BTC184: Q2 MACRO
W/ LUKE GROMEN
29 May 2024
In this episode of the Bitcoin Fundamentals Podcast, Luke Gromen discusses the macroeconomic outlook for the upcoming year. We cover the Fed/Treasury cap on USD, UST yields, potential changes in housing inflation metrics, and the significant backlog in transmission interconnections. Additionally, Luke explores the implications of a $1.8 trillion housing stimulus, key commodities like copper and uranium, the Japan treasury market, and how these factors could impact Bitcoin.
IN THIS EPISODE, YOU’LL LEARN
- The current Fed/Treasury cap on USD and UST yields.
- Potential changes in how housing inflation is measured.
- The implications of a $1.8 trillion housing stimulus.
- The backlog in transmission interconnections and its impact.
- Key trends in commodities like copper and uranium.
- Insights into the Japan treasury market.
- The effects of stablecoins on the dollar’s utility.
- How these macroeconomic factors could impact Bitcoin.
TRANSCRIPT
Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.
[00:00:00] Preston Pysh: Hey, everyone. Welcome to this Wednesday’s release of the Bitcoin fundamentals podcast on today’s show. I have the brilliant Luke Gromen to discuss the big picture economic outlook for the rest of the year. We’ll dive into the fed treasury cap on the U.S. Dollar and the U.S. Treasury yield, potential housing inflation changes in a significant backlog in transmission interconnections.
[00:00:21] Preston Pysh: We’ll also touch on key commodities, the Japanese treasury market, and how these factors could impact Bitcoin moving forward. All right. So let’s jump right to it. And here’s my interview with the thoughtful Mr. Luke Gromen.
[00:00:37] Intro: Celebrating 10 years. You are listening to Bitcoin Fundamentals by The Investor’s Podcast Network. Now for your host, Preston Pysh.
[00:00:56] Preston Pysh: Hey everyone. Welcome to the show. I’m here with the one and only Luke Gromen. Luke, welcome back. Great to be back, my friend. How are you?
[00:01:03] Luke Gromen: Doing great. Doing great.
[00:01:04] Preston Pysh: I want to start off where we always start off, which is kind of your overall big picture. I don’t think too much has changed since the last time we talked.
[00:01:12] Preston Pysh: Cause when we talked last, you were suggesting that maybe by early summer that they were going to have to really kind of devalue the dollar. And that was going to be the big play to kind of keep liquidity in the system. I don’t think, cause I read your, your weekly reports. I don’t think too much has changed from that thesis.
[00:01:28] Preston Pysh: I’m just kind of curious if you have anything that’s additive or if I am off base, let me know.
[00:01:35] Luke Gromen: I think we saw, it’s still, I think you’re going to have to continue to add dollar liquidity. I think it, as you know, as we’ve been writing for probably a couple quarters now that I’m not looking for some big devaluation, but rather orderly weakness really in the dollar.
[00:01:48] Luke Gromen: And maybe we’ve started to see it. We saw in April, I guess it was the second week of April. We had a really bad 10 year auction and the 10 year yield got pretty sloppy, 475 up near 4. 8. And I believe if I recall correctly, cause I was just writing about it recently, it was like April 15th or so. And we’re now, you know, in the ensuing month, we saw the DXY index from the high to the low moved down about 2. 2 or 2. 4%, which doesn’t sound like a lot, but in the dollar, that is significant. That is a significant increase in overall liquidity. And so. We’ve seen that the dollars kind of bounced off the lows a little, you know, one of was 104 flat. Maybe it traded under 104 for a cup of coffee, but I think that’s going to be continue.
[00:03:06] Luke Gromen: Yellen moved issuance surprise people to the front end, basically tapped the reverse repo in a way where the effects of what she did matched QE to the, to QT, but it wasn’t QE. The purists will tell you it wasn’t QE. I’m kind of like Tommy Lee Jones in The Fugitive where like when Richard Kimball’s pointing my own gun at me, I don’t care.
[00:03:27] Luke Gromen: Right? I don’t care what you call it. Stocks up, Bitcoin up, you know, gold up since they did it. Liquidity was injected. Same thing with this May QRA. She did not move any issuance to the front end, but the Fed did cut long term issuance. QT, if you look at these two together, as we increasingly should, The Fed and Treasury, the Treasury cut long term issuance in November and the Fed cut long term issuance in May.
[00:03:57] Luke Gromen: And so I think there, it’s a nod toward this view of they’re going to continue supplying whatever dollar liquidity is needed to keep the Treasury market functioning, to keep rates at politically and economically sustainable and palatable levels. And so I don’t think a whole lot’s changed on that front.
[00:04:13] Luke Gromen: It’s sort of steady as she goes, if you will.
[00:04:16] Preston Pysh: I briefly brought up the treasury chart there. And I also have a dollar chart that I might bring up here. When you’re looking at the treasury, the bond yield curve of the treasury market here, let me bring it back up again. I’m just, I’m wondering how high are they going to let yields go?
[00:04:32] Preston Pysh: How far are they going to let it sell off before they just cannot let it sell off any further? And so here’s the chart again for people that are curious that are maybe watching this on video. Are we looking at this 5 percent level kind of really being the threshold that they just cannot allow it to go back through where it, you know, it looked like the, the sell off kind of peaked in October of 2023 and I’m just, I’m looking at that level and I’m, I’m saying to myself, I just don’t think that they can afford to allow it to sell off beyond that threshold going into the summer.
[00:05:05] Preston Pysh: I’m curious if you would agree with that.
[00:05:07] Luke Gromen: I do agree with that. And I think there is a case to be made that that number moves down over time, which I think makes, you know, as you can see in that chart, right? So we saw the April peak and we saw, you know, that was right around the time when we saw 7 Fed governors job on the dollar down and then yellowed followed up on November 1 with what she did, which I just described.
[00:05:28] Luke Gromen: But now. We fast forward and we have started a similar action. If you go to this latest peak at whatever. Yeah, there it is.
[00:05:37] Preston Pysh: Yeah. Exactly.
[00:05:39] Luke Gromen: And yeah, there’s a we can, yeah, we can see sort of the what I was just describing that we’ve seen. So there’s a case to be made that the red line of 5 may be coming down over time.
[00:05:52] Luke Gromen: Yeah. Is it coming? Is it coming down that fast? I don’t know. Probably not. I would say I would agree with your view that 5 is a red line is probably pretty safe to say.
[00:06:03] Preston Pysh: The only way they don’t let that yield go higher really plays into the thesis that you’ve been saying for a very long time, which is they have to weaken the dollar in order for that to not make a new high because the rest of the world has to sell their treasuries in order to defend their currencies.
