IBIT's largest 2026 weekly outflow, MSTR buys bonds, Bitcoin consolidates.

Ajouté : 2026-05-30

[00:00:00]Exactly. It's still doing it.

[00:00:10]Hey, hey, hey. What's up everybody?

[00:00:12]Chris Franks with Texas West Cap and of course we got Andrew Parish here from Arch Public. Tilman is doing dad things today, so he won't be with us. Um, so no analogies, folks, but I'm sure we'll have more than a few movie references.

[00:00:25]Um, hopefully everybody's doing all right. uh enjoying life. Uh you know, we're coming in was this Wednesday, the last I guess it's last Wednesday of May.

[00:00:34]>> Yeah.

[00:00:34]>> Um >> time flies when you're having fun. By the way, as per the analogies, I'm really sad that Tilman has shifted from his early whole life analogies to now buckets of water in Colorado. It feels like it's going in the wrong direction.

[00:00:52]Uh this is a financial show, not a environmental uh type of type of show.

[00:00:58]Um but no, we we couldn't get enough of his uh his commitment to whole life policies.

[00:01:04]>> Hey, I'll tell you what, man. He's he's definitely got uh I I think, you know, I think honestly he'll probably be able to uh you know, put out a book here pretty soon. People will be expecting it. It'll probably be, you know, New York Times bestseller.

[00:01:17]>> Yeah, that's right.

[00:01:18]>> Analogies of Tilman. So, you know.

[00:01:20]>> Yeah.

[00:01:21]the uh Deep Thoughts by Tilman Holloway.

[00:01:25]>> Deep thoughts, there you go. That's the name of the book.

[00:01:30]>> So anyway, man, um you know, a lot of stuff kind of going on with Bitcoin this week uh making the headlines for retail and uh I'm not sure retail knows what to do with it. We had uh we had Sailor uh Micro Strategy or Strategy I guess. God, I wish they would change this. I keep calling them. Whatever.

[00:01:45]>> Yeah.

[00:01:46]>> Anyway, uh buying bonds this week.

[00:01:50]>> What do you call it? the BitVac uh is is now uh set up there. And of course, you had people I think even um what was it?

[00:01:59]Yahoo Finance was even talking about how he was buying US treasuries. And what did they actually buy, Andrew?

[00:02:07]>> They bought back their own bonds. Say >> for a discount, right?

[00:02:11]>> Yeah, that's right. So, you know, if at any point you you you postulated on twitter.com or x.com or Facebook or any social media where you thought you were smart enough to say that, well, this is proof that Sailor's got problems. He's buying treasuries or he's buy anything other than what he actually did.

[00:02:36]You're just you're just not you're not all that sharp. Um, all you have to do is watch what Sailor has done for several years now. And it's it's a a creation of additional strategy product or leveraging strategy product associated with Bitcoin. And so, you know, all the bonds that that that they're dealing with that they've issued um is, you know, strategy stuff. Um, and so they're going to, you know, it's the positive version of, let's just call it self-deing.

[00:03:11]They have the capital to be able to make choices about what do we issue, what to retire, where do we put the capital that we get that we take in based on the products that that that we've produced.

[00:03:25]Um, you know, how do we maximize the output or outcomes of of those products?

[00:03:31]And so no different than you know stock buybacks which were all the rage a decade ago associated with you know basically interest rates at zero. Um the same thing here and smart move by him.

[00:03:48]Um, one could, uh, one could one could make the case that there were potentially other bond, you know, uh, other bonds that that he could have, uh, retired that maybe made a little bit more sense. Um, I saw Jeff Park talking about that a little bit yesterday, >> but at the same time, um, still a good move by him. And it's all it's also a signal to uh to the markets to market participants to folks that uh have strategy positions that they're willing to be versatile in how they go about uh running that company. It's not just a raise debt by Bitcoin, raise debt by Bitcoin, raise debt by Bitcoin. Um it's a it's a bunch of different things. Um and and over time that will serve them well. Um you know, Sailor's been taking some punches lately, at least from a rhetoric standpoint. Um because he's an easy target, because he's the biggest target.

[00:04:57]>> Yeah.

[00:04:57]>> Um >> but kudos to him for handling it well, managing it well, and managing that company in a in a in a pretty remarkable way. It's it's uh it's pretty great.

[00:05:09]It's pretty great to watch. Kudos to him. Yeah. Yeah. I mean, I was going to say there he he can't seem to win either way, right? Uh he he doesn't uh you know, he says, "Hey, we may be selling Bitcoin." They get upset. He says, "Okay, well, we're buying back our bonds at at cheaper uh you know, at a discount." I believe these were 2029 and they were getting them for 8% less or something like 8% discount.

[00:05:31]>> I'd have to give it another quick quick look, but either way, it was it was an accretive uh transaction is the best way to say.

[00:05:39]>> Yeah. And you know, so you can't win you. They're like, "Oh, he's selling debt to buy Bitcoin." Okay, well, I'll pull buy back some of that DEBT CHEAPER NOW. OH, HE'S BUYING BACK to buy. And this but this is also after the previous week where he bought the 2.1 billion or whatever worth of Bitcoin, right? The 30 almost 25,000 Bitcoin or something like that.

[00:05:58]>> So, here here's the best layman's way to explain this. If you have a loan from the bank, right, they they offer you money, okay? they offer you effectively a a bond, right? So, if you have a loan from the bank and you pay off that loan early, right? You're you're making all your payments and then you also say, "Well, I want to pay off this loan three years early and it's a five-year loan."

[00:06:25]Do you think the bank is going to be more or less interested in loaning you more money? they're going to be more interested in loaning you money because first and foremost they got the benefit of a couple years of interest payments and then you paid off the loan and so now you're you're an even better credit risk. So not only will they want to loan you more money, they'll probably increase it by a factor of two or three, right? Um, so that's, you know, part of the part of the the process here is that by by paying off this quote unquote, you know, capital, debt capital, um, it's just going to make his debt partners all that more interested and keep the, you know, keep the keep the money flowing.

