The Bond Market Is Trapping The Fed | Weekly Roundup

0:00Nothing said on Ford guidance is a recommendation to buy or sell any investments for products. All right, what's going on everybody? Welcome back to another round of edition Ford guidance. We are finally on the other side of Labor Day. We're into September. It's time to lock in. No more nonsense. No more traveling. Quinn. It's a lock in season. What's up? How are you? I'm back. I'm back. Yeah, got a, came a little under the weather on some travel back but we're here and ready, ready for whatever the market's thrown at us. So, hell yeah, I love it. How are you doing? You up in New York? Yeah, New York at the deal block works HQ this week. Yeah, man, it's good to be here. It could be a nice way to start off, you know, post-labor day just really focusing in, getting a lot of work done out here. So, it's been good. Things are ripin' man. Nice. Yeah, surely in the markets too. Yeah, we all have to talk about before we do just want to do a quick

1:06shout out to our upcoming conferences. Digital Astros Summit Asia coming up real quick here in October 7th off the back where we're in the same venue, same partnership we're working with Token 2049. So, if you're there in Singapore for Token 2049, we're also going to be hosting a partnership with them this Digital Astros Summit in the same venue on October 7th. We have a pretty stacked line-up, some really great people there. Quite an eye are going to both be there on a couple panels. Should be a ton of fun. We also announced the Digital Astros Summit London speaker list. That's starting to rip out through too. And that's happening in November. So, big couple months. Don't slack on getting your take again at early. We'll have a link in the in the bio here in the description. And yeah, we're going to be both at the London one as well. So, it should be a lot of fun. It's going to be a week, a couple months. So, come out and yeah, listen to us and hang on person. It would be a good time. Can't wait, man. Time's fine. I can't believe we're, I got a board of playing again in a couple weeks. I know. So, it only has like fallen. So, I'm just like traveling all

2:10over the place and it's just like showtime. All right. So, obviously we got plenty to talk about reporting here Thursday. So, day before CPI, but we did get the PPI print today. The market is reacting pretty aggressively. But before that, let's talk a bit about what's going on with, you know, what what Besson is starting to call himself now, which is he's, he's, you know, proclaiming that he's the house now. I'm a pretty good insight into what the Japanese, what the bank in Japan is going to do. And he can bet against me if you want. So, yeah, obviously we had the announcement of the buybacks. Actually, it occurred a couple days ago. And initially, you know, he was talking about, so traditionally the long end buybacks have been two billion. He said it'd be at a four billion dollars minimum of buybacks. And he came out and announced that it would actually be six billion dollars. So, that was above his initial guidance of a four billion. But even regardless of that, we still saw the long end sell off further and yields go higher. So, you know,

3:12seems like market is saying we need more. If you're really going to try and fight us, if you're going to try and fight the bond market, you got to use a lot more ammo man. If you want to say that you're the house, you got to act like it. That's kind of seems like what the bond market's saying. What's your read, bud? Yeah, I think when these events occur, they display the political incentives that drive behaviors of politicians and policymakers once they're in charge. So, there's obviously everyone's aware of the kind of hot takes and criticisms that Besson and probably many on his team have had about how previous administrations have operated at these roles in the treasury and also at the Fed. And it's easy to say when you're on the outside. And Besson, if you were to move him from his current role,

4:131000% would be reacting in a similar way as, you know, that that drug letter, if it were someone else and he was on the outside looking in. So, it's just interesting to me because he obviously knows like he's very, very intelligent guy. Like he knows these things and what they cause in the ramifications. But again, the political incentives are so strong that they make people do things that they know probably shouldn't be done. And so that's crazy to me because, you know, obviously we have midterms coming up and, you know, he's well aware of what ultimately when you suppress yields and manipulate currencies lower, you know, those are inflationary and it's kind of one fighting the other. So, it's brewing this storm that, you know, he's trying to balance competing goals of keeping inflation and check, you know, not tightening, not allowing financial conditions of titans