[00:06:20] Preston Pysh: And I’m going to pull up the dollar chart here while we have this, this sell off that you’re talking about is right here in April in the DXY. And you can see for a month and a half now, it has, the dollar has weakened, which has, you know, helped keep the, the yields in the treasury market where they’re at, not putting in new highs with respect to the yield.
[00:06:42] Preston Pysh: So when I’m looking at this, I’m not seeing anything definitive that’s showing a momentum shift or a change based off of the, the volatility. I mean, there’s a lot of volatility in both of these charts. And so I guess for me, when I’m talking to an expert like yourself, I’m thinking, so why, what is different right now that you think that this trend is going to really, that the dollar is going to get weaker and that they’re going to be able to cap the yields on treasuries?
[00:07:10] Preston Pysh: What is that key thing that you’re seeing right now that you’re not seeing in the price action of these charts that you think is changing that?
[00:07:17] Luke Gromen: I think it’s the prospective possible slash likely liquidity yet to come. Right? So it’s that’s what we have to watch for is when you see these news stories go by.
[00:07:28] Luke Gromen: They’re not and they have not. They’re not going to say we’re doing this to cap yields. It’s going to be every other excuse in the book. The purists are going to say it’s not Q. E. Blah, blah, blah. They’re not doing this to finance deficits. Same thing they’ve been saying for 15 years. This is just happening a lot more frequently.
[00:07:47] Luke Gromen: I know it’s a lot more urgent because of what we described before the fiscal situation and the lack of central bank buying on net. What are those things as I look out over the next six months? I see a Freddie Mac guaranteeing second mortgages. Which the comment period ends today.
[00:08:07] Preston Pysh: 1. 8 trillion. Is this is the 1. 8 trillion?
[00:08:11] Luke Gromen: As much as 1. 8 trillion in liquidity. Right? So when you hear so Freddie Mac is 1 of the agency mortgage back and 1 of the 1 of the mortgage guarantors, none of them stay with me. Freddie Mac is a government mortgage. Yeah, right. So what? I forget exactly what they’re called. We know what they do. Right?
[00:08:31] Preston Pysh: So the government.
[00:08:31] Luke Gromen: So by way of background, about 21 days ago, 30 days ago, it was put up for comment. On the federal register, the idea, the proposal for Freddie Mac to guarantee second mortgages. When you hear Freddie Mac guarantee second mortgages, you should hear government guaranteeing consumer spending.
[00:08:54] Luke Gromen: When people take out a second mortgage, they tend to go on vacation, buy a car, put in a pool, put in a deck.
[00:09:01] Preston Pysh: It’s a windfall.
[00:09:01] Luke Gromen: It’s COVID STEMI 2. 0. What was COVID STEMI 1. 0? It was a government backed consumer spending boom. It weakened the dollar. It was into liquidity. It’s the same thing. Now, interestingly, people I’ve talked to said that, number 1, almost no one’s noticed this.
[00:09:19] Luke Gromen: The Wall Street Journal editorial board wrote something about it and may 1. Their tagline was what could possibly go wrong. And they’re exactly right. And the people I’ve talked to said, it’s very unusual. This thing only had a 30 day comment period. It was like, here it is. Anyone have said, I put it up for proposal second and second, didn’t keep objections.
[00:09:41] Preston Pysh: There was not, there was less than 200 people that viewed this file according to your report, correct?
[00:09:47] Luke Gromen: Yeah, it was, I think it was like 900 as of a week ago, and it gets up to 1300. Right, so we’re talking about something that could ostensibly inject hundreds of billions of dollars of liquidity. And ultimately trillions into the consumer, especially if they, if they do the same thing for Fannie Mae, and I don’t know why they wouldn’t eventually.
[00:10:04] Luke Gromen: And no one’s paying attention to it. And so the comment period ends today. I don’t know if that’s a midnight or if it’s already over. And so, okay, step one, that’s, you know, this is when I say we have to watch for these liquidity injections. Okay, let’s go to number 2. Number 2, last weekend, there were articles about how the U. S. banks had successfully pushed back on regulatory reforms, led by Jamie Dimon at J. P. Morgan. Well, that sounds good, and the article talked about how banks were running the bank lobby, particularly in the financial markets, were running advertisements, I believe during the Super Bowl, the article said, talking about how these regulatory reforms were bad for American growth.
[00:10:49] Luke Gromen: Okay, these are bad. Call your congressman. The regulatory reforms are essentially designed to turn the banks into monetary utilities to finance the government. Basically, treasury bonds are going to count against capital. Treasury bonds count against their capital ratios, then when they buy treasury bonds, they have to not make a loan somewhere else.
[00:11:11] Luke Gromen: And this is vastly oversimplifying, but this is, this is the key thrust of it. These banks are fighting these regulatory reforms so that the treasury bonds do not count against capital, which means they can buy infinite amounts of treasury bonds. And if they buy infinite amount of treasury bonds with no capital, that’s QE through the banks.
[00:11:31] Luke Gromen: More liquidity. It’s really good for growth. It’s really good for nominal GDP. It’s good for employment, like, and that’s the sort of, you have to understand what you’re seeing and kind of translate it. The banks aren’t wrong. This would be bad for growth. If these regulations, as they are written, stand.
[00:11:48] Luke Gromen: Government keeps running deficits. Those deficits will crowd out private lending by the banks. The banks will buy the treasuries, risk adjusted, it’s very attractive, blah, blah, blah. And they’ll stop making loans to what the bank said would happen in the advertising. Small businesses, industrial, commercial industrial loans, etc.
[00:12:04] Luke Gromen: And the economy will slow. They’re right. So the choice is do that. And work down inflation or suspend the regulations as it relates to Treasuries. So Treasuries do not crowd out the private sector when the banks buy them and the government runs deficits. So the banks still make loans to the government by Treasuries.
[00:12:25] Luke Gromen: And the banks still have the balance sheet room to make loans to the private sector, dollar liquidity, QE without calling it QE. So those are the next two things I’m watching for. And again, this is not catastrophe. This is not, it just is what it is. This is how when governments have a fiscal problem, they don’t just go, Oh, I give up.
[00:12:45] Luke Gromen: We’re going to cut entitlements and defense by the amounts we need to cut them so that we can, it’s not what they do, especially not in the geopolitical environment we’re in. So what we’re seeing is just this steady creeping, changing of the rules, moving of the goalposts, not QE, dollar. And let me tell you, you tell certain people on Wall Street that they are financing the deficit, they will lose their minds.
