WEBVTT - Daybreak Holiday: Jobs, Bitcoin and Markets 0:00:01.520 --> 0:00:03.680 Thank you so much for joining us for this special 0:00:03.840 --> 0:00:07.280 edition of Bloomberg Daybreak. US markets are closed for the 0:00:07.360 --> 0:00:10.639 Labor Day holiday. I'm Nathan Hager coming up this hour. 0:00:10.760 --> 0:00:13.319 As we enter the final few months of the trading year, 0:00:13.560 --> 0:00:16.720 stocks are trading near all time highs. Will it be 0:00:16.760 --> 0:00:19.520 a bullish close out to twenty twenty four and what 0:00:19.680 --> 0:00:23.320 about next year? We'll speak with Cameron Dawson, chief investment 0:00:23.360 --> 0:00:26.120 officer at New Edge Wealth Plus. It has certainly been 0:00:26.160 --> 0:00:29.680 a volatile year for bitcoin, so what's in store for crypto? 0:00:29.840 --> 0:00:33.639 Bloomberg Intelligence Senior commodity strategist Mike mcgloon will join us, 0:00:33.960 --> 0:00:36.839 but we begin with the economy and the Federal Reserve. 0:00:37.080 --> 0:00:39.760 Another key data point is on tap this week ahead 0:00:39.760 --> 0:00:42.800 of the next rate decision later this month. August. Non 0:00:42.920 --> 0:00:46.360 farm payrolls are due out on Friday. Ahead of it, 0:00:46.479 --> 0:00:50.479 we're pleased to welcome Michael McKee, international economics and Policy 0:00:50.479 --> 0:00:54.480 correspondent for Bloomberg News, and Anna Wong, chief US economist 0:00:54.600 --> 0:00:57.360 at Bloomberg Economics. It's great to have both of you 0:00:57.440 --> 0:00:59.440 here with us on this Labor Day. I want to 0:00:59.480 --> 0:01:01.680 start with you, Mike, because of course you were there 0:01:01.760 --> 0:01:05.560 in Jackson Hall for Chairman Palace famous time is Now speech, 0:01:05.600 --> 0:01:08.200 and then you followed it up with a conversation with 0:01:08.280 --> 0:01:11.679 the president of the San Francisco Fed, Mary Daily. Let's 0:01:11.720 --> 0:01:12.720 see what she had to tell you. 0:01:12.840 --> 0:01:15.800 Well, to my mind, we've been on this path of 0:01:16.480 --> 0:01:19.880 ready to adjust policy rates for several months. We just 0:01:19.920 --> 0:01:22.280 needed to get a little more confidence and inflation was 0:01:22.319 --> 0:01:25.199 truly on its path to two percent, and I wanted 0:01:25.240 --> 0:01:27.160 to see the labor market come into balance. But I 0:01:27.160 --> 0:01:30.000 think that's completely happened, and the risk to our goals 0:01:30.000 --> 0:01:32.800 are now balanced in the time to adjust policy is 0:01:32.920 --> 0:01:33.440 upon us. 0:01:33.880 --> 0:01:36.760 Is there anything that could derail a cut in September? 0:01:37.120 --> 0:01:39.679 To my mind, that would be hard to imagine. At 0:01:39.680 --> 0:01:44.440 this point, I do see that adjusting policy is appropriate. 0:01:44.560 --> 0:01:47.199 We don't want to get ourselves into a situation where 0:01:47.200 --> 0:01:50.960 we're keeping policy highly restrictive into a slowing economy. 0:01:51.120 --> 0:01:54.080 Puts the focus right back on the jobs market, doesn't 0:01:54.080 --> 0:01:57.680 it this idea that the labor market is coming into balance? So, Mike, 0:01:58.360 --> 0:01:58.640 is it? 0:01:58.840 --> 0:02:01.520 Well, it depends on who you talk to, because well, 0:02:01.680 --> 0:02:05.200 Mary Daily thinks they're in balance, and several other members 0:02:05.240 --> 0:02:08.800 of the Open Market Committee agree. The Chairman seems to 0:02:08.800 --> 0:02:11.959 think that they're a little bit tilted towards the downside 0:02:12.120 --> 0:02:15.160 for the labor market, and that it added to his 0:02:16.320 --> 0:02:20.040 emphasis on the idea that rate cuts are coming. So 0:02:20.360 --> 0:02:23.280 I mean, it definitely is going to be a very 0:02:23.360 --> 0:02:28.519 important report on Friday because it will drive the discussion 0:02:28.560 --> 0:02:31.360 about whether the Fed should cut by twenty five basis 0:02:31.360 --> 0:02:32.799 points or fifty basis points. 