5:14to try and boost markets in the midterms, but then also trying to avoid a problem on the other side. So, it's a very fine line and, you know, I think, I think if you asked him five years ago about the situation, he would, he would probably be criticizing it. But when you're in the role, what can you say? What is he supposed to say? Our bond markets fucked and you should not buy it, inflation spiraling out of control and we're short oil. Like, no, he's not going to say that. He's going to say everything's fine and, you know, I can bully this. And so it's kind of what you would expect. And I think the important thing for market participants is to just not get caught up in the dialogue and and hysteria either way, right? It's like he's not the devil and he's not the Lord. Like, he's, he's just another, you know, politician and posse maker trying to keep the ball of float doing what ever humanly possible to do so and achieve his political incentives. But he's still human and

6:18the markets are the markets. So I think there's, you know, there's still a month and a half to midterms. So obviously their incentives don't fall away just yet. But it's clearly getting harder and harder to keep the wheels on. Yeah, I mean, it's just crazy. Like, you know, he made an aim for himself when he was with Soros, you know, going against breaking the bank of England. And literally, you know, he was on the other side of the house that he's saying that he is now. So obviously, you know, like you said, he's a smart guy. He knows what's going on. But he's also still a human and he's in a political seat. And, you know, so here he is trying to try to get it done. And, you know, we'll see, we'll see what happens. I actually did a kind of cool analysis here just looking at like obviously, you know, the bond market wants the eels want to go higher. You know, the economy's ripping nominal GDP is hot and they're trying to keep a lid on it. That's really what's at play here. And this is just kind of cool looking at the regression of the 10 year to nominal GDP and trying to think through a fair

7:22value there. And you can kind of see just on this is that, look, if the game at hand here is, you could say through just looking at, yeah, this regression of, of nominal GDP, that the fair value of the 10 year is somewhere around 5.8% right now, roughly speaking, assuming that this 6.6% dollar GDP continues, but you know, I tend to think so. So, you know, they're trying to keep 100 bit spread there at a minimum. And the question is, does he have enough ammo to do that? And it seems like right now, you know, the market's calling his blood pretty, pretty aggressively, at least in the bond market. Like, the yen has worked out, honestly, which is, you know, I feel like it's kind of gone understated. Like, you know, they started doing this formal intervention in the 160s, and we're at 153 right now. So that that's side of things, you know, it's been a bit quieter, but it is it has worked out. Obviously, it's helped that the the B.O.J. has been a bit more hawkish there. But obviously, the market saying that looks 6 billion dollars of buybacks is not enough if you're trying

8:24to fight us. You got to at least double that thing, buddy. Yeah, I mean, I think it works for a short term move in the markets, but if fundamentally nothing is changing, in fact, it's kind of worsening when you when you manipulate markets like that. It's the same thing with oil, right? Like, the cure for high prices is high prices, and that brings on more production, and you solve the supply shortage. And so when they suppress prices for for many months post-war, that's why we're back to highs. And then, you know, similarly, if you if you continue to stoke asset prices and all these inflationary impulses, then you're going to get inflationary responses. So he knows this very well. This like, that's one of the things that I just I think is very important to stay even killed and not get too emotional because oh my god, best since you know, he what a joker like, okay, yeah, politics,

9:25there's plenty to disagree on or agree on, you know, that's its own thing, but when it comes to the markets, like the behaviors are fairly rational if what your goals are is to try and boost markets into an important term election. And then we'll see what happens, but you know, he that's why I think it's it's it's interesting because he knows what this creates, which is inflation, and he also does not want to see forehand those being printed on CPI. So at some point the air will have to be strategically let out, and maybe we're getting a little bit of that now, you know, letting ball fall expand a bit, and you know, you could you could argue one strategy would be to to let markets puke into into the FOMC to take, you know, pressure off, you know, make the market look a little woblier into into that decision and try and, you know, remove a rate hike that way.