[00:07:15]That that that's the easiest way to to explain it. um whatever the you know the the year of of um you know whatever denomination it was whatever the year of expiration it was is is pretty much irrelevant. Um he's he's doing I was about to say playing banking games but it's it's not really games when it's you know billions of dollars. He's he's making banking moves that will benefit strategy in a meaningful way shortterm and long-term um and allow him to keep on the path that he's on as being, you know, um a Bitcoin almost colossus at this point.

[00:08:04]>> And and that's and that's the goal, right? I mean, let's face it, at the end of the day, as much as he talks about buying and holding Bitcoin, at the end of the day, it is a business and you know, the business has shareholders and shareholders demand >> uh value. You know, they they want to see you increasing the value. Uh that makes them happy. Kind of like the the banker that loaned you the money and you pay it back early and hey, they got some interest and you paid it back. You're there, you know, they like it. So, >> right. Um >> well that's why at banks you know that's why at banks oftent times banks when you get into a relationship with them they'll you know the first transaction is is is pretty generally speaking is pretty friendly. the next transaction begins to be very business-like and okay, we did this for you, but on this particular transaction, you know what, we're going to extend ourselves, but we're going to we're going to take a little bit of a pound of flesh. And so, you know, they give you a 5-year loan, but effectively, you can't pay it off for the first two years. Like, like that that's part of the loan. like you have to make payments, aka shovel interest into their pockets for 2 years before you're able to pay off the loan. Okay, that's that's the that's the chess game that that we get to play with with bankers. And then you you pass that proverbial test and you know then the the purse is open even more until you're in a position where um you're almost setting your own uh sort of um you know interest rates and and uh outcomes associated with the debt because your relationship with that particular uh organization has matured in a meaningful way. That's probably where Sailor is. you know, these the folks that are doing these transactions trust what he's doing and they feel like his math is uh is nearly bulletproof.

[00:10:01]You you don't loan somebody tens of billions of dollars if you don't think that the math is bulletproof. Like you'd be you'd be insane. Like you'd be taking catastrophic risk as an organization uh to do that, right? You know, to Tilman's point, you know, if the bank loans you a million dollars, it's your problem. If they loan you a billion dollars, it's their problem, right? So, think about that sailor. I mean, I think TD Bank has has, you know, lpped off billions of dollars of loans and and transactional value to to Strategy and Michael Sailor. So, uh, yeah, that obviously that relationship has matured and there's an enormous amount of trust in not only the model but Michael Sailor himself. And then if you strip away strategy and you strip away sailor, they then have to trust the actual math associated with Bitcoin's quote unquote keer over time outpacing the S&P 500, which by the way, that's meaningfully been put to the test over the last couple years, like meaningfully been put to the test. So, um, yeah, it's a it's it's absolutely and always interesting, uh, to talk about and to get a front row seat to, uh, the world of Bitcoin and banking colliding in real time is that that's what that's what we're that's what we watch with with these transactions. And and I think it's probably important even in the timing that he's doing this because if you know the the big thing when it comes to banks and and loans and whatnot is you're supposed to go get a loan when you don't need it, right? And then you build up that trust and whatnot. And that way when you need it, >> the bank's like, "Sure, you you know, you've proven to us you can do this."

[00:12:00]And I I think uh you know, we've been in this secular bull market since, you know, like what 15 plus years now. Um, you know, it's not going to go up forever. We're going to get a meaningful pullback that's going to last a while at some point here. Um, and I think, you know, to Sailor's point, as you know, as far as what his business is and his ability to raise debt, I, you know, I think you do it right now. You do it right now when it's easy, when, when money's, you know, out there and available, when markets are going up, and you build that that >> proof uh that you can do what you're doing. And that way when the time does come and you really potentially really need that money, um not not that it will necessarily be able, you know, just right away get it to you, but it's going to get rid of a lot of the uh the things that'll be in the way uh a lot of times, you know.

[00:12:49]>> Yeah. Listen, there's there there's some commentators and and some folks that are smart uh in our space, both Tradfi and and the crypto space. Uh like a guy like Mark Yusco, you know, I've seen some commentary from him talking about markets and you know, he he he's of the opinion right now that markets are uh overextended.

[00:13:14]uh he's making comparisons to previous very serious downturns in the market like you know um um do you need something? Sorry, somebody needs something. Um um and the the the question is you know is he looking at individual stocks or is he looking at the markets at large? And again, I've I've taken a look at some of his commentary the last couple days, and he seems to be making the case that it's, you know, markets at large, but then I, you know, I pull up um a chart of the S&P 500 and there's no there's no parabolic move, right, over the past five years.

[00:14:02]>> Um, you know, you you've got you've got effectively a 78% return over the past five years. Now, to be fair, um that's above average return for the S&P 500 in a meaningful way, right? But it it's not um it's not NASDAQ uh you know uh uh internet bubble territory, right? It's not that. It's not Amazon going from a bookstore to, you know, an insane stock price inside of a nine-month period, right? It's not any of those things.

[00:14:41]>> Now, again, pockets of B bubbles associated with the AI trade and and all of those things that can be evaluated and looked at, right? For example, Micron going from, you know, a $70 billion company to a trillion dollar company in what about a year? Isn't that right?

[00:15:00]>> Yeah. Yeah. It was it was pretty quick.

[00:15:01]Yeah.

[00:15:01]>> Isn't that a real thing? Um, so you know, will there be again we we there's such a broad uh um a broad way that money moves now uh as it relates to I made this comment on a on a um on a uh a platform completely unrelated to Twitter. Nobody knows me there. Um, and somebody was asking about markets and you know, uh, first the the question was flawed because they're like asking about the next 6 months and they also attached the term long-term six months. I'm like that's not long term. I'll answer the question anyways, but you know, nobody knows from from whence I'm I'm coming.