0:02:33.240 --> 0:02:35.919 Of course, Anna Loong, you've been on top of this 0:02:36.040 --> 0:02:39.120 conversation about whether we are going to see a twenty 0:02:39.160 --> 0:02:43.359 five basis point or a fifty basis point cut. How 0:02:43.360 --> 0:02:46.400 do you view things when it comes to labor market 0:02:46.480 --> 0:02:47.600 dynamics right now? 0:02:48.120 --> 0:02:50.600 Yeah, I think we are already in the non linear 0:02:50.680 --> 0:02:53.600 part of the climb of the unemployment rate. And I 0:02:53.639 --> 0:02:56.919 think the reason why Powell seems to be more devish 0:02:57.000 --> 0:03:02.080 than the median FMC partic bit is that Powell is 0:03:02.120 --> 0:03:05.320 actually not a trained economist. He is a lawyer, and 0:03:05.360 --> 0:03:08.960 he's more skeptical about economist models. And when you look 0:03:09.040 --> 0:03:13.320 at how the other FOMC members view the labor markets, 0:03:13.320 --> 0:03:17.800 for example, Mary Daily is a trained labor economist. Chris Waller, 0:03:17.840 --> 0:03:21.440 who's an intellectual figure on the FOMC, is you know, 0:03:21.520 --> 0:03:25.080 depending on the beverage curve. They have this excessively precise 0:03:25.639 --> 0:03:27.680 way of looking at labor market. 0:03:27.680 --> 0:03:28.880 But whereas Powell has this. 0:03:30.320 --> 0:03:33.960 Very total and a holistic view of looking at things, 0:03:33.960 --> 0:03:36.320 and the holistic views of looking at things is that 0:03:36.560 --> 0:03:40.160 the labor market is cooling really rapidly recently, as we 0:03:40.200 --> 0:03:42.680 could see from a lot of the regional vet surveys 0:03:42.760 --> 0:03:46.720 that employment sub index is plunging. So I think my 0:03:46.880 --> 0:03:49.440 view is very similar to Powell, which is that the 0:03:49.600 --> 0:03:53.480 risks facing the economy is definitely tipped toward the downside 0:03:53.480 --> 0:03:54.960 on unemployment. 0:03:55.120 --> 0:03:58.000 And we certainly saw that downside risk to the unemployment 0:03:58.040 --> 0:04:01.680 picture when preliminary benchmarker visions came out last month, that 0:04:01.840 --> 0:04:05.640 big drop of eight hundred eighteen thousand jobs wiped out 0:04:05.720 --> 0:04:08.400 from the labor picture. So how does that cloud things 0:04:08.400 --> 0:04:10.720 when it comes to the labor market right now? 0:04:10.960 --> 0:04:14.360 It's maybe a slight cloud on the horizon. The problem 0:04:14.400 --> 0:04:17.440 with these revisions is that they get revised again, and 0:04:17.480 --> 0:04:20.120 there's a good chance that it will be revised lower 0:04:21.240 --> 0:04:25.920 the level of job creation. Even if you subtract. Right now, 0:04:26.960 --> 0:04:30.080 the eight hundred and eighteen thousand goes down from two 0:04:30.160 --> 0:04:32.640 hundred and forty two thousand average a month to one 0:04:32.680 --> 0:04:36.040 hundred and seventy four thousand, and that's still a very 0:04:36.080 --> 0:04:40.279 strong job creation number each month. So I don't know 0:04:40.320 --> 0:04:44.360 that it is any kind of push for the FED 0:04:44.480 --> 0:04:46.080 one way or the other. They're going to be looking 0:04:46.120 --> 0:04:48.400 at what's happening now, because remember this eight hundred and 0:04:48.440 --> 0:04:52.960 eighteen thousand that's through March of this year. Now you 0:04:53.000 --> 0:04:55.839 can extrapolate forward, but you don't really know if that's 0:04:55.839 --> 0:04:59.320 going to be accurate or not. And so do we 0:04:59.400 --> 0:05:03.279 get a repeat eat of the low job creation number 0:05:03.839 --> 0:05:08.400 last month in July when we saw only one hundred 0:05:08.400 --> 0:05:12.039 and fourteen thousand jobs created, or do we see a 0:05:12.080 --> 0:05:14.960 bounce back? That's going to be the real question. If 0:05:14.960 --> 0:05:16.599 we get a bounce back, it doesn't have to go 0:05:16.680 --> 0:05:18.560 above two hundred thousand, it doesn't even have to go 0:05:18.600 --> 0:05:20.320 to one hundred and seventy five thousand. But you get 0:05:20.360 --> 0:05:23.440 something one fifty or more, you're going to see people 0:05:23.480 --> 0:05:27.120 thinking that the job market has slowed, but it's not 0:05:27.400 --> 0:05:28.480 falling off a cliff. 