Macro breakdown: inflation, jobs, rate cuts and the Fed with Kyle Reidhead

Transcript

The macro landscape hasn't been this confusing in years. Inflation fears and job market scares are back. And the markets can't seem to decide if it's time to get giga bullish or go hibernate with the bears all winter. Hello and welcome to Milk Road Macro, the podcast that knows whether it's bull or bare markets, the real gains, the friends that we made along the way. I'm your host, John Gillan. Today is Wednesday, August 20th, and we are joined by the big gallon jug himself, Kyle Reedhead. Kyle is an entrepreneur focused on digital assets, media, and marketing. He's a co-owner of the Milkroad and the co-founder of Impact 3 Marketing. We've been fleshing out our macro framework here at Milkroad Macro. Two weeks ago, we put out an episode laying out that framework and I thought it would be a great idea to bring on Kyle to continue

that conversation here. So, if that sounds good to you, make sure you like and subscribe. Share this episode with someone who would enjoy it. And if you are not already subscribed to our Milkro Macro newsletter, make sure you click the link in the show notes to get subscribed there. We break down everything that's going on in crypto, everything in macro that you need to know, get it straight to your inbox twice a week. Big news, big announcement. We are launching Milk Road Macro Pro. You'll get monthly macro reports, live AMAs, and direct access to our research team. The kind of stuff that hedge funds pay thousands of dollars for. This week only, get 25% off Milk Road Macro Pro. Or if you want the full toolkit, macro, crypto, and DJ Pro.

All access is 25% off. Link is below in the show notes. Today's episode is brought to you by Aura. Removes your personal info from the web before scammers get to it. And without further ado, welcome to Milk Road Mackerel. Kyle Reedhead. How are you doing? >> I'm great, John. Happy to be here. I think on Twitter we decided yesterday that uh we weren't going to do podcasts unless we have a sneaky beer. Uh and I don't have a sneaky beer in front of me. So, I'm trying to figure out what's going on here. I I was lied to, I think. >> Well, I've got a sneaky glass of water, so we'll have to make do with that for for today. Uh yeah. So, I wanted to begin this conversation. You know, we we're laying out our framework for macro. just start us off with with what

your macro framework is. What are your thoughts on macro, where we are right now in the markets? >> Yeah, so I think um zoomed out on like a more broader basis, I think everything you talked about in your your first episode, uh I very much agree with on sort of the long-term time horizon, the long-term sort of like world that we're moving into. So, for those of you that haven't listened to it, go check that one out. Maybe we'll link it in the show notes. I think that right now we're in a we're in a funny time. You like you said, are we in a bull market? Are we in a bare market? It's like everyone's kind of like some people are thinking that we're at the top right now or about to be at the top and then some people think like we're going into basically like a

super cycle. Um and I'm actually I'm very bullish at the moment still and I remain bullish. I think um you know the famous words of is this time different? Um I do think that in terms of the last few cycles we've had and I I'm speaking more in crypto but I think you can look at equities it's all kind of the same. we've had these very like specific four-year cycles which have happened a lot because of monetary policy um and uh and rates and I think that we're still in that world except I think this time it's actually going to be extended uh for a number of reasons which I'm sure we'll get into. A lot of it to do with the business cycle where it's just sort of it hasn't really ramped up to what we normally see. And so I think we still got a lot to go in

this bull market. Of course it will be choppy and we we'll have ups and downs. We're we're in a down currently. Um, and we've we've had these crazy ups and downs for the last few years, but I think overall we've been in this kind of slow and steady grind upwards. And I just don't see that stopping uh this year. And so I think that this bull market will continue into 2026. Um, and then we'll have to see, you know, what the data shows in terms of how much longer. But for me, when I look at the data, I don't see a reason for us to be topping here, which seems to be picking up a little bit of steam on Twitter at the moment. Um, so I just think inflation not so bad. Yes, it's on the rise, but it's a little it's just on the

rise a little. So, nothing to be overly concerned about. It's not like 2021 where it was ripping up to whatever we were at 9%. Uh, unemployment getting worse, but not crazy bad either. The economy looking pretty decent. I don't see any like concern of like a recession anytime soon. So, things just continue to be like kicking along and don't seem too bad anywhere. Um, which to me just means, okay, as long as we continue to get adoption of of new technology, then prices should go higher, at least in certain assets, not all assets. Um, and so and I think we'll talk about that as well, sort of the K-shaped economy that's happening. Um, but to me, everything seems to look pretty good.

