#1008 Mike Singleton Explains The Importance Of The Bond Market

Mike Singleton Is a Senior Analyst at Invictus Research. In this conversation, Mike breaks down the Bond Market and why you should pay attention now. This Is an excellent starting point for anyone who is looking to learn more about the bond market and its relation to current economic conditions. ======================= Bullish is a powerful new exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Combining the innovations of DeFi with the regulated environment of traditional finance, Bullish empowers users to trade with certainty and earn passively at scale across variable market conditions, in an environment backed by multibillion-dollar liquidity contributions from the Bullish Treasury. Visit bullish.com/pomp today to learn more. Note: Bullish is licensed by the Gibraltar Financial Services Commission. Virtual assets and related products are high risk. Consult your investment advisor and trade responsibly. Bullish is available in select locations only and not to U. S persons. Visit bullish.com/legal for important information and risk warnings. ======================= Since 2018 Copper has been at the forefront of institutional digital asset development. From award winning custody solutions, to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services, in lock-step with a rapidly changing world. No other infrastructure provider covers as many assets, across as many exchanges, with the speed and security that Copper can offer. To learn how Copper helps the world’s largest institutional investors secure their digital assets, head over to copper.co Copper - the unfair advantage. ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit http://compassmining.io to start mining bitcoin today! =======================

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. Mike Singleton is a Senior Analyst at Invictus Research. In this conversation, we do a deep, deep dive on the bond market and how it relates to asset prices, the Federal Reserve, and the rest of the financial system. I really enjoyed this conversation with Mike, and I hope you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. This episode is brought to you by Bullish. Bullish has reinvented the digital asset exchange. They give you access to DeFi features like automated market making and liquidity pools, all in a regulated environment. It's a whole new way to generate alpha. Seems like something that game-changing should be making some noise, right? Well, bang, bang, it is.

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• 1:29Anthony Pompliano?

  Learn more at bullish.com/pomp and follow @bullish on Twitter today. Bullish is licensed by the Gibraltar Financial Services Commission. Virtual assets and related products are high risk. Consult your investment advisor and trade responsibly. Bullish is available in select locations only and not to US persons. Visit bullish.com/legal for more important information and risk warnings. Today's episode is brought to you by Copper. Since 2018, Copper has been at the forefront of institutional digital asset development. From award-winning custody solutions to creating the first truly off-exchange settlement function, Copper pioneers technology, products, and services in lockstep with a rapidly changing world. No other infrastructure provider covers as many assets across as many Exchanges with the speed and security that copper can offer.

• 2:13Anthony Pompliano?

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• 2:57Anthony Pompliano?

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• 3:21Speaker 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.

• 3:44Anthony Pompliano?

  All right, ladies and gentlemen, next up, we have Mike Singleton from Invictus Research. I'm super excited about this. Pay attention. We are going to do a whole deep dive on the bond market. There's plenty of people who are about stocks, about Bitcoin, cryptocurrencies, real estate, all stuff. We don't really talk that much about bonds, but it's a very important part of the financial system, and it's very timely right now. So Mike, how are you doing?

• 4:08Speaker 02

  Doing great, Tom. Thanks for having me.

• 4:10Anthony Pompliano?

  Of course. I'm very excited about this. I know that you've put together this presentation, and I figured where the best place to start, over the next maybe 20 minutes, 30 minutes, you're just gonna give me an education, is why I'm excited. Let's just start maybe with like, why should people care about the bond market?

• 4:28Speaker 02

  Sure. Sounds good, and feel free to interrupt me at any time. I know I'm prone to rambling a little bit. But I think there are really three primary reasons to care about the bond market. The first is that it's just a systemically important market. It has various touchpoints in the real economy. It's the foundation of the opportunity cost of capital and the risk-free rate. I think you actually mentioned that earlier in the show. Two, it has great information content about the things that matter most to investors, to allocators. That's real growth, inflation, and monetary conditions. And the third reason is sort of a more practical reason, especially for people that are biased toward stocks. I know there are a lot of stock jockeys out there. Frequently, the bond market will lead the equity market. So three good reasons to pay attention to what bonds are saying, because they have a lot of good information.

• 5:13Anthony Pompliano?

  Got it. And then if we start talking about monetary policy, which obviously we're talking today on a day that the Federal Reserve is gonna announce another interest rate hike, how do bonds and monetary policy, how do these two things kind of intersect?

