Latest / The Paul Barron Crypto Show / Japan Rate Hike Countdown📉Crypto Crash Market Update🔥

Transcript

Japan Rate Hike Countdown📉Crypto Crash Market Update🔥 · The Paul Barron Crypto Show

• 0:00
  Speaker 1: All right, let's break it down today. Japan has initiated
• 0:02
  Speaker 1: a hike and we'll see how this is going to
• 0:05
  Speaker 1: affect the market. So stay tuned right here, let's get
• 0:07
  Speaker 1: into it. I do want to thank our sponsor, and
• 0:08
  Speaker 1: that is Tangum. This is where you guys can get
• 0:10
  Speaker 1: into self custody. In times like this, this is probably
• 0:13
  Speaker 1: a good thing, and that is to try to weather
• 0:14
  Speaker 1: a storm. One of the things you can do, of course,
• 0:17
  Speaker 1: is drop your crypto into self custy. Of course, visit
• 0:21
  Speaker 1: tangum dot com. You guys can learn a little bit
• 0:23
  Speaker 1: more about self custy. If you're brand new to crypto,
• 0:25
  Speaker 1: this should be on your checklist of something you should
• 0:28
  Speaker 1: be doing. And you can do it in three minutes
• 0:30
  Speaker 1: or less. It's that easy to set up. Of course,
• 0:33
  Speaker 1: this works like our credit card with your iPhone, with
• 0:36
  Speaker 1: your Android, doesn't really matter. This is your way to
• 0:38
  Speaker 1: get into self custody. Use our link down below. Let's
• 0:41
  Speaker 1: get into a couple of points I wanted to hit
• 0:42
  Speaker 1: on the Bankutcheapan has confirmed it's going to increase rates.
• 0:46
  Speaker 1: This go to seventy five basis points tomorrow. And then
• 0:49
  Speaker 1: if you look at this in comparison, since twenty twenty four,
• 0:52
  Speaker 1: each boj rake has been followed by a Bitcoin drop
• 0:55
  Speaker 1: of around thirty percent. Right now, we did a quick
• 0:59
  Speaker 1: pull and the market says, yeah, we're cooked. This is
• 1:02
  Speaker 1: what we're going to see in the market as we
• 1:03
  Speaker 1: see the next few days. But it was not necessarily
• 1:06
  Speaker 1: a full win in reality. Yes, but all coins rally
• 1:10
  Speaker 1: and no Bitcoin and crypto have bottomed. Took over fifty
• 1:14
  Speaker 1: percent of the vote. So maybe there is a certain
• 1:16
  Speaker 1: contingent that simply says, this is a short period of
• 1:19
  Speaker 1: time before we start to see a little bit of action.
• 1:22
  Speaker 1: Let me go over to a clip real quick, because
• 1:23
  Speaker 1: this will get into the treasury threat and what this means.
• 1:26
  Speaker 1: Take a look.
• 1:27
  Speaker 2: Japan holds between one point one and one point two
• 1:30
  Speaker 2: trillion dollars in US treasuries. That makes them our largest
• 1:34
  Speaker 2: foreign creditor, the single biggest source of foreign funding for
• 1:38
  Speaker 2: our government spending. Imagine you could borrow money at negative
• 1:41
  Speaker 2: interest rates, not zero percent negative, meaning someone actually pays
• 1:46
  Speaker 2: you to take their money. When the Bank of Japan
• 1:49
  Speaker 2: raises interest rates, that free money becomes expensive money. Suddenly,
• 1:53
  Speaker 2: those Japanese investors who are getting paid to borrow yen
• 1:57
  Speaker 2: are now paying one percent. What do they do? They sell?
• 2:00
  Speaker 2: They dump US treasury bonds, convert the dollars back to yen,
• 2:04
  Speaker 2: and repay their loans before the math gets even worse.