[00:15:46]But so I answer the question like you know just always stay invested, right?

[00:15:52]just always stay invested because the dynamics of of markets right now associated with both the boomer generation and now Gen X by the way like we've also learned that you know it's very difficult for markets to go down because of >> the the machine that has become money moving into markets and again you know things like ETFs and and the like right it's it's very difficult ult to um have a 25 to 35% downturn in markets um because one, what are the catalysts for that? Where are they? What do they look like? Geopolitics clearly ain't it?

[00:16:41]Uh we've run the gamut of geopolitics for the past 16 months and nobody cares.

[00:16:47]Literally nobody cares. Um, so you know, is there some sort of contagion? Well, people are trying to make the connection with the housing bubble associated with, you know, we can't continue the spend associated with the AI trade. Well, okay. Um, but even if the AI trade unwinds a bit, does that contagion then spread to everywhere? No, it doesn't.

[00:17:20]The AI trade for all intents and purposes, if you dig in into it, is a is a pretty pretty clear circle jerk. I mean, one AI company's selling to another one who's selling to another and who's selling to another one. They're all buying the same chips and then they're all reselling activity and they're all reselling compute and they're all re reselling access yada yada yada. Right? So, that that's a in and of itself it's just a silo. So, one has to wonder where does a contagion come from? And even if a contagion happens, how do we get to 30% down when half the world has been taught when a dip happens, you put more money in >> and we currently have nearly $8.5 trillion in money market accounts.

[00:18:05]>> Yeah.

[00:18:05]>> So, dry powder, where's the contagion come from? you know, liquidity, ETFs, and everybody knows if there's a dip of any kind, you just put more money in because over extended periods of time, whether it's six months or a year, um, or even two years, markets just go back up and they go higher. Um, and that's been the case, you know, I mean, my goodness, take a look at the the the 10-year chart. I mean, the 10-year chart on the S&P just, you know, there are some there are some dips, but it's not it's just um Yeah, even the COVID dip.

[00:18:47]Um where were we at? 4766.

[00:18:51]>> Yeah.

[00:18:51]>> Got down to 3580.

[00:18:55]Okay. We were back to 4766 inside of where when was that? A year.

[00:19:04]>> Yeah, it was quick. Yeah, >> it was a year. No, it was less than a year. It was okay. 10 11 months. All right. So, you know, what do you do?

[00:19:14]Like like literally the world shut down.

[00:19:17]Like that's the worst version of a contagion. Like that's the definition of a contagion, right? That's even different than the mortgage crisis.

[00:19:25]>> Yeah.

[00:19:25]>> Right. mortgage crisis was fin this was financial uh medical uh mental the whole nine yards right Bill Aman gets on uh CNBC and says hell is coming right one of the biggest hedge fund managers in the world basically tells you the world is coming to an end the market dips by let's call it 20ish percentage points 20 let's call it 5 um and then it recovers in less than a year >> and recovered quickly. Yeah. And I think that's the big point is even when we had that pretty decent um draw down on that, it recovered quickly. There was no multi-year kind of sideways, you know, building [ __ ] it was just bought up and shot up, right? So we said that V that kind of V-shaped recovery. It >> it's important to study market dynamics.

[00:20:21]So for example, you know, the 70s existed and the 70s was a long slog of basically if you put money in the market, you didn't make any money in the 70s. Like you it was very difficult. It was it was the antithesis of what it is today.

[00:20:38]>> Yeah.

[00:20:38]>> Um but what did market structure look like back then? I mean very very very very different. Um liquidity wasn't what it is today in any way, shape, or form.

[00:20:49]access wasn't what it is today in any way, shape, or form. Participation wasn't what it is in any way, shape, form.

[00:20:57]>> Um, you know, structure and how uh you even got money into the market wasn't what it was before. Like a large percentage of people if they wanted to get in the market, they bought into a company and had the stock certificate sent to them, right?

[00:21:13]>> That that's that's not how it's done anymore. Um and so you know, uh I if you're hearkening back to moments, right, whether it's um you know, the the the Great Depression or the Great Financial Crisis or all of these different, you know, moments in time, you have to really evaluate market structure in that moment and what really happened, right? Great financial crisis had to do with leverage with banks. Well, banks had a meaningful hand at the time in just about every different portion of the world of finance, whether it was, you know, bond desks were still a huge part of Wall Street, right? Which is, you know, in all for all intents and purposes, >> why leverage got to where it did in the great financial crisis.

[00:22:07]>> Yeah. uh because bond desks were making an enormous amount of money, you know, sending, shipping, receiving and moving mortgage, you know, packaged bonds around like uh, you know, candy. I mean, moving it back and forth every day.

[00:22:24]Moving it back and forth, moving it back and forth.

[00:22:26]>> Less risk, little less risk, a little more risk, a little less risk. We'll just keep shipping it back and forth to each other and making money.

[00:22:34]>> So, what does that sound like? That sounds like kind of the AI circle jerk, right? Like you give me this and then I give you this and then you give me this and I give you this.

[00:22:46]>> But at the same time, AI companies aren't touching the entirety of the economy in the world in any way, shape, or form like banks did, right? Banks were everywhere. You know, that stuff was everywhere. insurance companies, banks, mortgage companies, the the whole nine yards all the way down to housing and individual houses, right? There's probably one of the best scenes that that people don't remember um in uh one of the great financial crisis uh uh movies, the one with um uh Brad Pitt and uh Christian Bale and Steve Carell. Um there was, you know, there Steve Carell had sent his staff down to what seemed like Florida or something.

[00:23:36]>> Yeah. I was in Florida.

[00:23:37]>> Yeah. And um >> for the strippers, right?