Uh, and I think, you know, maybe we're not going to have our 2021 wild euphoric bull market like we had in those few months there. Um, but I think we're just continue to go up and to the right uh over time here. So, I think it's a good time to be in markets. That's for sure. >> Yeah, appreciate that thought that in the analysis there. I think I'm going to get euphoric no matter what happens personally. But, um, okay. So, I think that's a good overview, sort of like laying out where you see things from where we are right now. Um, the Milk Road macro framework, we have three pillars of our our framework that we laid out in the last episode. Um, monetary, economic, and markets. So, I thought it'd be kind of a good idea to kind of just like step through some of

those. Um, and we can, you know, kind of like pivot around as we as we see fit. Um, starting with monetary, I think, uh, you know, obviously there's a lot of hubbhub that's been made about whether or not the Fed is going to cut rates. Um, I think there's a lot other thing a lot of other things to be paying attention to right now. I'm particularly interested in stable coins and how the Secretary of the Treasury has been so focused on using stable coins to increase demand for US debt, US dollars globally um, and to really sort of fund the government through that. That's a huge pivot from the last administration. What are your thoughts on this generally? How is this changing the macro framework and uh, the how do you see this playing out short-term, long term? Like what what's the story there?

Yeah, I think short term I don't think that stable coins are going to make much of a difference on the macro landscape. I know a lot of people are saying that stable coins are having their chat GPT moment. Um I think that that is overating what's happening. I'm obviously super excited about stable coins. I think it's it's a massive change to to the world. It's very exciting for you know globally. Um and so like I'm obviously very bullish on stable coins but we got to remember chat GBT went from like zero to 100 million users in like I don't know was it like a week or something like that? like something insane. That's not the rate of adoption of stable coins right now. This is a much slower while you know a big deal obviously and we're at what 270 billion in stable coins. Um you know

it's growing and it's growing pretty fast. We're getting a few billion every week which is exciting to see. It's definitely not at a level of chat GBT where it just changes the world in like one one moment. So short term like I don't think it makes a huge deal. However, over the next few years especially with the the new regulation that's come in I think it's going to be a massive deal. Um I think what it's going to do is um it's really going to proliferate the the US dollar globally which I mean the US dollar already is you know obviously the global reserve asset it is the most uh you know the currency that's used um you know the most around the world but I think that's only going to going to pick that up even further and make it even more dominant.

Um so I think one that is really exciting. Um, I think that it's going to make efficiencies in companies, um, whether that be financial companies or otherwise. I think it's going to make tons of efficiencies for for humans, like for people around the world because there's so much fees and kind of the slowness of moving money around the world right now that exists in sort of the the the tra the traditional rails. Um, and so I think that's going to kind of pick up the velocity of money, let's call it. Like if you think about what the internet did for information, that's kind of like what stable coins are doing for for dollars. Um, and so they're going to move around the world at the speed of light and for basically free.

Um, which is a huge deal. I mean, like right now, if I want to send money to Europe, um, I can fly to Europe with a briefcase of cash faster than I can send money, uh, online to Europe, which is just like insane in 2025. So, I think for the velocity of money, that's going to pick up really well. I think it's a big unlock for a lot of people around the world who have inflating currencies, right? When you think of places like Argentina and Turkey and Lebanon, etc., etc., I can like name tens and tens and maybe hundreds of of currencies that are you know inflating. And so I think it's it's a big deal for a lot of people around the world but will impact markets today or let's call it in this cycle. Um I would say probably not going to make a

