#1031 Brent Donnelly On How Bitcoin Saves Us From Insane Monetary Policy

Brent Donnelly is the President of Spectra Markets and is the author of AM/FX and Alpha Trader. In this episode, I'm joined by Julia La Roche. We discuss with Brent if Bitcoin is an inflation hedge, or is it a hedge against loose monetary policy. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= The Pod Pro Cover by Eight Sleep is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. Go to https://www.eightsleep.com/Pomp to check out the Pod Pro Cover and save $150 at checkout. Eight Sleep currently ships within the USA, Canada, and the UK. ======================= Valour (formerly DeFi Technologies) represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at valour.com =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Brent Donnelly is the president of Spectra Markets. He's also the author of AMFX and Alpha Trader. I'm joined in this conversation by Julia LaRoche as well. Julia and I talked to Brent and we really kind of pressed harder on trying to understand, is Bitcoin an inflation hedge? Or is Bitcoin simply a hedge against loose monetary policy? That ends up being a very nuanced conversation and one that I thought would be very valuable to this audience. I really enjoyed this conversation and I hope that you guys enjoy it as well. Before we get into this episode though, I first want to talk about our sponsors.

• 0:46Anthony Pompliano?

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• 1:23Anthony Pompliano?

  liquid, and they're trusted. Learn more at LMAXdigital.com/pomp. Again, LMAXdigital.com/pomp. This episode is brought to you by Eight Sleep. Eight Sleep is the single best product that I have purchased over the last three years. It completely changed my life. I'm not joking, pay attention. The Pod Pro cover, which goes over your mattress by Eight Sleep, is the most advanced solution on the market for thermal regulation. It pairs dynamic cooling and heating with biometric tracking. You can go to eightsleep.com/pomp to check out the Pod Pro cover and you save $150 at checkout. They currently ship within the United States, Canada, and the UK. And I told you, it changed my life. It helps me sleep deeper, helps me

• 2:05Anthony Pompliano?

  sleep longer. I feel much more refreshed and I have better energy. You want to know I have relentless energy every single day because I sleep on an 8-sleep. Seriously, go check it out, 8sleep.com/pomp today. This episode is brought to you by Valor. Valor represents what's next in the digital economy. They provide simplified trusted access to crypto, decentralized finance, and Web3 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols through a single stock purchase on a regulated exchange. They're currently listed on the OTC at DEFTF and on the Canadian NEO exchange at DEFI. For more information or to subscribe to receive company updates and financial information,

• 2:50Anthony Pompliano?

  you can visit their website at valour.com. That's V A L O U R dot com. valour.com. Go check them out today.

• 3:00Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:23Anthony Pompliano?

  Brent, how are you?

• 3:24Speaker 02

  Hey, I'm great. How are you?

• 3:25Anthony Pompliano?

  I'm doing fantastic. I'm very excited about this. Let's just jump right into the difference between being a hedge against inflation versus a hedge against loose monetary policy. Forget Bitcoin for a second. Like, what's the difference in those two things? Because it's somewhat nuanced but important.

• 3:43Speaker 02

  Sure. So really, the difference is that policy reacts to inflation. So if you're trying to find things that are hedging against inflation, you need things that aren't going to be crushed by policy. So risky assets generally get crushed when policy reacts to inflation, whereas certain other things like commodities and bonds, 10 or short, you have to be short bonds, of course, as an inflation hedge, tend to work even when policy reacts. So what you get essentially is two waves. You get the loose policy, which is what we had, extremely loose policy, fiscal and monetary, and that drives the price of all assets up.

• 4:26Speaker 02

  But the highest beta or the most volatile assets are the most risky assets. So Ethereum, Bitcoin, and then after that, you had like NASDAQ stocks.

• 4:39Speaker 02

  Meme stocks, all that kind of stuff reacts the most to loose monetary policy. And there's a whole bunch of vectors for transmission. I mean, one of them is just sentiment. There's you kind of get this panic to the top side essentially. But then what happens is eventually the policymakers have to react to the inflation and tighten monetary policy. So then that's when the rubber hits the road on on whether something's an inflation hedge or not. So things like commodities or short bonds have continued to perform well as the Fed has tightened. Whereas obviously Bitcoin and and more speculative assets have performed poorly. So what I'm talking about here is a cyclical thing.

