E84: Markets update, crypto collapse, Russia/Ukraine endgame, state of the podcast

In the US, we have a lot of other regulators that can prosecute cases, like the DFS in New York. ... there will be a lot of action on this over the next couple of years.

it's the worst kept secret in crypto, how much insider trading is going on amongst the organizations that run the exchanges and their side pockets that they use to manage liquidity. I mean, this is the biggest thing that's been happening in crypto.

there may not be a law in the books about front running NFTs, but there are laws on the books about fraud and NFT and conspiracy to, you know, grift people out of their money. So this is all going to come crashing down, and the discovery is going to be next level.

we pulled and we pressured Europe to really draw a hard line. But then now are kind of working around it so that the countries that suffer the most are Europe. ... according to Europe, a Lehman like situation in terms of economic contagion that could manifest over the next months.

countries like Germany and France are really going to question US leadership when they have basically a huge economic recession and they're wondering how they're going to heat their homes in the winter

there continues to be escalating issues with debt and concerns about debt repayment across the EU. ... Greece made a payment recently, but Greece's debt to GDP is still over 200%. ... the spread on Italian debt has spiked over the last couple of weeks.

What's the end? I mean, the end is a negotiation.

So I think that the end game is probably some organized, negotiated detente and ceasefire. ... I don't think anybody will be happy with it, but I think by and large, Russia is and has won, you know, meaning they've won economically.

what they actually re-underwrote was that actually it's not that the price to earnings was cheap. It's that the E in PE was just wrong. ... I think Wall Street's wrong. And I think that earnings are going to go down this year and will definitely go down in 23 ... I think what probably happens is the entire world of equities needs to get repriced at a lower price.

I think what people would say is maybe they're going to lower their costs. And so with layoffs and lowering salaries and lowering spend on advertising, you know, the E could go up.

we're at the beginning of the beginning. Again, we're at the beginning of the beginning. Okay, for all of us that lived through the 2000, this was four years of sheer hell and a grind. ... people all of a sudden assume that two or three rate hikes and five or six months of headlines are enough.

I think you need to buckle your seatbelt because the next three, four, five months of CPI will probably be very, very bad. ... So they will overcorrect because there is just going to be so much pressure for them to act.

And this is why I think the Fed is probably more likely to overshoot on raising rates is because if they really want to stop inflation now, they really have to slam on the brakes.

we engage in economic sanctions and I was the first one to say, hey, this could really work and this could be a roadmap for how to do it. And it turned out this is the roadmap for how not to do it. ... These sanctions were so porous as to be like Swiss cheese.

China's input cost has been capped. And so they don't suffer the same rate of inflation that the rest of us do. ... we allowed our largest competitive frenemy, if you will, to basically be able to, you know, drive their entire economy at 30 to 40% of the discount to what we have to pay to do the same.

So we've had this problem where we really need about 2 million people to reenter the labor force. And if you describe inflation as too much money chasing too few goods, we need to increase production and productive capacity.

wheat is down, I think, 30%, lumber is down 50%, gas prices are coming down. ... there are some of these, you know, commodity spikes that we've experienced over the past couple of quarters, particularly recently, that have had a significant part of the fueling effect on the inflationary trickle down into ultimately end products and whatnot. And those are coming down.

the amount of grift by so many of these venture firms in running these sketchy deals where they would put in some amount of money. ... You put in a little bit of equity at some crazy price and then you get these tokens and apparently there's no, like you can just sell these tokens day one.

in the US, I think the people of the country want us to be energy independent. ... it's elite opinion that bought into these foolish ideas that basically we should cancel energy independence, we should cancel the Keystone pipeline, we should cancel new drilling. America should be a net energy exporter.

most Americans have most of their net worth tied up in real estate. And if we see a 30% correction in real estate, it could be a real problem, particularly with rising interest rates, inability to refinance.

I don't understand why anybody would give up their liquidity in this moment right now. Why would you? Why would I give up $100 million of cash in my bank account? I would not do that right now.

the rate at which we pull the money out, which has had to be really, really fast over the last few weeks, can cause a recession. And that's the biggest concern right now is, will that actually trigger a massive recession or not that everyone's watching?

All roads, I think lead to lower equity prices. ... And so if all of a sudden you have some recessionary forces or prices go up and earnings don't, you'll have a contagion in the debt markets. You could have a contagion in the commodity market. So we're dealing with some really tough boundary conditions.

And if they don't, then we end up with like a chronic sort of stagflationary situation, where you get lower growth and inflation persists. So it's a bunch of bad options right now. ... And this is a bunch of bad options. I think, you know, we are going to have a recession.

yes, sure, theoretically, people will think about buying an electric car, but most people aren't thinking about that on average for five or six years from now, because that's the average of a 12 year cycle, right?

Oil is at 105 bucks a barrel. Russia is basically trying to break the back of Europe by now messing with their Nat gas supplies.

That's coming, by the way. That's coming. You think things are bad right now, wait until winter, and then that's only going to increase Putin's leverage. And that's when you're going to see a real fracture in the Western alliance.

Bitcoin's price is down 71% from the all-time high, 69K in November of 2021, bottomed out at 17,000 or so on June 18th. Ethereum's price down 78%.

it's like the.com crash all over again. I mean, basically you had an extremely promising technology. ... the price action got totally decoupled from the level of progress in the space. And people were not valuing these things based on real customers, real usage and real use cases, but it became very speculative.

Facebook just canceled like two of their prototypes they were working on to save money. So that whole $10 billion into VR, I think they're trying to make that number look smaller.

They had a whale who had tried to loan out $100 million and they had to freeze their account because they thought the downward pressure, since there's not many buyers in crypto right now, could collapse Solana.

the reason the stock market went up dollar for dollar was actually tied to the growth in the M2 money supply. The correlation was.92. So for every dollar that the Fed printed, the stock market went up by 92 cents. ... it stands to reason that if the Fed is going to take three to five trillion dollars of value out, then we have to rerate the equity markets by three to five trillion dollars at a minimum.

we've said it before that crypto is like a liquidity sponge. It sucks up when there's a lot of excess liquidity. It sucks up that liquidity. But now that sponge is getting wrung out.

They're predicting, they're forecasting that capital availability is going to decline about 75%. The amount of money that's venture money that's available to the ecosystem downs by three quarters. So if you try to raise in that environment, either you're not going to be able to, or investors are going to have all the leverage.

Anecdotally, I'm seeing people come back from rounds where they were expecting 40 or 50 million dollars. In some cases, like with 250K in revenue, 500K in revenue, they were living in a 200, 300 times revenue kind of world. ... they're now coming back with 10 million dollar caps, 15 million dollar caps on their notes.

there's a whole group of investors who have only known the up market. There's a whole group of founders who are only in the growth market. If you're under 40 years old, you don't understand what you're about to experience.