huge deal though I guess the other big thing is of course you have tether and circle becoming the biggest buyers of of US treasuries which I do think will matter moving into sort of next year. Um, obviously you have a lot of countries uh over the last little bit that have been becoming less of a buyer, let's call it, of these and so we need someone to be able to buy them. Scott Besson, that's his job is he needs to sell treasuries. Uh, and um, he's sort of I think that's why he's so bullish on stable coins as well as he knows that these guys are going to buy them. And so I think that'll that'll just continue to pick up. But will it be a chat GBT moment where everything changes tomorrow? I don't think so. I think it's too big of a change, right? there's too

much going on there and it's too integrated into so many different things that it can't just like happen overnight. It's not like a new app in the app store. So, I think it's just a gradual change and it's not really something that's going to make a huge difference in terms of the markets in the coming year, let's call it. >> Gotcha. Yeah, I I definitely agree and I think that's what's so interesting about it from a macro perspective is that it does change, you know, the calculus on the the grand scale of things. It's been interesting to see how China and the European Union have both been responding to this as well. there's a lot of pressure on them to continue to get adoption for for their currencies and to to push on that as well. So, um yeah, I think it's definitely changed a lot of

the macro backdrop for monetary policy, for the monetary system. Um, another thing I'll say about this I think is interesting for our audience to just sort of pay attention to. Um, Secretary Besson does a lot of interviews, a lot more than Secretary Yelen used to do. One of the things he said recently was when they say they want a strong dollar, they don't necessarily mean a strong dollar on the DXY. They mean a strong dollar in terms of global usage and adoption. So that to me plays into exactly what you're saying, which is like the strategy here is long-term adoption and use and and uh I guess yeah, like traction around the dollar. Um doesn't necessarily mean that they want to the dollar to be super strong against all other currencies. They just want to make sure that it stays in everybody's wallet. Um I think that's a

huge change macro wise. >> In fact, before Trump took over presidency, he said the dollar is way too strong. So did Besson. They both were, you know, on on TV saying, "We need to get the dollar lower." and they've done a hell of a job at that so far since being in office and I think that there's still more for them to do in that regard. So, I think the dollar continues to go lower. So, I I agree. Stable coins aren't necessarily saving the the the dollar in terms of measuring in the Dixie, but it is going to make it more of a dominant currency used around the world. >> Awesome. Yeah. And I think so, I think we can kind of leave monetary there for for the time being. Um, I would say like, you know, like like we said at the beginning of this, there's some fears

with the job market infl with with inflation, but I don't think we're going to see any like radical policy change from the Fed, which was really what would move markets until one of those blows up. Um, speaking of blowing up, let's move on to the economic pillar. Um, and and talk about that because I think both of us have a lot of thoughts about this. I want to come to the business cycle and where we are in the market cycle. First, um, you and I have been talking a lot and I think a lot of analysts have been talking a lot about this K-shaped economy, which is like this idea that the hyperscalers, the Mag 7, the people who are really participating in and benefiting from all this investment in the AI arms race are seeing their earnings grow, their valuations grow to unprecedented levels.

And then there's a whole other part of the economy that is not participating in that. We've seen, I think, near record uh bankruptcy filings that go back to, you know, 2008, we haven't seen filings this high. I think we're over 450 now in the United States. Um people are are concerned that that's going to lead to a big explosion in unemployment. Um tell me what you're seeing about this K-shaped economy. What are your thoughts on this? Is this like, you know, a change in a paradigm we're just going to get used to? Is there a big risk that you see from this? What are your thoughts on this? >> So, I think we've had a K-shaped economy for for a really long time, right? um you've had this old world pre- internet and then you have this new world when the internet came and it was like anyone

that was like building on the internet they had these way more profitable companies they were making way more in terms of salaries and they were doing way better than the person who was working or uh living in kind of the old world right worked at a bank maybe they did trades or they worked you know whatever uh something in that's called the physical world so that K-shaped economy has been happening for a long time and then I guess the other way you you would add that is those who hold assets those who don't hold assets right um if you Look at since 2000, we've basically been in a crazy bull market. Yes, there's been the great financial crisis, there's been the COVID crisis, there's been bare markets in between, but like if you've been holding tech assets, uh you know, things that have been growing at, you know, exponential