[00:13:09] Luke Gromen: And maybe technically they’re not because they’re going through the primary dealers. And as I asked someone the other day, okay, yes, we’re not a banana republic. This is not a banana republic move because they’re going through the primary dealers. But answer me this, We know the primary dealers are backed by the government.
[00:13:24] Luke Gromen: They’re too big to fail, right? Yes. Okay. So if a government backed institution is the intermediary to shoot between the fed and the government, what’s that semantics it’s semantics.
[00:13:38] Preston Pysh: Here’s where I would push back on the wall street person that says that they’re not, you know, doing that. There’s already a massive divide between boomers and younger generations, right?
[00:13:48] Preston Pysh: Massive divide. When we look at what we’re talking about, we’re effectively talking about a 1. 8 trillion stimulus to who a person that owns a house already. Yes, right? If you don’t own a house, do you get to participate in this 1. 8 trillion stimulus that potentially is going to happen? Of course not, right?
[00:14:12] Luke Gromen: No. Not until your parents die. Yeah.
[00:14:14] Preston Pysh: So when you pull back the thread, and you look at who is this actually impacting inside of society, and you say, how is it, how is it benefiting them? Who is it hurting? Who’s, who’s at the disadvantage of these policies that are being rolled out? And this isn’t a banana republic.
[00:14:30] Preston Pysh: Well, actually it is. It is, this is, this is total market manipulation where you’re choosing winners and losers. And what’s fascinating to me is the same set of people continue to be the winners on these decisions, these policy decisions as they continue to roll them out. And so the more that they double down on the manipulation of the markets, the more that they’re just ticking off in creating social unrest with a really interesting demographic, which is everybody that’s young.
[00:14:59] Preston Pysh: Because of these decisions that they’re making and it’s, it’s, we can get caught up in all the terminology and all the hoopla and describe how the banks are doing this and they’re doing that. But at the end of the day, like the end user, the person that’s being impacted in these decisions are the people that own the equity or they own nothing.
[00:15:17] Preston Pysh: And if you own nothing, you’re going to even own less than, than the nothing you already have, because anything that’s being printed is being jammed into the hands of the people that actually hold the equity and that divide in that, that obliteration of the middle class just continues to accelerate.
[00:15:32] Preston Pysh: It’s totally crazy. But curious if you have any additive, sorry to go off.
[00:15:38] Luke Gromen: Well, it’s interesting, right? Because the, you know, if the real reason we’re doing this is because we’re running these big deficits, that’s, that’s right. So, but then you look at why are we running these big deficits? It’s entitlements is so there’s there’s 3 things we spend our money on that matter.
[00:15:52] Luke Gromen: There’s we bring in 4. 8 trillion in tax receipts, roughly 4. 6. I think last year. We’re going to spend 3. 2 trillion this year on entitlements, health and human services and social security says Medicare Medicaid. And that primarily goes to the boomers. And the sound generation, so about 70 percent of tax receipts is going to entitlements.
[00:16:13] Luke Gromen: The next biggest line item is, of course, interest expense, which is only going up, which is going up, and that’s about a trillion two on a gross basis. Trillion one, trillion two on a gross basis, certainly pro forma.
[00:16:27] Preston Pysh: Which is more than military spending.
[00:16:29] Luke Gromen: Oh, it’s 50 percent more than military spending. I know, by the way, every hegemon whose debt service has gone over its defense spending doesn’t stay hegemonic for very long separate discussion.
[00:16:38] Preston Pysh: Which is a massive footstomp.
[00:16:40] Luke Gromen: It’s a very, it’s a very big thing. But so this 1. 2 train, who’s the biggest buyers of who’s been the biggest buyers of treasuries over the last 10 years, the biggest marginal buyer, other than the Fed and the banks has been the boomers, right? It’s been us retail, particularly since they began raising interest rates.
[00:16:57] Luke Gromen: So they’re getting more, the boomers are also getting more interest to. And then we’ve got defense it call it 900 billion. The point here is, is that the reason we have to do this in terms of this liquidity injection to finance these deficits, which are heavily driven by money that’s ending up in the boomers hands to pay for services that the boomers are ultimately consuming.
[00:17:20] Luke Gromen: But the boomers on the bonds, and so who’s really losing in all of this. The boomers, right? So basically there’s 2 ways you could structure this. I’ve got to pay this, this entitlement. I can do 2 things. I can tax. I can be overt about it. I can put it up for a vote, which will never pass. So it might pass now, actually, but forever it wouldn’t pass, right?
[00:17:45] Luke Gromen: When you look at the demographics of boomers are not going to vote for this, but now they’re not the biggest generation anymore. They might pass, but. I put up for a vote like we would do in a democracy, or I could just do it the easier way that governments always do. Here raise rates. Hey boomers, you can get four or five percent.
[00:18:01] Luke Gromen: Oh, great. I’m gonna have four or five percent All right, Jack inflation to eight And like, these boomers are going to sell their bond funds. Like, you know, my dad last fall was like, when’s my bond fund going to start going back up? It just goes down every year. Like, yeah, I said, that’s probably going to stop going down on a nominal basis.
[00:18:22] Luke Gromen: Now comes the fun part where it goes from buying you, you know, a house to a cottage to a tent. And that’s how the boomers will pay for their own entitlements. And the collateral damage to that is what you talked about, is the people who don’t own houses, the people who don’t own assets. And I think we’re watching all of this happen.
[00:18:42] Luke Gromen: I think we’re watching markets recognize this, start to recognize this in real time. When you look at me, which is the 130 trillion bond market, recognizing it’s the sucker at the card table. I mean, if you said, Luke, what is one of the surest signs of where the bubble is throughout your career? I’ve been doing this almost 30 years.
[00:19:00] Luke Gromen: Every time retail and banks have been like flooding into something, it’s usually a sign that that’s the bubble. Guess where retail and banks have been flooding into for the last 3 to 5 years? Treasury bonds. Long term treasury bonds are the bubble. And if long term treasury bonds are the bubble, and as you just showed, 5 percent is the rate, they’re not going to let it go over.
[00:19:21] Luke Gromen: Then we should see what we’ve been seeing in markets, which is S& P over long bond. Boom, NASDAQ over long bond. Boom, gold over long bond. Boom, Bitcoin over long bond. Boom. Everything over long bond takes off. And because there’s a reflexivity, markets are forward looking. They’re not going to go, oh, rates are at 5, sell.
[00:19:41] Luke Gromen: No, they’re starting to go, oh, rates are at 5. Here comes the next application of sugar. That’s sweet, sweet liquidity from Powell or Yellen or. Whoever’s going to generate it, but they’re not, you know, they’re not going to eat less because rates are at five and if they’re not going to eat less because rates are at five, then the right thing to do is sell long bonds and buy stuff that goes up when they have to apply them latest round of liquidity, something that’s desirable and scarce.