[00:23:40]>> Yeah. Well, that but there was another part of, you know, one of those scenes before or after even that one that says, you know, they knocked on the door and you know, you know, do you know that you're so many behind? like we we you haven't paid your payments yada yada yada. Um and the guy's like, "What do you mean? I I've sent in my >> Oh, that's right. The landlord never miss rent. I send my rent every time."

[00:24:10]And so he had no idea that the company or the organization that he was renting from >> wasn't wasn't making those payments.

[00:24:21]Right. Right.

[00:24:21]>> So, you want to talk about risk, right?

[00:24:24]and and and three steps removed from even knowing that that that was a possibility on your behalf. That's not anywhere that we are um with markets today. All of that stuff, by the way, was flushed out of the markets in after the great financial crisis. Like >> banks uh you know, basically avoided risk for a decade um and they've kind of kept it that way.

[00:24:54]um they don't take on meaningful leverage risk. Bond desks quite literally don't exist anymore. Um those parts of banks are gone. Um banks pivoted for in terms of profit centers for the bank instead of equities trading desks or bond trading desks. Those all went to smaller smaller shops that now do it uh and hedge funds. Um and so now the the where where banks make all their money is wealth management, right? Where it's simply >> gather more actual assets and then charge a fee to manage those and th those fees never stop because those assets continue to grow. Um so those fees just increase over time and they're also not at all volatile and can't be leveraged. Um, so yeah, it it is a it's a very very different market. Um, and uh, so interesting. We'll see if there's something on the horizon that nobody sees right now. But to my earlier point about you know what Mark Yusco is talking about you know it's just it's just hard to see um you know what is the catalyst for a 30% downturn in the markets because that that's what he's talking about right that type of move >> what is the catalyst for that because Chris you and I have lived through the reality of some of those things >> um at least two of them you and I were adults when the internet bubble burst, market participants, and then we were also front row seat for Yeah. the great financial crisis and that's a dumb name for it, the banking crisis. Okay.

[00:26:45]>> You got to come up on the sales headlines, right?

[00:26:47]>> Yeah. So, so you know, we had a front row seat to both of those things. And uh you know >> well and let's and let's be real here because this is something I pointed out before when you know probably a year ago when people were really pushing the this is a repeat of the do bubble thing uh you know and comparing Nvidia to Cisco and all that other stuff and you know at the end of the day yeah there's a lot of money circulating you know just round and round through the AI companies but let's be real these companies are making money. I mean there it's not like the internet companies back in in you know in the early 2000s the dotcom bubble where it was just hopes and dreams and whatnot. These Nvidia these companies are making huge amounts of money and >> to be fair to be fair Cisco was making a lot of money too >> and Cisco stood the test of time. Cisco still exists right now for meaningful periods of time not all that different than Microsoft. Cisco was dead money, right? Um, so will there be a period where we have a downturn? Will there be a period where the leaders in AI will, you know, are dead money? That doesn't mean they don't still exist. Um, yeah, it is a it it we're now projecting out what could happen based on what we've seen happen. And oftent times it just doesn't work that way, right? Like literally nobody saw the mortgage crisis coming.

[00:28:18]>> I mean just just very very very few people and even their smartest investors and smartest colleagues and smartest everybody like that's impossible.

[00:28:31]There's no way that happens. The structures and and everybody says there's there's no way until it did. So again, we, you know, there's reason to be thoughtful and and cautious, but there's also um a century worth of truth that says stay invested.

[00:28:55]>> Well, and I think, you know, the other thing we talk about, you know, I've continued to push here is this idea we're, you know, um come coming up into this this, you know, we're transitioning into this next epoch, right? And something I hadn't thought about, it just hit me here is um I guess I probably need to go back and study it, but what have the transitions looked like? What have you know, again, you're looking at things that happened in the future, but things are materially, I can't even say the word, materially different today, which is something you keep saying here. You know, you look at the 70s, you look at combo, you look at the, you know, things are materially different today. And so historically if we look when these uh epochs have come through you know how has that changed the way in which we look at um you know at the the fin the you know the the financial sector and you know and how you know pullbacks and recessions and things like that happen.

[00:29:52]>> So um I think that be something I'm gonna actually look up there. But anyway um so yeah so we've got that. What else do we have this week here? We had um oh we had uh IBIT, right? IBIT I think had a large billion plus this past week. I think it was like the largest outflows they've had in 2026 and over the last two weeks has been about a2 billion dollar outflow which by the way is still small compared to how much has held in there. Um and yet the market it's not really doing a whole lot. You know kind of just consolidating here.

[00:30:25]That's the perfect transition to what we were just talking about because it it goes to issues of market structure and liquidity, right? So you go back in 0809, a big part of the issues there had to do with liquidity. like could you move uh these positions on your balance sheet that that you know just weeks earlier were trading like crazy back and forth, right? Trading like crazy back and forth. Um and so today those same products would all be wrapped up in ETF wrappers, right? and would would you know live or die on their own associated with interest in them and liquidity that poured in or out of them. But they would be easily movable, easily sold or bought again associated with the way that ETFs has have adjusted market structure. go take a look at, you know, do do a not even a deep dive, a dip your toe in the water as to when ETFs started and took hold and then became, you know, meaningful, a meaningful shift in terms of percentage of where capital went to in the markets wasn't happening in 0809, right? It was just starting to bubble up as a new product category.