10:28Otherwise, you're kind of looking closer to like a Q4 2018 scenario, potentially where you actually had a real growth scare hit because, you know, the Fed, the Fed was kind of turning hawkish as as the data was kind of teaping, you know, peeking out, and that was a pretty nasty, you know, a couple months for the market. So it's it's precarious either way slice it, the midterms being a month and a half away at definitely add some, you know, variants along the path, I'm sure. Yeah, I'm just saying, yeah, we're definitely in this air pocket right now, as we wait for the FOMC, especially in light of this new regime of marginal guidance, not not entirely no guidance, but pretty much no guidance. So the market has to just kind of take what it can get and run with it, which really feels like what's happening today with this this PPI print. So we had it come in a little hot on headline. So Core Month and World Month actually came in at point two percent, slightly below

11:28consensus of point three percent. So Core was actually decent, but the headline PPI was fairly hot there. And the market's really just taken this and running with it. Obviously parts of it get imputed into PCE, which is what the Fed looks at, you know, some people are trying to extrapolate this hot PPI print into a hot CPI print. I thought this take was pretty good. From Gail Abass, he always has some really, you know, nuanced analysis of these big economic data points. So this is what he's saying, which is that, you know, of course, PPI doesn't actually measure producer input costs like many people think it does. It obviously goes into PCE, but a couple of things that he noted here is one, August all items, PPI, 0.4% month every month in line with expectations. PPI services were on the low side, safe for transport, warehousing, which is probably an energy story. There's a whiff of gas price pass through in the numbers. That's probably what has the market going the wrong way here. You know, you just have to look at the like diesel, like wholesale diesel right now is breaking out and that's that's a pretty clear one-to-one relationship into input costs.

12:34Then three says the stuff that falls through to the PCE was actually pretty benign with portfolio services, negative 1.6% being the most obvious. So overall, a neutral rating with a hint of energy price pass through an in easy push into PCE. Now it's on to the one and to the 30-year auction that's happening today. So I just thought that was a pretty reasonable take. But again, it just feels like the market is just trying to grasp at anything it can grab on right now and just kind of run with it. So even though it wasn't like a scorching hot PPI, yes, it's accelerating. And you know, this was from I think it was about mid-August is the timeline here. So obviously, you know, oil is hitting a hundred bucks here. So there's going to be even further inflation on that side of things. And maybe that's really spooking the market. You actually put out a good meme here that I want to point out here your take on about the basically the fork and the path here of which direction to take. So like, yeah, what's your what's your read here in terms of just what we got today and how that's leaning in here?

13:34Yeah, go back to that that tweet just for a second. I just kind of want to push back on one of the things is like, you know, sometimes it's easy in the in the thick of things to get caught up in the did it come in line or did it come, you know, around expectations. But when expectations point four percent month over month and you're printing, you know, with the forehandle into the almost five year over year, like, it's still super problematic. So I think that's important here for people to remember like, okay, that's right. And then the other thing is like, you know, okay, the stuff that flows through to PCE or benign portfolio services. And it's like, all right, well, you know, we know that the top what like one percent on all the assets and portfolio services are not even a thing that most people would be in their inflation baskets. I just think it's funny. Like nothing against what guys saying because it's all accurate. It's more of just like zooming out and sort of chuckling at the situation of that we find ourselves in in terms of markets and policy makers where they're like, it's constant, you know, finding these little ways to thread the needle.

14:34Oh, it's expectations. But then you look at the long-term chart and like, we are reaccelerating. Yeah, it's a great point. And it's like, oh, oh, don't worry. Like, you didn't have inflation this month because portfolio services were minus 1.6. It's like, dude, 80% of the people don't know any portfolio. They'll have portfolios. It's like, you guys have ran the bottom half of the cane, the ground. But anyways, on that other, on my tweet, yeah, the fork in the road with two bad paths, it's like, there's many, many, many historical instances of central banks hiking into an energy supply shock. And they don't end well. They get reversed usually within 12 months. And this has happened all across Europe. It's happened to some extent in the US in different instances. And so the obvious like, or most simplistic way to explain that is like central bank hikes don't create more oil. And so, you know, in some ways, they restrict the production because

