The Two Biggest Macro Forces Driving Markets Over The Next Decade w/ Michael Nicoletos

本站添加: 2026-05-27

[00:00:00]All these agents, how will they transact? They will not be transacting with cash. They will not be transacting with a bank account. They will be transacting most likely on a blockchain with stable coins.

[00:00:13]>> The two biggest macro stories right now are geopolitics and artificial intelligence. But how are these two massive forces shaping each other? And what do investors need to know about how they will drive markets in the rest of 2026? Hello and welcome to Milk Road Macro, the podcast that knows that the recent explosions in the straight of Hormuz have been mostly peaceful. I'm your host, John Gillan. Today is Tuesday, May 26th, and today we are joined by Michael Nicollettos. Michael is the founder and CEO of Defi Advisers, an independent firm focused on macro strategy and digital assets with over two decades of experience in capital markets across developed and emerging economies. He previously co-founded Apple Tree Capital and sits on family office investment committees. Shares insights on macroeconomics, politics, and crypto. Michael is going to share a ton of alpha and insight with all of us today. So, that sounds good to you. Make sure you like and subscribe. Share this episode with somebody who needs to hear it. And without further ado, welcome to Milk Road Macro. Michael, how are you?

[00:01:06]>> I'm fine, thank you, John. Nice to see you. Nice to be with you guys.

[00:01:09]>> Yeah, I'm I'm happy to have you on the show today. Uh Michael, I think a lot of investors are paying attention to the situation in the straight of Hormuz. It seems like a ceasefire has been negotiated. There's hopes that finally we might get a peace here and the strait might be reopened, but there's been self-defense strikes and it's just not clear whether or not all this is going to hold. Um, what do you think happens here? Do you think that we'll finally see the straight open or do you think Iran is going to continue to hold the world hostage here? Okay, first of all, I don't think that what we're going to hear about and we're going to learn and if there's an agreement, whatever agreement comes, it's going to be what actually happens. So, if you look at history, what the the the saying is that the first casualty of war is truth, but it's not only the first casualty, it's the last casualty. meaning that whatever agreement comes and if there's an agreement which I think it serves both sides for at least a temporary agreement to see if they can sort it out is that what the media wants to hear is not what it's going to be agreed in in a room. uh the US I think has started uh a geopolitical strategy which is to try and control the energy the oil around the world. The first hit was Venezuela and the second one is Iran and I would assume that the third one would be Russia. But Russia obviously you don't go into a war with Russia. So I think if and when uh the US finds a solution with Iran then the next shoot drop would be an agreement with Russia. So I think that's the last thing for for this whole thing to work out for the US. There's a as we well as we know there's I don't know if we could call it a cold war but there is definitely let's say a dispute between the between US and China and who's a global power and who's a new global power and who controls uh who's a superpower of the world right now and we've seen the rise of China and I think the US clearly does not like that.

[00:03:26]So in this big conflict there are two elements. One is AI and the other one is energy. In terms of energy and geopolitics we see that the US has started to react. Uh as I mentioned Venezuela now Iran in terms of AI this is another conflict happening on another scale. Who produces the chips? Who uses the chips? Who has the better models?

[00:03:50]Again what is a number one input?

[00:03:53]Energy. Now if you look at China, China imports I think more than 70% of its oil from abroad. It doesn't have its own resources. So by so the US by controlling Venezuela and then Iran if it manage to do so then it controls a big uh it has a big uh card on their sleeves in terms of negotiation when it comes to China to anything that goes there. That's why I think the US went Donald Trump went to China and met with I'm pretty sure the discussions were much different than what we hear on the news. But again this is not something that's gets resolved in half an hour in a room. This takes days and delegations and there are various issues to be discussed. Now given what has happened in this trade formulas which is that what is a number issue that the markets are afraid of is oil lack of oil and higher energy prices. Why is that an issue? A because we need oil to to move.

[00:04:57]The US is self-sufficient but the rest of the world is not self-sufficient. And the second one is that driving prices up in energy costs creates inflation.

[00:05:07]And when it creates inflation, it creates a bunch of headaches for all the central bankers and all the politicians that want to give money to the people and want to reduce rates and want more liquidity and want the economy to grow and all the things that that go with it.