• 5:25Speaker 02

  Well, there's a pretty decent amount of overlap there, because ultimately, the bond market and the Fed both care about the same things. Ultimately, they both care about growth, inflation, and financial conditions. So what that means is essentially you can learn a lot about what the market thinks the Fed will do, just from looking at the bond market. And unless you have some sort of experience yourself at a Federal Reserve Bank, where you have a degree from the CIA in investigating body language, and even if you do, there are tons of Fed watchers that get stuff wrong all the time. The bond market is usually your best source of information. Information and but I think to understand how it's kind of important to take a step back because I think this gets overlooked a lot, especially in the face of all the headlines, you know,

• 6:10Speaker 02

  is the Fed going to hike 25 basis points, 50 basis points, now it's going to hike 75 basis points. It's important to understand how the Fed actually implements monetary policy. Everyone knows that, everyone knows to look out for the Fed funds rate and for the size of the Fed's balance sheet, those are the two primary levers. You could probably ask a layperson on the street and they would, you know, generally know those two things are related to the Fed. But I think a lot of people miss the forest for the trees here because they miss how these things actually impact the real economy. And I don't think it's totally intuitive, right? The Fed funds rate is for Fed funds. It's a market that virtually no one you know or I know would interact in, it's for commercial banks. So how does the Fed funds rate impact the real economy?

• 6:55Speaker 02

  And hint, hint, it's largely through the bond market. So that's what we're going to talk a little bit about now. Fed policy works primarily through the transmission mechanism of financial conditions. And Nick was talking a little bit about that earlier, but I think it's important to sort of define the terms and talk about it a little bit more because I don't know anything in finance generally that's more important and more often overlooked. So the NBER defines financial conditions as the current state of financial variables that influence economic behavior and thereby the future state of the economy. You can think of them as leading indicators for growth, or maybe more specifically, leading indicators for how the Fed wants to influence

• 7:39Speaker 02

  growth. You can see, I think, the little chart on the bottom of the slide there, or at least the slide that was just up. The Fed toggles interest rates, that changes financial conditions, and that influences growth up or down. So, you know, if the Fed wants to influence growth, growth up, it stimulates, obviously, and if it wants to influence growth down, maybe to manage inflation or inflation expectations, it tightens. I don't want to act like the Fed is all powerful, or that there are no limits to what the Fed can do. There are significant limitations. But it still pays to pay attention to the Fed because the Fed is an enormously important actor in financial markets.

• 8:19Anthony Pompliano?

  So when we think about this, the Federal Reserve essentially is responding to financial conditions, or does the Federal Reserve create the financial conditions? Like, how do you think about the chicken or egg between the Fed and those financial conditions?

• 8:32Speaker 02

  Oh, I think the Fed creates the financial conditions, right? If the Fed said, "We're never going to raise rates again," you'd see the curve flatten immediately, right? I mean, and look at the Bank of Japan, right? Like, you see how interventionist these central banks can be, and, you know, the market has to respond. So I think Nick said something earlier that I don't completely, you know, agree with. He was talking about how you're going to start seeing the US behaving a lot more like an emerging market in terms of other stuff. I don't know if he was talking about central banks, but I think I would be more likely to look toward Japan rather than emerging markets in terms of how US economics and policy plays out over the next decade or so.

• 9:11Anthony Pompliano?

  Yeah. If we go ahead and we look at the supply and demand, explain how the Fed looks at supply and demand and the relationship between those two.

• 9:18Speaker 02

  Sure. I think this is actually funny. So you can think about the US economy in terms of an econ 101 supply and demand chart, where you've got the supply of goods and services going up into the right, and you've got demand for goods and services going down into the right. And, you know, this determines GDP, this determines price levels. It's a terrific mental model that, you know, I almost never see discussed for some reason. Maybe because it's too simple, it doesn't pay to talk about things in terms of simple. But it also helps with understanding Fed policy. So the Fed obviously cannot affect the supply of goods and services. The Fed can't drill new wells for oil. The Fed can't grow new wheat or new food. But what the Fed can do is it can influence demand on a lag through financial

• 10:03Speaker 02

  conditions, right? So like we said earlier, the Fed can, you know, reduce the cost of borrowing for the private sector, which in theory increases borrowing, increases spending, pushes that aggregate demand curve out, right, and increases GDP and re-flates the economy, right, in theory. And then, on the other hand, the Fed Can do the opposite when it tightens, it can, you know, among other things, uh, make private sector borrowing more restrictive, which brings that uh, demand curve in, reduces uh, inflation, but the collateral damage is always growth. So, uh, the Fed uses a lot of euphemisms. We want to cool demand. We want to cool off the economy or whatever. What they really mean is we need to slow growth. Uh, growth is always the collateral damage of the Fed tightening financial conditions and bringing back,

• 10:48Speaker 02

  bringing inflation expectations back in.

