one they all move up and down together but when they have a low implied correlation that means some stocks are rising other stocks are falling you have you know basically like a wide dispersion of returns across the market which holds the vix down because the vix goes up when implied correlation rises so this kind of what should theoretically pull the vix down uh over the next like a couple weeks as liquidity is is not there no real credit problems no real scare from the Fed no real bigger earnings problems maybe we get a little pop involved tomorrow after Oracle and AI but I don't know on the whole I think everything's kind of fine here so what do you guys think about the rest of the year here Santa Santa rally or not it feels like there's we're pretty well suited for it I don't know what you guys think like you have all coming off you have the targeting funds that are reallocating CTA's CTA's are pretty strong you buy back then and you're like you said how's giving the green light you're starting to see some yeah yeah yeah exactly so yeah how are you guys think about the rest of the year here as you close up your book I'm I'm long the things I like uh which we've talked about metal cyclicals um basically every dip in in energy uh but about the net gas dip today like you will not yeah and I said I'm sure to basket of semis and meg seven stuff I think I don't know like I don't I don't have a view on the Santa rally like the vix is at I mean the vix is at what 15 60 like I'm not it's not like it's going from 25 to it's it's just and people at the market repositioned I did a couple of charge if you go to just rip through 23 this is just a longer term process of volatility snapshot from the cb cbo you puts out but it just shows you like look gold is really the only interesting vol surface right now um equity rad little pops get suppressed as Tyler mentions this is the name of the game keep this stuff down and and probably more interesting like most interesting is the fx vaults it's you know one way to describe that is just like global coordinate coordinated cooots of of of do policy that supports assets and so you know you look at this and it just kind of yeah there's not big boogie man out there but also people aren't hedged um but I do look at like the next chart uh the next two charts and I think like you know these are these are relative of cap cap share for S&P information technology and communication services like 50 50% of the S&P the next one if you go to it split up by sectors and is AI the future yes but also worst all the news that comes out about Nvidia now is basically that's what I say when I think the market has a make seven problem is like the news is I think bearish it's like last time I find you can sell in the china all these competitor chips coming online um you know for all we know china doesn't even really want the chips because they have a so like it's not a bearish AI thing necessarily it's like it just happens in every semi-conductors have been around for decades and they always are there's one of the most traditionally known cyclical businesses like everybody know it's this very classic thing so like you have a huge investment boom wherever there's profits investment comes and and chases those profits down and especially when china enters the room and so I just think you look across the board and you have all these the sectors that have just been left for dad for many years and at the end of the day we're all still humans so we need energy we need utilities we need the place to live we need like so I think investing across those but then but if you do look at the um the next couple is just positioning maybe the next this one is just shows the panic index which was almost a high you know in in November now back to the lows so people have definitely repositioned and then the next one too is consolidate equity positions from DB is back um so I don't know like that's it's kind of my view I don't think like there's any very obvious like broad picture beta trade here going into the year end and I know my sentiment is like just get away for the markets for a while so uh you know I think people are like yeah I don't know who's really sticking their neck out here it's time for the holidays yeah yeah but but no I like it like oh but is that this is my coach this is monster alpha this is our one mask this year yeah this is our that's the muddy water's mask everybody's just right that's awesome yeah I got one good chart that you're gonna love this is 31 this is uh another another goldman one on the back of what you meant about like the name of the game is just stultifying volatility because and this goes to my green's all point is the boomers have the balance sheet and you know the next generation's income statement from that piece look at how much the top 1% and the 50 you know the the 50 the 90th to 99th percent so the top 10% own all the wealth there and then look at the bottom 50 percent it's like a little tiny sliver of wealth is is trickling down to them um you can you know you can make all sorts of arguments but what I what I wanted to say just sociologically is I listen appears Morgan and Nick Fuentes and it was I don't know if you listen to this day I was wild that was a lot there was this rage bait on both sides there it was a generational like moment I thought because you had this like genx boomer