Latest / The Paul Barron Crypto Show / Macro Meltdown or Market Shift?

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Macro Meltdown or Market Shift? · The Paul Barron Crypto Show

0:00
Speaker 1: The market, of course, adjusting now in a big way.
0:03
Speaker 1: We are going to talk about oil today, what kind
0:05
Speaker 1: of impact that might have on crypto and also the
0:07
Speaker 1: traditional markets. We'll also look at DeFi, maybe stabilizing. We'll
0:11
Speaker 1: get into the CPI. Everybody wants to know what these
0:14
Speaker 1: numbers mean in terms of investing. And then, of course,
0:17
Speaker 1: we'll also take a look at the growth of where
0:21
Speaker 1: the traditional finance market could be. Because if you look
0:23
Speaker 1: at earnings, this is one of those areas that's been
0:26
Speaker 1: very good for the S & P 500. So we'll
0:29
Speaker 1: look at that. Because this has a huge factor in
0:32
Speaker 1: how it could play out toward the end of the year,
0:35
Speaker 1: especially with the CPI numbers. Who knows what this is
0:37
Speaker 1: going to do with Kevin Warsh. It's going to be
0:40
Speaker 1: a good show today. It's a little different today. As
0:42
Speaker 1: you guys see, I'm out of the studio. We're going
0:44
Speaker 1: to be putting this show on the main channel and
0:46
Speaker 1: we're going to bring back in one of our analysts
0:49
Speaker 1: that has joined us. She actually comes on this show
0:52
Speaker 1: called The Digital Street over on the podcast channel. So
0:54
Speaker 1: you guys can check it out over there. But let
0:56
Speaker 1: me bring in Rebecca Walzer, who comes in from Walzer
1:00
Speaker 1: Wealth Management. How are you, Rebecca?
1:02
Speaker 2: I'm great, Paul. Thanks for having me. Glad to be here.
1:04
Speaker 1: Yeah, nice to see you back. So we have to
1:06
Speaker 1: talk about what's going on with oil prices. And obviously,
1:10
Speaker 1: that was one of the core elements in the CPI
1:12
Speaker 1: that everybody panics and the sky is falling. First of all,
1:18
Speaker 1: what did you think about them waiting out? Because oil
1:21
Speaker 1: and energy in general, specifically to diesel, was kind of
1:25
Speaker 1: the big part where this CPI number came in from.
1:28
Speaker 1: But what was your first opinion when you saw the
1:31
Speaker 1: CPI data?
1:32
Speaker 3: In a way, I was a little relieved, but also
1:35
Speaker 3: happy in the sense that you could dig into the
1:38
Speaker 3: numbers and see that over half of the increase was
1:41
Speaker 3: just energy related. And we just had this rule in
1:44
Speaker 3: economics that you... you don't look at policy decisions on
1:48
Speaker 3: short-term price action or short-term interruptions. The issue, of course, Paul,
1:53
Speaker 3: is that we've been expecting this Iranian situation to get
1:56
Speaker 3: worked out and then not get worked out and then
1:58
Speaker 3: get worked out. And so is it a short-term disruption?
2:01
Speaker 3: Is it a short-term price action? Is it some kind of,
2:03
Speaker 3: or is it longer term? And is it something we're
2:05
Speaker 3: going to have to continuously look think about, well, we
2:08
Speaker 3: have to keep discounting and we have to keep inflating.
2:10
Speaker 3: We have to keep dealing with the fact that we
2:12
Speaker 3: don't know what's going to happen. But clearly, when you
2:15
Speaker 3: see that a lot of it was attributed to gasoline
2:18
Speaker 3: specifically rising, you know, massively, again, driven and derived from
2:25
Speaker 3: both the diesel and the wars.
2:29
Speaker 1: Do you think that, I guess my question is, how
2:32
Speaker 1: long can the U.S., I know you look at the EU, Asia,
2:37
Speaker 1: China specifically, they are very dependent on Middle East oil,
2:41
Speaker 1: specifically from Iran. How long do you think this can handle?
2:46
Speaker 1: Because I think this obviously has been, I don't think
2:50
Speaker 1: it's going to have any impact on the midterms now,
2:53
Speaker 1: if anything were to happen in the sense of trying
2:57
Speaker 1: to stop this. So unless there was a magical, you know,
3:01
Speaker 1: in some way, a ceasefire or some sort of retracement
3:05
Speaker 1: out of Iran. But how much of long-term impact do
3:08
Speaker 1: you think this has truly on the market?
3:11
Speaker 2: I mean, well, I.
3:13
Speaker 3: Think if we could truncate it and have kind of
3:17
Speaker 3: status quo return to us, then we could get back
3:19
Speaker 3: to what we would really be talking about, which would
3:22
Speaker 3: just be all of the monetization, decentralized finance really coming
3:25
Speaker 3: into its.
3:27
Speaker 2: Beginning to come into its own, we would be focused
3:30
Speaker 2: on that.
3:30
Speaker 3: And we wouldn't constantly be going back and forth to
3:32
Speaker 3: Ukraine and Russia and Iran and the Middle East. But
3:36
Speaker 3: I will say that with the diesel situation and with
3:39
Speaker 3: the deal that Russia and the United States are trying
3:41
Speaker 3: to make around diesel, that is obviously causing us some
3:45
Speaker 3: issues with our Ukrainian support. And there's already, as you
3:49
Speaker 3: probably are seeing, that there's already Ukraine saying today that
3:52
Speaker 3: they've been cut off from their access to certain military-grade surveillance.
3:57
Speaker 2: Satellites.
3:57
Speaker 3: So all of this, Paul, is absolutely related and interconnected.
4:01
Speaker 3: The world is very, very interconnected, more than we've ever been.
4:05
Speaker 3: And it's interesting to see that, well, we've got a
4:07
Speaker 3: diesel problem over here. So now we're talking to Russia
4:09
Speaker 3: about diesel. Now that's affecting our Ukraine. It is all
4:11
Speaker 3: so connected economically.