• 5:23Speaker 02

  And then what a lot of people believe is a more structural thing, which is that loose monetary policy, which I would just say MMT is kind of like the basic framework, which is very loose fiscal and it's kind of aided and abetted by monetary. So that's kind of like the the primary framework, like the old Keynesian thing where you you stimulate when things are bad. And then you pull back fiscal when things are good. That's kind of gone in the garbage and now it's a lot more like about MMT. So that started with like the TCGA, which was Trump's tax cut in the in the at the peak,

• 6:06Speaker 02

  which is extremely unusual, totally unheard of, and continued with the COVID response. So I think there's also this structural element of, you know, these things like Bitcoin as as a hedge will work in the long run because money is being debased, you know, but then that's a structural thing and then you got to watch out for the cycles, which obviously the cycles can be nasty. And I'm not saying this in hindsight. So like I was writing about this in November of 2021 that like the party's pretty much over as you know, the inflation and Like loose policy and raging inflation is like mana for risky assets and for for things

• 6:49Speaker 02

  like Bitcoin and but then when eventually policy reacts with a lag, then you got to watch out. So I think that some, I mean, some people would, I know someone responded on Twitter, yeah, like, thanks for the update. Obviously, this is like, I can see the prices on the screen. And I mean, that's certainly fair to some extent, but I don't think it's totally fair, because lots of people were making this observation, including me in November. So it's not, it's not all hindsight. And also, I do think there's an importance or a usefulness to understanding the current cycle so that the next cycle, you understand it better.

• 7:25Anthony Pompliano?

  So, ergo, Julie.

• 7:26Speaker 03

  No, I was gonna say, like, where, where do you think we're headed from here? Because as you pointed out, this is something you were writing about back in November. Where are we headed?

• 7:33Speaker 02

  So I'm like, very cautiously optimistic now. Like, I'm a little bit more bullish crypto, but definitely not raging bullish. There's a few things. So one is that the terminal rate, which is like, how high is the Fed gonna go, is pretty high now in terms of what the market expects. So the room for rates to go higher to me is pretty limited, unless you got like another full on subsequent inflation shock, which I don't think we'll get, which would mean like, probably that would mean oil to 150 or something like that, which is not my base case. So I'm cautiously optimistic, because I think we're kind of around peak Fed. But then, you know, just the way I was saying, you got to separate the cyclical

• 8:18Speaker 02

  from the structural, you also have to separate the endogenous from the exogenous. So crypto has been getting hit by exogenous, which is external forces, which is macro, higher real rates, tightening policy, essentially like the inverse of the fiat debasement trade, right? So. People correctly saw crypto and specifically Bitcoin as a fiat debasement hedge. And that was true, but then if the Fed hikes real rates from minus one to plus one, you know, fiat debasement isn't really a thing as much anymore because fiat currency has positive, you know, positive value in theory. So the question now is, okay, if that exogenous shock is done, which I kind of think it is,

• 9:03Speaker 02

  like, I think the Fed's close to probably peak. Although I will just say one quick little caveat there is that the Fed tends to always fight the last war. So that's what you got with flexible average inflation targeting, was they failed to to get inflation up for so long that they finally like said, okay, screw it, we're all in. And of course, that was the worst possible timing. So now they're going to be fighting the last war again, which is they're going to be scared of inflation. The politics of inflation are bad. It makes the Fed look bad. They're hurting credibility wise. So I don't think it's going to be like 2018, 2019, where they just went from like hiking to cutting. My feeling is probably they stay just stay on hold for ages once they find their happy place.