[00:05:23]Now it's it's very important here to clarify something which is very important. Not all inflation is the same. Meaning you raise rates when inflation comes from the demand side. So the market is overheating, the economy is overheating, you needed to cool it down. So what do you do? You raise rates in order to increase the savings and to increase the costs of borrowing and thus you know putting a break on an accelerating economy. If you put brakes on an economy which has just got a new tax because when inflation comes from the supply side, it's the equivalent of a new tax.

[00:06:03]So meaning what? I have to pay more for oil. I have to pay more for heating.

[00:06:08]Suddenly my disposable income goes down because I just got a new tax if you can put it this way. So raising rates won't do it. It won't do it because the the energy prices unless you want to collapse the economy and take it into depression where demand stops period everything else won't work. Now if you look at the US and you look at Europe, it's important to see that the two central banks have different mandates. What does that mean? The US has a dual mandate which is price stability and full employment and Europe the ECB has only price stability. So the two mandates are different and the reactions will be different. ECB unfortunately is too focused on price stability. So they might make the mistake to raise rates. the Fed goes to full employment and uh price stability. But when the two diverge, history has shown that the Fed most likely lowers rates, does not increase rates. So one when one points for a hike and the one points for a a rate uh cut, usually the Fed sides with a rate cut. So that's what history has shown.

[00:07:25]Now, I think that inflation comes from the supply side and I don't think that the reaction should be to raise rates if you're asking me if I were to wear my macro hat or my having spent so many years in front of a screen looking all these numbers because I think you're going to make it you're going to create a greater damage than you're going to create a greater good. You're you're going to bring the price of energy down because you're going to create a huge economic contraction which will eventually create lot less demand. But that's not the point of having read it.

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[00:08:28]>> So, let me ask you a question about this. I I think you brought up a good topic here. You brought up several topics in that answer. Um there's a lot you a lot of ground you covered in there. We'll try to get get to some of this, but um Fed Governor Waller gave a speech yesterday in Germany basically saying that he thinks that this easing policy from the Fed is is now crazy and that the energy shocks and other pressures have made um domestic inflation more structural now. And he he's arguing that we need to start looking at rate hikes. It seems like the Federal Reserve, the United States, might be split on this, right? like Worsh and some of the committee might be in favor of holding rates where they are or cutting. Waller and maybe Powell, it's not clear yet, might be in favor of rate hikes. Um, which like you just said you think that rate hikes would be a mistake here. Do you think that that's the direction that the committee is going to go or do you think that these price shocks and inflation spike that we've seen here is going to force the Fed to uh hike rates even if they maybe don't want to or or it's not actually going to be effective?

[00:09:26]>> Two things. First of all, if there is an agreement or a temporary pose between the US and Iran, clearly the Fed won't hike. So that's if there's an agreement, they will wait it out uh for sure and maybe lower rates, I don't know, but they will not they will not be hawkish in that sense. Let's assume now that this thing prolongs and oil stays at 100 and for the lack of you know speculating of where oil goes, let's say it stays here.

[00:09:55]The first issue which we need to mention is that Powell has remained in the Fed which is the first time which creates a problem in terms of who do the governors align with with a new Fed chairman or with the old one. So I think that will create some issues that aside and let's assume that Powell is an independent Fed member which will vote without having to to to bring others with him.

[00:10:24]It's very hard to argue a Fed a rate hike. And the reason is that what are you going to do? Create what? A recession. What what's the goal here to stop the economy from growing?

[00:10:39]>> Yeah.

[00:10:39]>> Demand destruction, right?

[00:10:40]>> Demand destruction. Because what else are you going to do? This is a supply side. As I said, inflation. Now, the argument that it's more structural. A, it's too soon to tell. B, the Fed can find other ways to do that. It It doesn't need to do the hikes. The hikes are going to take time. They do not go one-on-one. You're going to start raising rates. It's going to be a policy mistake. The policy mistake will be uh seen by the markets as a problem. You're at a time where SpaceX, Antropic, OpenAI want to raise capital in a strategic time for the US where it wants to lead in the AI race. you're going to create issues which are have collateral damage.