[00:20:06] Preston Pysh: That’s exactly right. You had a comment that you think that they’re going to remove, potentially remove shelter from the CPI index. Were you serious about this?
[00:20:16] Luke Gromen: It was not, it was, that was more tongue in cheek more than anything else in terms of their inability to get housing down. It was probably too cynical, but maybe not as cynical as it would have been.
[00:20:28] Preston Pysh: I read it that way. I read it as you being a little cynical. So This was a really interesting comment, and I would love to get into this, especially because I think it has ties to Bitcoin and AI. You said there’s currently a backlog in transmission interconnections of 2, 600 gigawatts. That is larger than the installed capacity of all power plants currently operating in the United States.
[00:20:50] Preston Pysh: What are you talking about here?
[00:20:53] Luke Gromen: So one of my biggest investments or one of my bigger investments personally is a private equity investment in an electrical infrastructure equipment company. And one of the executives of that company here in Rust Belt, USA sent out that update after being at a trade show.
[00:21:10] Luke Gromen: And what I’m saying is that the amount of requested permitted grid build out basically, right, is bigger than the entire installed base of current generation in the United States. And so when I see people like short copper, I’m like, good luck, good luck, have fun storming the castle right from a princess bride.
[00:21:36] Luke Gromen: And that’s not to say it can’t go down, but like, there is such a gross mismatch between the stated policies of. Our country and basically every country, right? Which is we’re going to electrify everything and the available capacity today. And then the perspective capacity, when you look at all right, how are we doing on copper supply?
[00:21:59] Luke Gromen: How are we doing with aluminum? How are we doing with the industrial production capacity to make this stuff? Like the execs at this private. And electrical infrastructure company, they think they’ve got 10 to 20 years of open field running, like, just as much business as they can do. And so when you then translate that to things like AI, and we’re starting to see this a little bit in the headlines is the bottlenecks, energy, the bottlenecks, copper.
[00:22:26] Luke Gromen: The bottleneck is all this stuff. So it’s a very, it introduces this really interesting potential paradox, which is for the year in my entire professional lives, you roll out a new technology. It’s disinflationary. It’s a massive productivity enhancement. And it’s deflationary for the 1st time that I can recall in my career, this new technology is so powerful.
[00:22:50] Luke Gromen: That the bottleneck are these industrial components and the raw commodities like copper and uranium and the industrial components and infrastructure to make this stuff, which introduces this really interesting paradox, which is for the 1st time in our lives, technology, the latest technology.
[00:23:10] Luke Gromen: Productivity miracle might be inflationary, not disinflationary, because then when you follow up a chart, you know, they call copper, you know, the, the metal with a PhD in economics for a reason, the correlation between GDP and electrical consumption is like nearly perfect and electricity doesn’t move without copper.
[00:23:30] Luke Gromen: So when copper prices start going up a lot, you can run a correlation with copper with inflation expectations in the U. S., copper with inflation break evens. AI is going to make rates go up because they’re short the copper and the electrical infrastructure and energy it’s going to be so that’s, and you would think it’s completely the opposite.
[00:23:49] Luke Gromen: So I think that may, or excuse me, gigawatt comment really was like, sometimes you just hear these comments that just smack you across the face. The last time I recall hearing one like that was we used to cover in a, in a former life, we used to cover a coal mining company called joy global. They, they did drag lines and I forget what the other kind of giant coal mining machinery was.
[00:24:12] Luke Gromen: But these are like, at the time they were like 20 to 100 million, a rattle machines, huge, huge metal machines. And we went and met with them and like, 2002 or 2003 or something. And they’re like, our order book is extended out like years. The Chinese are buying everything we can make. I’m like, okay. And the stock just went, like the next six, seven years.
[00:24:38] Luke Gromen: That’s the last time I remember hearing something like this with that gigawatt comment. Like there’s two choices. We don’t have the grid to do what we want to do with electrification. Bulls t. And so then your answers are, do we not do it or do we do industrial policy and the Fed cap yields ultimately one way or another to do it.
[00:24:59] Luke Gromen: And you see in science, it’s the latter.
[00:25:02] Preston Pysh: Is AI the thing that’s driving this massive increase in energy?
[00:25:07] Luke Gromen: It’s a part of it. It’s a big part of it, but it’s, I mean, that’s still early days. I think it’s, it’s more just the data centers, like it’s the data centers, it’s the, you know, it’s the, the EVs, like even the small amount of EVs people, again, these Doomberg did a great piece about a year ago where he said these.
[00:25:28] Luke Gromen: The average transformer that we use in sort of, you know, and I apologize to any, any people who really understand the electrical grid stuff. Cause I’m not that guy. I know like not even enough to be dangerous. I’m just dangerous. So I don’t know what size of transformer this is, whatever size you use, you kind of see on the polls that sort of for like a neighborhood or whatever.
[00:25:49] Luke Gromen: At any rate, Doomer pointed out that these transformers are designed to run on a cycle. So they’re supposed to last 30 years. And the way they last 30 years is during peak hours. Like you have in a grid, right? Max power use, they get really hot. And then at night when use is much lower, they cool down. And so they cycle down, they cool down.
[00:26:09] Luke Gromen: And it’s that cooling period that allows them to last 30 years. Well, what Doomberg pointed out was that does Ron hot? Well, yeah. When does everybody plug in their cars? At night, when we never used this stuff before. Okay, that takes the temperature of these things and runs them hot 24 7. What happens to the useful life of a transformer?
[00:26:30] Luke Gromen: How far does it fall from 30 years driven by just a token amount, you know, not nowhere near our goals for EV penetration, but just once you hit sort of some threshold on EV penetration. How far does it go from 30 years? It goes to three years. They cut the useful life of transformers by 90 percent by stopping in your cars at night.
[00:26:50] Luke Gromen: Really? And I run this by, you know, these, these, these friends of mine at this electrical and they’re like, yeah, this really direction is insane. So there’s a degree of reflexivity in this, that wall street is not thinking about. They are just not thinking about the average investor is not, well, let’s just plug it all in AI cars, electrification.
[00:27:13] Luke Gromen: No, no, no. There’s an order of operations, fellas, and it all runs through copper. It’s all got to go through copper. Then it’s got to go through the U. S. industrial base, and electrical infrastructure, and aluminum, and like, like copper’s probably not priced in the right freaking zip code. If we want to achieve what we want to achieve, and again, that’s fine.