• 10:50Anthony Pompliano?

  Yeah. And so when you think about this, really what they're trying to do in the moment is they're trying to destruct uh, demand. And they have a couple of tools there. Uh, and that leads to an analysis of like, where are we in the financial conditions? You've got this uh, chart that shows uh, how you measure financial conditions. Explain this a little bit.

• 11:07Speaker 02

  So I, I, in my opinion, financial conditions are much, much tighter than most people realize. I think a lot of uh, investors anchor to the Fed funds rate or the size of the Fed's balance sheet. And so what they'll say is financial conditions really aren't very tight because the Fed funds rate is way below inflation. I mean, even if the Fed surprises to the upside today and does a hundred basis point hike, uh, you know, you, you have a Fed funds rate of a hundred and seventy-five basis points relative to inflation that's over eight percent. The Fed's balance sheet is, is virtually at all time highs. Uh, so financial conditions are really, really easy. And that's just not true because uh, like I said earlier, um, you know, the, the, the, the cost of Fed funds doesn't really impact the real economy. What does impact the real economy are uh, the various measures of financial conditions.

• 11:50Speaker 02

  And on the, the slide that you just showed, I had a few of them listed that are important. Treasury rates, mortgage rates, yield curvature, the dollar, equity valuations. I'm a, I'll maybe go through treasury rates real quick because I think it's a, it's a very intuitive one and it's easy and you can stop me after that if you want. But uh, treasury rates are the cost of financing for the public sector.

• 12:11Speaker 02

  Obviously, the more debt that's on the federal government's balance sheet, the more onerous uh, higher interest rates become. But it's not just the public sector. It's also the private sector. So you hear people talk a lot about credit spreads making private sector borrowing more expensive. But you can't forget that the Fed is really what sets the benchmark rate, or the treasury curve rather, is what sets the benchmark rate. So if you're a non-investment grade borrower and you want to go raise uh, uh, you know, junk. A junk bond with a five-year tenure. Your cost of interest is the benchmark rates, something like the five-year treasury, which is highly influenced by the Fed, plus the credit spread. And so what we've seen over the last six months is credit spreads have actually remained relatively sanguine, but the cost of raising capital for anyone, investment grade or non-investment grade,

• 12:53Speaker 02

  has gone up quite a bit because treasury rates, because benchmark rates has gone up. So what that means is, as companies need to refinance, they're going to be paying more and more interest. For really weak companies, that'll mean bankruptcies. For stronger companies, that'll just mean more interest payments, which in turn means less investment, which in turn means slower earnings growth. So increasing treasury rates is one way that the Fed slows the economy. And there's a handful of other mortgage rates, there's an obvious one, the mortgage rate came out this morning, that obviously impacts the affordability of a home. What a lot of people don't realize is that it also impacts adjacent industries like construction and home improvement and home furnishings. And all of those are really, really large industries, right? Hundred billion dollar plus industries.

• 13:35Speaker 02

  And so when homes are no longer affordable, all of that slows very, very quickly. And actually, a lot of, a lot of, there's a lot of the analysis of the housing market gets a little confused because there's a lot of different data points and how do I really know what's happening, there's supply chain issues. If you want the best picture of demand in the housing market, it makes sense to look at mortgage applications for purchasing new homes. That's where you'll see the cleanest picture of demand. It's not impacted by supply chain issues or anything like that. And if you were to look at the MBA mortgage purchasing index, it's down over forty percent from its peak. If you were to look at the week-over-week rate of change in new mortgage applications, it's been down something like seventeen of the last twenty-four weeks.

• 14:18Speaker 02

  That's, that's what Fed-induced demand destruction looks like in the housing market. So, you know, are there supply chain issues in housing? Yes. If you look at the really lagging data series like the Case-Shiller Home Price Index, is the price, are prices still going up quickly? Yes. But has the Fed already started to impact demand through tightening financial conditions? From looking at mortgage applications, the answer is pretty clearly yes. And I'm I'm happy to start, stop there, but I can go through the other indicators if you're, if you're curious.

• 14:48Anthony Pompliano?

  If we take a look, let's jump to the actual treasury curve and the repricing and how it's going higher. I think many people probably aren't paying attention to this and don't understand the ramifications. So explain this a little bit.