4:13
Speaker 2: And that's the point.
4:14
Speaker 3: And so I think that investors are always already told investors,
4:18
Speaker 3: be investors, be in for the long term.
4:20
Speaker 2: With nerves of steel as we go through this.
4:23
Speaker 3: And that is even more definite as we continue to
4:26
Speaker 3: have these energy problems that are impacting, unfortunately, capital costs.
4:31
Speaker 2: And capital costs are most important right now because this.
4:34
Speaker 3: Is the age of not only government's funding, but also
4:38
Speaker 3: private sector needing massive funds for the monetization. So it's
4:43
Speaker 3: a big and challenging time to deal with all of
4:45
Speaker 3: these factors that consistently change every night.
4:47
Speaker 1: You've got the crude oil chart. I'll bring it up
4:49
Speaker 1: real quick. it's not back to the all-time high, but
4:53
Speaker 1: definitely hovering right there, almost near $ 100. It's at $ 95
4:57
Speaker 1: trading right now. We saw that pullback a few weeks
5:01
Speaker 1: ago where it looked as though there might be some
5:04
Speaker 1: sort of reprieve, but that did not happen. However, you
5:09
Speaker 1: look at this low back here at $ 68. I mean,
5:12
Speaker 1: do you think, because the market has been performing regardless
5:16
Speaker 1: of what has been happening with oil. At some point,
5:20
Speaker 1: does the market finally kind of throw its hands up
5:23
Speaker 1: and say, okay, we're done. We think this top is in.
5:26
Speaker 1: You look at the earnings data that we saw from Q3.
5:30
Speaker 1: What do you think is going to be the factor here?
5:32
Speaker 1: Do they care about where oil is or not?
5:36
Speaker 3: Yeah, and I think what you're seeing, Paul, is you're
5:38
Speaker 3: seeing the market doing crazily well right now in the
5:43
Speaker 3: face of everything that's happened because you have had a
5:47
Speaker 3: substantial run of time, and I'm talking about over a decade,
5:51
Speaker 3: of hyperscalers and Mag7 and all of these companies having
5:56
Speaker 3: massive free cash flow and building up. Look at Apple,
6:00
Speaker 3: for example, building up just a war chest of cash
6:04
Speaker 3: and then now starting to monetize. So in other words,
6:07
Speaker 3: what I'm trying to say is we are less than
6:09
Speaker 3: a year into this war, although it doesn't.
6:11
Speaker 2: Seem like that.
6:11
Speaker 1: It doesn't feel like that.
6:13
Speaker 3: It seems like it's been three years because of how
6:15
Speaker 3: much back and forth it is. But I think that
6:17
Speaker 3: the action started on February 28th, really the beginning of March.
6:21
Speaker 3: And so what that means is we're not even a
6:23
Speaker 3: year into this. And so companies that had substantial reserves
6:26
Speaker 3: are going to be able to kind of deal with
6:29
Speaker 3: short-term temporary price increases without massive drag on maybe share
6:34
Speaker 3: price or even revenue expectations and profit expectations. Until it
6:39
Speaker 3: is no longer short term, until it's like, okay, now
6:41
Speaker 3: this is going to be a medium term threat and
6:45
Speaker 3: we're going to have to deal with it in the
6:46
Speaker 3: medium term. And that's when you're going to start seeing
6:48
Speaker 3: things change. I think a lot of companies have made
6:51
Speaker 3: a lot of effort to keep the price increases on
6:54
Speaker 3: their end. Because the consumer, obviously, especially at the bottom
6:57
Speaker 3: of the K in this bifurcated economy that we have,
7:00
Speaker 3: they can't really take on more. And, you know, when
7:03
Speaker 3: you see McDonald's dropping in sales because the person that
7:07
Speaker 3: goes to McDonald's can't afford to go to McDonald's, that's
7:10
Speaker 3: when you know, like, they're tapped out. ironically, we still
7:14
Speaker 3: have retail sales.
7:14
Speaker 2: The last number for August come in surprisingly high. And
7:18
Speaker 2: part of that though, yeah.
7:19
Speaker 3: And then, so you're like, you've got a, you know,
7:21
Speaker 3: a dismantled consumer, higher prices, yet they're still spending. Part
7:26
Speaker 3: of the increase in spending is the cost is that
7:28
Speaker 3: it's more expensive, but still it's not more expensive enough
7:32
Speaker 3: to make the actual sales go down. But we're getting there, Paul.
7:36
Speaker 3: It's been almost nine months and we're starting to get there.
7:39
Speaker 1: Well, you mentioned McDonald's. That was one of the performers.
7:41
Speaker 1: I think it's up two and a half percent, which
7:43
Speaker 1: is good for a stock like that. But to your point,
7:47
Speaker 1: maybe this whole issue with the CPI coming out and
7:51
Speaker 1: consumer data coming in a little soft, but not necessarily
7:54
Speaker 1: that much, even though we reported yesterday that there is
7:58
Speaker 1: almost 75 percent of consumers that are looking at ways
8:02
Speaker 1: to reduce spending during the holidays because we're getting ready
8:04
Speaker 1: to to roll into one of the biggest retail seasons.
8:07
Speaker 1: When you go back to the earnings data I just
8:08
Speaker 1: showed on screen, just for you guys, actually, let me
8:11
Speaker 1: share that with you guys again so you can kind
8:13
Speaker 1: of follow along here in case you're listening to this
8:15
Speaker 1: on the podcast side. Let me go over here. Yeah,
8:18
Speaker 1: here we go. All right, so this was the Q3,
8:21
Speaker 1: year over year. Earnings were expected at 30.6. That would
8:25
Speaker 1: be excluding the energy sector. It came in basic estimate
8:31
Speaker 1: right now at 26 and a half. Of the 19
8:35
Speaker 1: companies in the S & P 500 that reported earnings
8:38
Speaker 1: to date for Q26, Q3, 84.2% reported above. So at
8:47
Speaker 1: some point, does this market top have to stop? I mean,
8:51
Speaker 1: I just can't see this continuing with all of the
8:54
Speaker 1: macro pressure that we have.