[00:11:25]I don't think right now in terms of geostrategically and uh where the markets are this is something the US would want to do. Now there's the argument that the Fed is independent. Well to be honest it's never been independent. It's been independent in theory but in practice it's never been independent. And I'm saying that because you cannot assume that the Fed governor does not speak with the treasury secretary and with the president of the United States two three times a week.

[00:11:57]Of course they speak. Of course they try to to coordinate and if you see which is very important here and I think because of the war this will be delayed is both uh the new Fed chairman Scott Besson and Steven Miran who used to be a governor until now all have advocated that the Fed should have a less actually liquidity in the market should not come from the Fed but it should come from the the banks. And how do they do that? They will lower the reserve ratio or take it out for holding US treasuries and thus giving more liquidity to the real economy which would have a multiplier effect because the money come from the banking system goes directly to the economy and that would create growth. On the other side, QE what did they do?

[00:12:51]They bought bonds. They lowered rates.

[00:12:54]The wealth effect through the markets trickled down and gave a sense of euphoria. But this was not really democratic in the sense that those who did not have equity portfolios did not benefit from that. So the new administrations has realized that even though they're Republicans and you would argue that they would not be the ones doing that and that would be the Democrats, they have realized and they're trying to do that. Now, if the 10 year and the 30 years start going through the roof because of inflation expectations, I would not be surprised if the Fed started doing QE again to cap the yields and to be able to manage the yield curve. So, all the tools are on the table. Uh I think that if I were to lean towards lower rates or higher rates by the end of the year, I would say lower rates for the Fed for sure. I'm also pretty convinced that DCB will make the mistake. They've always done it, so why not do it again? And but then the thing is that the in the in the US you have three people. I mean the president, the Fed governor, the treasury get into a room and they can decide. In Europe you need 30 you need 20 people to decide and then go to their parliament and then decide and then go back and then have another discussion and then talk to the ECB. It's a nightmare. So right now they're looking at the prices as if it's a given. Prices are going up. How do we stop prices?

[00:14:21]We raise rates.

[00:14:23]So I don't think it's the same thing for both countries. But I think the US is well positioned to be able to absorb it.

[00:14:29]A because it has a dollar, B because it has self-sufficiency in in oil prices.

[00:14:34]It's easier to cap oil prices or to cap I don't know gas prices than to raise rates. Why do the second one?

[00:14:42]>> Gotcha. Okay. So, you're expecting the ECB to make the mistake of hiking rates.

[00:14:46]The central bank in the United States, you don't think will make the same mistake. Um, Michael, I want to pivot a little bit to artificial intelligence because, you know, in your your first answer, you talked a lot about this contest over energy and AI between all these global hegeimons that are competing with each other. Um, a question that's on a lot of investors minds right now as it pertains to AI is looking forward to these IPOs that are planned. There's SpaceX, OpenAI, Enthropic, several others that are planned for 2026 or or in the near future, let's say. Um that could pull up to $4 trillion by some estimates out of the global capital markets here. And I'm curious how all that factors into what you expect in terms of fiscal and monetary policy for the rest of 2026.

[00:15:27]How do you think that the market is going to sustain all these IPOs that are coming up for for all these AI companies here?

[00:15:32]>> Well, if you ask me, there's enough money on the sidelines to go into these IPOs. That's the one thing for sure. The question is whether it goes or whether it doesn't. Now, I'm pretty sure that the US administration has made it a strategic choice to be ahead in the AI uh competition, if you put it this way, all the legislation, the way it frames it, uh innovation before legislation.

[00:16:04]So uh I think all that points to the direction that the US administration wants to make sure that this is a success.

[00:16:13]So I think these IPOs will do at least they will raise the capital they will do well and as long as liquidity in the markets keeps coming in markets will continue to go higher. Now the basement has been an issue and I think you've had other guests talking about it. It's been a thing for some time now. However, now it's more apparent to the average person because prices of the goods you're buying are more expensive and it's not necessarily inflation because they're they're more expensive. It might be shinflation which is you buy for the same amount of money less products and you're happy with it.

[00:16:52]So the cost of living has gone up and that's and your purchasing power is going down. So people need to find a way to protect themselves. Now when global liquidity increases, buying a treasury at 4% or at 2% whatever which whatever you buy on the curve or buying bonds won't cut it. Your debasement is around 10% a year.