could not process this guy's mentality of just being outright racist and and then he and then Fuentes basically says like what are you gonna do I'm just racist what are you and like he couldn't it was like two worlds Clyde because he's coming from this place that he's already lost everything you know in a lot of terms and now because he's not afraid to say like the craziest shit he's getting more and more viewers and that's what a lot of people like when I see that chart that previous chart is you're seeing a lot of people fall into the basket of like well I got nothing else to lose so I'm just gonna point the finger at somebody else and and when you have that problem it's and it's incapable for the boomers to understand that that's an issue like that or like the genx mindset of mainstream media is like now he's getting all these views and he's becoming more powerful being the Hitlerish type of person saying all sorts of crazy stuff but he doesn't care and like they this base loves it the power and control is changing in there in that chart says it all which is like I'm trying the more I try to maintain balance of my at my balance sheet and stultify the volatility therein lies this sociological change that's happening and they they still can't process it and I'm not saying it's right or wrong it's just a a a cause and effect right you stultify all you get that this is the reaction in this centralization process will keep happening until the revolt happens right until that and you're seeing he's even telling you I'm making millions now he's like I don't care you can't control me anymore I can say whatever the hell I want and he's making millions basically doing this in the power structures shifting where the wall yeah on the surface you can stultify the asset volatility or the effects volatility or all these things through fiat mechanisms but the social ramifications are getting worse and worse and they're breaking through the mainstream and becoming mainstream and so eventually that leads through asset prices well I don't know when it's going to happen but all the centralization scheme is is it's they just keep doing the same tools and they think it's fine but when I when I wash out it's frightening it's absolutely landed the plane so well on this Tyler would you first thought I was like I was like we're gonna get canceled but like no that was that was a banger because sometimes I said he tried to go and explain this it goes around me but that was perfect yeah it's like the world the market take any structure and it's it's an amoeba of it has a characteristic of volatility that is normal and you can hold it down hold it down and that looks good here but pockets of it are popping off and you see that with these huge rotations in the market where it's like the S&P's flat but then meg seven's up seven and mainstream's down seven and to like how I think about what you just said is like it makes so much sense where you're suppressing you suppressing suppressing you know huge swaths of society and you're gonna get these guys popping off that are saying ridiculous crazy and all that says is like volatility is not going away it's actually increasing under the surface and that I mean wasn't it wasn't it pretty cool that said it like you can't suppress volatility you can only transfer it yeah yeah like trying to think about that quote all you transmute it you transmute volatility you can't suppress it and so it shows you yeah you use to press it in assets and wealth and equality and it shows up in social like social uncohesion or like just fun which is crazy because like you look at you look at society you look at wealth inequality you look at rich versus poor all these you know the the diversity of the political spectrum is as extreme you know on both sides and then you look at markets and you're like vixette 15 fx vol and the gutter but you're like what the heck and it's what makes markets so difficult because you have to hold these truths like we're saying and and but at some point it will matter because people will come people will come for that prize jewel but it it this takes a long time but it is the Tyler great point like it's it's fascinating to see some of these things where like it's so extreme you're like man I can't believe he's saying this but you were the beneficiary of the system for like 40 years you you literally cannot comprehend that mindset and but I I think I'm close enough to the next generation where like oh yeah if you got you know 200,000 knowledge of student loans and you can't find a job you're gonna get an extreme pretty fast right yeah and this is why the it's it's not sustainable to have a system where a government just prints money makes markets go up forever because eventually you have social revolt basically and like too much inflation and eventually they come for the assets like this is what Ray Dalai talks about about in terms of the delivering of these long term debt cycles like one of those versions is revolution and coming for the rich and quote unquote redistribution of that wealth and it doesn't look pretty like go look at the French revolution it's not a pretty process and they're not this is like here's I think we're pretty much pretty balanced guys for our generation in terms of like trying to see things from every perspective like I get what the build etc but this is a national security