• 9:47Speaker 02

  So that's the exogenous story, which is like getting better, but it's not amazing. But then you have this endogenous, which is like the internal factors of crypto, which I think is like maybe reaching a crescendo around now. And it comes down to liquidations, right? Like 3AC and and all that stuff. So like I've been dabbling, for example, in GBTC, because like the biggest holder of GBTC is is 3AC. And so I'm guessing there's going to be some forced liquidation there. That's part of probably why the the discount has widened so far. So I believe in the structural crypto story as I think MMT and like completely insane

• 10:32Speaker 02

  fiscal and monetary policy in tandem is like the base case for the next 20 years. But then I am more of a trader, so I tend to like ride the cycles as well. And so I feel like if you're riding the cycle from the short side, like short Ethereum or whatever, that trade's over. And now it's more like, I don't think it's the raging bull scenario either. I think it's more like you dabble, you pick your spots. And, you know, if you're an investor. Or you're looking for like long-term debasement insurance in your portfolio. You know, buying Bitcoin from here down to 10K makes a ton of sense to me. And honestly, like, I don't know if you want to go into it, but to me, most, almost every other like

• 11:14Speaker 02

  altcoin, and I would include Ethereum, obviously not as an altcoin, but I would include Ethereum as I feel like those are just a completely different category and they might not work as fiat debasement hedges. They might just all go to zero.

• 11:30Speaker 03

  All right, I'll take the next one then. You mentioned kind of going down to 10K, like, is that where you're kind of expecting a bottom? Like, what's kind of your outlook for Bitcoin and maybe if you have like a time horizon on that?

• 11:43Speaker 02

  Sure. So I, I think this is a boring view, but I mean, sometimes views are boring. And my view is that we just chop, and so chop into probably like into Q1 of next year. And then I think that's the point where you'll probably get more visibility on Fed policy being, you know, the Fed being done hiking. You're also going to eventually get into the better part of the halving cycle, which is, which will be helpful. And then in terms of where we bottom, I mean, the tech levels were pretty good on the way up and they haven't been very good on the way down. And the reason I think for that is that techs are a lot of behavior. There's a lot of behavioral element to technical analysis.

• 12:26Speaker 02

  So when it's like a behavioral story on the way up, the levels kind of, the levels like 69K, obviously being the ultimate meme level work, but on the way down, there's a lot more for selling and liquidation. And for selling and liquidation doesn't care about technicals. So if you're looking for levels like 20, obviously was, was that huge breakout in whenever that was, I guess, late 2020. And we briefly went below that on the weekend, um, down to seventeen five. The other level, so by basically buying between twenty and ten, I mean, I know that's a super wide window, but if you're buying for like longer term insurance, I think that's the window to buy.

• 13:07Speaker 02

  The reason I'm looking at like down to ten is eleven four is eighty-five percent off the highs. And so the in first crypto winter, we were eighty-four percent off the highs. And there's a weird um commonness, I don't know if that's a word, but commonness to eighty-five percent drawdowns in um super speculative assets like if you go through the list of like, what are the big bubbles in the last like twenty-five years? Uh, so crypto in twenty seventeen obviously was one NASDAQ two thousand. Um, housing in two thousand and six, all of those things, uh, Nikkei in nineteen ninety, all of those things

• 13:47Speaker 02

  went high to low eighty-five percent. Um, so eighty-five percent is eleven four in Bitcoin. So I feel like that's like a reasonable place to to kind of think that I I mean, I don't think it goes that far down, to be honest, but that would be like worst case scenario.

• 14:03Speaker 03

  Right. Um, you mentioned uh liquidation. I suppose that's probably a risk that you're paying attention to. How do you begin to, you know, assess that risk? Um, how widespread do you think that might be?

• 14:16Speaker 02

  So I I actually wrote a piece about this, so I have a lot of experience in in TradFi with liquidations, going all the way back to like Bear Stearns liquidating through JP. JP was liquidating in this huge position in in March twenty and two thousand and eight. And I remember that well because I was trading, I actually worked at Lehman Brothers at that time. And so the thing about liquidations, there's two things. One, they don't care what the price is, right? They're just, they sell because they have to sell. And generally, it's not like an optimization exercise, it's just like a risk reduction exercise. The other thing is that you tend to see it cluster around uh the turns of the months, the quarters and the half year end. So this is a particularly interesting little period right here that we're in because

• 15:01Speaker 02

  A lot of the gates. So you see the same thing with inflows, actually, like during the good times, Bitcoin and crypto tends to perform very well at the turn of the month. And part of the reason is that that's when people get paid. So retail puts money in. But then the other reason is that that's when inflows happen. So most hedge funds and institutions, the gates and the entry points and the exit points tend to be around the turns of the round points on the calendar. So this is a really interesting time right now. I think that if you can kind of like survive this, this next, like, I don't know, let's say five days. I think actually that's like peak liquidation window for the next little while and we, and we could stabilize.