15:36they make financing costs even more restrictive. So that's just a bad situation. And typically, when that happens, you sow the seeds of recession in many cases. Maybe it's not nominal. In this case, because this goes spending so high and it could be real. But I'm not calling for recession here, because I don't think they, I think, I think this was part of the plan. Frankly, like, best end is talked about it. Everybody's like, the policymakers on the US side, in particular, have talked about this. They say, you don't hike into an energy shock, which is pretty much true, because at some point, it becomes that even a week ago. Yeah, it becomes much more of a demand hit. Like if oil's clocking 100% gain year over year, that's much more of a reduction in demand that it is, you know, sustainable, durable price feed through. So that's one half of it. But the other half is like, yeah, inflation is here and it's a problem. So like, what do you do? You also,

16:37you also don't do what they're doing right now, which is weakening the dollar and stimulating commodities even further and suppressing bond yields and intervening the bond market to support asset prices even further, create an even more positive wealth effect, drive even more demand into a supply shock. So the other thing you don't do, that, or you shouldn't because it often produces adverse results is stimulate into this because you don't, you kind of have to just sit back and let it digest. Like the war has to get sorted out, the straight has to get sorted out. Like you don't want to be stimulating demand into a supply shock, otherwise you get COVID crazy levels of inflation. And you don't want to hike and, you know, send the economy into a depression either. So you have to just kind of sit there. But right now, thus far, they've totally chosen the right path via all the intervention. The fact that a hike is even on the table

17:39at the stage is a direct result of, of all their intervention, whether it be with the SPR, whether it be with the bond market, the currency market, the tariff refunds, like the list goes on of things they've done this year to stimulate. And frankly, like, I've been talking for a long time, I think hiking on the front end is not really the right thing they should be doing. They should be letting the long end find a fair value. But again, political incentives, the housing markets absolutely dead. It's like completely ground to a halt. Financing conditions are becoming very restrictive, particularly for the longer tail, small businesses and consumers. So yeah, I mean, ultimately they will pick inflation. But again, these paths on the way there get really dicey because neither are very good. Welcome to token 2049. token 2049 Singapore is back October 7th and 8th bringing together 25,000 attendees 300 speakers and 500 exhibitors for the world's largest

18:40crypto event. token 2049 will be happening at the same time in a partnership with our own digital assets summit Asia. So come check out both conferences during the same week. Across token 2049, week specifically, there'll be more than 1000 side events culminating with after 2049 and the Formula One weekend. And the speaker lineup is stacked across the board. Shane Copeland, a Polymarket, Jeff Yan, a hyper liquid, Arthur Hayes, Belagie, Nas Xio, Adina Friedman, and many more. Join us in Singapore this October for token 2049 and the digital asset summit Asia. Avalanche summit is coming to New York City September 16th to 17th. Join the business and technology leaders building the next generation of financial products, enterprise systems, and consumer applications on chain. Learn how blockchain is enabling faster settlement, more efficient markets, and new business models at Avalanche Summit NYC register for Avalanche Summit and use promo code

19:41blockworks 15 and ahead of the summit you can track Avalanche tokenized equities alongside tokenized treasuries and their growing footprint on Avalanche. See the data for yourself with blockworks researches Avalanche dashboard and don't forget to join us in New York City for Avalanche Summit. Yeah, I mean, I agree. Like it feels like the foot like there's some sort of tightening that this market is screaming that it wants and I guess the question is is it on the short end or the long end and right now it's it's been predominantly on the long end. One one question though is on that point of like what do what do markets really want going into the Fed meeting next week? Like let me just pull up the the current Fed odds right now, but you can see like off the back of this hot PPI print today are you know slightly hot. We're down to about a 30% odds of a pause