[00:27:34] Luke Gromen: That implies some massive secular investment shifts in terms of, look, if copper is the bottleneck for AI, copper is an AI play, baby. If the price of copper is, you know, going to 10 from 5, like, it’s not like you’re not going to buy the copper. And so I, you know, people say, why is China buying up all this copper?
[00:27:58] Luke Gromen: And why is China buying up all this nickel? Why is China buying up all these metals? They’re getting ready for war maybe. Or more likely in my opinion, data centers, they know, like. If you knew something, if you, if you didn’t have to market to market and China done for 2 years, if you knew in 2 years, copper is going to be 15 and today it’s 5, how much property about if you don’t have to market to market?
[00:28:21] Luke Gromen: Because maybe it goes to 4 percent and of course, the American way of doing it is that. Well, I’m not going to buy it. If it’s a 5, it might go to 4 or 350. Before it goes to 15 because we all have to mark our books to market monthly or quarterly and China’s like, okay, I’ll take it a 5 and if it goes to 4, I’ll buy more.
[00:28:37] Luke Gromen: If it goes to 350, I’ll buy more. And like, I don’t know why these people keep selling me all this stuff because it’s going to be 15 in 2 years or 3 years if they look at their own plans for EV and the 15 is a random number. Maybe it’s 8, maybe it’s 9, maybe it’s 10, maybe it’s 20. I don’t know. But it’s higher like it’s it is so obviously higher barring some sort of catastrophic or some sort of productivity thing, right?
[00:29:01] Luke Gromen: We have some. Hey, we have a way to not, you know, we can do this wirelessly. We can transmit electricity wirelessly and we don’t need the cover. Okay. That changes everything. But like, the people that are building the grid, if we have this and we’re going to use it, you probably ought to inform them because they got 2600 gigawatts of sort of stuff to build, which is bigger than the entire grid.
[00:29:24] Luke Gromen: And no one’s let them know, like, hey, don’t worry about the wire yet. Because we, we’ve, we can do it wirelessly right now, unless it’s classified, it doesn’t exist.
[00:29:35] Preston Pysh: Just for folks listening, three tickers for companies that have a market capitalization that deal in copper in excess of a billion, you got FCX, IE and BVN.
[00:29:47] Preston Pysh: That first one, FCX Freeport, this is a 67 billion company. I haven’t dug into any of those tickers. I’m just did a quick Google search and just throwing out a couple of names of companies that deal in copper. So, and is that how you would play this Luke? I’m assuming you would buy the companies that are mining it, or are you like actually going into the futures market and trying to own copper?
[00:30:09] Preston Pysh: How, how, how do you play this?
[00:30:11] Luke Gromen: I, for me, and I can’t make individual securities recommendations, but from a trade structure standpoint, if I was an average investor, yeah, I wouldn’t get involved in the future. So that’s a tricky game that’s better served for professionals. Given the leverage involved, I would be more inclined to own copper producing companies with good balance sheets, you know, low debt, low debt to cap because it is, I don’t think it’s to be a cyclical business for a few years, but it is in the long run, a cyclical business.
[00:30:37] Luke Gromen: Yeah, that, that to me is, I think the safest and best way to play for, for most people.
[00:30:43] Preston Pysh: But I would think if the dollar does weaken, like we talked about earlier, these are going to rip. I would think. Yeah. Yeah. How about on the uranium front? Cause you had quite a bit that you were talking with respect to that as well.
[00:30:54] Preston Pysh: And this is again, another energy centric type position based on the increasing expectation for energy demands all around the world. I also read that Japan was starting up one of their nuclear reactors. What are some of your thoughts on this?
[00:31:09] Luke Gromen: I’m not dug in as deep to it other than tangentially, but to me, I look around and I see a lot of countries coming to the recognition that they’re short electricity relative to their plans and goals and that nuclear is the best way to implement large amounts of baseload capacity.
[00:31:31] Luke Gromen: And the supply side of it again, by what I can tell is also relatively tight. Okay. You saw last week, the U. S. government is basically, not even basically, they just implemented in the aftermath of sanctioning Russian uranium, they implemented a program where they’re basically going to spend 3. 4 billion dollars to sort of buy up uranium and try to stimulate the domestic uranium industry, which is fine.
[00:31:56] Luke Gromen: It’s the right thing to do. It’s a good strategy. But that yields conclusions, which is that’s industrial policy. The American government is selling treasuries to buy uranium. Why wouldn’t I sell treasuries to buy uranium? Why should many investors sell treasury to buy uranium? I think you should. I think the outlook for uranium is very good.
[00:32:14] Luke Gromen: I look at, I think it was Amazon a few months ago, I think dropped several hundred million dollars to buy a nuclear power plant to for themselves to help run. So we’ve got this technology company with all this amazing, you know, they run web services. They’ve got all of this tech. And they’re buying a nuclear power plant.
[00:32:31] Luke Gromen: Why? I’ll tell you why, because they see what I was just talking about in terms of the mismatch between interconnection applications and the lead times and the existing capacity. And so they’re dropping several hundred million dollars on a nuclear power plant because they think it’s getting to the point where it’s not what’s the cost, it’s what’s the availability.
[00:32:56] Luke Gromen: You know, what’s the value of Amazon if they don’t have enough electricity? I don’t know what it is, but it’s hundreds of billions of dollars less than market cap. So who cares? Drop off several hundred million dollars on a new power plant. Make sure your uptime doesn’t go down as a result of your electricity hookup.
[00:33:14] Luke Gromen: Microsoft has talked about buying nuclear power plants. For their AI type stuff, so I think you’re going to see more of this, which again breeds this interesting question, which is if I take a look at the multiples on copper and uranium and electrical infrastructure, and I, and I contrast it with the multiple on a true AI stocks.
[00:33:36] Luke Gromen: And if the former, if the latter, if the AI stocks don’t hit their goals without the former, then the multiples should probably at least be a little closer together on the stocks and the earnings multiples, right? So I’m not saying they should trade at a, you know, some insane high multiple, but they probably should get a little bit of a pickup from being stocks that the AI stocks can’t live without.
[00:34:02] Luke Gromen: That’s what I’m thinking about at the moment. I think it’s kind of interesting.
[00:34:07] Preston Pysh: I’ve got a chart I’ve got to bring up here. This is such a bloodbath. Look at this. Look at this whopper. Japanese bond yield curve, Luke. I mean, this is crazy. This is, this sell off is totally insane. Like we’re back to yields in Japan that were there during the great financial crisis.