• 15:45Speaker 02

  And at least then, so like, obviously there's the correlation to NASDAQ and all that, which I kind of believe is a somewhat permanent feature of crypto. Although not completely, like, you know, the correlations are not static, but they can still also be kind of structural and persistent over time. So I think that correlation will be somewhat structural and persistent. But at the same time, at least the endogenous aspect of like just liquidation, I think is actually probably going to draw to a close in the next week or so. And then, you know, things might actually calm down. So I'm a little bit more optimistic going into July,

• 16:26Speaker 02

  specifically as more of like a tactical play to be long into July, but scaling in between now and like 4th of July because of liquidation risk and then also the holiday and the weekend and all that.

• 16:39Anthony Pompliano?

  So Brent, that was my question was around, there's a couple of things that are going to happen over the next five days. And you mentioned that Bitcoin must survive over the next five days. And I think that you're talking less about Bitcoin going to zero as much as just kind of chopping sideways here. We have the end of the first half of the year, the end of the second quarter. There's all sorts of redemptions and things that go on with funds and, and maybe some forced selling there. You have the liquidation risk throughout the industry. We've seen a big washout of a lot of liquidation, but doesn't mean it's over. You've got the grayscale Bitcoin trust. Decision coming up from the SEC in July, there could be some movement around that. But there's also kind of a positive story around the retail inflows because people get paid either at the end or beginning of a month.

• 17:22Anthony Pompliano?

  There's also people putting new capital into whether it's hedge funds or other types of funds that will go buy these assets. And then I think the one piece we've seen Arthur Hayes write a whole piece calling out the July 4th holiday, having this kind of illiquidity. Where people can't take fiat from their bank account and put it into their crypto account to go and purchase assets if they do drop. We saw when Bitcoin went down to $17,500 two or three weeks ago, it was over a three day weekend. There was a banking holiday that weekend. How do you kind of put together this confluence of events that's about to occur between end of Q2, beginning of a new month? You've got the banking holiday, like just talk through how you kind of evaluate what you expect to happen over the next five days.

• 18:04Speaker 02

  Sure, I mean, I think you've covered it pretty much perfectly there. So essentially what you're describing is downside risk until 4th or 5th of July. And then probably it's safer to be bullish. So when I was saying if you survive, I was talking about trading from the long side, you know, people that use that are using stop losses. Certainly Bitcoin will survive the next seven days, God willing. So I would, so the way that I handle this is to scale in. So I don't think you want to try to like pin the tail on the donkey and pick like the perfect entry point. So I just want to separate two things. So I'm up till this point, I've mostly been talking about structural, more like investor mentality.

• 18:44Speaker 02

  Now I'm talking more trader mentality, which is actually more what I do is much more, you know, like in for three weeks or three months kind of stuff. That's generally what I do, both in crypto and in fiat or TradFi. So the way that I would handle it is that you think there's going to be downside pressure or risk of downside pressure over the next, say, say 10, seven days. So you split up your purchases over seven days. And then once you're in, you pick a stop loss, probably like my stop loss would be below the lows at like 16, nine or something like that. And then you try to ride the rebound, which I do think July, actually I'm pretty optimistic, like I said, for the month of July, once we get through this window.

• 19:26Speaker 02

  Now, the one thing, like if you want to play the second derivative game, or like the the third derivative game, if Arthur Hayes is talking about it and I'm talking about it, obviously, other people are talking about it, too. And that's also part of why I want to scale in and not just wait for the end. Like, you might think that the optimal strategy would just be like by at 4:00 PM on July 4th, once all this, you know, once the hurricane has passed. But the problem is, everyone knows about this, so the risk is actually that that it's wrong, that that analysis is wrong, and you miss the whole thing, and we're at 23.8 on July 5th, and you're like, oh, shoot, I missed it. So in order to avoid missing it, that's what I'm doing, is just going like, you know, split

• 20:08Speaker 02

  it into five purchases of 20% each, and then, once I have my average, I'll put my stop below the lows.

• 20:14Anthony Pompliano?

  Julia, what else you got?