20:41and about 70% odds of a hike just a week ago, you know, that was a bit more even 50-50. I personally feel like it's it should be at around 50-50 going into this. Obviously, you know, tomorrow's CPI print is going to be the deciding factor for how this nets out, especially because of Waller's new dogmatic style of monetary policy guidance where he just decides that one single print is going to be everything he's going to lay his cards on. So, you know, he kind of puts it out there like he did this a couple months ago. We were criticizing him kind of criticizing him again, which is just that look like his yeah his his reaction function. It just feels really dogmatic and it's like, okay, look if if CPI print comes in a bit hot above economic consensus, I'm going to vote for hike if it doesn't, I'm going to go out for a pause. I mean, at least it's good to know what how he's going to react, but I don't know. I feel like it's still it's it's been much, you know, maybe he's a little salty about not getting the chair position. I don't know, but I guess my

21:45question to you is going in the next week like say we got a say we got a hot CPI print and say rate odds for a hike get to 80% tomorrow after it. What do you going into the meeting? What do you think like the market wants the most? What do you think would settle things down the most? Do you think a hike at this point like a one a hike with this hint at like one and done? Do you think that would actually like tame the long end a little bit? Do you think if they pause the long end would sell off further or like yeah, what do you what do you think there? I do. Yeah, it's very nuanced because exactly the things you alluded to I think like first of all, my bias is that inflation is coming in on the firm side. If anything, I would guess in line or surprised to the upside and I think even looking further out, there really isn't going to be much disinflation. If anything, we could get a total revamp and inflation over the coming months given what oil is doing. So it's not good. Like it's going to be

22:50very difficult for them to not hike I think over the coming meetings. The political pressure is just getting too great and remember you do have a bunch of you have both the Trump appointees like Waller who's clearly disagreeing with Warsh on a lot with all the speeches who's salty about not getting the chair pick and then you also have all the you know the anti-Trumpers who would love to to slam a rate hike into the election. So I actually think that matters here and I think they my base case was not a hike and but I think it's getting stronger and stronger and ultimately like part of that has to do with Warsh for all of his speeches for months has been talking about wanting to wanting to empower the bond market and the financial markets to send a signal. We don't want to interfere with Ford guidance but law so tell us what we need to do and all that. So the bond market

23:52sending a very clear signal that they should start to restrict. I just have so much beef with the mechanism through which they restrict on the front end and then over here manipulating on the currency and bond side it just it's so kind of backwards but I think I think that's what they kind of want is this like you know Jim Krossounds talking about this good cop bad cop but yeah my guess is like you probably dragon morse tooth and nail to to do it and it's probably like a framed as an insurance cut and the one and done but that again yeah insurance hike yeah it makes things spicy though because if the next month shows another you know continue like up in inflation you so I don't know man I would have to say I think the market like if you hike you probably helped the long end a little bit right yeah if you don't you you definitely put pressure on it so but for risk

24:54like maybe we sell off enough into it where it's just like a relief regardless of what happens I'm not really sure it definitely depends on kind of what fall and price does do into the event but clearly the bond market's been signaling this for a while like we've been above 50% for for some time and equities are just starting to care which I find interesting because the bond market's been saying this and equities are only starting to care now that it's in the purview yeah yeah I'm like definitely ready to be stopped out on my notion of like max hawkishness and actually the realization of a hike like it's just getting so desperate um so I'm willing to be wrong there and but to your point like it really depends again what CPI print does tomorrow I'm kind of holding my reservations of of where I'm gonna lay my cards down until then um and I have no edge in predicting CPI like I just yeah I don't think I'm smart enough for that um so really I just have to decide like yeah to that point and then really the question for me is is this just an

25:59insurance hike credibility hike kind of tame the rest of the committee that's pushing for a hike and that sort of thing and really dragging the seals or does it become a bit more of this sustained thing to your point like do we do we get the hike in September and then suddenly the talk gets going again for for October or or December what have you um and obviously you know if we start to hear about something in October that's really close to the midterms and whole host of other issues there um another little experiment that I did in my uh my vibe coding here is is actually I was really curious about like what is what is the reaction from long-end bonds after the first hike and what is the context of what drives the long end into that first hike so it was it was actually really interesting analysis um because to my opinion and and this is kind of evaluated here is it really matters what part of what composition of a long bond yield is is heading higher you know is it inflation expectations going up or is it term premium going up that's leading to higher real yields and what was quite interesting here is that when it's inflation expectations leading