[00:31:53]mutual funds, again, indiv individual bonds and packaging of bonds. Like again, think about the idea of a CDO, right? A CDO now looks and sounds like the way that you would package an ETF full of equities, right? Um, a CDO was a packaging of mortgages that then you could move around and insure and do all sorts of stuff with. um ETFs has has completely shifted that structure. So you can have uh you know more than a billion dollars in one trade on on an IVIT product that doesn't move the market at all. It may grab people's attention, but the actual movement in the market that it causes based on that type of transaction is barely a ripple uh in in the in the lake of of liquidity associated with it. So to my point earlier because market structure has changed so much and liquidity, you know, the the rails associated with the movement of capital in the banking system and in in in markets in general have been so in incredibly greased um that there's there's there's nearly zero friction. And again, all of that was learned coming out of the great financial crisis. Um, and so again, like you would think that a, you know, $1.3 billion one-time trade, literally that's a that's a sell, right? Like >> y that was not even um, you know, that was not even a a hey, we got to find a partner to do this and an OTC desk. That was, you know, just a a market transaction. So, um I also think um moving forward a little bit to 2026, I I think that's a good that was probably a good um example of kind of sell in May and go away. My guess is is that was part of a kind of a carry trade unwind associated with >> IBIT options and then IBIT spot. Um and as we all know, you know, the the the the biggest uh of the big on the banking side, hedge fund side, um they, you know, leave their offices and go to Montalk, the Hamptons, California, Florida for, you know, uh 3 months.

[00:34:30]To that end too, like there were photos I saw somewhere on Twitter of like Ken Griffin of Citadel like standing next to or dancing next to Tom Brady, you know, at some function in monta or whatever.

[00:34:47]Um, and so, you know, real world real photos of the the truth of sell and may go away. So that there there's no there's no cause for concern about a transaction like that because it can be easily explained. You know, again, probably part of there's by the way, there's probably been transactions that are 300 million, 500 million, 700 million, which haven't been talked about. Um, but this one rose to over a billion, so it is talked about. But again, it it it it if you peel the curtain back just a little bit, selling may and go away spot option carry trade just makes all this the sense in the world.

[00:35:30]>> Yeah. Yeah. And and I mean, you know, I think um one of the important things you hit on there is is this idea of liquidity, right? And this is something that um I've spent a lot of time, you know, when I'm talking to traders trying to explain to new retail traders, right?

[00:35:44]Because they get into into crypto, right? and and then they go look at these low, you know, these number 1,000, this very low liquidity shitcoins, and they're like, look, if this thing pops, it can make me this much. And, you know, not understanding the role of liquidity, right? And the way that experienced traders would rather put their money into something that is liquid, something where they can likely get in and importantly get out where they want to without incurring all that slippage that comes with it. Um, and you know, I I think you know, everybody's out here saying, "Oh, well, you know, Bitcoin, you know, there's this better thing out there. There's a better thing." Well, you can say that all you want, but at the end of the day, Bitcoin has liquidity.

[00:36:25]>> If you're case in point, if you're going to drop 1.3 billion in one shot >> and the market just sucks it right up and then, you know, there's no like $10,000 drop or anything. And so, um, you know, I I think if you're watching in here and you haven't really given a lot of thought to >> how important liquidity is in markets, hopefully you start doing that now and you start trading those things that are more liquid, those things that are a lot more liquid. you know, um I had a question the other day, uh because when we do live trading over at uh Texas West Capital, um I'm often trading the um the S&P futures and uh somebody asked, "Well, is that is that all really the only thing you're trading there? Do you trade the other futures?" I said, "Well, really, I just kind of stick with the S&P futures." Uh because it is the most liquid futures market in the world, >> right? Um, you know, if I'm trading uh, you know, forex, uh, well, why don't you trade one of these exotic pairs? Uh, you know, like like the uh, >> yeah, >> you know, one one one off, you know, emerging another one, right?

[00:37:30]>> People don't realize the lack of liquidity in in some of these markets like it's extraordinary.

[00:37:35]>> Um, like go and tried at go and try at scale to trade like Dow futures.

[00:37:42]>> Yeah. that that very very thin liquidity, thinner than you would think.

[00:37:47]Even NASDAQ futures are they're they're nothing like S&P futures. So, >> um you know, Arch Public has has traded futures for five years now out of our six years of being in existence. And we've had to we've had to intentionally limit the amount of people in that product because when we're taking down 4,000 plus contracts in a particular trade on behalf of 200 clients, you know, CME wants to know where that's coming from. Uh because that's a that's a big number, right? On a fivem minute candle, that can be a sizable portion of the contracts inside that candle. Um, so while the S&P is still, you know, meaningfully liquid market as per your comment, um, yeah, you'd be surprised at like the Dow and the NASDAQ, you'd think it they'd be just as, if not more. No, that's not the case. like people, you know, small small things that you and I have known for forever, but I go over them just, you know, just for the sake of education, like, you know, the type of of conversations that happen on news shows, right? So, at the end of like Brett Bear's Fox News show every day or in the middle, they talk about markets, but the first thing out of their mouth is the Dow, right? then the S&P 500. So, if you're not a market participant, you're like, "Oh, man, sweet. The the Dow's open. Um, you know, the Dow's up. Um, and nobody even, again, if you're not an educated participant, you're like, I don't even know what the S&P is. Like, why is it so much smaller? Like, who cares? The Dow's at 50,000. Sweet." Um, but you know, the Dow in terms of market structure is is completely irrelevant. like epically irrelevant, but it still gets mentioned in pop culture, so to speak, >> over from the old days when we used to talk about it a lot, right? I I I blow people's minds sometimes, you know, our our students over there. I I'll be like, "Yeah, I remember trading uh you know, uh trading when the Dow was below a thousand, when it was below 800." And and and I gotta be honest, you know, I don't really think about it, but when you stop and think about it, you go, "Man, it's 50,000 now." And then you think, "Oh god, it's been 25 years. It doesn't seem like it's been 25 years," you know, but really that that right as you got into that right before the uh the dot bubble there, right before that that bubble popped, you know, it was it was around that thousand uh area in those years right there previous. And >> sure, sure.

[00:40:23]>> We are just 25 26 years later and now we're talking about 50,000. But again, that goes back to what you were already talking about earlier. You know, the market today is different than what it was back then.