• 2:08
  Speaker 2: If Japan decides to sell even ten to twenty percent
• 2:10
  Speaker 2: of their holdings, we're talking about flooding the market with
• 2:13
  Speaker 2: one hundred to two hundred billion dollars in treasury bonds
• 2:17
  Speaker 2: that need new buyers. That kind of supply overwhelms demand,
• 2:20
  Speaker 2: spikes yields, and creates a cascading crisis that hits both
• 2:24
  Speaker 2: the bond market and stock market simultaneously. They stated this
• 2:28
  Speaker 2: unwinding could contribute to a rise in US government bond
• 2:32
  Speaker 2: yields that could be a trigger for the bursting of
• 2:35
  Speaker 2: the artificial intelligence bubble. Let that sink in for a moment.
• 2:39
  Speaker 2: We're not just talking about bond market stress. We're talking
• 2:42
  Speaker 2: about a potential cascade that pops the AI stock bubble
• 2:45
  Speaker 2: that's been driving our market higher. When safe treasury yields spike,
• 2:49
  Speaker 2: risky tech stocks priced at fifty to one hundred times
• 2:52
  Speaker 2: earnings become impossible to justify.
• 2:56
  Speaker 1: All right, So, as you can see, this is a
• 2:58
  Speaker 1: serious situation that is going to start unwinding in terms
• 3:01
  Speaker 1: of the Japanese reverse carry trade. Treasuries are going to
• 3:05
  Speaker 1: take a hit. The question is is whether or not
• 3:07
  Speaker 1: the market will respond in the same capacity. Do we
• 3:10
  Speaker 1: see a market falloff after an all time high in
• 3:13
  Speaker 1: the S and P? Do we see gold becoming a
• 3:15
  Speaker 1: safe haven asset or do we see risk assets starting
• 3:19
  Speaker 1: to look a little differently to investors as we see
• 3:21
  Speaker 1: those come down. Those are all the things that are
• 3:23
  Speaker 1: playing out right now. The countdown, of course, is underway.
• 3:26
  Speaker 1: Will the US stock market repeat Black Monday? If you
• 3:29
  Speaker 1: look back in history, the market's greatest concern is the resurescence,
• 3:34
  Speaker 1: the recurrence, i should say, of Black Monday, which was
• 3:37
  Speaker 1: a big unwind of carry trade similar to what we're
• 3:40
  Speaker 1: seeing here. And remember the S and P has hit
• 3:43
  Speaker 1: multiple highs over just the last ninety days, so this
• 3:46
  Speaker 1: continues to put a lot of pressure, and a lot
• 3:48
  Speaker 1: of that has been driven by the AI bubble, if
• 3:51
  Speaker 1: you want to call it a bubble. Or is this
• 3:54
  Speaker 1: going to be another segue into possibly seeing what we
• 3:58
  Speaker 1: could do within the whole idea around stable coins, because
• 4:01
  Speaker 1: essentially you buy a stable coin that of course is
• 4:04
  Speaker 1: going against a US treasury that could be one of
• 4:07
  Speaker 1: the things that's easing out on this stable coin market
• 4:09
  Speaker 1: not necessarily large enough to be able to soak that
• 4:11
  Speaker 1: up yet, but it will be interesting to watch how
• 4:14
  Speaker 1: this moves. Present this sense of panic has significantly eased,
• 4:18
  Speaker 1: the market still is almost fully priced in the quarter
• 4:21
  Speaker 1: basis point interes strike. I think the question is how
• 4:24
  Speaker 1: many of the Japanese bond sellers will actually go to
• 4:27
  Speaker 1: market with that, and are they concerned about additional hikes,
• 4:31
  Speaker 1: And that's the question that many people will say at
• 4:34
  Speaker 1: that point, Yes, the market could see a big issue,
• 4:36
  Speaker 1: that could mean a little bit of a stability scenario
• 4:39
  Speaker 1: that plays out, but our anticipation is that the market
• 4:43
  Speaker 1: may not necessarily respond positively. AI stocks are dominating the
• 4:47
  Speaker 1: equity markets right now. They reflect about twenty three percent
• 4:50
  Speaker 1: of global market cap, nearly all time high, and if
• 4:54
  Speaker 1: you look at this in comparison, the percentage has doubled
• 4:57
  Speaker 1: since just twenty two and this obviously was and check
• 5:00
  Speaker 1: GPT was introduced. These stocks have also been primarily the
• 5:04
  Speaker 1: driver of the global bull market that we've seen over
• 5:07
  Speaker 1: really the last three years, and continues to see even
• 5:10
  Speaker 1: maybe the push into crypto because a lot of people
• 5:12
  Speaker 1: were taking profits, moving that into risk. Risk of course
• 5:15
  Speaker 1: went up to one twenty six on bitcoin. Those are
• 5:18
  Speaker 1: the kind of things that could play out here again
• 5:20
  Speaker 1: depending on how far the market falls. So AI is
• 5:24
  Speaker 1: definitely redefining the market overall. If you look at the
• 5:29
  Speaker 1: complexity of these companies and why it's such a contagion potential.