• 20:16Speaker 03

  I would just love to hear more about, um, maybe more of like your macro views as it relates to policy, like, do you think like MMT, is that going to be here to stay?

• 20:28Speaker 02

  I would say 100%. So, I mean, to me, like, I've studied, I've read Stephanie Kelton's stuff and all that. To me, it's like a completely insane policy that has no limiting factor, it basically has no brakes. So even if, like, Stephanie Kelton is the expert on this, and even when I hear her responses to like, what's the limiting factor, I just don't find it convincing, like, to think that politicians are going to raise taxes, or that government's going to correctly target spending, or withdraw spending, to me, it's just like, there's no way that's ever going to work. So, if you believe that, which I do, and then, it's, and you also believe, so, the whole thing of how spending and government and Keynesian policy and economics basically

• 21:13Speaker 02

  worked for my entire lifetime, and probably the 50 years before that, was that there's a connection between revenue and spending. And the connection's loose, and you can argue about it, and you can say like, how are we going to spend, spend, how are we going to pay for it, when new spending is announced? But there was always the question of like, how are we going to pay for it? Even if they were bullshitting, and, and really, they weren't paying for it, there was that. Connection between tax taxation and spending. Now that has been snipped. There's no anchor whatsoever for spending. They don't even ask the question anymore. They just spend and don't like it doesn't even matter where the money is coming from. So that that ship having sailed as a politician, it's just always easier to spend more.

• 21:56Speaker 02

  And in the past, the limiting factor was kind of like this taboo on on spending during good times. There was kind of like this taboo deficits tended to increase in bad times. And then you, you know, Clinton had a surplus in the good times. So that whole thing is gone and I just, I don't see it coming back. And the only thing that would break it would be some kind of like extremely disorderly inflation that creates this sort of Volcker moment where the the politics of spending completely change. And I just, even with this inflation, even with inflation at eight or 10%. I don't think we're even close to that moment. So if that moment's gonna happen, probably not even next cycle.

• 22:40Speaker 02

  It's probably like the next cycle after that. So that, you know, if these cycles are, say, two to five years, nothing's gonna change on this front for at least 10 years. It would be like, I mean, that's my guess. And that's a lot of runway for for something like Bitcoin to appreciate in the long run.

• 22:57Anthony Pompliano?

  So Brett, when you start to think about Bitcoin over, let's call it the next couple of years, is the macro kind of story just you're hedging against MMT? You're hedging against a continuation of the fiscal policies almost more so than the monetary policies? Or how do you balance kind of monetary and fiscal policies in relationship to Bitcoin over the coming years?

• 23:19Speaker 02

  Well, I think you need both turned on in order for the trade to really work. Like they obviously the empirical evidence suggests that, but I think logically as well. You know what it, what you're looking for is deep pay debasement of the currency. And that really is fiscal spending that's monetized or, you know, aided and abetted by monetary policy. So if they're pushing in opposite directions, like that's not really. That's not really the prescription for extreme debasement. The debasement prescription is spending money and printing it to cover it. And like, there's a whole debate, just so people don't at me. There's a whole debate about whether it's printing money or whatever.

• 24:02Speaker 02

  But increasing M2 or increasing the monetary base to me is essentially the denominator in the in the fraction. And, you know, if the denominator keeps on getting bigger, then then there's going to be a reaction in assets. And to me, like, you can argue that there's definitely an argument to be made through my framework that something like NASDAQ is like, or levered NASDAQ would be similar. And I agree somewhat, but there's a lot more stuff going on with NASDAQ in terms of like, you got to worry about earnings and all that. To me, Bitcoin is just a lot simpler in terms of it has one thing that it's doing in my mind, and it's good at that thing.

• 24:47Speaker 02

  And so I don't want to screw around and worry about whether Apple's buying back stock or not buying back stock and whether iPhones, you know, are going to get beaten out by some other competitor and all that. And whether the mega caps are overweighted in the index and all that. I just feel like, even if you can argue that there are a lot of similarities in terms of the purpose of these, of some of the assets other than Bitcoin, I just feel like Bitcoin does the job better.