0:05:28.640 --> 0:05:30.480 I want to ask you about this as well, Anna, 0:05:30.560 --> 0:05:32.880 Not only did we see that much lower than expected 0:05:32.960 --> 0:05:36.000 top line number of one hundred and fourteen thousand, jobs added. 0:05:36.080 --> 0:05:38.440 Last month, we saw a pretty big pickup in the 0:05:38.520 --> 0:05:41.280 unemployment rate as well. Is that a one off or 0:05:41.400 --> 0:05:43.080 could it be a sign of a trend of things 0:05:43.120 --> 0:05:44.320 to come in the labor market. 0:05:44.520 --> 0:05:48.279 That is the trillion dollar question, Nathan, whether the increase 0:05:48.320 --> 0:05:51.720 in unemployment rate is do you to temporary factors or 0:05:52.720 --> 0:05:57.880 transitory factors? Do you want to be a transit transitory 0:05:58.200 --> 0:06:01.360 or is the im permanent factor. So into the micro 0:06:01.520 --> 0:06:04.720 data behind the household survey that produces the unemployment rate, 0:06:05.360 --> 0:06:08.400 really drill into the details right and what we found 0:06:08.600 --> 0:06:12.440 is that the two most benign explanation for the increased 0:06:12.520 --> 0:06:17.680 unemployment is not valid. The two most benign explanation is one, 0:06:17.760 --> 0:06:21.279 it's due to layoffs related to Hurricane Barrel. Well, it 0:06:21.320 --> 0:06:23.720 turns out that most of the temporary layoffs are not 0:06:23.920 --> 0:06:28.279 in Texas or any of the hurricane impacted states. On 0:06:28.320 --> 0:06:33.160 the other hand, they are concentrated in places like California, Michigan, 0:06:33.680 --> 0:06:38.520 New Jersey, and Nevada. You know states that you know 0:06:38.640 --> 0:06:42.240 the labor market is weakening. The second most benign is that, oh, 0:06:42.279 --> 0:06:45.159 it's due to the Michigan auto re tooling. So every 0:06:45.240 --> 0:06:50.040 July the car auto plants will rest to get ready 0:06:50.400 --> 0:06:53.280 for the next season, and usually that leads to temporary 0:06:53.400 --> 0:06:56.240 layoffs in the auto markets way. But what we found 0:06:56.400 --> 0:07:00.520 is that that accounts for very very minute part of 0:07:00.600 --> 0:07:04.839 the temporary layoffs, and historically they don't show up at all. 0:07:04.920 --> 0:07:11.080 So in fact, the layoffs related to auto manufacturing is there. 0:07:11.360 --> 0:07:14.600 In fact, it's more severe and normally, and just looking 0:07:14.640 --> 0:07:18.840 at Bloomberg stories on Stillentis and what's going on Ford 0:07:18.840 --> 0:07:22.120 and GM, a lot of these temporary layoffs are becoming 0:07:22.400 --> 0:07:24.280 permanent layoffs due to lack of demand. 0:07:24.720 --> 0:07:25.880 What we actually. 0:07:25.560 --> 0:07:28.280 Uncovered in the driver as a driver of the rise 0:07:28.320 --> 0:07:35.960 in unemployment rate is actually education sector and people. This 0:07:36.040 --> 0:07:39.160 is one issue that's not on people's radar is that 0:07:39.720 --> 0:07:44.800 one pandemic federal stimulus is expiring in September, and that 0:07:45.320 --> 0:07:47.840 stimulus measure has been providing funding for a lot of 0:07:47.880 --> 0:07:51.080 schools all over the country and because of its expiration, 0:07:51.240 --> 0:07:53.840 a lot of the local schools are laying off teachers. 0:07:54.240 --> 0:07:57.560 And so we're seeing clear signs in the August payrolls 0:07:57.960 --> 0:08:02.280 and July perils that those layoffs are not temperate, going 0:08:02.320 --> 0:08:03.280 to be permanent. 0:08:03.600 --> 0:08:06.680 We're speaking with Anna Wong, chief US economist at Bloomberg 0:08:06.720 --> 0:08:11.880 Economics and our Bloomberg Economics and Policy correspondent Michael McKee 0:08:11.920 --> 0:08:14.560 with us as well, and Mike, let's pick up on 0:08:14.600 --> 0:08:16.240 what Anna was talking about. There are a lot of 0:08:16.240 --> 0:08:20.400 the seasonality baked into the last payrolls report, and what 0:08:20.440 --> 0:08:24.080 could that mean for the Fed's planning when it comes 0:08:24.120 --> 0:08:28.000 to whether to actually go ahead and make it clear 0:08:28.040 --> 0:08:30.160 that the time really has come to kick off a 0:08:30.240 --> 0:08:30.960 rate cut cycle. 