[00:40:34]>> Yeah. Yeah, it really is. And the the amount of capital that's that's been put in like you know people don't give meaningful consideration. You you don't hear about um the you know the the positive qualities of bonds. When's the last time you you've had a conversation with anybody about that? Uh so you know so much of of so much capital just goes into equities. It it it and you know that at some point there'll have to be a moment where that foundation is shook just a little bit but until then it's not going to be shook. And again to market structure, why does it make sense for uh people to put money into equities beyond just performance reasons? Well, securities based lending exists, right?

[00:41:33]So, uh, instead of, um, you can't get a loan, um, a meaningful loan against your, you know, money market account, your cash account, but you can against the assets that you own in your in your account, right? The the individual stocks, the individual ETFs, everything that's considered a security. Um, and so if you're somebody of, you know, got substantial capital behind you, um, you're now you're now playing a market structure game where you're financing your lifestyle at a particular number and amount a without having to liquidate um, liquidate your holdings, right? So instead of instead of um buy low and and and sell high, it turned into buy low and sell when you die. Well, that's now turned into buy low and never sell.

[00:42:33]>> Yeah. And just keep buying.

[00:42:35]>> Just keep buying and borrowing. So buy and borrow. Buy and borrow because even when you die, there's the structures are set up where you effectively don't have to sell. Your cost basis uh effectively adjusts. based on the day when you die.

[00:42:52]Um because you know when those loans are paid yada yada yada. There's market structure that exists there where it is extremely advantageous to stay invested.

[00:43:05]Not just because markets may go up a little more, but because your ability to leverage um let's just call it yield slash uh loan type products based on you know you staying invested is a huge huge huge plus plus across the board.

[00:43:25]>> Yeah. Yeah. And so, you know, again, guys, no, nobody here's saying it's never going to, you know, come down.

[00:43:32]It's never going to pull back. But I think the important thing to take away here is that, you know, it's it's, you know, again, that old adage, right? The market can stay um can stay, you know, crazier than than you can I can't remember how the dang thing goes. You remember what it is, Andrew?

[00:43:47]>> What's that?

[00:43:48]>> Uh the market can stay um irrational.

[00:43:51]That's the word I'm looking for.

[00:43:53]>> You can stay solvent.

[00:43:54]>> Yeah. Yeah, that's right. That's right.

[00:43:56]>> And so, you know, you got a lot of people, especially if you're on X, um, you know, it's got its good, it's got a lot more of its bad on there. And you got a lot of armchair economist, a lot of armchair traders, people that really don't have experience in markets. Um, you know, and there and they'll and they'll tell you every time there's a slight bit of a pullback, they'll tell you that's the top, that's the top, that's the top. And you know, heaven forbid you don't have experience and you don't know, um, you know, that's going to kind of shake you out, you know, constantly and make it difficult for you to get back in. And then that market continues to go up, right? And that becomes worse when you have what we call the, you know, uh, where the market's climbing the wall of worry, right? Where you have all this negative stuff going on there, but the market just continues to go up.

[00:44:41]>> And, you know, if you're not, >> if you don't have cycles through markets, guys, we're not just talking about crypto. We're talking about trad legacy markets. If you don't have cycles through that, this kind of stuff is going to throw you off and you're going to miss a ton of opportunity because of what's going on there. So, you know, be a part of it, stay in it, and but you know, but pay attention as you do.

[00:45:05]>> Yeah.

[00:45:05]>> Don't just jump out because it pulls back right away.

[00:45:08]>> Yeah. It is a um um you know there there used to be before securities based lending put a choke hold on again market structure from a retail standpoint. Um, you know, you when you retired, you had to you had to go through several sets of whatifs and uh, you know, evaluations of, okay, um, you know, the the quote unquote yield that you're going to get from your portfolio each year, you had to invest in bonds to produce that income and yield. You had to invest in dividend producing stocks. And oftent times you had to give consideration to what portions of your portfolio are you going to slowly liquidate to get you to where you want to go? Like in other words, the question was always h how long is your money going to last in retirement? Are you in a spot where it's going to last?

[00:46:09]And now that question is very very different. the idea of liquidating funds is uh it's not a meaningful conversation with people anymore. Instead, it's how how and to what level will will you borrow against these assets to bridge the gap versus, you know, other yield producing uh you know, stocks or portions of a, you know, municipal bond portfolio that that gives you favorable favorable tax uh implications and tax revenue. Um so, you know, again, that market structure is so different. It's just it's just very very very different and uh I just don't see where the catalyst is. Very difficult to find a catalyst when you know we're we're we're embarking on you know Kevin Worsh's regime at the Fed. They're going to they're going to cut rates. Um, and I tell you what, if they don't cut rates in the first two meetings with Kevin Worsh as the guy, um, you haven't seen nothing like you've seen from Trump. Um, because what that will denote is for sure Worsh is there to cut rates. Like that is indisputable.

[00:47:29]But he's not the guy that just says yes or no and flips the switch and the rates are cut. There's got to be consensus on the the Fed board, right? Yeah.

[00:47:37]>> So, we may see the unveiling of the the pure partisan hackery that is the Federal Reserve. That that that may be something that is meaningfully revealed um here over the next six months. It's going to be interesting to watch. I'd keep your eye on Caitlyn Long and and and her long history associated with uh work in banking, dealing with the Fed, dealing with different Fed uh um banking, you know, regional offices across the country, um and what that's like and what she knows about the politics of the Fed. Um there's already been two people that are on the, you know, the Fed board that have come out preemptively and thrown shade on what they know to be Worsh's sort of uh you know, his thesis, right?

[00:48:32]>> Um and so, you know, it's just very interesting because in the last decision that uh Jay Powell made, there were four descents. That's never it's it's been 50 years since that's happened.

[00:48:48]>> Yeah, we were talking about the Yeah, >> right. 50 years since that's happened.