27:01so like 2022 um you see continuation higher in long bond yields even into the hike uh but but interestingly enough when it's when it's more term premium story which you know you can see is has been the leading driver yes inflation expectations are a bit higher but the the main driver of long bond recently has been this term premium composition and if you look at historical precedence of first hikes uh based on the lead up when it's term premium led you know that's really the bond market screaming for we need a credibility hike um which feels like we're at now and you can see the the moments where that happens where you get that hike uh especially like this one and done credibility based off term premium screaming for it you actually see long bond yields sell off so in my opinion depending on like again how hot the CPI print is and and whether there's any sort of hint at it being start of a hiking cycle versus not um I certainly don't believe it's the start of a sustained hiking cycle

28:01yet I see no reason to believe that um to me it feels like it would be the thing that you would actually see this reaction of like a hike but long end falling um what do you think of that yeah it's it I don't know what's part of the curve I like better in that situation because I do think structurally there are such issues with the long end I I um I kind of agree with you though this sulfur curve right now in de june in september of next year basically has three hikes priced in and I have a very very very difficult time seeing them get above above that like that that seems if they did three if they rip three hikes in the next six to nine months like you got to imagine the stock markets taking it and it's good beating yeah ripping three hikes into a hundred and twenty dollar oil and like that's just that sounds sounds

29:04like a crisis session yeah yeah so I would fade that but I think you only can fade that once they start because if if they continue to kick the can kick the can you know who knows like these things are kind of reflexively self reinforcing if you know we could get even more and plus I think inflation still surprises to the upside at least for a month maybe it could longer we got to just see so I'm kind of with you I lean lean towards being with you I might prefer sulfur in that case because it's just a little bit more I think like something they have a little bit more control over but granted they're intervening every day on the long end so the curve is also flattened pretty hard into this stuff so I I could imagine some steepening to come out on the other side like if if they're yeah if they're getting more dovish at the fed because it growth problems that removes the need to like cap the long end is is much so I'm with you though on that sentiment like

30:10the question is the 10 year hits 5% or close to it here is is you know what is the underlying real growth plus inflation that that you know this could should kind of command and you're definitely starting to get up into the upper bounds probably of that yeah yeah I mean so much of that growth question I don't you so you kind of think it's it's where we're peeking out in terms of growth because a lot of this has obviously been you know fiscal deficit and AI spend so do you think you see in AI investment infrastructure kind of slowing down here is is that the read through I think the the the rate of change the growth in it is definitely slowing so it's decelerating at a at best and you know it's not definitely not declining at least in the foreseeable but the rate of change I think will slow and is slowing and it's the main driver of the economy plus think about

31:12how often we see these lagged real rates take their toll it usually comes months after where you know we're sitting above 2 now for quite some time spreads and the long like junkier stuff are widening financial conditions for all purposes outside of stocks which are just keeping supported in the midterms are tightening and so that usually works with a lagged effect and I think a lot of the fiscal impulse stuff that has been enacted to boost things in the midterms will fall away as well and you also just don't have a very pretty outlook on the other side of of elections because you have you have some debt ceiling budget issues you know gridlock in the House and Senate a lot of disagreement and even if you know that the data center and AI trade that that's getting such political backlash and it's not even just a Democrat thing it's it's across the aisle so I think the outlook is just so murky that yeah I would not like the fed inflation is not

32:16in a good spot but but when it's energy price driven like this that's going to cause demand destruction too and I do think growth growth will be peaking out and yeah decline from here into next year yeah the like really sticky drivers inflation like wage growth are still not really parking up like you just I just can't get on board a sustained hike cycle until that starts to really turn and accelerate like it's been yeah it's investment and obviously that yeah you need to have a view on the rate of growth of that and then yeah it's it's oil and headline and the derivatives of that and obviously like next month you know we got oil breaking above 100 here today so so that can you know lead to a further positive web saw let's talk a bit about like tactical trades here in light of all of this especially like an update on this debatement trade idea that like obviously the narrative of it got really ahead of itself on the back of this this best and buy