• 14:59Speaker 02

  Sure. So this is just a chart of basically the entire treasury curve from, from the one year out to the 30 year. And you can see it's obviously going up really, really quickly. It almost looks like it's being sucked into a vortex or a black hole or something. And in truth, it is, it's the Fed. So you, you know, what actually drives rates? It's, it's a mix between growth, inflation and the Fed. You know, you can break it down and the analysis gets a little bit more complicated, not, not much more, but a little bit more. And I can tell you that this move is being largely driven by the Fed. So this is what it looks like essentially when the Fed wants to destroy private sector wealth. Right. When it wants to raise discount rates, when it wants to raise the cost of the private sector, when it's, when they're borrowing.

• 15:42Speaker 02

  When it wants to basically conduct a reverse wealth effect. So I think you hear a lot of people saying the Fed is out of control right now because risk assets are selling off like crazy. I don't think that's a symptom of the Fed being out of control. I actually think that's a symptom of the Fed being in control. I think this is, again, look at the credit markets. The credit markets aren't pricing in that much stress yet. I think eventually they will, right? When the head hits the, you know, quote unquote, breaking point, when we hit the Minsky moment of the cycle. But right now I, I see a Fed that is relatively in control. And a sell off in risk assets, that's been largely induced by the Fed.

• 16:18Anthony Pompliano?

  And then if we go ahead and we take a look at this next one here, we've got the two-year, 10-year and the five-year, 30-year. Both continue in this kind of inversion. What, what is this showing us?

• 16:28Speaker 02

  So it's another measure of financial conditions. I think the best way to understand it is. First, you need to understand what, what drives the rates market. So if you look at long rates, think 10 years and out, the 10-year, the 20-year, the 30-year. Typically those rates trade on top of nominal growth expectations.

• 16:45Speaker 02

  You know, the Fed has maybe distorted the signal there a little bit, but you know, historically. If the bond market thought that long-term potential trend growth in the U.S. was going to be 5%, then the long. Long bond would trade at about 5%.

• 17:01Speaker 02

  But and that's probably not true precisely anymore, but I think it's still directionally true. The short end of the yield curve represents the Fed's policy path. So when you see a yield curve that's measured by a long rate minus a short rate flattening and then inverting, what it's telling you is that policy expectations are going higher usually, right? The two-year and the five-year are going higher and the 10-year and the 30-year aren't increasing as quickly. So that's what's called a bull or excuse me, a bear flattening. And generally, a bear flattening means that the Fed is tightening policy to an extent that it's impacting long-term growth potential. And again, that's what financial conditions do, right? Financial conditions are the Fed influencing the economy, economic growth, the economic growth cycle up or down.

• 17:45Speaker 02

  And right now, the yield curve is telling you that the Fed will be successful in bringing down growth over time. The the yield curve infamously leads the growth cycle by six to 12 months.

• 17:55Anthony Pompliano?

  And when you look at the 30-year mortgage, that's been exploding upwards. We were talking earlier on the show about just how expensive this capital has gotten. What is that telling you?

• 18:05Speaker 02

  That that tells me that it's a lot harder to buy a home, that getting a home is a much, much more expensive. I think if you translated this into the average monthly cost of servicing your mortgage, it translates to maybe 30, I think it's 40 or 45% more expensive than it was at the beginning of the year. So that slows demand for new home for new home applications like we discussed earlier. And it also slows demand for any adjacent industries, right? It also reduces the value of homes over time. I don't think that's showing up in the price data yet because the index that everyone looks at comes out on a two or three month lag. That's the Case-Shiller data. But ultimately, this is what's going to bring down the value of homes. And you know, that that also creates a reverse wealth effect. Most Americans have the preponderance of their net worth in their homes.

• 18:49Speaker 02

  And when they start to see the value of real estate going down across the country, they feel less rich and spend less money.

• 18:56Speaker 02

  Ultimately, I think that's what the Fed is angling for.

• 18:58Anthony Pompliano?

  Got it. And then when you continue and kind of look at this, the 230 basis points is a huge, huge number. But you can look at MBA purchase index or the mortgage applications that you have here. Something like mortgage applications, negative for 17 of the last 23 weeks. This feels, I mean, literally, we're in a different world than we were, you know, 12 months ago. Is your expectation that this will continue to suffer as long as the Fed is aggressive and raising rates? Or do you think that there is some relief at some point?