• 5:34
  Speaker 1: This is the layout of how Nvidia fuels most of
• 5:38
  Speaker 1: the money machine within all these companies, and you're going
• 5:41
  Speaker 1: to see companies like Microsoft in their core weave. You
• 5:44
  Speaker 1: can get into obviously what's happening over there at Oracle, Xai, AMD.
• 5:49
  Speaker 1: Then you get into all these midcaps, Figure, Mistral, Intel,
• 5:53
  Speaker 1: All of these are centered around in Vidia, primarily open
• 5:57
  Speaker 1: Ai and then Microsoft. So those are the one to
• 6:00
  Speaker 1: keep a close eye on on how this market responds
• 6:03
  Speaker 1: to what's going on In Japan. Bitcoin dumped after three
• 6:06
  Speaker 1: triple witching events. This is what they call it the
• 6:08
  Speaker 1: triple witching, and this has happened in a quarterly event
• 6:12
  Speaker 1: where stock options, index options, and index futures all expire simultaneously.
• 6:17
  Speaker 1: So this is where we are right now. Do we
• 6:20
  Speaker 1: see Bitcoin respond to that afterwards continue down? Could we
• 6:25
  Speaker 1: say a seventy k Bitcoin. Let me know what you
• 6:27
  Speaker 1: guys think in the comments. Do you think this is
• 6:30
  Speaker 1: the time where bitcoin starts to make its move in
• 6:32
  Speaker 1: a downward fashion or do you think this actually flips
• 6:36
  Speaker 1: and we go bullish on risk assets. You could go
• 6:39
  Speaker 1: on the contrarian side. Markets indo this week all selling
• 6:42
  Speaker 1: off and if you look at bitcoin, even though this
• 6:44
  Speaker 1: week two point four eight, two point three, the run
• 6:47
  Speaker 1: up on this, both eth and bitcoin has been leading
• 6:50
  Speaker 1: up for many, many weeks. So it's possible that that
• 6:53
  Speaker 1: has all been looking at what's going on in the
• 6:56
  Speaker 1: Bank of Japan and they're hinting at more rates, and
• 6:59
  Speaker 1: I think that that is the real question. In twenty
• 7:01
  Speaker 1: twenty six, last time BOJ raised race, the crypto market dumped.
• 7:05
  Speaker 1: But this time the market isn't waiting. They're going ahead
• 7:08
  Speaker 1: of it. So this might mean you come out of
• 7:10
  Speaker 1: it faster in risk assets. All that's still pending on
• 7:14
  Speaker 1: how it performs. All right, So let's take a look
• 7:16
  Speaker 1: at this because there are things that correlate to the
• 7:19
  Speaker 1: Fed and how they're responding. Because remember with Bankerchepan you
• 7:22
  Speaker 1: got a rate high. With the United States and the
• 7:25
  Speaker 1: Fed you've got a rate cut. Now Ken Griffin of
• 7:29
  Speaker 1: Cidadel said, well, wait a minute, you can't really deal
• 7:32
  Speaker 1: with this because we're talking about inflation still getting worse,
• 7:37
  Speaker 1: and you can't blame the FED any longer. If inflation
• 7:40
  Speaker 1: is continuing to move, this of course, is going to
• 7:42
  Speaker 1: play down for the Trump administration. Listen to this clip.