33:18back announcement and you know of course like there's going to be many times where they really the market's going to test this idea especially in light of this these big question marks around how the Fed wants to react to this because you know that's in doing what he's doing is obviously on the surface at odds with what Warshall is saying that he cares about which is you know getting out of the game of markets for the Fed as much so to me like I I was fully ready and embraced to you know give back some of my gains on those debatement trades over this murky period into the lead up of the Fed and that's fine you know that's where I like it always matters to know like what price you get in and how much buffer a P&L you have for whether you're willing to give some of that back because you just don't want to overthink like the last thing I want to do right now personally is end up being right on my thesis but getting stopped out in the interim like I would just be pretty bombed about that say we get like a cool CPI and they don't hike next week and then you get this

34:22like big rally or whatever and oh man like you know this slightly hot PPI print today in the bond market testing best and stop me right before the next like higher like I'm just willing to take some you know egg on my face in the interim to ride that way so that's kind of where I'm at is like you look I got into these in a good position is it to ride a bit of downside short term knowing that like over the next year or so I feel like it'll do well but yeah here's how you're thinking about that yeah I tend to agree I mean if you if everything if you entered decently on you know in advance of this run up is still fine and and it's all outperforming stocks so yeah I think a simple you know there's plenty of ways to hedge it with the whatever asset you own as well as with other you know beta and equity indices I mean small caps of Russell got smoked NASDAQs like it's all it's all underperformed quite meaningfully since since the pop I think

35:24that we talked about it at the time and have for many months what makes this tricky is it's so tightly controlled and influenced right the thesis is is that so you have to be comfortable and and heads up on the the idea that they also part of the game is that they also need to let air out and let vol expand and basically you know kind of ding the the debatement trade in order to to kind of run the next lag so I think that's important to keep in mind because there is there is a lot uncertainty I mean one thing we I would say I would bet on into next year is that I do think Democrats will perform well in the midterms definitely take the house probably the Senate that ones although less likely but in years past a lot of you know the quote unquote compromises

36:26is more spending and less market friendly things which you know as we know uh you know usually is kind of more socialistic tendencies and and um it's inflationary and so I think like yeah very much so that the fundamental thesis is unchanged but you have to be ready for path risk I I think it could be very bumpy because again bests it knows exactly the ramifications if he just lets commodities go up into the right for forever but certainly the dips are to be bought I mean Nvidia's back or was I guess like pre this stuff it was like back to like I'm like five and a half to six trillion market cap and to keep that thing elevated you know you're gonna need some big the bond markets at a couple trillion you know you're gonna need some big big government bazookas and inflation isn't going away like they're good we're talking about potentially having a growth problem

37:27here with inflation at three and a half percent so you know that's messy yeah like yeah you know it should not surprise anyone if in the next year or two there's four five six inflation yeah yeah at the same time too like so much of that growth is dependent on on the AI race and like yeah it's a bipartisan hatred of AI right now and like dude the people at these frontier models are not doing favors with themselves when they're tweeting about like doomsday scenarios and that oh not only are you gonna lose your jobs but you're also all gonna die you're not you're not really if you're trying to get data centers built and like friendly you know perceptions of AI you're you're like what what the hell are you doing like there's there's governors or like there's there's people running in the midterms right now that were supportive of data centers that are now because the polling is will switch so aggressively are now anti data center so you know even your supporters are bailing right now like that's just a that's just a shit show it's crazy man out of yeah it reminds

38:34me so much at 2021 crypto for this reason because because in the same way that you people were making so much money back then it just it creates these unpopable egos and untouchable hubris where you're just there's wealth created out of nowhere that creates mints young people into you know more money and power than they ever could have imagined and then human thing is to like take that and run with it and we're seeing it play out like the the the cloak of invincibility that seems to be kind of draped over the industry is it's gonna get tested like it hit every one of these frontier tech industries do and you know it's with Trump and Besson and everybody you know totally read congress it's easy to look at it and say we're fine you know like we can overlever