• 19:25Speaker 02

  I mean, not to sound dramatic, but I think that the Fed wants to tighten financial conditions. It wants to bring in that demand curve. It thinks that this reverse wealth effect is one of the best ways of doing it. So I think until, you know, the Fed says, you know, uncle, or really maybe the bond market says uncle, you're going to see the Fed continue to tighten and you're going to continue to see risk assets perform poorly. And you're going to continue to see even non-tradable assets like homes under pressure. And really, a lot of the pain in the housing market is difficult to detect. This is one of the few data sets we have to know that there is stress in the housing market. Right? You could cherry pick 20 other indicators that make it look like the housing market is doing fine. I don't know what the Fed is anchoring to.

• 20:08Speaker 02

  If I were a Federal Reserve official, this data series would tell me, don't tighten too much faster because we're already having a pretty substantial impact and it's negative.

• 20:18Anthony Pompliano?

  Yeah, it's, um, it's pretty crazy. And I think that you've got another slide here that shows that mortgage applications and rates are really just showing slowdown in growth on the horizon.

• 20:29Speaker 02

  Yeah, I think this is a fascinating chart. So if you look at the black line, the black line is the ISM manufacturing PMI, which is one of our favorite measures of economic growth. No need to overcomplicate it. It's just a different way of measuring the growth cycle. It correlates pretty closely with GDP, but it's a little higher frequency. The purple line is the 30-year fixed rate mortgage minus the 30-year Treasury yield. And what's amazing is you can see how closely these two time series track each other. As growth, as growth decline, you know, there's always a chicken or the egg thing. But essentially what you're seeing in the, in the mortgage market is financial stress. And it's financial stress that usually accompanies substantial decelerations in growth.

• 21:08Speaker 02

  So, you know, is the equivalent place on the PMI on this chart is probably like 40? Do I think we're going to see the PMI decelerate to 40? Probably not. That's really aggressive. That would be like, you know, you can see that would be below. Covid.

• 21:27Speaker 02

  But I, you know, I do think that directionally growth is going to slow. And that's going to put a lot of pressure on risk assets, right? Growth slowing is the worst thing that can happen to risk assets, particularly stocks, which makes sense, right? The growth cycle should drive the performance of business assets.

• 21:42Anthony Pompliano?

  Yeah, it's, um, it's frankly crazy to kind of watch this all play out. The, the other one that I wanted to, to focus on here is the D Y X Dollar Index. Earlier we were talking about its strengthening, obviously against other fiat currencies. And I think when many people see inflation at eight point six percent is forty year high. They're like, hey, what do you mean the dollar is actually getting stronger at the same time that it's being devalued from an inflation standpoint? Help people understand how you look at something like the Dollar Index.

• 22:11Speaker 02

  That's a, that's a good point. So the Dixie Dollar Index is a trade weighted index of the dollar versus other currencies. So think the Euro, the Swiss Franc, the Japanese Yen. It's not, uh, it's not measuring the value of the dollar against, say, commodities, where obviously the dollar has lost a good deal of purchasing power over the last six or 12 months. But the reason that we look at it at Invictus is really as a measure of financial conditions. Ultimately. Well, ultimately, there are two things that drive the price of the dollar, but financial conditions is a really big one. And so right now the Fed wants a higher dollar for a handful of reasons. I mean, the first is that.

• 22:47Speaker 02

  A higher dollar is disinflationary in and of itself, right? Which, which makes sense if you, if you're increasing the price of the dollar relative to the price of other things and they are cheaper in dollar terms. So believe it or not, inflation would actually be worse if the dollar were

• 23:02Speaker 02

  at a lower point. If it were at the same place as it was six months ago, uh, you know, instead of seeing eight and a half percent inflation, you'd see 10% inflation or something like that. But the, the dollar also makes fundamental economic activity more difficult for businesses, particularly abroad. And that matters to the U S. And the reason is, uh, as I'm sure you probably know, global commerce and global finance is largely denominated in dollars. So if, say, China wants to buy copper from Australia, they're generally doing so.

• 23:35Speaker 02

  And as the price of the dollar goes up, the price of copper then goes up for China because it's also denominated in dollars. This crowds out, you know, other investment and ultimately reduces economic growth. Additionally, tons of countries, particularly emerging market countries, have pretty substantial, what's called a euro-dollar debt or dollar-denominated debt. So they have to service their debt in dollars rather than local currency.