• 25:15Speaker 03

  What do you think? I mean, I just like, when you, when you, I just want to go back to MMT for a sec. Because like, when you talk about that and what the consequences could be and like, what it might mean for the appreciation of Bitcoin, like, I mean, nobody has like, a crystal ball and could like, imagine what the future looks like. But when you start to parse out that scenario or think about it, like, what do you think it means even for like, the younger generations, you know, who might be watching this program? Like, what are the longer term consequences?

• 25:41Speaker 02

  I mean, I think everything that's going on right now is just is the is the the Petri dish or whatever you want to call it, right? We're seeing it. We're seeing the result of the experiment in real time. The result is hard assets go up a lot. Um, and there's a lot of pain and in there's a lot of in income inequality. And I just don't see that changing. I feel like the the framework that the orthodox policymakers are using is the same everywhere. And like if, you know, if I I would say like, I'd be hopeful because I I think this policy is bad um because of in income inequality and inflation and all that. But so if if I were to be hopeful, I would see at least some smaller economies like, say, New Zealand or Canada,

• 26:23Speaker 02

  or some of the smaller economies that have tended to be leaders um in terms of monetary policy. Until like the intellectual leaders in monetary policy have tended to be the smaller countries like New Zealand. And they're not they're not pivoting at all either. So I don't see a lot of evidence or hope that that this stuff is going to change. And the ramifications are really, I mean, not to oversimplify it, but just look around, whatever's happening right now, that's that's what's going to keep on happening. And it's probably going to get worse. And what it essentially means is that we continue with these cycles of, you know, explosive monetary growth that leads to a lot of inflation.

• 27:05Speaker 02

  And then like, oh shit moments where the central banks try to get the horse back in the barn for a while, but they don't have the political will to to withstand unemployment once it starts going up. So then, you know, the whole cycle begins again. Now, obviously, like COVID was a crazy, super turbo example of of this policy. So I don't think the next recession is going to see anything like what we just saw. Um, it'll be just this series of of mini um QEs or mini mini MMT or MMT Lite compared to what we just saw, which was like MMT on steroids because of the crisis.

• 27:45Anthony Pompliano?

  So Brent, when you start to think about the Fed, obviously, they continue to remain committed to increasing interest rates, at least through the end of the year, they're talking about 50, 75 basis point hikes. They're doing it, though, with Q1 GDP contracting. We don't know what'll happen in Q2 yet. What's your thought process in terms of when will they kind of wave the white flag and give up? Are there one or two milestones that you're looking at saying, you know, this is the moment that either something breaks or something gets to the point where they have to give up and they'll return back to loose monetary policy?

• 28:13Speaker 02

  So there's two things. So like, there's one, when can they, when will they stop tightening? And then the next one is when do they go back to loosening? When they stop tightening, I think, first of all, they just need to get to neutral. So I think that has been the message is that they're so far behind the curve that they first just have to get to neutral. So wherever that is, let's say around 3% or something. And then they'll probably pause, and then it will come down to the data. So part of the reason that I don't think long-term rates can go up much more from here is that, I agree with you, they're hiking into weakness because one built-in flaw of monetary policy as it operates now is that it eases very quickly,

• 28:57Speaker 02

  like in a panic in any emergency, and then it tightens extremely slowly. So by the time they're tightening, they're tightening into weakness because they waited so long. I mean, they were still buying assets in February when inflation was at 7%. So that just shows like how lagged their policy is. So I think that they, if they're, what they've kind of done now is like specifically said, we're watching CPI, and CPI is a super lagged indicator. So, you know, you can look around and see commodity prices are down 20, 25%. Housing looks like it's peaked. Trucking, autos, like everything's, all prices of everything are falling, but the problem is CPI is lag, CPI lags. So I think they're just going to keep

• 29:40Speaker 02

  tightening into economic weakness. And the thing is, it's not just the US, right? Like, Europe and everywhere else is pretty weak as well. So I think they're going to keep tightening into weakness, and then they'll get to neutral, they'll stop, and they Economy will probably be weak enough by that point, which would be like kind of Q1 2023. The economy would be weak enough at that point that they probably should be cutting. But I think they'll be scared to cut because they got scarred by like I like I was saying, like the fighting the last war thing. So I think they'll be actually kind of slow to cut in 2023, but that's the path in 2023.

• 30:17Anthony Pompliano?