[00:48:51]And so Kevin Walsh goes in now and then it see it would seem like from the other side of the political aisle now there's two people that are speaking out before in in the public before we've even gotten to a meeting which again that these are you know little red flags associated with you know is the mask going to come off on some of this stuff?

[00:49:15]Um so we'll see you know left to his own devices. Um, you know, my guess is two of the next three meetings would be quarter point cuts. Um, because that's what he was installed to do, quite literally. Um, so we'll see.

[00:49:34]>> It'll definitely be interesting. Um, Fib's got a question. He says, "Are you concerned about some sort of yield control?"

[00:49:41]>> I don't know what that means.

[00:49:43]>> Um, I I think he's talking about >> of what kind? Like what what do you mean? Um I I I think he just means maybe like um I I'm going to assume maybe like Japan, you know, Japan's the big yield control uh kind of thing. Do we head to that extent or you know, my my thought is we don't. Uh my thought is, you know, again, we still have a lot of things that Japan doesn't have, including the US dollar being, you know, the global reserve currency and and things like that. Um I I I >> think the government would step in and say I I don't I don't understand the question like yield control like would the government say you're not allowed to pay this or you have to pay that or I I don't know I don't know what he's what he's referring to there why I often times say that he should come on the show because it's hard to it's hard to answer that question without having any idea >> being able to yeah to get it back unfortunately. Yeah, unfortunately he's like sneaking in during lunch or you know while work while he's at work uh trying to do this. So he's not like us that can you know make our schedule unfortunately.

[00:50:50]>> Okay. So yield curve control where the government prints money to buy their own bonds like that's been happening for 20 years. I mean we I I don't know if I'm concerned about it. It's par for the course effectively. Um, you know, it's that that's QE has been happening at some scale or another for, you know, again, for almost 20 years since the great financial crisis. Um, >> so, so I don't know, you know, um, that's not a new phenomenon is is my point. I think yeah I I think the government continues to become you know involved uh in the financial system. Uh that's just that's a given I think uh especially these days especially after co um I think you know uh the US u definitely has has a bigger um I guess I guess a bigger reasoning to become more involved in it. Uh I don't think things collapse overnight. I don't think we have a big hard crush suddenly um right now. I think it's more of a a deterioration over time.

[00:52:02]>> Yeah. And and historically that's what you know what leading um you know global financial kind of things do you know they don't really just kind of implode most of the time. Most time it's just this kind of deterioration if we look historically. So yeah I mean I think the government becomes you know more and they probably find other ways to do it right. It probably government intervention 10 years from now probably looks a lot different than government intervention 15 years ago. Yeah. Yeah. I can see it looking differently. Um but again to to to what end? What how we we don't know, right?

[00:52:38]>> Um you know, is there going to need to be meaningful printing of money to continue to facilitate the you know, the enormous amount of money that's going to be spent on AI compute over the next 5 years? I don't know, maybe. But >> that that I mean that that >> that's going to be a big number. That's going to keep being a big number. Um I personally have been waiting for Nvidia to, you know, [ __ ] the bed because how do you just keep absolutely crushing souls every quarter?

[00:53:17]>> Oh, it's it's been crazy. It's like 20 somewhat times of the last 20 somewhat times. They missed like twice, I think, in the last 24 quarters or something like that, right? just just extraordinary results.

[00:53:29]And but again, what that shows you is that there there currently is not an end to the um the need for and the want to of of buying again compute of of buying their products, of buying capacity and capability.

[00:53:48]>> Um it it it doesn't seem to have an end right now. Um, which is something, you know, is it's pretty remarkable.

[00:53:57]>> I've said it so many times on here. You know, we're living through this really crazy amazing time in history and most people are going to basically sleepwalk through it. They're going to wake up one day and go, "What the hell happened?"

[00:54:08]And they're missing it as it's happening right in front of their faces, right? I mean, heck, you know, again, something I brought recently is, you know, CME is trying to launch uh compute futures already, >> you know, by the end of the year. And we had your favorite guy, Larry Frink, talking about compute futures. And all of a sudden, you know, it's like energy, right? You start hedging >> your cost of compute. And what does that mean going forward? Because now you got companies that are able to, like I said, try and hedge their compute cost going into the future. Uh so do do the you know, are they able to use more compute then and what does that lead to in terms of results? Um and how does that continue to progress everything? I mean, >> and and then beyond that, it's all about energy, right? I mean, it's always throughout history been about energy, >> but especially these days, it's about energy. It's not just about energy itself. It's where the bottlenecks in energy. Um, and you know, there's a lot of opportunities for people to get involved in markets right now, um, that kind of are just outside of, you know, just by, you know, major AI name, you know, Open AI or something. Yeah, it is a um um it's something to be aware of. So, you know, you see these um memes, you you see narratives that are out there and you're reminded that if these narratives have taken hold, you know what people miss out on, right? Um so, let's let's let's go through one of those narratives. Like you see these narratives where >> millennials have have lived through seven of the last eight like you know what's the next disaster right like great financial crisis and then >> the war before that the war in Iraq or the you know the terrible election or just crisis after crisis after crisis.

[00:56:03]And what that presupposes is is that from a mindset standpoint, they they they feel like there's just always crisis, which means that the world that they live in, i.e. the markets associated with the world they live in is uninvestable, right?

[00:56:22]>> Yeah.

[00:56:23]>> Okay. We've lived through so many crisis. So all I'm thinking about is the crisis themselves and what happened. So, I see the markets as negative based on all that. And they've missed out on 200% to the upside. Well, actually, you know, I'll give you the exact amount. Um, they've missed out on over the past 10 years 260% to the upside on just the S&P. I'm sure the NASDAQ is meaningfully higher than that.

[00:56:52]>> Oh, yeah. Yeah.