0:08:31.320 --> 0:08:33.120 Well, I think it would take it awful lot for 0:08:33.160 --> 0:08:35.600 the FED to change its mind about kicking off the 0:08:35.679 --> 0:08:38.240 rate cut cycle. You'd have to have a very strong 0:08:38.400 --> 0:08:43.160 jobs report, which people are not expecting at this point. 0:08:43.480 --> 0:08:46.000 But we are going to get more seasonal issues. A 0:08:46.000 --> 0:08:49.560 lot of schools start around the country, so you add 0:08:49.559 --> 0:08:52.840 a lot of teachers and also education workers, people in 0:08:52.880 --> 0:08:58.439 the cafeteria, janitors, et cetera. And so the numbers account 0:08:58.440 --> 0:08:59.360 for that as well. 0:09:00.280 --> 0:09:02.880 One other question, Anna, as we think about whether the 0:09:02.880 --> 0:09:05.200 FED is kicking off a rate cut cycle of a 0:09:05.200 --> 0:09:08.640 lot of expectation that it is going to happen later 0:09:08.679 --> 0:09:12.200 on this month, is the Fed behind the curve and 0:09:12.360 --> 0:09:16.280 what can the FED do to get investors thinking that 0:09:16.640 --> 0:09:19.080 it is on top of what's going on in a 0:09:19.120 --> 0:09:20.079 slowing economy. 0:09:20.720 --> 0:09:21.959 So, given the. 0:09:21.880 --> 0:09:25.480 Fed's dual mandate, it is behind the curve. We estimate 0:09:25.520 --> 0:09:28.600 that they are about seventy basis point behind the curve. 0:09:29.040 --> 0:09:31.839 I think the question is how fast and how deep 0:09:31.920 --> 0:09:34.440 are they going to cut. If they decide to go 0:09:34.559 --> 0:09:37.200 for a twenty five basis point cut, it means that 0:09:37.240 --> 0:09:41.240 they're still behind the curve, and I think given our 0:09:41.280 --> 0:09:44.559 concern about the rapidly cooling of the labor market, it 0:09:44.600 --> 0:09:47.319 would suggest that the FED well risk having to cut 0:09:47.400 --> 0:09:49.600 more sharply down the line. 0:09:49.880 --> 0:09:51.760 What say you, Mike, what can the FED do to 0:09:51.800 --> 0:09:53.920 show that it's not behind the curve? 0:09:54.840 --> 0:09:57.000 Well, it would help a lot for the FED if 0:09:57.640 --> 0:10:02.120 we get a reasonably strong job report that will make 0:10:02.160 --> 0:10:05.280 one difference, and also we get another CPI report before 0:10:05.679 --> 0:10:08.880 the FED meeting on September eighteenth. But I think it's 0:10:08.920 --> 0:10:11.240 going to come down to this statement. They've told us 0:10:11.280 --> 0:10:13.720 they're going to cut. They generally don't want to do 0:10:13.840 --> 0:10:18.280 fifty basis points. So given the feeling of some economists 0:10:18.320 --> 0:10:21.400 on Wall Street, like Anawong, they're going to have to 0:10:21.440 --> 0:10:25.880 explain themselves. And I think they'll probably note that we 0:10:26.040 --> 0:10:31.319 have had some strength in the numbers that was kind 0:10:31.360 --> 0:10:35.080 of not seen in July that came back in August. 0:10:35.200 --> 0:10:39.480 If we get a rebound, and they'll point to the 0:10:39.480 --> 0:10:43.800 fact that the economy overall is growing at a basically 0:10:43.920 --> 0:10:48.119 a trend or above trend pace, and they're not particularly 0:10:48.160 --> 0:10:51.480 concerned because about the labor market because jobless claims have 0:10:52.080 --> 0:10:56.520 remained low. So they will defend themselves sort of on 0:10:56.559 --> 0:10:59.640 that way. Of course, this all depends on eighteen days 0:10:59.640 --> 0:11:01.560 from now, the conditions being the same. 0:11:02.120 --> 0:11:06.160 In our last minute and long since Mike mentioned the 0:11:06.200 --> 0:11:10.160 CPI report coming out just before the Fed decision, let's 