[00:17:18]So you need to do something to keep your purchasing power at bay. And if you want to make money, you even you need to take even more risk.

[00:17:27]So I think markets are structured in a way where this is going to continue happening. You're going to get eventually some flash crashes or some big corrections because there are scares. Could be a war. It could be like COVID. It could be a crypto event. But whenever that happens, there's so much money on the sidelines which comes in and buys it back. So if you ask me as a trader, would I buy now? I would say I would keep money on the sidelines in order to buy more if the there is a correction ahead of me. But if it was a correction or a big scare, I would not be a seller. I would be a buyer. So I think markets are a way for people to preserve their purchasing power right now. And I know it sounds crazy because buying at these valuations seems ridiculous and if you look at in a historical context you're everyone who says that is absolutely correct. But the question is where do I put all that liquidity? A B can the government afford for a market correction where this would create probably depression and given the tools that we have today that could be QE that could be buying equities for the Fed or the so you can you can do anything you want at the end of the day what will get hurt will be the currency but if everyone's doing it then you won't see it in the currencies because everyone will be doing the so where will you see it you will see it because your purchasing power goes lower. So this is the way I see it. I think that these IPOs will do well. Uh and I think it's a new era. I would say it's a new era in the sense that we had the internet which was a big boom. Now we have this. The risk here is is not them doing well. The risk is all if all the prophecies or all the issues that everyone's talking that one day we have a thousand agents and people lose their jobs and the computers do. What humans do? What do the humans do in their lives? That's a bigger discussion.

[00:19:41]I don't know how this I I've had a few of them. I haven't come to a conclusion.

[00:19:46]I think that this is going to materialize in the next we're going to be seeing the signs of how this goes in the next two three years because this is going to speed up. I I can tell you from my daily life, my life has changed with all these tools. Research that they took me to do a month takes me three days. To write a report, it took me to took me 10 days. Right now, it takes me one day.

[00:20:09]I'm not I I use them and I love them.

[00:20:13]But now in instead of having three assistants to help me on research, I don't need anyone or I need one. I'm not going to go to the extremes of going from 100 to zero, but I need less.

[00:20:26]That's the the side effect. But now a person, three people in a garage can create a 1 billion company.

[00:20:33]>> There's a lot of changes that have come from artificial intelligence. I want to kind of situate this in the the broader macro framework you outlined. So you talked about how the United States is trying to become the global hegeimon on energy and you know we talked a little bit about how they're trying to do that with artificial intelligence but what you said was that you think that the dollar is going to weaken because they're going to have to continue to you know continue this debasement and provide liquidity to support all of this while they're you know growing these massive companies. One of the tools in the toolbox that's come out recently is this stable coin legislation, the Genius Act. And it seems like a strategy by the United States to try to bring in capital to support the Treasury market and the US dollar um by expanding access to the dollar through stable coins. And I know you know you're focused on crypto and digital assets in a lot of what you do.

[00:21:19]Talk to me about how you see that playing out geopolitically. Do you think that's going to be affected by the United States? Is it going to backfire?

[00:21:26]And just what do you see happening as these stable coin wars start to go global here?

[00:21:30]>> Two things. First of all, I'm not sure the dollar will weaken. If everyone does the same thing, it won't weaken. I'm pretty sure that the US would like it to weaken. I don't know if it will be able to weaken it unless, of now, if the ECB raises rates and the Fed cuts rates, obviously it's going to weaken. Uh I think the US wants it to weaken. What matters here is not if it does or if it doesn't. It matters at what speed it does. So even if it weakens and it does it at a measured pace, it won't be an issue. If suddenly the dollar starts falling off a cliff, it's going to be an issue. That's one thing. Second thing is no, there are two things to to to clarify here. What the dollar does in terms of price and what the dollar does in terms of dominance are two different things. So whether the dollar goes higher or goes lower, it's one thing. It has to do with micro events. It has to do with liquidity, has to do where the capital is getting allocated. And it feels to me that the dollar is getting allocated to the US.