8:57
Speaker 3: You know, your question to me from an economic perspective
9:01
Speaker 3: is what is the ultimate source of this wealth?
9:03
Speaker 2: I mean, where is it coming from?
9:05
Speaker 3: Yeah, exactly.
9:06
Speaker 2: You know, right now the.
9:07
Speaker 3: Hyperscalers have a substantial war chest and they are happily
9:13
Speaker 3: able to sell bonds. And they are happily able, even
9:16
Speaker 3: like we've seen Alphabet issue stock, which that is a
9:19
Speaker 3: little bit alarming. When you start to, when you leave
9:22
Speaker 3: the using your free cash flow and you leave the,
9:24
Speaker 3: you raising capital through bonds and you start to issue stock,
9:27
Speaker 3: that's when the market doesn't like that as much because
9:31
Speaker 3: the market wants you to use bonds and use stock
9:34
Speaker 3: only for, I would say really IPOs, unless there's some,
9:36
Speaker 3: unless you have some kind of new formula or something,
9:40
Speaker 3: you know, so really, Ultimately, we're able to do this
9:44
Speaker 3: on a very short-term basis. We can very short-term use
9:48
Speaker 3: our war chest. We can very short-term cover higher energy costs.
9:52
Speaker 3: We can do all those things. But ultimately, where does
9:55
Speaker 3: the wealth get originated from?
9:57
Speaker 1: Right.
10:00
Speaker 3: Source to be able to continuously build that fortress and
10:03
Speaker 3: spend more on energy and do that, it will stop.
10:06
Speaker 3: And that's the question, Paul, is, Who is the ultimate
10:09
Speaker 3: source of going to be able to consume all of.
10:12
Speaker 2: This AI for what it is costing?
10:16
Speaker 3: And the interesting thing is that the very consumers of
10:19
Speaker 3: it are the people that will be supplanted by it.
10:23
Speaker 3: And this goes back to the same concept we keep
10:25
Speaker 3: talking about is how are we going to make money
10:28
Speaker 3: after we no longer as an individual human contribute either
10:31
Speaker 3: gross domestic product or service to our GDP?
10:35
Speaker 2: That is the question.
10:36
Speaker 3: What is the originating source of wealth on a continuous
10:39
Speaker 3: basis once we get to this phase? Because no, we
10:43
Speaker 3: cannot on a continuous basis keep up investment and expenses
10:48
Speaker 3: like we have without some additional source.
10:52
Speaker 2: And the source of wealth, Paul, has always.
10:53
Speaker 3: Been us creating value of something.
10:59
Speaker 2: And if we're not doing that anymore, that is the.
11:02
Speaker 2: Atmospheric question that no one can seem to answer.
11:04
Speaker 1: Well, it definitely is. It's a big question. Many people
11:07
Speaker 1: are on two sides of this. There are the AI
11:11
Speaker 1: doomers that are out there saying, you know, this is
11:13
Speaker 1: going to kill us all. We've got this also doomerism
11:17
Speaker 1: saying that this bubble is going to pop. So you
11:19
Speaker 1: have that angle. Then you have the opposite side of
11:22
Speaker 1: the trade, which I'm looking at right now. That's the
11:24
Speaker 1: S & P, guys. And if you look at this
11:27
Speaker 1: date right here, that was March of 26.
11:28
Speaker 3: Hmm.
11:30
Speaker 1: And what a great time to be in the stock market, right?
11:33
Speaker 2: Right, right.
11:35
Speaker 1: March of 26, if you were entered at that time,
11:38
Speaker 1: we haven't seen those kind of numbers in a very
11:41
Speaker 1: long time. But even at trading it today, 20% on
11:43
Speaker 1: the year so far, and it's what, October 15th as
11:46
Speaker 1: we record this. So not a bad performance if somebody's
11:50
Speaker 1: out there. The real question is, does it actually crack 8,000?
11:54
Speaker 1: What would be your prediction on that? Do you have one?
11:58
Speaker 1: Do you think it hits 8,000?
12:00
Speaker 3: I mean, I think that we are going to skip
12:01
Speaker 3: an October hike and it's just never, we don't, we
12:05
Speaker 3: don't hike this that close to an election. And that would,
12:07
Speaker 3: I think, give the markets a little bit of just
12:10
Speaker 3: knowledge that, okay, we've got set policy through until at
12:13
Speaker 3: least December. And, You know, I think that what we
12:16
Speaker 3: might see, Paul, what I'm starting to kind of get
12:18
Speaker 3: feelers out economically is that we might see some jobs
12:22
Speaker 3: data come in negative in the next, you know, couple
12:25
Speaker 3: of reads before the December hike, in which case, if
12:29
Speaker 3: we were to get that, then I would hope that
12:30
Speaker 3: we would start to think about.
12:32
Speaker 2: And here's what I'm concerned about, Paul. Just let me
12:34
Speaker 2: just cut to the chase.
12:35
Speaker 3: What I'm concerned about is that we have had the
12:39
Speaker 3: energy prices disguise the fact that overall we don't have
12:43
Speaker 3: the breadth that we need in this market. It's not,
12:46
Speaker 3: even though you pointed out that it was beyond just
12:49
Speaker 3: the hyperscalers, it's not as deep and as wide as
12:52
Speaker 3: I would like. And for that reason, any kind of
12:55
Speaker 3: economic malaise, like jobs starting to, you know, the jobs
12:59
Speaker 3: claims going up, jobs numbers being missed. Those kinds of things,
13:03
Speaker 3: I think, are or would not be, they're being obfuscated
13:06
Speaker 3: right now by the fact that everything is still more
13:09
Speaker 3: expensive as if this energy and this whole economy is
13:12
Speaker 3: taking off. And the economy has done well. The S
13:14
Speaker 3: & P has done very well. But I think if
13:16
Speaker 3: you look at the breadth and the depth, you'll see
13:18
Speaker 3: that it's still really relegated to tech.
