Speaker 3
I think it's a different kind of cycle, to be honest. I'm on the super cycle boat. So people like to hate about that, but it just makes sense. Like on one hand, the thing is on the macro side of things, on macroeconomics, the global economy is what you could call early stage. And you could see this by basically industrials and manufacturing for the first time in years, and it just started a few months ago, to grow and not just grow. This is happening across the world. It's not just the US. And you can also see this in basically the price of copper ramping up. So on the econ side of things, it's early cycle. On the risk asset side of things, we got ahead of ourselves as we always do. I mean, that's how markets operate. So it kind of makes sense for the slope of things to be shallower with periods of volatility coming in every now and then, like we just happened, making people panic about the end of things. I think Bitcoin has a long way to go and I think equities have a long way to go this could be something like the 90s and we're like 1997. the the bursting of the bubble is is i don't see it i don't know what do you think
Speaker 1
yeah i mean depending on how you define super cycle is whether or not i agree with you but i think you're you're bang on with the with uh the the kind of the commodity cycle um even like many of our construction in the United States is just ripping right now. The price of lumber is collapsing. The price of oil is collapsing. I saw a stat that blew my mind today that there's only two states in the United States where home inventory is dropping. So you have inventory rising in every single state except Nevada, which I think is minus 12%, and the state of New York, which is minus 1%. So call it flat, if you will. 48 states are seeing rises in inventory of homes. So they're just... I don't know. To me, it doesn't feel like from a macro perspective, we're anywhere close to this sort of cycle top. If you was chatting with a friend over the weekend, he's like, you think S&P goes to 6,000? I was like, minimum. Like, look at what just happened with the Fed this past week. The Treasury's adding liquidity in the system. If Jenny Elligan can buy off the run bonds in the market, particularly the long end of the curve, like 30-year, it's not YCC. It's not yield curve control, but it kind of looks like it. If she can kind of keep a lid on that interest expense 30 years out, it's great. The Fed can handle the front end of the curve if they end up cutting rates as well. So to me, it feels like just looking at it from that perspective suggests we've got a pretty long way to go. And I was chatting with Raul Paul last week, and he had an idea that I tend to agree with. I'd love to get your guys' thoughts on this. I think a lot of people are underweight the right tail of the distribution of outcomes, meaning just crazy bonkers rise, particularly crypto, to say something like $10 trillion total market cap or something to that effect. I see a lot of chatter. Some folks are completely discount saying that the top is in for Bitcoin. That's nonsense, in my opinion. Other folks saying that we're probably getting to get to like $K Bitcoin, maybe 110, 115. I don't see hardly anybody really beyond like Cathie Wood, right? Anyone's suggesting that Bitcoin could be trading 250, 300K, that Ethereum's trading 10,000, Solana's trading 1,000. I don't really see a lot of that. And that actually makes me even more bullish and increasing the probability of the right tail actually occurring over the course of the next, call it 12, 18, 24 months, something to that effect. So are people actually, from your perspective, James or Alex, underweight the right tail here as it relates to a potential super cycle or bubble? Yeah. All right. Well, you guys are
Speaker 2
getting ready to start up the second three hours capital with all this super cycle talk. I'm going to throw out there just to be clear. Kathy, I think said 3.8 million was the number like over some extended time period and 1.5 million by 2030. So yeah, she's definitely not, she's definitely not underweight the right tail, but I'll let Alex answer the question first. Oh,
Speaker 3
I think it's a matter of, I mean, we keep on repeating this, but it's simple PTSD. I mean, when you suffered such an insane drawdown and crash as we did in 22, it's very hard to trust what comes afterwards, especially when actually things don't look that great. And you're always concerned about inflation, you're concerned about housing, you're concerned about everything. Geopolitics, there's so many things going on to keep people that don't think it very concerned. Now, back into where we're in the cycle, it's like we are at 5,200 on the S&P and the Fed hasn't even started to cut rates. Exactly. That's the point. And And they will. 100%, they will. Okay, maybe not 100%, maybe 90%. Maybe something really bad happens and inflation starts spiking up again. I haven't seen, I don't know if you guys, I haven't seen a single solid analysis justifying for inflation to basically reverse trend start going up. I haven't seen it. Well,
Speaker 1
I mean, yeah, look at like lumber and oil, all of these things that went, you know, limit up seemingly every day. Those are all crashing, collapsing now,
Speaker 2
right? Yeah, it's the services stuff that's going up right now, right? I think that's what's keeping everything and housing. Ironically enough, the high rates are almost keeping housing high because the building is almost completely stopped in certain areas, which is ironic enough. I mean, the flip side of this, I would say, is we're at record levels of assets and money market funds. So there's a lot of cash on there. So I guess, yeah, maybe you're right. There is a lot of people that still haven't fully bought in. On the same side, I talk to plenty of people and it really, particularly in this space, when I talk to people at different crypto type events, it doesn't seem like anyone's underweight. risk-seeking in this space. So I guess do with that information. That's completely anecdotal. But yeah, there definitely seems to be a lot of tepidness from the data that I look at in the Tradify world. I mean, rates are so high. If you can get over 5% in a money market fund right now, and yeah, maybe you could earn double that or maybe more in equities or something else. But there's plenty of people that are just fine sitting on that. So yeah, especially
Speaker 1
the point about the money market funds is super, super important, because, you know, Jenny Ellen said she's going to continue to issue T-bills, right? She's basically going to continue to fund the government by issuing short dated paper. And if you can still earn five and a half percent annualized a four-week T-bill, I mean, that's pretty good. But at some point, I think folks are going to end up emptying the coffers or certainly starting to slowly drain it out of there because they're going to see the MAG-7 ripping again. S&P makes new all-time highs. And 5.5%, if you're a pension fund and you need to hit your 7%, 8% annual target, sure. They have loads of fixed income already in their portfolios. But other folks, retail, portfolio managers, etc., you're going to end up seeing that cash chase risk, especially if the dollar actually starts to drop in value, which in my opinion, has topped. And as that continues to decline in value, people are less likely going to just be parking their cash in a 5% or 5.5% money market fund. Which also, if you look at real rates right now, for the Fed to be running a tightening policy as high as they have for this long with real rates as high as they are, something's got to give there. And when the cycle turns, the real rates tend to not stay as high as they have been for this long. So that's another thing I think is an important indicator to keep track of is how real rates actually respond to a weakening dollar, potentially rate cuts, as well as, I would say, lower volatility in the bond market. If they can do this, think of Yellen and Powell as Kobe and Shaq, one controlling the front end of the curve, the other just controlling the back.
Speaker 2
Yeah. I mean, talking about real rates, I guess we should explain to make sure people understand. Basically, he's talking about the difference in the fact that I know there's probably a lot of people listening to still trust the government data on inflation, but essentially the interest rates that the Fed is offering right now is above what the official inflation rates are. So it's technically, what's the word? Restrictive, if you will. So by cutting rates, that would be less restrictive or dovish or what have you. So that's what Joe was speaking about there for those of you who weren't able to follow. We're finishing up here. We've only got a couple of things left. Robinhood just got a Wells notice. Does anyone have any strong opinions on seeing Robinhood getting Wells notice here in relation to some of their crypto movements?