• 7:47
  Speaker 3: This is a real issue. And when the White House
• 7:50
  Speaker 3: usurps control the FED, even if they don't actually have
• 7:53
  Speaker 3: it as a practical matter, if they're perceived to control
• 7:57
  Speaker 3: the FED, then if in inflation rears its ugly head,
• 8:02
  Speaker 3: the president can't blame the chair of the FED. The
• 8:06
  Speaker 3: buck stops on his desk. So I don't know why
• 8:09
  Speaker 3: President Trump wants to take that risk in an environment
• 8:13
  Speaker 3: where the outlook for inflation is so difficult to forecast
• 8:17
  Speaker 3: or predict. And there is again a lot of pro
• 8:20
  Speaker 3: inflationary pressures that have been created by the change labor markets,
• 8:26
  Speaker 3: the high fiscal deficits that is physcal stimulus, and of
• 8:31
  Speaker 3: course right now, the relatively easy monetary policy.
• 8:36
  Speaker 1: All right, So, as you can see, and this is
• 8:39
  Speaker 1: something we've talked about quite a bit here, is that
• 8:41
  Speaker 1: the FED is really in a rock and a hard
• 8:43
  Speaker 1: place that we are ending up with higher inflation. It
• 8:46
  Speaker 1: appears to be that it's not going to slow down.
• 8:48
  Speaker 1: It may stabilize, but it's still higher, which is always
• 8:52
  Speaker 1: going to compound higher anyway, and you're dealing with an
• 8:56
  Speaker 1: issue of job loss. Chris Waller though, talks about this
• 9:00
  Speaker 1: because it gets back into the job issue right now.
• 9:02
  Speaker 1: Take a look at this one.
• 9:04
  Speaker 4: Well. Earlier this summer, when the jobs numbers were looking
• 9:08
  Speaker 4: very good, I had a lot of anecdotal evidence talking
• 9:11
  Speaker 4: to CEOs around the country and other sources of soft
• 9:14
  Speaker 4: data that told me the labor market wasn't doing that well.
• 9:17
  Speaker 4: People were kind of like, what's he talking about. And
• 9:20
  Speaker 4: then the August August first, the July jobs report came out.
• 9:24
  Speaker 4: Everything was revised down pretty dramatically, and so we've now
• 9:29
  Speaker 4: come around to this view that the labor market is
• 9:31
  Speaker 4: very soft. The job's numbers are around fifty to sixty
• 9:36
  Speaker 4: thousand in the last couple of months on average. We
• 9:39
  Speaker 4: know that that's too high and those are most more
• 9:42
  Speaker 4: likely to get revised down when we get the Unemployment
• 9:46
  Speaker 4: Insurance Administrative data later. It'll take a while before we
• 9:49
  Speaker 4: get that, but board staff is estimating take off another
• 9:52
  Speaker 4: fifty or sixty thousand jobs, so we're close to zero
• 9:55
  Speaker 4: job growth all right.
• 9:56
  Speaker 1: Just to be clear, I think this is a a
• 10:00
  Speaker 1: FED governor Waller, He's one of the guys that's, you know,
• 10:02
  Speaker 1: in the potential line of being able to be a
• 10:04
  Speaker 1: FED chair for him to first and this is a
• 10:08
  Speaker 1: FED governor for him who have all the data, supposedly
• 10:11
  Speaker 1: have all the data for them to finally come to
• 10:13
  Speaker 1: the realization after what I know we've been talking about
• 10:16
  Speaker 1: here for at least a year, is that jobs are
• 10:19
  Speaker 1: going to be the problem. They will be the problem,
• 10:21
  Speaker 1: and they're not going to end being the problem in
• 10:24
  Speaker 1: early twenty twenty six. It's very possible we could see
• 10:26
  Speaker 1: this going into late rounds of twenty six and continuing
• 10:30
  Speaker 1: to see inflation going. This is stagflation at it's worse.