issue where you have to you have to break apart companies you have to literally just tear apart these monopolies get the regulations like gone unless you want to see you know more and more extreme social commentary and more extreme you know violence and all that crime that's fine but like I don't know that I think my use of of this stuff is I would like to see capitalism work in the way it should I'd love to see like rational optimism like win productivity win and all the stuff but it doesn't seem like there's a fire under anyone's ass from a political standpoint because they I think they're still milking it they're milking it until you you can't anymore every aspect of the world whether it's the financial markets every single thing as everything's become increasingly financialized short-termism in every single facet of life no one can't that there's a huge problem across developed nations of delaying gratification every decision you make in life is that's worth it is difficult because you're you're delaying gratification for something better in the future and they're like at the onset of what Trump campaign done we're going to balance a budget we're going to cut unnecessary spending we're like this stuff is you have to take pain but so it's it's just bigger than any one person they're grifting it you know they're grifting it hard but that's just the predicament is like it's unfortunate because there's so many smart people out there who see the problems and have solutions that want to try and fix them on both sides of the aisle but they will never be able to in a very effective way because you will the repercussions in the short-term will be too politically unstable and that that that's what you just you can never be get past with how far gone developed nations problems are like and it's our largely a legal issue that's a thing is it's not even even though it's a political reelection like it's like favorability it's like I mean if Trump didn't pivot on tariffs like imagine right like you probably would have been assassinated imagine Trump said tomorrow like executive order I don't even know if you can do this but like every incremental dollar can't go back to the same passive scalable people it has to go into like an American actively managed fund instead like imagine that's the thing is the the government controls what pension what what retirement accounts can invest and they approve these like target date retirement funds like pretty soon they're going to have to put the retirement date target funds is just 100% bonds because no one else is going to want to buy the debt so they're going to have to mandate I mean they're basically doing that with the banks are saying to the banks hey free up all this balance you will deregulate you so you can stuff your stuff yes financial repression and action we are we are in the middle of it for sure and that's the conviction for gold and medals sorry it just makes it that much like this this is probably like a bigger cycle than we think everyone it's the beginning of it it's not the end of it well I just want to bring up it what a shame it is about like how crypto-strating recently because everything we talk about is like it was built for it like this is this should be bitcoin's moment and it and it hasn't been no way you cut it like when you really boil it down to what has been the marginal driver a price like the vast majority of it has been micro strategy and debts and then obviously just the the unlock of ETFs and that whole thing like that that brought in the marginal bid but when you when you when you when you set the the playing field flat and you say okay here's the premise of what's going on in the macro world place your bets that actor is just not choosing bitcoin they're choosing precious metals they're choosing gold silver etc or or equities and yeah they're not by crypto and it's a shame and and maybe the thesis is wrong or maybe this is just a local bottom I don't know so I don't I think the sentiment is spot on most things outside of bitcoin also are just garbage and deserve to be at zero I think the problem is that the industry as it's scaled became the same thing as everything else which was a griff Ponzi scam pilfered by the top 1% I mean look at the VCs that max extracted along the way and now you know they made a billion dollars laugh about how the crypto industry is falling apart after they extracted and all yeah so you basically need this cleanse because you need these it just markets markets are so truth seeking right over over long periods of time markets are truth seeking and what's going to happen in my view is that like all this kind of stuff gets cleansed you're going to have these people people go away but but bitcoin survived everything bitcoin bitcoin is still an asset for these events and if you look at it on a long term monthly type of charts and like like the structure's fine it's like it was propped up by like it was propped up by debts and all these VC exit liquidity schemes and it's rinsing that out and there will be buyers that will step in and there will be another big catalyst that sends it again and speculation will come back and so in some respects the four year cyclers are correct in that view but I just think it's a rinsing out of this excess and where the capital is kind of flowing to but I think I think the problems with it are because