0:11:10.520 --> 0:11:14.719 dig into that. Can inflation get the Fed off the 0:11:14.800 --> 0:11:17.439 rails when it comes to the time has come. 0:11:17.920 --> 0:11:20.719 I think generally we are going to see more disinflation 0:11:20.920 --> 0:11:25.199 in the fall, particularly from goods sectors, because it turns 0:11:25.240 --> 0:11:27.640 out that a lot of retailers has been front running 0:11:28.000 --> 0:11:31.840 the holiday season, and given our consumer demand is that 0:11:31.880 --> 0:11:34.200 it's going to slow in the fall, they might find 0:11:34.240 --> 0:11:37.840 themselves to having all these excess inventory, which means more 0:11:37.880 --> 0:11:41.680 discounts for the consumer come holiday season. But I think 0:11:41.960 --> 0:11:45.200 the Fed does have a base effect problem when it 0:11:45.200 --> 0:11:48.960 comes to inflation. If inflation data just comes in pretty 0:11:48.960 --> 0:11:52.000 good the year over year twelve month change and inflation 0:11:52.040 --> 0:11:56.360 will actually climb throughout to December. We are expecting it 0:11:56.400 --> 0:11:58.440 to climb to two point eight percent from the current 0:11:58.480 --> 0:11:59.400 two point six percent. 0:12:00.080 --> 0:12:03.040 Long Chief US economist at Bloomberg Economics, thank you for this. 0:12:03.080 --> 0:12:07.120 Along with Michael McKee, our international economics and policy correspondent 0:12:07.480 --> 0:12:11.079 for Bloomberg News and straight Ahead, on this special holiday 0:12:11.200 --> 0:12:14.439 edition of Bloomberg Daybreak, we're going to talk with Mike mcglohane, 0:12:14.520 --> 0:12:18.560 Senior commodity strategist for Bloomberg Intelligence, as we look at 0:12:18.600 --> 0:12:23.600 the volatility that is bitcoin. That's straight Ahead. I'm Nathan Hager, 0:12:23.760 --> 0:12:37.000 and this is Bloomberg Welcome back. Thanks for joining us 0:12:37.000 --> 0:12:40.360 on the special edition of Bloomberg Daybreak. US markets are 0:12:40.400 --> 0:12:43.360 closed for the Labor Day holiday. I'm Nathan Hager. Well, 0:12:43.360 --> 0:12:46.400 it's certainly been a volatile but profitable year if you're 0:12:46.400 --> 0:12:51.080 an investor in bitcoin, the world's most valuable cryptocurrency, started 0:12:51.080 --> 0:12:54.520 the year above forty thousand per token. Then in March 0:12:54.600 --> 0:12:58.400 it's soared to it all time high above seventy three thousand. 0:12:59.000 --> 0:13:02.200 Since then, coin's been in kind of a bouncing ball mode. 0:13:02.200 --> 0:13:04.200 If you look at a chart on the Bloomberg terminal. 0:13:04.280 --> 0:13:06.480 So what's in store for the rest of the year. 0:13:06.640 --> 0:13:09.400 For some answers, let's bring in Mike mcglowan and senior 0:13:09.400 --> 0:13:14.200 commodity strategist our guy on all Things Crypto at Bloomberg Intelligence. 0:13:14.200 --> 0:13:17.040 Thanks for joining us on the holiday Mike. So what's 0:13:17.120 --> 0:13:21.080 been driving all this bitcoin volatility since the spring? 0:13:21.360 --> 0:13:24.360 It had the launch of us ETFs. We've been waiting 0:13:24.400 --> 0:13:26.079 for that for about a decade. It had to have 0:13:26.240 --> 0:13:27.840 in where there's a cut and supply, and it had 0:13:28.000 --> 0:13:30.679 bay to the stock market making record highs. Now it's 0:13:30.720 --> 0:13:33.240 in and then hangover, and I think it might be enduring. 0:13:33.600 --> 0:13:37.079 Bitcoin was the next best trade for a long time. 0:13:37.520 --> 0:13:39.720 Now I think it's kind of transitioning to the last 0:13:39.840 --> 0:13:42.680 best trade. And part of that is because it just 0:13:42.720 --> 0:13:45.120 went so far so fast. And key thing you remember, 0:13:45.120 --> 0:13:47.920 aout Bitcoin is basically trades about three times a volatile 0:13:48.040 --> 0:13:51.199 the stock market, and it's been showing pretty significant divergent 0:13:51.280 --> 0:13:53.360 weakness since that peak. So I like to use this 0:13:53.480 --> 0:13:58.439 number around. It's dropped to about bitcoin s and P 0:13:58.520 --> 0:14:02.120 five hundreds, dropped about eleven SMB five hundreds versus the 0:14:02.240 --> 0:14:04.240 bitcoin I like to use as the ratio. The peak 0:14:04.280 --> 0:14:07.880 in twenty twenty one was fifteen, so it's heading lower. 