• 23:58Speaker 02

  Which, you know, creates substantial demand for dollars, particularly during times of economic stress. Right? Like, essentially, if you know you need to pay your rent in dollars, you'll sell some other assets to make sure you have the dollars to pay your rent. And a lot of times, you'll see that cause a dollar to squeeze higher. And now, maybe it's a little much to say that's what the Fed wants. But the Fed does want a higher dollar because it's fundamentally disinflationary. And again, what they really want is to bring in that demand curve, reduce, reduce growth and reduce price levels.

• 24:27Anthony Pompliano?

  Yeah. When you just zoom out for a second, the Fed obviously was talking about 50 basis point hikes. Uh, now they're talking potentially 75 basis point hikes for a couple of hours away. What, what's your general thought process in terms of what they'll do? And, and how do you think about the implications if they do do 75 basis points, uh, through the rest of this year?

• 24:44Speaker 02

  Uh, well, ultimately, it's, ultimately, private sector borrowers are, are borrowing off the rest of the treasury curve, not off of the Fed funds rate. And right now, we know Fed funds futures have already priced in, last time I checked, it was 75 basis points, right? So, uh, the question is, can they get incrementally hawkish from here? Obviously, if they do 50, that would mean, it would be incrementally dovish and you'd probably see real rates decline and the entire treasury curve sell off a little bit. But right now, I would say the trend is that monetary conditions get tighter and you can dissect the yield curve 100 different ways. Uh, or, or look at, you know, various different measures of financial conditions like we did, like we just did. Uh, and right now, the trend is upward and our view at Invictus is that markets tend to trend and trends tend to persist.

• 25:27Speaker 02

  And so we would be, um, we would be investing right now as though monetary conditions are, are likely to continue tightening. But we'll caveat that by saying, uh, this is no longer as easy a trade as it was six months ago when monetary conditions were, you know, relatively looser. Because now that monetary conditions are so, so tight, um, well, there's, there's just not that much more room to go before you cause a growth scare. Right? Before you, before you really start to break things.

• 25:55Anthony Pompliano?

  Yeah, it, it's, um, it's kind of crazy to think that they could, uh, just continue until they break things. And, uh, one of the big, um,

• 26:04Anthony Pompliano?

  You know, questions I have right now is just we're hours away. We are hours away from the announcement. No one knows it's gonna happen. And it is absolutely incredible that we are asking business owners to plan their businesses. We are asking investors to plan their investment portfolios around a future that constantly changes. That is this like moving target and it's not a thing where um five minutes beforehand you even know. Right? I mean, it literally changes when that announcement comes out 50 basis points, 75, 25, 100, 0. It just what happens, right? And to me, it's just crazy that that is still the the situation. That that we all operate within.

• 26:48Speaker 02

  I know it. I've certainly been surprised before. I thought that the Wall Street Journal leak about 75 basis points. I think 75 basis points is, you know, tending toward policy mistake.

• 27:01Speaker 02

  In my opinion, right? Because financial conditions impact growth on what Milton Friedman called a long and variable lag. Right? So everyone wants to see inflation go down right away, but that's not the way that Fed policy works. It's not the way financial conditions work. And, you know, the the tendency is to want things to work really, really fast to see inflation at, you know, 2% next month. And, you know, if that's your policy, you know, objective, the only way to do that is to over tighten and, you know, cause a recession sooner rather than later. So I don't think that the Fed needs to be incrementally more hawkish in order to reduce inflation over the coming year. I think it's, you know, very likely to happen already.

• 27:39Anthony Pompliano?

  I um, I don't know what's gonna happen, but we're gonna find out for sure. Where can we send people to find you on the internet or find out more about Invictus Research?

• 27:46Speaker 02

  So our website is invictus-research.com. Twitter handle is at Invictus Macro. And our goal is to provide a replacement for the business section of the mainstream media. So instead of reading the Wall Street Journal or Bloomberg, we send you five to 10 minute videos each morning on where we are in the business cycle, what the implications are for forward returns and try and keep it short, very informative and, you know, more entertaining.

• 28:14Anthony Pompliano?

  And then just reading through the business section, hopefully. I tend to think that you do some amazing research. Anyone who has not subscribed yet, definitely go check it out and then follow Mike on Twitter as well. He put out some great stuff. So thank you for coming on and kind of giving us an overview of the bond market. We'll definitely have to do this again in the future as this all plays out. And I'll cross my fingers, you cross yours, that the Fed doesn't do anything crazy in a couple hours, but we'll see what happens. Yeah, amen. Amen. Thank you for having me, Tom. All right. Sounds good, Mike. Talk soon. 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

• 28:57Anthony Pompliano?

  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.