13:21
Speaker 2: And we need a broadening out.
13:22
Speaker 3: And right now that isn't happening in the bifurcated economy.
13:26
Speaker 3: That isn't happening for the bottom half of the country.
13:28
Speaker 3: They're thinking that we're basically probably in a recession. That's
13:32
Speaker 3: how they're feeling. And I think that you can have
13:36
Speaker 3: a one sector that's rising the boats and it looks
13:40
Speaker 3: good until you really look under the covers and you realize, wow,
13:43
Speaker 3: this is really an inflationary time with some jobs issues. And,
13:48
Speaker 3: you know, that can switch really quickly to, you know,
13:52
Speaker 3: a disinflationary problem.
13:53
Speaker 1: Yeah. Well, do you think that because we've had bad
13:58
Speaker 1: news coming in from OpenAI, then good news on Anthropic,
14:03
Speaker 1: they're just their quarterly, I think, jumped like 45 percent
14:08
Speaker 1: up to almost 17 billion, I think was the numbers
14:10
Speaker 1: I'm looking at it here.
14:11
Speaker 3: Yeah. Yeah.
14:12
Speaker 1: Yeah.
14:12
Speaker 3: 16.8 billion.
14:14
Speaker 1: So that would be a pretty significant variation in a
14:19
Speaker 1: very short period of time of these major AI companies
14:23
Speaker 1: losing money, then all of a sudden earning money. Is
14:27
Speaker 1: it somewhat cyclical here? Are there other things that are
14:31
Speaker 1: brewing that really kind of cause the market? And I
14:34
Speaker 1: guess the real question is, is what other stock sectors win?
14:38
Speaker 1: If AI does get a bid here and continue its
14:41
Speaker 1: climb above 8,000 for what we're seeing on the S
14:44
Speaker 1: & P, what do you think it would be?
14:46
Speaker 3: Well, so it's interesting you ask that because I would
14:49
Speaker 3: have expected utilities to have a banner year with the
14:52
Speaker 3: data center build-outs because they're absolutely massively integral.
14:55
Speaker 1: Exactly.
14:56
Speaker 2: And they're the second worst performer of the year to date.
14:59
Speaker 3: I mean, you've got consumer discretionary, not like an 8%
15:04
Speaker 3: decline year over year, but utilities are off over 5%
15:07
Speaker 3: year over year. And that's unusual because you would have
15:10
Speaker 3: thought that the demand... would just be massively picking up.
15:14
Speaker 3: So right now, outside of tech, I can tell you
15:17
Speaker 3: where I won't put money, and that's financials. I just
15:20
Speaker 3: feel like I'm not a huge financial... I'm not a
15:24
Speaker 3: bank fan because I know that their time is limited.
15:26
Speaker 3: And for the ones that can figure out how to
15:28
Speaker 3: continue to remain relevant, they will be winning. I think
15:31
Speaker 3: Wells Fargo is starting to really look at that. But otherwise,
15:35
Speaker 3: it's hard to pick a winner, to be honest. What
15:38
Speaker 3: I would normally say What I'm feeling right now, Paul,
15:40
Speaker 3: is that you should probably look at consumer staples and
15:44
Speaker 3: utilities as kind of your your laggard. You know, they
15:48
Speaker 3: will stop.
15:50
Speaker 2: They are a backstop. Yeah, they are a backstop. Exactly.
15:53
Speaker 3: Because it does feel recessionary. I'm feeling recessionary right now.
15:57
Speaker 2: It's not good.
15:58
Speaker 1: I know. Oh, Rebecca is feeling recessionary. That's not good
16:01
Speaker 1: at all. I know. Because normally you're very bullish on
16:03
Speaker 1: the market.
16:04
Speaker 3: I am. I am.
16:05
Speaker 2: And that's the dichotomy.
16:07
Speaker 3: How do you reconcile what is happening with AI and
16:11
Speaker 3: the fact that you do have a lot of corporations,
16:14
Speaker 3: multi corporations, national corporations that, you.
16:17
Speaker 2: Know, will be able to withstand a short term. And
16:20
Speaker 2: what does short term mean? Is it two years?
16:22
Speaker 3: Can they do this for two years? Can they, is it,
16:24
Speaker 3: or are we going to, or is it a year
16:26
Speaker 3: and that's it? And we need energy prices to come
16:28
Speaker 3: down and we need, you know, yields to come down.
16:31
Speaker 2: It's just a really unique, unique time.
16:33
Speaker 1: This was the IMF kind of referencing that is that
16:37
Speaker 1: they're saying that basically that this is going to job
16:41
Speaker 1: changes from AI are going to gas the economy a
16:43
Speaker 1: little bit. AI investment boom already delivering advanced shock and
16:48
Speaker 1: an investment shock. We've seen that already. That could boost
16:52
Speaker 1: growth in advanced Asian economies by half to a full percent.
16:58
Speaker 1: And then the emerging Asian economies by 0.2 to 0.8.
17:03
Speaker 1: So where do you think the growth is really going
17:07
Speaker 1: to come from? I mean, we've been watching Japan. We've
17:11
Speaker 1: been watching what's going on in Korea, Hong Kong specifically.
17:14
Speaker 1: Do you think that tech is going to slowly migrate
17:20
Speaker 1: to Asia versus what we've seen coming out of Silicon
17:22
Speaker 1: Valley for so long?
17:24
Speaker 2: Oh, gosh. I mean, it is it is a huge concern.
17:30
Speaker 3: Right. I mean. you always had Taiwan and the semiconductors
17:34
Speaker 3: and Taiwan's to me, you know, they, they have, they
17:36
Speaker 3: have really been dominant for, you know, decades, you know,
17:42
Speaker 3: so it's not like we haven't already seen that Paul
17:45
Speaker 3: and past, you know, technology developments, but this is something different.