• 10:34
  Speaker 1: Powell is going to exit at maybe the best time
• 10:37
  Speaker 1: for his career because he's going to get out right
• 10:39
  Speaker 1: before what could be a huge implosion, and that means
• 10:41
  Speaker 1: possibly a heavy recession that could play out in twenty
• 10:45
  Speaker 1: twenty six. Now, how does that work within investing circles?
• 10:48
  Speaker 1: We will see a draw down. I think on the
• 10:50
  Speaker 1: S and P five hundred, I'm completely opposite of where
• 10:53
  Speaker 1: Tom Lee is on this kind of permeable position, even
• 10:56
  Speaker 1: though I am usually a bull, because I know that
• 10:59
  Speaker 1: that is where you're going to make money. So the
• 11:00
  Speaker 1: way you get around this and start to hopefully defend
• 11:05
  Speaker 1: is start to lay into where things are going to
• 11:07
  Speaker 1: be going, and that is assets. May be the way
• 11:10
  Speaker 1: to fight inflation, may be the way to fight issues
• 11:14
  Speaker 1: that we're dealing with right now economically, And this is
• 11:17
  Speaker 1: something to look at the wealthiest of US. Households now
• 11:20
  Speaker 1: above with networth above a billion hold thirty seven percent
• 11:24
  Speaker 1: of their wealth in stocks, thirty five percent in businesses,
• 11:28
  Speaker 1: those with one hundred million to a billion fifty eight
• 11:31
  Speaker 1: percent in businesses, ten percent in equities, and then by comparison,
• 11:35
  Speaker 1: households with networth under ten grand thirty six percent of
• 11:38
  Speaker 1: their assets in primary residents. That is a huge problem.
• 11:42
  Speaker 1: In these vehicles, that's not an asset. That's not an
• 11:44
  Speaker 1: asset at all. So you guys need to be driving
• 11:47
  Speaker 1: corollas everybody should be. If you get as much into
• 11:52
  Speaker 1: real assets as you can, that's where this is going
• 11:55
  Speaker 1: to change the game. Of course, if you look at
• 11:58
  Speaker 1: the overall American's net worth under a million, this is
• 12:01
  Speaker 1: the kind of thing we're dealing with right there. Let
• 12:03
  Speaker 1: me kind of zoom in on this right here, just
• 12:05
  Speaker 1: to show you the big blue category right there. Those
• 12:09
  Speaker 1: are all the good categories. The orange ones not good categories. Okay,
• 12:14
  Speaker 1: outside of liquid I think that is still a position
• 12:17
  Speaker 1: that still under ten k is decent. But this idea
• 12:20
  Speaker 1: of where we're dealing with vehicles and primary residence not
• 12:23
  Speaker 1: that I'm and I'm not a big fan of real
• 12:26
  Speaker 1: estate right now outside your primary residence definitely not a
• 12:29
  Speaker 1: real estate investing. I feel like it's just too long term.
• 12:32
  Speaker 1: There are going to be some opportunities here going forward, guys,
• 12:34
  Speaker 1: So if you're not part of our own private member,
• 12:38
  Speaker 1: get in on that, because I talk about this all
• 12:39
  Speaker 1: the time on additional research that we drop over there
• 12:42
  Speaker 1: so we can join for free. Just click the link
• 12:44
  Speaker 1: down below. Catch me out there on x app Paul Baron.
• 12:47
  Speaker 1: We'll catch next time right here on The Paul Baron Show.