  So Brett, one of our sponsors is Eight Sleep and I spent a lot of time thinking about just how do you optimize your life outside of just staring at screens all day long? And eight hours of sleep is a huge piece for me. How do you think about in these bear markets where people seem to, you can feel the sentiment on Twitter. People are much more worked up, they're much more stressed out. You feel people just almost like attacking each other more. And there's liquidations, there's kind of these sudden abrupt moves, some that also violate what people thought was going to happen previously. What do you do in your own life to kind of keep a clear head and just make sure that you can kind of get through this without going nuts? Or, you know, freaking out and having a rage quit on Twitter or something like that?

• 31:00Speaker 02

  Sure. So yeah, I've written quite a bit about this because I feel like part of my reason that I've survived so long in finance is like that. I've looked at some of these issues and taken them seriously. So for example, I turn my phone off at 10 and I turn it on when I wake up. Whereas say like eight years ago, if I got up to go to the bathroom, I'd check my phone. Where's the yen? Where's the euro? Where's S and P's? And that just like has absolutely no value. It doesn't have any financial value because if you make a trading decision, or if I make a trading decision at that time, it's generally a bad one with incomplete information would land no edge. And then it kind of like makes your next day worse because you haven't slept as well. So that's one simple thing is like create friction around unwanted behaviors.

• 31:45Speaker 02

  So like my unwanted behavior was checking my phone at night. So now I turn it off and I put it downstairs. So like I'm not, there's no chance I'm stumbling downstairs in the pitch black to check my phone, you know, to see where S and P's are at 3:15 in the morning.

• 31:59Speaker 02

  And then sort of on that same topic of of either creating friction around unwanted behaviors. Or automating good behaviors. I always automate all my orders. So I always put stops and take profits on every single position that I have. And I feel like that kind of means that you don't need to be staring at the screen all day. Like there isn't a ton of value. Like I actually close my trading platform half the time. I mean, generally because of my job, I know where markets are roughly. But I would say all the trading that I do, I try to have my plan when I put it on. And then I just put my orders in and you know, Inshallah I kind of wait for it to happen. And I don't think like that some people will say, well, there's

• 32:41Speaker 02

  there's value in watching the price action. I, I just don't really believe that. I don't think price action contains a lot of information other than around major events, you know, the way that things trade, like good news, bad price and things like that. I think have value. But generally I think you have to look at your behaviors and say like, is this adding to my overall utility or no? And be thoughtful about it and, and say, okay, this is stupid. There's no reason to check my phone in the middle of the night, for example. So I'm going to X that, that, that activity. And I think you can go through a lot of things and, and do that.

• 33:15Anthony Pompliano?

  Where can we send people to find you on the internet or subscribe to your writing?

• 33:19Speaker 02

  So spectra markets.com is where everything is. So I write a daily global macro, um, which is like kind of my main thing. And then I write a weekly crypto piece as well, um, which is more through the lens of like macro behavioral, technical, um, that kind of lens. Like I don't get into like L1 versus L2 solutions and stuff like that. That's not my, my thing. I'm more of like a macro, macro guy. So yep, spectra markets.com.

• 33:46Anthony Pompliano?

  All right. My, actually I lied. My last question says that you like table tennis. Are you good?

• 33:51Speaker 02

  I'm pretty good. Yeah. I would say like, I'm not professional. But if you just put me against like random person, I think like 99% of normal people I could beat, but not ever like, no, I mean, not an Olympic tennis, table tennis.

• 34:06Anthony Pompliano?

  Brent, there's three, there's three, there's three categories of table tennis players. There's people who just volley. There's people who can put what I call amateur spin on the ball. And then there's the pros and it sounds like you're in that second bucket, which means that you would beat 99% of people listening or watching this.

• 34:20Speaker 02

  Yeah, I mean, like top tier second bucket, but nowhere near the third bucket.

• 34:26Anthony Pompliano?

  Awesome, man. Well, listen, thank you so much for, for joining us. We'll definitely have to do this again.

• 34:29Speaker 02

  Awesome. Thanks for having me.

• 34:31Anthony Pompliano?

  For sure.

• 34:31Speaker 02

  See ya.

• 34:33Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more, and I'll meet you guys for the next episode.