17:50
Speaker 3: This is, really saying that you could see IT development, production,
17:56
Speaker 3: manufacturing really continue to expand beyond the American multinational corporations.
18:05
Speaker 3: And that is what is alarming is that Again, we
18:11
Speaker 3: get in our own way.
18:12
Speaker 2: We're such a bureaucratic machine now.
18:14
Speaker 3: We're so massive that our enemies really, if I was
18:18
Speaker 3: one of the United States' enemies, the easiest thing in
18:20
Speaker 3: the world to do is just divide the United States.
18:22
Speaker 2: Just put some money into some NGOs.
18:25
Speaker 3: Over here that will blast your message to half the
18:28
Speaker 3: country that will agree with you anyways. And make it
18:30
Speaker 3: a divisive topic and that's what will happen. And so
18:34
Speaker 3: this is why I've been so hard on the bank saying,
18:38
Speaker 3: do not do this to us because you're not going
18:40
Speaker 3: to preserve your industry.
18:42
Speaker 2: Nothing can save it. It's over. It's time to innovate.
18:45
Speaker 3: And yet it could cause the United States, our lead
18:49
Speaker 3: in DeFi, and it could cost us our lead in
18:52
Speaker 3: the data center problem. We had 30% of the country
18:55
Speaker 3: only last year, just last year in 2025, opposed to
18:59
Speaker 3: data centers, just 30%.
19:00
Speaker 2: That and 60 plus.
19:00
Speaker 3: That's probably skyrocketed now. That has flipped completely. You had
19:05
Speaker 3: a ton of money coming in. China's not dumb. They
19:08
Speaker 3: know how. Yeah.
19:09
Speaker 2: To get America to be against our own interests.
19:11
Speaker 1: Just get everybody complaining about it. Just get everybody complaining
19:14
Speaker 1: about it.
19:15
Speaker 2: That's what I'm saying.
19:16
Speaker 3: I saw this meeting, this local town, Paul, where they
19:19
Speaker 3: were having their town meeting. This town was 200,000 people
19:23
Speaker 3: had dwindled down to less than 20,000 people. So you're
19:26
Speaker 3: talking about not even 10% of the population left. They're
19:29
Speaker 3: having a town meeting and you had a gentleman get
19:31
Speaker 3: up and say, not this, something else.
19:34
Speaker 2: We'll wait for the next thing. And that's America. That's
19:37
Speaker 2: the American statement right there. We're so arrogant.
19:40
Speaker 3: We expect to be what we have, what we built,
19:43
Speaker 3: how hard our forefathers worked.
19:45
Speaker 2: They built things. They migrated west with nothing. They built
19:48
Speaker 2: tunnels under us. rivers.
19:50
Speaker 3: And I mean, the stuff that they accomplished when we
19:53
Speaker 3: had nothing, and that was because they had to do it.
19:56
Speaker 3: And now- China can come and fund some NGOs over
20:00
Speaker 3: here to be anti-data centers in America. And just one
20:03
Speaker 3: year can be completely majority anti-data center. And the guy
20:07
Speaker 3: can stand up at a town hall and think that
20:08
Speaker 3: there's something else that someone's going to want.
20:10
Speaker 2: To come along and bring to their town and give jobs.
20:14
Speaker 2: This is it. We either, and that's what my advice is.
20:17
Speaker 3: Take the data center, but negotiate at the table with
20:21
Speaker 3: multinational corporations and say, I need a five-year plan on
20:24
Speaker 3: water reclamation that's completely self-sustaining. I need you to build
20:28
Speaker 3: your own little mini power grid and be able to
20:30
Speaker 3: fund our town when the grid goes down. Like, these
20:32
Speaker 3: are the things that you can negotiate.
20:34
Speaker 1: It'd be easy.
20:34
Speaker 2: Trillions of dollars being spent here.
20:36
Speaker 1: Don't say no. Just the tax dollars alone.
20:39
Speaker 2: Say yes and then add your conditions. But don't say no.
20:42
Speaker 2: There is nothing else coming. We lose this. We lose
20:46
Speaker 2: who we are.
20:47
Speaker 3: And I don't think Americans know how to be not American.
20:49
Speaker 3: Like I went to school with a lot of Europeans.
20:52
Speaker 3: And it's different when you don't come from the country
20:54
Speaker 3: that's the number one economic power or the number one
20:56
Speaker 3: military power in the world.
20:58
Speaker 2: It is different. And we aren't used to that. We
21:00
Speaker 2: don't know how to be that. So I think America
21:02
Speaker 2: needs to wake up.
21:03
Speaker 1: I like that. I like your fire today, Rebecca. You
21:06
Speaker 1: always bring it, too. Explain this to me. I'm going
21:09
Speaker 1: to share the gold chart with you because I know
21:11
Speaker 1: you are into and really analyze what's going on in
21:14
Speaker 1: the gold market. You get the CPI data yesterday. It
21:18
Speaker 1: comes in soft. Then, of course, we come in and
21:21
Speaker 1: gold pulls back. Then immediately the next day, it's as
21:25
Speaker 1: if it didn't happen. And gold just spikes again. So
21:29
Speaker 1: we're up around, what, 4,157 right now. It dipped down
21:31
Speaker 1: to the low 4,100. How do metals respond to this?
21:37
Speaker 1: with what we're seeing right now in the inflation data,
21:42
Speaker 1: what we're seeing with essentially is dollar debasement, you would
21:45
Speaker 1: think that gold would be up.
21:47
Speaker 2: Yeah, it should be. It should be up massively.
21:50
Speaker 3: And as you know, I think it's extremely undervalued and
21:53
Speaker 3: not reflective really anymore of what it really is valued
21:55
Speaker 3: at with the inflated dollars that we've printed in the world,
21:58
Speaker 3: especially since 2020 coronavirus. But I will say, so yesterday, Paul,
22:02
Speaker 3: when you had inflation come in higher, there was a
22:07
Speaker 3: sense that there was a possibility that we could see
22:12
Speaker 3: an October increase.