[00:34:27] Preston Pysh: And I mean, it just, it looks like it is just going to continue to fall apart. So. When I think about where this is in relation to all the other yields around the world, this really kind of seems to be the canary in the coal mine. And I’m curious if you would agree with that with respect to just, there is a brisk change playing out in fixed income.
[00:34:50] Preston Pysh: Do you have any other thoughts or like opinions when you’re looking at this? And I can also show the Japanese yen. Which we’re seeing against the dollar at levels that it hasn’t hit since 1990, which I also think is incredible. What are your thoughts, Luke, when you think about Japan and some of these charts?
[00:35:12] Luke Gromen: I think it is a canary in the coal mine. Japan is one of the world’s biggest creditors, right? They have been running surpluses against everybody for virtually everybody. They’ve been running surpluses against the West, certainly against the United States, certainly for, I don’t know, 60 years. And what do they do with those surpluses?
[00:35:33] Luke Gromen: They reinvest them into American assets. So, ultimately, we can see that those yields and we can then game theory or game out what the possible options are for them, right? So, that goes up, that puts pressure on everything that puts pressure on in Japan. What does Japan want to do? They’ve got 3 trillion in dollars, denominated assets sitting in America.
[00:36:03] Luke Gromen: They can say, listen, we’re going to finance our deficit to defend our currency for, you know, we’re going to sell 5 percent of that every year. We’re going to sell 10 percent of that every year. You know, so we’ll sell 300 billion worth of dollar assets a year for the next 10 years, but it could probably go longer.
[00:36:17] Preston Pysh: But on that front, they just opened up swap lines to them. So why, if I’m Japan, why don’t I just beg for mercy? And say, open up the swap lines. I’m not going to sell my, my treasuries. Just like, just help a brother out would basically be my strategy. And it seems like that’s the strategy that they’re taking.
[00:36:37] Preston Pysh: Is that it? Or well, that goes right back to our initial discussion, right?
[00:36:41] Luke Gromen: That’s not QE. Those are just swap lines. They have to be bought back. But if the alternative was them selling treasuries, what are those swap lines? Financing U. S. deficits, right? Financing net U. S. deficits. Because otherwise, Yellen would have had to sell her 2 trillion.
[00:36:56] Luke Gromen: The Fed would have had to sell theirs. And Japan’s going, you know what? You take these. I need, I need the dollars. And they would have been, and so the punchline is, is the Treasury yield would start to look like that, you know, that would be, you know, that’s what it would start to the 10 year Treasury start to look like that.
[00:37:13] Luke Gromen: And we can see that if you chart, you know, it’s a 2 axis chart, so take it with a grain of salt, but you run the yen against the the 10 year Treasury, you know, so the weaker the yen gets, the higher, you know, the higher the dollar yen goes, the weaker the yen gets. Okay. The higher the 10 year treasury goes for the last five years, it’s like a very tight correlation.
[00:37:34] Preston Pysh: And so in all of this, just so people can understand, like, so what’s the impact when they open these swap lines and they allow this to take place. Japan benefits before the United States benefits. But if the U S didn’t open these swap lines, we would have total dysfunction in the treasury market and everything would go chaotic globally.
[00:37:57] Preston Pysh: And so it’s kind of like you and I are in line to go on a ride or something like that, and I put you in front of me, even though it doesn’t benefit me for you to go first. But if I don’t go first, we basically both die or we both fall apart. So like we’re here helping out like all these countries around the world by opening these swap lines just so we can keep the dollar stable and normally functioning at the expense of every U. S. citizen and their purchasing power and their ability to buy equity around the world because they’ve basically given that liquidity to somebody else first. Is this, is this a correct description?
[00:38:33] Luke Gromen: Generally, yeah. And it speaks to when you’re highly levered, there typically aren’t linear, gentle, soft landing outcomes.
[00:38:43] Luke Gromen: They get very, very binary, right? So, okay. We don’t open the swap lines. The Japanese sell treasuries. The yield goes up, the dollar goes up, as the dollar goes up, global growth slows, as global growth slows and treasury yields go up, the amount of global selling of treasuries accelerates, the net effect of supply of treasuries accelerates, Yellen plus everybody in the whole world, right?
[00:39:08] Luke Gromen: So Yellen sells 2 trillion, the Fed sells whatever, they’re still selling, and the world sells 2 trillion. The world can sell a trillion a year for the next eight years. Central banks can sell a trillion a year for the next three and a half, four years. So, okay, and we know that that market’s not very liquid.
[00:39:24] Luke Gromen: It’s, it’s not necessarily not that liquid because we’ve seen it dysfunction three times in the last two and a half years. So we go into a death spiral globally, right? Because, oh, by the way, treasuries are the collateral underpinning the whole system. And we saw, started to see the impact of that last spring.
[00:39:40] Luke Gromen: It wasn’t a banking crisis last spring. That was a treasury problem. The collateral underpinning those banks had fallen too far. And so the Fed wrote the collateral up via BTFP swaps to keep those banks in a decent position. That’s option one. That’s extreme option one. We started to see us go into that in 3q23 when we saw the long term treasury market fall 20 percent a quarter.
[00:40:02] Luke Gromen: Option number two is not like, well, let’s just do Goldilocks. Option number two is okay. Do the swap lines, do whatever liquidity you need to do to keep treasury yields from going too high to keep the dollar stable to moving down and to kind of keep, but the release valve then is. S& P up versus, you know, like this versus the long bond, NASDAQ spiking versus the long bond, gold spiking versus the long bond, Bitcoin spiking versus the long bond.
[00:40:28] Luke Gromen: Those are the two options. It’s fire, it’s ice or fire. That’s it. There’s not like, hey, can we make like a nice warm tea out of the ice and fire. It’s ice or fire until you write the debt down significantly. That’s, and we’ve seen ourselves going back and forth. And sometimes we spend a little time between the two.
[00:40:47] Luke Gromen: But it’s not like, Hey, we’re going to spend the next two years stepping in a nice cup of tea, blended of ice and fire. It’s going to ice fire, ice fire, ice fire.
[00:40:55] Preston Pysh: I don’t think that even writing it down solves the issue at hand, which is that you have productivity through about to be AI and what that’s going to do.
[00:41:07] Preston Pysh: And you’re trying to measure all of this with a fractional reserve system that has to keep expanding. And so I just don’t see them writing, quote unquote, writing it down being anything other than yet another band aid on a, on a wound that is bleeding out aggressively. You have to get to some type of sound money in order to have the, quote unquote, write down in a way that the world can move forward.
[00:41:30] Preston Pysh: In a way that incentivizes cooperation as opposed to incentivizing everybody at each other’s throats.