[00:22:35]Uh my good friend and I Brent Johnson from Santiago Capital has done a lot of work on that. We're good friends and we speak we we speak quite often. He's done an excellent job in describing this and I think he's spot on. So everyone in the world even Europeans they want to spend their money they want to invest their money where do they do that they invested in the US why don't they invest in Europe for all the reasons we just mentioned so all the liquidity goes to the the US so that's one thing that's so that's in terms of price now in terms of dominance which is how much dollars do I hold in reserves how many invoices do I in how How many invoice do I use a dollar? How in FX transactions? How many times the dollar is in one side? If you look at all these numbers, so in terms of FX, I think it's more than 80% of transaction. In terms of invoices, more than 50% globally and in terms of FX reserves again, it's again more than 50%. So the dollar is still dominant and by any metric, it's at its close to its highs in terms of me not being in the US holding dollars because the US and the US holds those.

[00:23:48]The question is does the rest of the world want dollars or do they want something else? Gold had been a discussion for a few years. Bitcoin has been a discussion for a few years. But again, all these are on the rise, but the dollar still remains the dominant power. And the reason the dollar remains the dominant power is not because it's the dollar. It's because when I hold a billion or 10 billion or a trillion of dollars, I don't hold dollars in a bank account. I hold dollars in treasuries or in market money funds which I can sell with as I push a button I can sell them.

[00:24:21]There's no other liquid market as the US. So the US dollar is a derivative of the capital markets and the liquidity that they provide and the transparency they provide. Do that with the Chinese.

[00:24:33]You want you hold 10 billion in Chinese bonds and you want to sell them. Let's assume you manage to sell them. Can you repatriate your money? No, you can't.

[00:24:41]They have capital controls. So you're stuck. So why how can a country hold reserves in a in a currency which cannot get its money back. So that's one issue.

[00:24:52]The US administration realized that the swift system was starting to become obsolete and they needed to change it with something else.

[00:25:02]Crypto came up. The first I'd say the first successful application for blockchain was Bitcoin. The second successful uh application is stable coins. And with the Genius Act, what did the what did the US administration say?

[00:25:18]We're not going to be issuing the currency. So, it's not the central bank digital currency. Anyone can issue a stable coin provided that they hold one to one dollar or dollar equivalent. And by that we mean US treasuries or bonds.

[00:25:36]So, suddenly I can do that. Let's say if I get the regulation, I can issue 100 billion or 100 million whatever in US dollar stable coins provided that I hold in my bank account or in my portfolio the equivalent of dollar dollar equivalents. By doing that, two things happen. First of all, the total addressable market for US treasures went through the roof because now anyone in the world who holds stable coins implicitly is telling the issuer to hold US treasuries. So now everyone's holding US treasuries in order to back the stable coin and to get the return from the interest. The second thing is by doing that and having it on a blockchain transactions are faster, are cheaper, are transparent. The ledger holds all the information. And by being the first one to do it, they get to have the late start. It's more than $350 billion dollars the the the the issue to stable coins right now. Europe is still fighting on the legislation.

[00:26:41]Why are we going to do it? Who's going to do it? Is it going to be a central bank? No, it's not going to be a central bank. Who's going to do it? So again regulations has come in the crossfire and Asia is China has tried to do something but it's more closer to a central bank digital coin than a stable coin. What's the difference? The central bank central bank digital coin is issued by the central bank. So they issue the supply in a stable coin which is backed by anyone not by anyone. It's backed by US dollars but issued by anyone the supply does not increase. It just changes the way that is transmitted. So the US realized that by doing that it will be dominant in the next year as well. So they're the first ones out there. They've gained 350 billion. I I think uh Scott Besson said it could raise to two trillion. I think it it will raise it will rise much higher than two trillion. In the next 5 years you're going to see 5 trillion of dollars on stable coins. Why not? If I can hold, if I can let Okay, if you're at two US banks, it takes one day to to to to to to send money. Let's assume that you're in Argentina. You want to send money to someone in Nigeria. Do you know how much time it takes? It takes like a week. It takes like a 100 bucks. It will take two, three, four, five, six correspondent banks. And maybe you don't manage to put the information correctly and the money comes back after a week.

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[00:30:11]>> Okay. So, what you're saying is this is a much superior product from scalability, from efficiency and security. And so, you think that there's going to be an even greater demand for US dollar stable coins than the two trillion estimate. Um, Michael, I appreciate the outlook on that and and how that factors into that geopolitical contest between these different nations.