22:13
Speaker 2: Like, you know, when you have inflation saying, oh.
22:15
Speaker 3: It's sticky, oh gosh, it's higher than we expected, that
22:19
Speaker 3: immediately sends your short-term, you know, statistical probability of a
22:24
Speaker 3: rain increase Faster. And that is going to make metals
22:27
Speaker 3: pull back because anytime there's higher passive yield out there,
22:33
Speaker 3: then a lot of investors will roll out as soon
22:35
Speaker 3: as they can get passive yield higher than what they
22:38
Speaker 3: can get in gold. So you see transition out, you
22:40
Speaker 3: see rotation out. But then when you see that, OK,
22:44
Speaker 3: there's some resolution potentially with the diesel problem and with
22:49
Speaker 3: this deal potentially with Russia, then metals say, oh, well,
22:53
Speaker 3: that will be disinflationary. That means the possibility of rate
22:56
Speaker 3: increases possibly for December may go down and people will
22:59
Speaker 3: rotate back into gold.
23:01
Speaker 2: It's that fast.
23:02
Speaker 3: The machinations of how price action users are looking and
23:05
Speaker 3: buying and selling.
23:06
Speaker 2: Into gold It's that fast, Paul. So you could get.
23:09
Speaker 3: Positive reasons that it could go up with an energy
23:13
Speaker 3: resolution or potentially less energy price pressure. And then you
23:17
Speaker 3: get inflation rate and again, it goes right back up.
23:20
Speaker 2: So this is a very fluid thing.
23:23
Speaker 3: And it's not anywhere reflective of the true risk of
23:27
Speaker 3: the world moving forward. And I actually think that the
23:30
Speaker 3: blockchain is much more financially stable than what our current
23:33
Speaker 3: system is because our current system, fractional reserve, where we
23:37
Speaker 3: don't actually have the reserves and there's no real backup
23:40
Speaker 3: to the assets in our system. It's just not a
23:42
Speaker 3: very solid system right now. It's very fragile.
23:45
Speaker 1: Yeah, you look at the, I'll show you the stablecoin
23:48
Speaker 1: market right there, and I'll kind of zoom in on
23:49
Speaker 1: this a little bit for you guys. This has just
23:52
Speaker 1: been going up and up. So it correlates to what
23:55
Speaker 1: you're saying is that even now, next generation investors are
24:00
Speaker 1: chasing some yield here. Because this, of course, will affect
24:03
Speaker 1: everything from USDC, USDG over on Robinhood, which is paying
24:07
Speaker 1: just insane yields. But even what we're seeing right now
24:10
Speaker 1: with a 300 billion market cap for just stable coins
24:15
Speaker 1: in general, if this thing goes to, because, I mean,
24:18
Speaker 1: you look at where RWA growth is going, what that's
24:21
Speaker 1: going to look like, you know, both with institutional assets.
24:25
Speaker 1: But more importantly, I think the question is, is When
24:29
Speaker 1: do you think or do you think we will see
24:32
Speaker 1: an institutional shift to mostly stable coin transactions? Do you
24:39
Speaker 1: think we're going to see that anytime soon?
24:41
Speaker 2: Yes.
24:41
Speaker 3: And I think it's going to be brought about mostly
24:45
Speaker 3: because people are going to start tokenizing their stocks.
24:49
Speaker 1: Yeah.
24:49
Speaker 3: And that tokenization process of stocks is going to make
24:52
Speaker 3: them feel more comfortable with tokenized assets. And I think
24:56
Speaker 3: that will actually increase. So what I'm trying to say, Paul,
25:00
Speaker 3: is that maybe banking wasn't going to be the lead
25:03
Speaker 3: into DeFi as the mainstream.
25:04
Speaker 2: Maybe it is tokenized stocks. Maybe it's investing.
25:07
Speaker 3: Maybe it's investors saying, well, my stocks are tokenized and
25:09
Speaker 3: I can trade them 24-7. And so why not move
25:13
Speaker 3: my money to a similar situation with stablecoin and decentralized
25:18
Speaker 3: finance that way? So I do think that because we
25:23
Speaker 3: have this five-year innovation exception now from the SEC, and
25:26
Speaker 3: that means you're going to see a lot of activity
25:29
Speaker 3: even by the end of the year. I bet you
25:30
Speaker 3: will have a substantial amount of activity that has already
25:33
Speaker 3: happened around tokenizing stocks. And then the second that you
25:36
Speaker 3: tokenize stocks, it's almost like how putting Bitcoin into an
25:41
Speaker 3: ETF democratized it to the mainstream.
25:44
Speaker 2: I think that's what it's going to take.
25:45
Speaker 3: It's going to take, yeah, the mainstream is understanding that
25:48
Speaker 3: now we're going to be able to have these digitized
25:51
Speaker 3: representations of assets.
25:53
Speaker 1: Okay. So with that being the case, because this is
25:56
Speaker 1: all going to a point of where assets are being held,
26:00
Speaker 1: whether you're holding it in metals, you're holding it in
26:02
Speaker 1: crypto or DeFi, you look at just the 12 month
26:06
Speaker 1: percentage change, we've saw some pretty specific growth in the
26:13
Speaker 1: consumer price index. This obviously being one of the bumps
26:16
Speaker 1: that or is in the road again. It was flatlining
26:19
Speaker 1: there for a while. Let me see if I can
26:20
Speaker 1: bring up this chart because I want people to see this.
26:23
Speaker 1: This was flatlining slightly. And then all of a sudden
26:27
Speaker 1: we start to see this movement coming back in. I
26:30
Speaker 1: think it's important for people to see this. And this is,
26:33
Speaker 1: here we go. All right. This is the chart I'm
26:35
Speaker 1: talking about. All right. So Rebecca, this is what I'm
26:38
Speaker 1: looking at right here is you look at the performance here.
26:41
Speaker 1: It goes all the way back to 2020. Obviously we
26:43
Speaker 1: saw the spike. Somewhat flatline. And then we start seeing
26:46
Speaker 1: this climb and this push that we've had a problem with.