[00:41:38] Luke Gromen: No, that’s exactly right. And it’s, as you know, our friend Jeff Booth wrote the great book, Crisis Tomorrow, and that’s the, that’s absolutely correct. It’s absolutely, and that’s something again, Wall Street in by and large is not paying a lot of attention to, which is, I don’t think Wall Street understands that.
[00:41:55] Luke Gromen: That it’s, it’s difficult to get a man to understand something when his salary depends on is not understanding. Yes. Which is to say the, a debt backed system, a debt based system is fundamentally incompatible with a deflationary technology. Like, yes, people aren’t getting that. Yes. Setting aside how I might actually inflate commodities.
[00:42:18] Luke Gromen: Like we just said, set that aside as a trigger of inflation. Let’s say AI arrives too fast, or just at a reasonable pace. It doesn’t arrive, it arrives too fast relative to the pace not needed to do this. You’re going to create wage deflation, right? There was a great paper on AI, humanoid AI robotics, right?
[00:42:40] Luke Gromen: And the paper on it, a couple of weeks ago, we wrote about it. And it’s something that, that again, Jeff Booth introduced me to as a concept. About a year ago, they think AI humanoid robots could send the median wage in the world down to a dollar an hour by 2034. Let’s say they’re wrong. It’s only 10 an hour by 2034.
[00:43:03] Preston Pysh: Still.
[00:43:05] Luke Gromen: Who pays the consumer loans, right? So the wage, the wage level is going to drop. Pretty much every consumer loan out there will default. Okay, are they going to let the banks blow up? Well, we know they’re not going to do that. What are they going to do? They’re going to print the money to save the banks.
[00:43:19] Luke Gromen: Because guess what the banks are going to sell to get liquidity as their consumer loans default from this deflationary wage. The 4. 2 trillion in treasuries and mortgage banks they own as high quality liquid assets, just like they did last spring for Silicon Valley and, and, and Signature Bank. Well, that’s not good because now it’s a treasury market problem again.
[00:43:39] Luke Gromen: And we know they’re not going to, so AI means. The end point of AI, to your point, in the presence of a debt backed system, means central banks are going to have to fully reserve all the debt, or the substantial majority of the debt. That’s where AI leads us. And I don’t think that’s understood yet. And so like the way I’ve been positioning for it is keep my own balance sheet low, do not take on consumer debt.
[00:44:08] Luke Gromen: I don’t need. And from an investing standpoint, understand that neutral reserve assets will outperform everything else as the deflation of technology forces central bankers over time at an accelerating pace to fully reserve. Everything all the debt and the price level will adjust and like, that’s, there’s like an easy way to do this in a hard way, but it ends up the same way either way.
[00:44:36] Luke Gromen: And this, this part is not understood. But when I see all the stuff about AI, and it’s almost, I don’t know if they’re just not thinking that far ahead, or if it’s 1 of these things where, like, it’s the boogeyman in the closet. Like, you can’t like, if I worked in a big Wall Street firm, you can’t do that.
[00:44:50] Luke Gromen: The consumer loan guys will come over and kick your head in. Right? What are you talking about? Stop? I don’t so I can.
[00:44:56] Preston Pysh: Yeah. When I’m looking at this and I’m looking at it picking up and accelerating and who knows what that timeline is, and they’re needing to be some type of buyer for all of this issuance that’s, that we know is coming, that has to come.
[00:45:08] Preston Pysh: I think you and I have talked about this very briefly, Luke, about stable coins. Effectively being the transmission mechanism for them to have a buyer for all of this garbage and short, it’s going to have to be short duration garbage. I was blown away when I saw the former Speaker of the House ran as a vice president.
[00:45:27] Preston Pysh: You saw this clip as well. I can see you’re nodding your head. Paul Ryan. Talking about how important stable coins are moving forward and basically getting, literally getting into this argument of them being buyers of treasuries. And when I watched this clip, I was like, Oh my God, they, meaning Washington have finally figured out what’s happening here and like where this is all going.
[00:45:52] Preston Pysh: And I was taken aback by all of this because. In my mind, they are totally missing like how this transmission mechanism is going to take place for the buyer of all this garbage. And now it seems like they’re figuring it out. It looks like they’re implementing policy to embrace this and You and I have had this opinion for a while.
[00:46:12] Preston Pysh: Nobody needs this more than washington these stable coins It’s just taking them a long time to figure out. Would you argue that they that they all these politicians on, on Capitol Hill have started to actually figure this out, or is that Paul Ryan clip just kind of like a one off thing?
[00:46:30] Luke Gromen: I think the Paul Ryan is an interesting, because I think it’s a signpost on timing, in other words, that they’re talking about it now, because over the last call at six months or so, I’ve had a couple of conversations where it was made apparent to me.
[00:46:48] Preston Pysh: I love how you’re trying to like, make sure you don’t dox anybody or go ahead, go ahead. I will not interrupt you, Luke. Go ahead.
[00:46:58] Luke Gromen: You get it. In the aftermath of world war two, you think about where we were on whatever, May 10th, 1945, Europe flattened, Russia flattened, Japan flattened, England de industrialized.
[00:47:16] Luke Gromen: The world was looking at a period now from a classical economics standpoint. What that means is the capital of the world was destroyed. It was gone. The retained earnings of 2000 years gone. Obliterate that leaves 1 of 2 paths. We spend the next 60, 40, 40 years, 2 generations, maybe 60 years slowly rebuilding the capital obliterated over 200 to 2000 years of capital obliterated little by little, right?
[00:47:50] Luke Gromen: So, we, we eat hand to mouth and we try to save a little bit. We take the retained earnings. We put it over here in a pile and we hold it there someday. And then we add the next year and the next year and someday we have enough to rebuild the roads. And then someday we have enough to, once we rebuild the roads, to rebuild this and rebuild that.
[00:48:07] Luke Gromen: Okay, that’s option one. Option two is you move to a system that you know you’ll have to move back away from at some point, where debt becomes an asset. I will go into debt to rebuild you. You will hold the debt as your asset. And by doing this, we can pull forward. The 40 years of rebuilding to a much shorter period of time, then reality is when we built it over 10 years, probably much longer than 40 years, right?
[00:48:34] Luke Gromen: It might take you a hundred years to rebuild from that using the first way. But we’ve always known it’s a problem. Triffin’s dilemma told us it becomes a problem at some point. You can not. And this is the first time in human history, as far as I’m aware of where the debt, where it became so widespread that the debt became.
[00:48:53] Luke Gromen: The asset of another in such a large way, ultimately, it’s my understanding that it’s always been known that at some point, you’ve got to go back to a more equity based system, something that is not a debt based system. The fact that you’re seeing people like Paul Ryan say these things, the fact that you’re seeing central banks by gold, not treasuries for going on 10 years now.