rates, uh for the last 25 years, you've made a lot of wealth. And if you didn't hold those things, you haven't made a lot of wealth. And so there's this this kind of two different worlds that are happening. And it's been going on for I'd say 25 years, but that's just more my lifetime. I'm sure that this K-shaped economy thing maybe has happened even previous to that. Um, and it's only picking up further I think right now since COVID, since the invention of AI, all this kind of stuff, since we've had more money printing, this is picking up even more because assets are going up much more. Uh, technologies and companies are using more and more tech and they're sort of accelerating exponentially, not just linearly, which means that they're becoming more and more profitable. They're becoming more and more bigger parts of the economy of

what people use and do every single day. And so their valuation of these companies, think Apple, Amazon, you know, Nvidia, etc., they're just becoming higher and higher and higher. Now we have like what, three, these are like three trillion dollar companies. You couldn't even think of that 10 years ago. And so I think that that trend is only going to continue. And AI is only going to make that trend accelerate and pick up. And so I think this this K economy um is is not stopping and it's only going to get, let's call it, worse. And so for those that hold assets, particularly in the tech world or in crypto, let's call it, or AI or the MAG 7, I think they're going to continue to do well and these things will continue to go up because they are taking advantage of the big new technologies,

the the technologies that everyone in the world is beginning to use. Um, and then those that don't use this stuff are going to continue to become zombie companies, right? Like you just talked about, there's more and more bankruptcies every year. Part of that's because there's more and more companies than we've ever seen, right? AI, the internet, it allows you to create more companies at a much cheaper rate. And so we have more companies today by a large margin than we ever did 20 years ago or 25 years ago or 50 years ago, right? And so do we have more bankruptcies? Uh yes, of course we will. We will always have more bankruptcies year-over-year for the most part in a long-term trend because we have more and more companies, right?

Uh and so the other thing I would say is like the data is getting really mixed here. And I think it's hard for a lot of people to wrap their heads around. So many people are so confused about like why are the MEG 7 going up and then the 300 or 49 uh 93 companies that exist in the S&P 500 are not going up. What's happening here? Is this a big problem? And many people think it is and maybe it's a problem in some regard, but all I would say is like there's a reason why those are going up and the others aren't. And it's because those are continue to be, as you said, the supercalers. They buy more companies. They create new products. They can launch more things. And so like yes, we are going to this world where like good companies are consolidating and there's

not so many of them anymore and they're just going to get bigger and bigger and bigger and bigger. And I don't know what that means for the world. It's maybe it's a good thing, maybe it's a bad thing. Probably it's a bad thing. Um because it means we've got to print a bunch of money for the rest of the world that doesn't have companies that that can keep up with this. And so um to me, I understand why. And then I guess there's one other thing to to add to it is like the big companies in the world, if you think of Amazon and Apple and all them, they're not hiring a lot of humans anymore. They're using AI. And so like it's not like growth in these companies isn't happening. It is. They are growing. They're becoming more and more profitable. So the fact that the prices

of Meg 7 uh stocks is going up makes sense to me. Even though the data is a little bit weird. We're like, well, they're not hiring new people. Unemployment might be going up. You know, are we in this like bubble? Are they overvalued? I don't think so. I think that the PE ratios and the and the valuation these things are just going to keep going up and up and up like they have again for the last 25 years. The internet and then the and then AI and even crypto like we just talked about with stable coins. It allows companies to get bigger and bigger and bigger and more efficient, more efficient, more efficient, more profitable, more profitable, more profitable. And so of course the valuations of these companies should go up. The problem is is that most of the other companies in the world aren't using these technologies. They

aren't, you know, using AI. They're still doing it kind of the older way. And so those things need to fall off. Now, just like we saw with the internet, there was a bunch and there still are a bunch of companies today that probably shouldn't be companies and shouldn't exist, but the government has bailed them out. We find ways to subsidize them and keep them around. Uh, and so I'm assuming the same thing will happen. My big thesis, and I think maybe John you share this as well, is the government isn't going to let all these companies and everything just blow up. They never will. It's not going to let the stock market blow up. They never will. Why?