26:50
Speaker 1: Of course, the Fed adjusts that. And are we in
26:53
Speaker 1: a position now where we are in another climb? Or
26:58
Speaker 1: do you think this is just a do you think
27:00
Speaker 1: this is temporary? Here's my question.
27:02
Speaker 3: Yeah.
27:04
Speaker 2: Can you go to the bottom?
27:06
Speaker 3: That started at the beginning of March of this year.
27:08
Speaker 1: Right here. That was February.
27:10
Speaker 3: February.
27:10
Speaker 2: 2.4.
27:11
Speaker 3: So as soon as the Iranian situation, which started February 28th, began,
27:17
Speaker 3: we started to see this run up. And then it
27:20
Speaker 3: did come back down. And I think that that coming
27:22
Speaker 3: down was kind of the MOU beginning. Yes, exactly.
27:26
Speaker 2: Exactly.
27:27
Speaker 3: So it started to come back down. And now we're
27:29
Speaker 3: starting to see a reverberation back to the upside. Right. Obviously,
27:33
Speaker 3: if we want to get back to baseline, we have
27:34
Speaker 3: to go back to prior to 2020. So that's not happening.
27:37
Speaker 3: We printed a ton of money. What we haven't done
27:40
Speaker 3: this year, Paul, is print a ton of money to
27:43
Speaker 3: get through this Iranian situation. So that is a positive,
27:47
Speaker 3: which basically what I'm trying to say is that we
27:50
Speaker 3: haven't irretrievably impacted our balance sheets yet so that if
27:54
Speaker 3: we can get clarity and resolution, we could potentially come
27:58
Speaker 3: back down to baseline. But if we don't get solid
28:03
Speaker 3: resolution to Iran that is going to be reliable for
28:06
Speaker 3: companies to count on, to understand what how their shipping policy,
28:10
Speaker 3: you know, is going to their insurance.
28:12
Speaker 2: Costs, their all of that.
28:14
Speaker 3: If we're not going to get that resolution, then you're
28:17
Speaker 3: looking at more shifting to it. Not yet, but after
28:21
Speaker 3: we're shifting towards more immediate solutions. type of threat that
28:24
Speaker 3: is going to be baked in more and that baking
28:26
Speaker 3: in more is the issue.
28:28
Speaker 2: That's the problem.
28:29
Speaker 3: You already have so much inflation of need of money,
28:35
Speaker 3: capital need with what is happening privately in the private
28:40
Speaker 3: markets of AI and DeFi, you have capital need. That's
28:44
Speaker 3: already inflationary. When you combine that with energy inflation.
28:48
Speaker 2: You get a problem.
28:50
Speaker 3: And that problem cannot go on beyond what companies can
28:54
Speaker 3: kind of withstand because of their war chest.
28:56
Speaker 2: And after that, it's going to be absolutely impactful. And
29:00
Speaker 2: that's the problem.
29:01
Speaker 3: We really can't afford this inflationary geopolitical pressure while we're
29:05
Speaker 3: already under such massive inflationary pressure because of the capital need. Yeah.
29:10
Speaker 1: Well, I think the point you're getting at starts to
29:12
Speaker 1: affect the rotation question is, do we see a rotation?
29:16
Speaker 1: We're showing the Bitcoin chart right now, holding and responding
29:20
Speaker 1: back up, almost edging to 82K right now as we
29:23
Speaker 1: start to record this one. ETH also trying to come back,
29:28
Speaker 1: but still at around 2400. And these are some of
29:31
Speaker 1: the strongest assets out there when it comes to digital.
29:33
Speaker 1: Most of our audience is either a Bitcoin or Ethereum
29:36
Speaker 1: or a Solana holder. You look at the rotation. opportunity
29:40
Speaker 1: here with everything that's happening with this kind of quasi
29:46
Speaker 1: performance boom that we're seeing in terms of earnings. Is
29:51
Speaker 1: there any point in which an investor is simply going
29:54
Speaker 1: to say, OK, I think the rotation time is now?
29:59
Speaker 3: Out of BTC and Ethereum into stocks. I mean, yeah,
30:06
Speaker 3: I think that it is, but I also think that
30:08
Speaker 3: that is also, it's going to really sound odd to you, Paul,
30:11
Speaker 3: but I also think that that same BTC, Ethereum, Solana
30:15
Speaker 3: investor could be not rotating out to stocks, but they
30:20
Speaker 3: could also be just rotating.
30:21
Speaker 2: Into 10-year treasuries.
30:22
Speaker 3: I mean, you've got the 10-year above 5.2%.
30:25
Speaker 2: You know, this is crazy.
30:27
Speaker 1: Yeah.
30:27
Speaker 3: 5.2% 10-year treasury, I have to understand that my real
30:33
Speaker 3: yield is so low on that because of inflation that
30:38
Speaker 3: it's not worth doing so that I then take the
30:40
Speaker 3: risk of going back into a stock or I stay
30:43
Speaker 3: in BTC because I do think that that is eventually
30:46
Speaker 3: going to be you know, the ethos that we exist
30:49
Speaker 3: in and it will be a much more relevant player
30:51
Speaker 3: when that all comes to fruition.
30:53
Speaker 2: So yeah, Paul, you've got a lot of choices right now.
30:57
Speaker 3: It doesn't seem to be the choice that they're not
30:59
Speaker 3: buying gold at the dip, which I think that I
31:01
Speaker 3: wish that they would.
31:03
Speaker 1: Okay, so your clients, Walls of Wealth, that's the conundrum
31:07
Speaker 1: they're in right now is when they're looking at asset
31:11
Speaker 1: and some of these classes, you have such a narrow
31:13
Speaker 1: sliver that's performing in the S & P And then
31:16
Speaker 1: you have these 10 years that are absolutely locked and
31:19
Speaker 1: loaded at rates we've never seen. That's kind of the
31:22
Speaker 1: question that everybody is trying to answer right now. Is
31:24
Speaker 1: that what you're saying?