0:14:08.440 --> 0:14:10.600 And if beta drops, the stock market drops, I think 0:14:10.600 --> 0:14:13.000 Bitcoin's going to have more of a problem. I think 0:14:13.040 --> 0:14:14.640 maybe he ill end with this. So I think the 0:14:14.720 --> 0:14:17.000 key thing about some people have called it the fastest 0:14:17.000 --> 0:14:19.400 horse in the race. It may be indicating the race 0:14:19.480 --> 0:14:19.760 is over. 0:14:20.720 --> 0:14:23.560 If Bitcoin is the last best thing, let's make that 0:14:23.680 --> 0:14:27.240 the case here. Does that make the next best last 0:14:27.280 --> 0:14:31.600 best thing something like ethereum, something like the doge coins? 0:14:32.840 --> 0:14:35.840 Probably not. If Bitcoin goes down, it's beta for the 0:14:35.840 --> 0:14:38.840 whole space, and it probably means all the other highly 0:14:38.960 --> 0:14:42.520 much more highly speculative digital acids. It's hard to argue 0:14:42.560 --> 0:14:45.400 Bitcoin is not a highly speculative digital acid. It's the 0:14:45.440 --> 0:14:47.440 one that trades twenty four to seven. It's the benchmark. 0:14:47.480 --> 0:14:49.560 If it goes down, the whole space goes down, and 0:14:49.600 --> 0:14:51.560 to me, that's the risk is partly because it just 0:14:51.600 --> 0:14:53.840 went up too much. But the bottom line to me 0:14:54.040 --> 0:14:56.960 is this whole space started with bitcoin in around two 0:14:56.960 --> 0:15:00.640 thousand and nine, was coordinated with them pretty significant rally 0:15:00.680 --> 0:15:03.480 in US stock market, and if we're entering to recessions, 0:15:03.520 --> 0:15:05.920 stock market's a really expensive we start rolling over a little. 0:15:05.920 --> 0:15:08.520 Bitcoin may be leading that way, and I think that's 0:15:08.560 --> 0:15:11.080 what's happening now. One thing that's significant is the Vix 0:15:11.160 --> 0:15:13.160 Valtili index. It's say, the one hundred week or two 0:15:13.200 --> 0:15:15.400 hundred week movement average is bottoming from about a six 0:15:15.480 --> 0:15:17.720 year low. And then of course we have things like 0:15:17.800 --> 0:15:20.960 the dis inversion of the yield curb and utrising unemployment. 0:15:21.680 --> 0:15:25.360 To me, those are all kind of signaling that the 0:15:25.400 --> 0:15:27.480 fastest horse and rice might be tilting lower. And the 0:15:27.560 --> 0:15:30.160 key thing is it's been showing divergent weakness versus gold 0:15:30.360 --> 0:15:31.960 and the stock market for quite a while. 0:15:32.000 --> 0:15:35.160 What about if we are getting into a rate cut 0:15:35.240 --> 0:15:38.280 cycle from the Federal Reserve. If rates do start to 0:15:38.400 --> 0:15:42.400 come down, does that change the outlook for digital currencies? 0:15:42.600 --> 0:15:45.400 We are we're starting, certainly from a if you look 0:15:45.400 --> 0:15:48.200 at the curb the long bond around four percent and 0:15:48.240 --> 0:15:51.280 Fed funds well about five percent, we're certainly indicating yields 0:15:51.280 --> 0:15:53.720 are going lower. It does, But I think the problem 0:15:53.760 --> 0:15:56.280 is now it's the cat and mouse game between the 0:15:56.640 --> 0:15:59.920 stock market, which is market capitalization about two times GDP. 0:16:00.160 --> 0:16:02.120 That's the highest since the twenties and thirties, so it's 0:16:02.520 --> 0:16:06.440 rather expensive and the FED easing, and this, Nathan, is 0:16:06.480 --> 0:16:09.600 the most widely anticipated FED easing I've ever seen in 0:16:09.640 --> 0:16:12.400 my entire career, and I started in the trading pitching chericognnites, 0:16:12.400 --> 0:16:14.320 I've just never seen it. So I think it's so 0:16:14.560 --> 0:16:18.960 priced in that the market's so priced for the enthusiasm 0:16:19.080 --> 0:16:22.280 of a Federal Reserve easing cycle. And we know the 0:16:22.280 --> 0:16:26.080 Fed gets that they do not want to risk refueling 0:16:26.120 --> 0:16:28.640 some of the inflation that really forced them to do 0:16:28.680 --> 0:16:31.040 a lot of the aggressive hiking to the top in 0:16:31.080 --> 0:16:31.880 twenty twenty three. 