[00:30:30]I I do want to ask you here one question at the end here as we're getting towards time uh about digital assets themselves because another thing the United States has publicly said they want to be the leader on is Bitcoin crypto digital assets um and there's a lot of competition around that but the Clarity Act is moving through Congress as you said stable coins are a big part of the US's strategy now to to keep demand for the dollar in place and dominance of the dollar in place um what's your outlook for the rest of 2026 for for Bitcoin and crypto here do you think we're going to see them sort of rejoin in this bull market, do you think they're going to continue to lag or like what is your outlook for for for those assets as we go forward in 2026 here?

[00:31:06]>> First thing to watch here is because AI has been the main driver right now and because you have these huge IPOs, it's going to be hard for them to pick up.

[00:31:15]I'm not saying they're going to go down, but they're not the main focus of the market right now. People are focusing on how to raise money for the SpaceX, OpenAI, Antropic, and all these names.

[00:31:26]And I think this will remain the number one issue right now. The second thing is as long as there's a discussion about rate hikes or at least rate hikes, it's going to be hard for them to take off. So I think they consolidate at current levels and once the inflation scare clears out and once the IPOs, the big IPOs clear out, I think you're going to see a rally towards the end of the year after the midterm elections. That would be my my my my assumption. So what I would do, I would wait. If there's a correction for any reason, I would be a buyer and I think it will rally end of the year, beginning of the next year. But it's mostly because of liquidity and where people focus their their energy right now. It's not because there's some issue in the crypto world right now. I think on the other side on on contrast, there are a lot of positive developments which should make the market go higher.

[00:32:22]>> Gotcha. Okay, so I want to ask a general question about this. Our audience are pretty savvy investors, but a lot of them are self-directed investors, and something they're always curious to hear is how people are allocating their portfolios. What are you focused on going towards the end of or the second half of 2026 here? Are you heavily in digital assets? Are you heavily allocated to semiconductors and AI? Are you in indices or precious metals? Like what's your focus in in terms of your polio portfolio construction right here?

[00:32:49]For the past few years, I've had a big position in gold and in technology stocks and in crypto.

[00:32:57]Uh I still hold these positions. I have an amount of cash which I would buy in any correction. And not I'm not a big fan of the bond market because I think the return versus the debasement that we're having does not represent uh a good risk return. I prefer holding cash for a correction to buy than to do the opposite. I understand that there are big portfolio managers who need to do the risk adjustment and have on portfolios. So it depends on what your risk profile is and it depends on what you're looking at. What I'm trying to capture here is understand that the technology in the next 5 years will be gamech changing. I think our realities will change materially. I don't know how. I'm not a pessimist. I don't think we're all going to lose our jobs. Some of us are going to lose our jobs, but we're going to get the opportunity to get another job or to do something more interesting or to have more time to do nice things in our lives. I, you know, I try to see things half full and not half empty. Uh so my thing is given the volatility given what's going on and given the systemic changes we're witnessing I think that where your portfolio will be in 3 years is much more important where it been 12 in 6 months because 6 months has a lot of volatility a lot of uncertainties and I think that uh is going to be an issue because you cannot predict all the corrections you cannot predict Trump coming out with a liberation day you cannot predict uh coffee. There are these things happen and it could happen again. I'm not saying you don't know if they're going to happen. So any of these happen, having a portion of cash on the sidelines of 30 40% and getting in to get that benefit, I think is the best way to to address these issues. Again, when the market rallies, you reduce, you keep your cash, and then again. But that's the way I see the markets going forward. I don't see the markets of I understand why people might want to make six seven% a year. I'm fine and good and they might be right and I might be wrong. But my thing my my my my thinking is here if things are going to change as much as I think they will and I don't know how I want to be able to have the flexibility and the agility to be able to take part in it. So this is the way I see the markets. How do you think about taking part in that economy and what that looks like 3 years from now, right?

[00:35:35]Like as you said, that's what you want to invest for is what the markets look like and the economy looks like in three years. The the rise of the agentic economy is something that a lot of people are speculating about. And I think a lot of investors are wondering how to capture the value acrruel from that. Is it, you know, Bitcoin? Is it Ethereum? Is it just stable coins? Is it buying some of these IPOs this year that are coming? How are you thinking about positioning to capture value from the agentic economy that's coming in in the near future?