31:25
Speaker 3: Yeah, and I think that it's not a binary choice.
31:28
Speaker 3: It's not a zero-sum game. Like what I mean by
31:31
Speaker 3: that is you should always participate in risk to the
31:34
Speaker 3: extent that you can take the risk.
31:35
Speaker 2: And you can take more risk with.
31:37
Speaker 3: Your own portfolio if you will allow yourself to have
31:41
Speaker 3: a buffer, if you will build a foundation on gold.
31:44
Speaker 2: I also would put in the foundation BTC.
31:47
Speaker 3: I would put in some traditional, not necessarily transactional coins,
31:51
Speaker 3: but long-term hold on the DeFi block Those would be
31:55
Speaker 3: my foundation. I would have that as a foundation. And
31:58
Speaker 3: then with that foundation built, then I'm comfortable taking risk
32:01
Speaker 3: with money that I have to continue to keep ahead
32:04
Speaker 3: of inflation. You're not going to stay ahead of inflation, unfortunately,
32:07
Speaker 3: in 10-year treasuries. I'm just going to be honest because
32:11
Speaker 3: the inflationary number that is creeping in, plus your real
32:15
Speaker 3: risk is a problem in a treasury, a 10-year treasury.
32:19
Speaker 3: There's a reason they're paying over 5.2%. So you but
32:23
Speaker 3: but they're necessary. So you have to have a foundation
32:26
Speaker 3: that's not risk based, you know, gold treasuries. I would
32:30
Speaker 3: put BTC in there. I would. I would put some
32:33
Speaker 3: of the original digital assets on the on the blockchain.
32:37
Speaker 3: That would be my foundation. And then the rest I'm comfortable.
32:39
Speaker 3: I have to make sure that I have an income.
32:41
Speaker 3: I have to have an income plan. And as long
32:42
Speaker 3: as I know where my income sources are coming from.
32:44
Speaker 3: That is going to be a part, the most important piece.
32:47
Speaker 3: And then I've got, okay, now I have this and
32:49
Speaker 3: this amount has to chase yield and return and has
32:53
Speaker 3: to chase, it has to stay above inflation. And if
32:55
Speaker 3: you do it that way, you can stay the course
32:58
Speaker 3: because you have your basis covered.
32:59
Speaker 1: And there's, for me, it's always an issue of how
33:02
Speaker 1: do you weigh the opportunity cost? Because if you do
33:05
Speaker 1: lock up like that, into some of these assets. Yes,
33:08
Speaker 1: it's a fixed yield, but in many cases, the opportunity
33:11
Speaker 1: cost disappears. Many people will say, well, that's okay, and
33:15
Speaker 1: I'm fine with that as long as we don't see
33:17
Speaker 1: a recessionary situation hit the market, which is where I'm
33:20
Speaker 1: locked into something that's performing versus what the market is
33:24
Speaker 1: doing with maybe a major pullback. And you've got, I
33:27
Speaker 1: think it was Paul Tudor Jones, he's very bearish. Then
33:30
Speaker 1: you have Tom Lee over here that's very bullish. It's
33:33
Speaker 1: like there's two complete separate sides of Wall Street right now.
33:37
Speaker 1: Where do you fall?
33:38
Speaker 2: Paul Tudor Jones is much more on the global macro side.
33:41
Speaker 3: Myself, that is very concerned about really how we just
33:45
Speaker 3: are totally bankrupt as a world, meaning all central banks
33:49
Speaker 3: don't have the assets that they need to really back
33:52
Speaker 3: up the currency that they produce. So I would say
33:55
Speaker 3: that I'm both because on the Paul Tudor Jones side,
33:59
Speaker 3: I don't disagree. And I think he's onto something. And
34:01
Speaker 3: I've told you for a while, there is a global
34:03
Speaker 3: currency reckoning that is coming. And we are going to
34:07
Speaker 3: be moving to different currency. We won't be on just dollars,
34:10
Speaker 3: paper dollars, paper coins.
34:12
Speaker 2: But at the.
34:13
Speaker 3: Same time, I definitely with, you know, believing on the
34:17
Speaker 3: same that we are at the beginning stages of the
34:20
Speaker 3: largest economic shift in human history. And you absolutely must
34:24
Speaker 3: participate in that. I just want to quickly remind everybody
34:28
Speaker 3: that the safety of buying a 10-year bond is by
34:31
Speaker 3: buying that bond individually and holding it through maturity. If
34:35
Speaker 3: you buy a bond ETF, even if it says it's
34:37
Speaker 3: a bond ETF that's structured on the 10-year.
34:39
Speaker 2: You are probably going to lose money. And I will
34:42
Speaker 2: tell you why.
34:43
Speaker 3: Because you're going to buy that and you're not going
34:46
Speaker 3: to hold it for 10 years and therefore you're not
34:48
Speaker 3: holding it to maturity, but you're buying an ETF and
34:50
Speaker 3: the ETF is being managed by a bond fund manager
34:53
Speaker 3: and they're buying and selling all the time and you're
34:56
Speaker 3: not going to realize that safety. You cannot expect bonds
34:59
Speaker 3: to be safe unless you're going to buy the bond directly.
35:02
Speaker 3: Don't just buy a bond ETF and think you bought
35:04
Speaker 3: a bond. That's not how it works.
35:06
Speaker 1: Exactly. Yeah. That's a good tip for a lot of
35:08
Speaker 1: people because I think in many cases, people are maybe
35:10
Speaker 1: looking at bonds for the first time. So- Pay attention,
35:13
Speaker 1: guys out there. Rebecca Walzer coming in from Walzer Wealth Management.
35:18
Speaker 1: Thank you so much for stopping in today. We appreciate it.
35:20
Speaker 2: Thank you, Paul.
35:27
Speaker 1: If you like this video, hit like and subscribe. Drop
35:30
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35:33
Speaker 1: member group. The link is in the description.