0:16:32.200 --> 0:16:34.240 I mean, there's, as you say, there's been so much 0:16:34.320 --> 0:16:36.240 anticipation that we are going to see a rate cut 0:16:36.320 --> 0:16:38.600 later this month, that the cycle is going to begin. 0:16:38.760 --> 0:16:41.720 And ahead of that, we've been seeing a lot of speculation, 0:16:41.880 --> 0:16:45.600 a lot of thought that gold, you know, the original gold, 0:16:45.680 --> 0:16:48.040 could get as high as three thousand dollars an ounce. 0:16:48.120 --> 0:16:51.480 We're not seeing that same kind of thinking, or at 0:16:51.600 --> 0:16:54.240 least as far as I can tell, when it comes 0:16:54.280 --> 0:16:55.520 to bitcoin. Why is that. 0:16:55.640 --> 0:16:57.960 I think it's a transition, And I'm glad you we 0:16:58.000 --> 0:17:00.480 went to gold because to me, the old analoge digital gold, 0:17:00.560 --> 0:17:02.440 it's just a matter of time it gets through three thousand. 0:17:02.680 --> 0:17:04.800 It's in a bull market. Maybe it's a little bit overdone, 0:17:04.800 --> 0:17:06.680 and the short term it's fine. But the new and 0:17:07.040 --> 0:17:09.120 the new digital version. I like to say, it's kind 0:17:09.119 --> 0:17:12.159 of risky to have old analog gold without some of 0:17:12.200 --> 0:17:14.720 that digital version in space, but re memory, it's new. 0:17:14.760 --> 0:17:16.080 And the key thing that I like to say about 0:17:16.080 --> 0:17:18.359 bitcoins all the things I look forward to the last 0:17:18.400 --> 0:17:22.240 five years, the having the you know, there's pretty significant 0:17:22.320 --> 0:17:25.359 discounts in some of the ETFs like Greyscale, Bitcoin Trust, 0:17:25.640 --> 0:17:28.520 the ETFs, and it's going to the mainstream. It's in 0:17:28.600 --> 0:17:31.439 the mainstream. I mean even we have presidential candidates knocking 0:17:31.440 --> 0:17:33.400 around how great it is because they want to get elected. 0:17:33.760 --> 0:17:37.360 It's already so and it's it's so well armed out now. 0:17:37.400 --> 0:17:39.080 So to me, the best of the days of bitcoin 0:17:39.080 --> 0:17:41.679 appreciation are over. Yet what we're seeing now is is 0:17:41.680 --> 0:17:44.199 pretty significant global tilt towards recession. Now, remember I'm a 0:17:44.200 --> 0:17:47.680 commodities guy, and the tilt from commodities is severe recession. 0:17:47.720 --> 0:17:51.240 We were seeing declines in almost all commodities, particularly things 0:17:51.280 --> 0:17:54.439 like corn and natural gas and crude. All's just starting 0:17:54.520 --> 0:17:57.159 till lower. And only one that's really going up is gold. 0:17:57.280 --> 0:17:59.040 And a lot of that's because of what's happening in China, 0:17:59.160 --> 0:18:01.320 just like at bond yields and trying to their declining. 0:18:01.440 --> 0:18:03.600 So to me, that's what gold's picking up on the 0:18:03.960 --> 0:18:06.600 deepest pockets on the planet. Central banks are buying gold, 0:18:06.840 --> 0:18:09.480 and that's typically will probably accelerate. I think gold will 0:18:09.520 --> 0:18:11.760 be more attractive if we see a little bit of 0:18:11.760 --> 0:18:13.959 back and fill in US stock market, US rates going down. 0:18:13.960 --> 0:18:17.639 And the problem is digital gold. Bitcoin is trades typically 0:18:17.680 --> 0:18:20.840 about three times a voltui of analog gold and the 0:18:20.840 --> 0:18:22.520 stock market. So if we have a little bit of 0:18:23.040 --> 0:18:27.359 normal recessionary back and fill in the stock market, digital gold, 0:18:27.480 --> 0:18:30.200 bitcoin will probably suffer a lot more than the analog version. 0:18:30.200 --> 0:18:32.879 It's just such a voltal speculative asset. 