[00:36:03]>> I I think one way is to get the names that you just mentioned, the IPOs that are going to come in, watch and see once they come in, what the market does. The second thing is I'll give you a second line of thought which I have thought about a lot.

[00:36:21]If we're in an agentic world where each of us has two, five, 20 agents or each corporation has 30 agents. All these agents, how will they transact? They will not be transacting with cash. They will not be transacting with a bank account. They will be transacting most likely on a blockchain with stable coins. So I think the best way to take advantage of the agentic world in transactions is to through the stable coin market getting issuers that have stable coins. So I think that would be because if agents to agents do transactions this will be in a split of a second there'll be a thousand transactions. So velocity of money will start going through the roof. That's going to be the problem when the Fed needs to raise rates to stop agents from transacting which are not going to be easy. So, we're not there yet.

[00:37:16]Hopefully, we'll be there one day. But imagine now agents transacting all day long, velocity of money going through the roof and GDP growth going to 6 7%.

[00:37:26]So, if you're asking me, my first line of thinking is how do I get exposure into the stable coin market and the stable coin issues which I think the market is going to rise materially. The second one is the identic solution that you just mentioned which needs to be careful because all these models are likely the prices are likely to collapse and I'm saying like a collapse because the models now from what I've been seeing you'll be able to have a model on your computer which is fully trained and can do 90% of the work that you do right now. I'm not saying to solve a new math problem or to send a spaceship into space, but if you want to do research or things which are day-to-day, you'll be able to do it from your laptop. So, they will not be using tokens and token prices are going to collapse in my view.

[00:38:17]So, this is going to create an issue for all these issuers that been making money on that. So you might see a price correction in the issuers like the internet happened. Initially you had a boom then you had the repricing and then the leaders remained the leaders and took off. So I think you might likely see something like that in terms of how these stocks perform.

[00:38:42]Uh so again I'm aware I'm watching trying to understand what the value proposition is going into an IPO before.

[00:38:51]If I had stocks yes I would do the IPO and flip it but I'm not that convict I don't have that conviction that this thing is priced correctly in terms of making actually justifying the riskreward of doing it right now. If it goes up the first day we'll see what happens. But again I'm saying that all these models need a lot of energy which going to be squeezed from the input side. The pricing side which is the output side is likely going to be squeezed because the token prices are going to fall dramatically.

[00:39:25]So I'm saying that this is probably a good investment but you need to pace yourself. Don't go all in. take a small portion to see how it goes and wait it out and probably you'll get a chance to increase your position at the lower valuations. My sense at least this is how I see.

[00:39:43]>> Gotcha. Well, I thank you Michael very much for coming on Milk Road Macro and sharing your thoughts and insights on this. I know you're following all of these things very closely and you know I think what stands out to me from your comments today is that the world is changing, the economy is changing, finance is changing, investing is changing and it's difficult to predict what the next 6 months to 3 years looks like. Um, so it's a great time to to lock in, pay attention, and as I always say, stay safe, stay educated, and stay bullish. Uh, Michael, where can we send people to find more of you and your work online?

[00:40:11]>> First of all, thank you for having me.

[00:40:12]It was a great discussion. Uh, love your work. I have a Twitter account, which is I think you have my handle on uh on on the screen. And also I have a SAS which is free. So I write about various issues and if someone wants to follow me, if they write my name on sapstack, they're going to find my sapstack. It's and I write it's free. I write randomly about things that I I find interesting. So most of these thoughts I lay out usually come up there.

[00:40:40]>> Well, I hope as your thoughts continue to come up there, we can have you back on here to continue to share with our audience more. Michael Nicolos, thank you so much for being on Milk Road Macro.

[00:40:48]>> Thank you for having me.

[00:40:49]>> And thank you all for joining us. I hope you all learned something today. So until next time, as I said, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Macro. Thanks for being here everyone. Bye. Want insights on what's really moving markets and how we're trading each event? Subscribe to our channel, then join the Milk Road Macro and Macro Pro newsletters. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.