[00:56:53]>> Um, so that's what you have to ask yourself, right? We can talk about whatifs and you know Fippo has his take on on markets. You use things like um you know it's a it's a house of cards.

[00:57:09]Um even the questions that he's asking about yield curve and QE and all this stuff again presupposes that at some point there's some outcome where the market is you know goes in the opposite direction and stays that way. Well, if that's what you're thinking and then the market goes another 50% higher as it has in just the past three years, you know, you're missing out, right?

[00:57:38]Like you're missing out. So, is there a middle ground? Is there a middle ground between I'm a millennial and I've lived through eight of the worst 10 things that's ever happened in the United States and so I've not participated at all in 250% to the upside or is there a okay you know what I'm going to I'm going to be 50% in cash but 50% in the markets and whatever happens happens but I've got a huge backs stop here that I keep and you keep adding to both right and maybe that's where we're at with the way people think about markets. And the reason I say that is because markets keep going higher, but so do money market balances.

[00:58:22]>> Yeah.

[00:58:22]>> You know, four months ago or six months ago, we were talking about 7 and a half trillion in money markets. Now it's almost 8 and a half trillion. So maybe maybe that is actually what's happening.

[00:58:34]So it it's certainly interesting to talk to um talk talk about. Um, so yeah, love doing it. Love being here every week.

[00:58:44]>> Yeah. Exactly. Exactly. And you know, um, time will tell. You know, time will tell. You know, we do the best we can with the experience we have and, uh, you know, what we know and, um, you know, time will tell if if the things that we're talking about come to fruition or not. But, uh, you know, I think it's definitely worth paying attention to either way. uh you know you're you don't want to assume just take like a dead position that this or that happens you know I think that you you go okay well listen until the market is really meaningfully down you just kind of keep positioning for for you know for higher um but that also means you have to kind of step back and understand at what point you say okay well you know is this the point at which I kind of pause that or I kind wait a bit more and and I think that's probably where most people um you know get caught up in unfortunately. Um I know he's with the with the short >> Yeah. One one other thing to add. I know you know Tilman's not here today because uh as he said he you know he's got a family obligation. I just want to make it clear that that's probably not true.

[00:59:56]Um you know it's been a couple weeks now. Tilman owes me some money and I finally had to take some action. I I you know I don't know if anybody remembers the Seinfeld episode where Jerry inadvertently breaks the guy's uh wrists. You know that's the bookie that that Kramer introduces him to Mike something or other. Yeah. So I had to you know I had to uh might have to go break some.

[01:00:21]>> I had to take action. So you know Tilman is he actually doesn't have the ability to log on. I mean, that's I apologize that that had to happen, but you know, consequences, >> man. I hope your guys at Ars Public clipped that and post it so we can uh get Tilman's real time reaction to that.

[01:00:43]You know what? If anything, y'all have fun. I mean, at least there's that, right? Life's too damn short otherwise because Lord knows if you let yourself, you'll find a reason to be upset. So, uh, try to have some fun out there.

[01:00:54]Quote movie lines. Come up with analogies. Don't break risks. Uh >> by the way, uh Fibbo's point, last point he made is the beauty of markets, you can buy whatever side you want to be on.

[01:01:07]That that's actually true.

[01:01:08]>> Yep.

[01:01:09]>> Right. Like if you think that markets are are going lower, there's a plethora of products out there that you can tap into that that will uh appropriately carry out your thesis. And if you're on the other side and you think the markets have uh further to run, aka throughout the last century, they've always had further to run. Um uh you can decide to to to bet on that as well. Um >> but do me a favor, stay out of the two, three, 5x bull and bear.

[01:01:44]>> Yes, stay out of those certainly. Um but you know what actually um those can make up a small percentage of your portfolio.

[01:01:54]Um there's no reason not to do that. I I think two years from now we'll be talking about the integration of prediction markets and how those can facilitate additional returns into your portfolio. So, you know, being early sometimes is uh a good thing um to, you know, potential new products and new product categories. Um don't, you know, I I do my best not to be the old guy that's like, you know, that's just the way we did it back in the day.

[01:02:28]>> Get off my lawn. Yeah. So, you know, we'll see products everywhere that can carry out your uh what what your actually market thesis is. So, >> absolutely. Absolutely. There's something out there for everybody.

[01:02:42]>> Yeah.

[01:02:42]>> Be careful what you take.

[01:02:45]>> Oh, man. Hey, man. This has been great, man. I appreciate you being able to be here, even though Tilman decided he wanted to take the day off.

[01:02:52]>> Um, you know, broken wrist or not, I don't know, you know. Uh but anyway, I'm looking forward to having you guys back again next week and um you know, we'll see what Sailor does and what ID does and WHAT EVERYBODY'S FREAKING OUT ABOUT, MAN, ONLINE. And uh >> we'll try and do our best to laugh at it or at least make it seem not so crazy as it seems. So, uh y'all, thank you for joining us. We appreciate you all coming in each week, listening in uh to the things that we have to say. Uh, again, no guarantees we're going to be correct, but we've got a pretty good track record so far.

[01:03:29]>> So, we'll see if we can keep going.

[01:03:31]>> Y'all take, you know, y'all take care out there. Be careful in the markets.

[01:03:35]Um, try not to trade off narratives.

[01:03:38]It's one of the best things I can give you. Uh, you know, headline narratives.

[01:03:41]Usually, it's knee-jerk reaction stuff.

[01:03:44]And, um, I don't know. Andrew saying sell in May and go away. So, uh, we'll see how that works out. Andrew, we'll catch you all next week. Thank you everybody for joining in. Y'all have a great week. Trade safe out there. Be safe in the markets.

[01:03:58]>> Check out these guys at Arch Public and uh check out what I do there at Texas West Capital. Uh both would love to have you guys in uh either way helping you try to make better uh market decisions out there. Take care everybody. Thanks a lot, man.