0:18:33.200 --> 0:18:37.880 Speaking with Mike mcglohon', senior commodity strategist at Bloomberg Intelligence, 0:18:38.080 --> 0:18:41.639 and you know you talk about bitcoin as digital gold. 0:18:41.640 --> 0:18:44.280 There's been this debate for years about whether it is 0:18:44.320 --> 0:18:47.439 going to be the sort of hedge against inflation in 0:18:47.520 --> 0:18:50.120 the years to come. What's it going to take for 0:18:50.320 --> 0:18:54.080 bitcoin to get to that level. It sounds like you're 0:18:54.119 --> 0:18:56.199 thinking that it might be a ways off before it 0:18:56.200 --> 0:18:56.720 gets there. 0:18:56.840 --> 0:18:59.520 In terms of some other melting currencies. I'm based in 0:18:59.520 --> 0:19:01.400 Miami's so we hear a lot of people come from 0:19:01.440 --> 0:19:04.200 South America and they're used to melting currencies. It has 0:19:04.280 --> 0:19:06.080 provided some of that. But the thing is it's a 0:19:06.280 --> 0:19:10.160 very volatile speculative digital ass and it's gone so far 0:19:10.440 --> 0:19:12.720 so fast. I think it needs to back and filth 0:19:12.760 --> 0:19:14.959 little well. So typically what bitcoin does when it makes 0:19:15.040 --> 0:19:16.679 new highs like it is now, it has a fifty 0:19:16.680 --> 0:19:18.879 percent correction, so that means it could get down the 0:19:19.000 --> 0:19:21.479 thirty five and that's normal. But I think to be 0:19:21.560 --> 0:19:24.440 more of a digital version of goal and an alternative, 0:19:24.640 --> 0:19:26.680 valatility has to come way down, which means it has 0:19:26.720 --> 0:19:28.960 to have a very boring period. Right now, it's just 0:19:29.000 --> 0:19:32.040 a very volatile speculative digitalist. And now, in the big picture, 0:19:32.119 --> 0:19:34.600 I'm very favorable to the price of bitcoin going higher. 0:19:34.720 --> 0:19:39.080 It has definable diminishing supply and increasing demand and adoption, 0:19:39.200 --> 0:19:42.400 so rozec economics means it should go up over time. 0:19:42.440 --> 0:19:44.879 But to me, right now, the risk is it's a 0:19:44.880 --> 0:19:47.760 little bit too extended and it's showing the virgin weakness, 0:19:47.760 --> 0:19:49.520 and I think that's going to continue. The bottom line, 0:19:49.520 --> 0:19:52.000 to me, the big test for bitcoin will be is 0:19:52.400 --> 0:19:54.879 when we get that next say ten percent correction in 0:19:54.920 --> 0:19:58.040 the stock market and see how it performs. Typically when 0:19:58.040 --> 0:20:01.240 it trades, you know about three times a volte of beta. 0:20:01.320 --> 0:20:03.600 It typical is down about thirty percent if the stock 0:20:03.600 --> 0:20:05.760 market goes down around ten percent. Now that's not set 0:20:05.800 --> 0:20:07.359 in stone, but we have to see how we can 0:20:07.400 --> 0:20:10.920 get through that period. If bitcoin can sustain upward momentum 0:20:10.960 --> 0:20:13.399 with stock market going down, the problem is it's showing 0:20:13.440 --> 0:20:17.120 downward momentum Bitcoin is with the stock market still going up. 0:20:17.280 --> 0:20:20.960 What about copper? When we think about whether we are 0:20:21.000 --> 0:20:24.720 getting into a global economic slow down, whether the Fed 0:20:24.840 --> 0:20:28.960 can provide some support in some way with rate cuts, 0:20:29.080 --> 0:20:30.920 where does copper go down? 0:20:31.040 --> 0:20:33.760 The risks for copper are down. Unfortunately, the copper did 0:20:33.800 --> 0:20:36.120 make a new high this year at about five dollars 0:20:36.160 --> 0:20:39.480 and twenty cents a pound. It's around four dollars and 0:20:39.520 --> 0:20:43.080 twenty cents upon now and it has a it's highly autocorrelated. 0:20:43.359 --> 0:20:45.919 Copper is number one. Is highly correlated to what's happening 0:20:45.960 --> 0:20:48.480 in China. We all know China somewhat in decline. Just 0:20:48.520 --> 0:20:50.320 look at their bond yields. The ten you notte yield 0:20:50.320 --> 0:20:52.399 in China right now is about two point two percent. 0:20:52.880 --> 0:20:55.320