it became what ever it started as this grassroots thing not something where you could launch a meme coin at be a billion dollars and sell everything and just send it to zero like that's what that's what open AI is for with the IPO at a trillion you know that that was the antithetical opposite of crypto beliefs but bitcoin is going to be fine but there's the give it 2728 something there's going to be a mega bitcoin trade again I'm with you there I like I like that framework yeah I think I think it's going to be a great long yet the way I think about it again I've said this on the truth a few times is that there is this artificial pocket from debts that we're leading to this premium and now all those debts are the trading at part or at a discount none of them in a premium none of them are buying I don't know if they're going to sell a couple of them might be small marginal sellers but really it's just you had to find the equilibrium and I think you can characterize last six eighty months as us trying to find that equilibrium again and at the same time we have all the all-point thing going on of just this cleansing and yeah I think it's I think we're gonna yeah you know bitcoin is not dying anytime soon I'm not selling my long term holdings but yeah guys I've good news separately that that being oak tree in my backyard that I called up some high school kids they did it for they did it for 150 wow I love capital I had a blast doing it too yeah oh yeah it's a great it's great they said it was yeah four thousand dollars for this you know Christmas tree lighting on your oak tree yeah look to Utah helping I'll call some high school kids you're helping alleviate the youth unemployment issue that is accelerating four times as fast as the the normal unemployment so good job that's part of that I start talking to these kids and ones like yeah you know what unsolicited I was like you know you you guys looking at colleges and and they go you know now they made a rational decision they're just like it's egregious you know we will I'll probably do like a year or two at community college but I'll probably you know I'm gonna try and get into like being electrician or construction management or you know these these things that AI AI can't replace and I was like okay maybe we got all that it's great it was great it was great it was great hearing that you know maybe this bubble of of college nonsense I don't know we're gonna look back in this lane kiffin hundred million dollar thing and realize that that prick the bubble of like college sports and it's I I as a sports fan and everything that college should have been it's just it's turned into a big bucket of slop it's so the Utah thing though there's a private equity firm and getting involved with I think it's University Utah it's it's it's it's just yeah you know the opportunity to grift is gonna get grifted out like that's just when things are running like this and then you know what happens is we go back to like I'm gonna we'll start fishing with my kids or do doing like really awesome cool stuff and this is someone who like basketball like that's how you get a scholarship and you go and you you pay for your education in like this whole prescription of liberal arts nonsense I think it's just dying it it's so awesome here the next generation's not I'm not gonna take that $200,000 debt for you know where a robot can take my job anymore it's kind of nice I think that's like if you zoom out the Bitcoin thing as well is if you zoom out over a 10-year period what we know is that you know are these the conditions that Bitcoin and liquidity driven things should be working it's like well all the buyers of it the young people are out of job like the the worst job market ever so so the they're it's not benefiting from this this wealth trickle down to new distribution to new age younger age groups which we know has to happen over time the boomers that are 70 plus owning all the assets that wealth redistribution one way or the other will occur and so I still think that long term like upward slope pers like exists there but you've had also a very bad liquidity environment the RP at zero all these things and the job market for young people horrible so like it's just it's just not like from a high level macro perspective very conducive to it and that's really just popped propped it up but there will be a time because politically there will have to be a time where young people are the favored group again because they're the future of the longevity of the country so who knows when it's if it's next year not till 28 29 but it's going to come again well said fellas yeah part I think we can leave it there but um as usual the beautiful mix of social commentary and market commentary in one who is a pleasure guys happy holidays I won't I'm won't be seeing you guys we have kind of tough schedules next few weeks so I'll be back and yeah might be a little dicey this this may or may not be the last one with all three of us before the new year so we will say happy holidays everybody happy holidays merry christmas happy new year you happy yeah merry christmas happy holidays all that good stuff um thankful for you girls you guys make uh in every week I learned some and I really enjoy hanging out with you guys so thanks yeah we'll see you next year that's the hour of my week all right see you boys good see you later