[00:49:18] Luke Gromen: Is a hugely important message when central banks buy gold and not treasuries in the context of what this 80 year process of rebuilding from the 1913 to 1945 period. That’s telling you the central bank saying that system’s done. We are starting the transition to a neutral base system. And so when I see Paul Ryan say things like that, it’s really interesting to me.
[00:49:47] Luke Gromen: When I see Janet Yellen say, I, for my entire career, she’s a 76 year old woman. For my entire career, I thought that if someone wanted to send you cheap goods, you should send them a thank you note. I would never again say, send China. She’s throwing 40 years of economic orthodoxy in the trash. National Security Advisor, Jake Sullivan, getting in front of the Brookings Institute and saying the last 40 years of US economic policy has been wrong.
[00:50:13] Luke Gromen: So there’s this building theme of a move toward this equity based system. Now, what tactically what no one’s talking about yet, I suspect you probably have, but not a lot of people. If you stable coins, you’re not going to be putting 10 year treasury bonds and 30 year mortgages in these things because of the duration mismatch, all T bills.
[00:50:34] Preston Pysh: And so if, which works for both parties, which works for both parties, it works for the US government.
[00:50:40] Luke Gromen: Yeah, it works for everyone. It works for everyone except the retail. We’ve plugged with all these long term bonds. Remember what I said before long term treasury, but yeah. If we use some version of stable coins backed by T bills to sort of redo this, the release valve is inflation.
[00:50:56] Luke Gromen: It’s going to go bonkers. You’re going to have like very high rates of inflation, which is fine. You’re going to have very high rates of nominal growth. In fact, I suspect it will be spun as preparing the dollar and the U. S. for growth or something like that, right? That is, who can be opposed to growth?
[00:51:14] Luke Gromen: Well, I don’t know. Don’t tell the boomers who are about to go from buying them a house to buying them a tent, like.
[00:51:21] Preston Pysh: Who is buying that garbage? Who’s buying anything? That’s long duration bonds of any country right now. Who who’s the buyer of all that?
[00:51:29] Luke Gromen: Pension funds, duration, pension funds, duration, matching.
[00:51:32] Luke Gromen: Like if you can, you, yes. It’s the short answer, but what the dog that doesn’t bark in that whole equation is if that market is so deep and liquid relative to the size of our deficits, why isn’t Yellen terming it out? And the answer is. Either a she’s stupid, she’s not, or B, the market’s not that deep and liquid out that far relative to the size of our deficits, you know, they can place a certain amount of it with organic buyers of, you know, of it, but they could just roll it.
[00:51:58] Preston Pysh: They could just roll it too. Couldn’t they just gobble it up and then reissue it as short duration?
[00:52:03] Luke Gromen: Well, they could, but that’s, you know, I think that’s done that to a certain degree. They’ve talked about doing it earlier this year. You know, when we talk about those dollar liquidity injections, Waller at the fed came out, I think on March one and said, you know what, we have historically had a quarter of our holdings of our balance sheet in T bills and it’s like 3 percent now.
[00:52:24] Luke Gromen: We want to move back towards a historical amount. Great. And think about it. I’m trying to break it down. So the shorter the duration of paper you issue, the more it’s like money printing, right? I hold my money in cash, right? Well, what’s cash, cash or T bills? Cash, T bills, cash, T bills. If the government is running massive deficits and issuing it more and more in T bills, the government is more and more printing straight cash to finance its deficits.
[00:52:50] Luke Gromen: It’s inflationary over time, very inflationary. Which is, again, that’s in the cake. Like, if we didn’t want this, we should have done a lot of the dumb stuff we did for the last 20, 30, 40 years.
[00:53:00] Preston Pysh: I tell people all the time, it’s already all been printed. It’s all out there. You just got to convert the duration into something short duration.
[00:53:07] Preston Pysh: And then have a bunch of stablecoin people buy it up over the next 10 years.
[00:53:11] Luke Gromen: Well, it’s, it’s, yeah, it’s the 130 trillion going, wait a second, I’m the sucker at the card table. Oh, God, the 130 trillion bond market, and you can see it happening in markets in front of us. And it’s going to continue to happen because again, to believe it isn’t going to happen requires either a productivity miracle or a belief that the United States government is tomorrow going to cut.
[00:53:33] Luke Gromen: Entitlements in defense by 25 to 30%, meaning, you know, immediately permanently, and then stand aside as those cuts lead to a financial crisis and a depression worse than the great financial crisis. There’s zero chance that’s going to happen.
[00:53:48] Preston Pysh: Last, my last question I got for you is what are you hearing on Bitcoin from wall street?
[00:53:54] Luke Gromen: I’m here and just demand is really good. I’m here. Demand’s really good. I’m here. I mean, you can see that in some of the filings with that we saw last week. If everything we have said is even directionally true.
[00:54:08] Preston Pysh: Hang on.
[00:54:10] Luke Gromen: We know, yeah, we, right. Like it is the common knowledge game is such that it is, I think everybody knows that everybody knows that sort of the, the cleanest, one of the cleanest, easiest ways to play that is on Bitcoin.
[00:54:23] Luke Gromen: One of the most leveraged ways to play. What’s happening is Bitcoin. I think there is a growing recognition of that on Wall Street.
[00:54:33] Preston Pysh: It’s not even 2 trillion, Luke.
[00:54:35] Luke Gromen: No, I know it’s, I mean, yeah, I mean, it’s what a trend, true trillion four right now, trillion four or five, something like that.
[00:54:41] Luke Gromen: Yeah. It’s still very early days in my opinion.
[00:54:44] Preston Pysh: I could talk to you all day, brother. I really could. I love these chats. Likewise. Yeah, thanks for making time and coming on. For people that are listening, I’m a massive fan of Luke’s report that he writes. I am a subscriber of his report. I read it every Friday as soon as it hits my inbox, religiously, and I just, you know, I love having you on, Luke.
[00:55:09] Preston Pysh: And anything else you want to highlight to the audience?
[00:55:12] Luke Gromen: Thanks. No, I appreciate you having me on and I always enjoy our conversations immensely as well.
[00:55:20] Preston Pysh: Likewise, sir. All right. Well, thanks for joining me, Luke.
[00:55:24] Luke Gromen: Thanks for having me on.
[00:55:25] Preston Pysh: If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.
[00:55:58] Outro: Thank you for listening to TIP. Make sure to follow Bitcoin Fundamentals on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decisions, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permissions must be granted before syndication or rebroadcasting.
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