39:36ourselves we can over commit to all these plans we can you know do all this in session with financing and someone's always gonna bail us but it gets a lot trickier when you don't have that agreement and yes okay let's say the Republicans keep keep the Senate there's still a lot a big loss in political capital that occurs which on the margin just reduces like the Trump and broader administrations interest willingness or ability to use all these political course coercion tactics you know with corporations or foreign governments supply chains it's sticky man I don't know like I just I think a lot of air has been let out of the semi-conductor trade which was the momentum trade and you know there was there was a pop-up earlier this week that showed some signs of life which yeah really he's yeah he's back in dude if I mean yeah I

40:41don't know like I saw some some commentary on it but yeah man doubling back so I mean it's just the leopold bit again seems like I feel like yeah if there's one less than to take away from a bubble is the as fun and long and forever the the run-up felt like the same thing is true in the opposite direction and so like you're gonna get these crazy relief rallies that make it seem like it's all back and then that brings those prices higher prices bring out more of the trapped top buyers and it's usually a really painful messy thing that lasts months and I just I just once a trade is so invoked that it's levered to the gills you know hundreds of billions of 3x-levard ETF volume you know a fund 40 billion levered four times like what's that stuff gets to the main page and then rinses out that's usually an area you don't want to go near for a

41:47minimum six months maybe a year and it's not even that like it's gonna go lower like you know the day after leopold sold and go liquidate we were just like I think bottom's in but it doesn't mean it's a good trade like it's gonna be dead money for a while and we've just been ranging ever since like there's a lot of healing that needs to happen because like there was so much leverage built up to get these these bottleneck trades where they were like that's just a long time of turn through and yeah we saw it with bitcoin which you know seems to have worked through a lot of that supply we gold in January yeah so over gold the metals yeah I mean it's tough like it's tough because there's a lot of different trades that worked over the last year whether it be metals or semis or whatever and a lot of them are sort of in this weird path like situation where you know people instinct is to buy but you know the market market might be trying to to develop some new leadership and one of the things that surprised me actually over the last few weeks is how

42:48despite the the worsening of the situation in Iran plus the supply and demand picture deteriorating and and price being a vertical line the oil positioning data is still fairly light for what I'd expected to be obviously we're starting to get a little bit more and see kind of gapy moves last few days but it seems like yeah people always you always go back to what you know before kind of recognizing the new leadership that might have emerged yeah 100% all right well I think we can leave it at that um for those that are still listening 40 minutes in um we're going to start to get some guest appearances with us on the roundup moving forward here so still to have that start to roll out um looking like we're gonna have Vincent Delawar Jonas next week for the first one of those so that'll be a ten of fun um get the three of us dropping it up he has some you know he's he's so good I'm a big fan of his so it'll be great to have him on we're gonna start to get some more people rolling in so uh yeah should be a fun time here you know we're post-labor day so time to lock in here

43:54yeah it'll be great to have Vincent next week post-fed a lot of lock going down and um and yeah it makes it up so every now and then people don't have to hear just us so it's yelling at each other yeah yeah yeah should be good all right ready you're ready yeah thanks we'll we'll see what the CPI brings for us tomorrow and um yeah see where the cards fall from there good stuff oh dude I watched if you watched the movie Fargo yeah yeah I watched it this I always get made fun of in New York because people would say I have that action yeah which they oh you betcha I finally watched it for the first time fully through and it was like I was just laughing at somebody parts even though it's a movie there's you're not really laughing yet yeah because like how exaggerated they make that exit but yeah there's like all the heritage yeah there's multiple stretches where they're just like yeah yeah yeah yeah yeah you betcha yeah you betcha oh don't you know it's a great movie though I

44:59definitely want to watch some more that that uh those produce your stuff oh man they're amazing but we're gonna all right we'll have to get uh yeah have a good rest of the week and um see you on the other side oh yeah we'll do see you but