Well, because all the boomers, they've promised them their whole lives that if you just put your money into your 401ks or into, you know, RRSPs is what we have here in Canada, and you put it into the stock market, we'll ensure that you have a pension. We'll ensure that you have money as you retire. And so, basically, every boomer in the world, which there's, you know, that's the the largest demographic we've ever had, all their net worth is either in their home or in the stock market. And so I tell you right now, there's no way that the government's going to let the stock market just blow up or let real estate blow up, right? So even if there's this confusing world of should they lower rates, even though we think maybe they should, maybe they shouldn't, doesn't really matter. They're probably going to

do it because they just need to make sure that boomers are happy because they've told them their whole lives that they could retire and they'll be fine and they can't just pull the rug from from under them. So I I I just think um this K-shaped economy is only going to get worse. It's been getting worse for for many many years. Um, but I don't think it really matters because I think the government is just going to find ways to keep it that, you know, kicking the can down the road. >> Oh man. Pro tip, don't Google your name in city. I just did and instantly regretted it. They've got everything. My address, my email address, phone number. If you've ever wondered how scammers get your phone number or why your inbox is constantly flooded with spam, this is why. 24 hours a day, 7 days a week, data

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>> So, I think that there's a lot to unpack in that is a a long long answer, but full full of good insights and analysis. Look, I I'll say I agree that I think that the trend will continue. I wouldn't say get worse. it'll get worse for the people who are in the worst part. Um for the companies rather that are in the worst part. Um the trend's likely to continue. I'll say that the the valuations on the Mag 7, the the the hyperscalers, the ones that are performing really well, their earnings are backing that up, right? And so I think that's something that's interesting to observe is that although they are in overvaluation territories that are, you know, exorbitant and and by some measures are are causing a lot of concern for investors, they're also having earnings come in and grow and out outperforming their own earnings

estimates cons. Exactly. Right. So like so that to me is a sign that okay, maybe there is some some real economic value there that's driving that and that's going to support those valuations to continue. >> The problem is as we said that there's a whole an enormous amount of not just companies but people, right? like there are a lot of jobs being created at these hyperscalers that are not necessarily for people. There are people employ employees and companies that are are not participating in this and that are struggling to find ways to to remain economically viable. Um that's a huge issue. I think that how that gets resolved is still not clear. I think that it's it's the hope that the the rally will as some analysts have said broaden out uh to the rest of the market. Um to me it's not really clear

that that's what's going to happen. Really what I'm anticipating more is a a shock in uh unemployment that leads to a huge pivot in policy from the Fed and that sort of like restores confidence and activity and broadens the the the bull run and restores the bull run to the to the rest of the economy. But in any event, I think it's something that we've talked about a lot a lot of analysts have. I did an episode with Craig Shapiro of Milk Road Macro this week where we talked about this in detail. Um so I'd encourage people to go check that out um as well. And we're going to continue to monitor this as we monitor this as we go forward with some of these things. Um, outside of that, right, the the business cycle is something that we haven't really seen pick up, right? The ISM has not broken

above 50. Um, what's your view on where we are in the m market cycles with this situation? Because I've heard a lot of different people say different things. I was two podcasts this week. I heard somebody say we're in the first inning. Another person said we're in the third inning. Another person said we're in the seventh inning of the bull run and the business cycle. So, it's like everybody's all in different directions on this. where where is your head on that and and what what do you think is going to happen with the the cycle that we're in right now? >> Yeah, it's a good question. I actually um do you ever show the the the PMI? Let me let me um just share screen. I'll pop that up for our viewers so they can see kind of what we're talking about here.

I've got it handy here for you. Um so this is this is kind of the business cycle indicator. At least one of the ones that you can use this the PMI. And the weird thing that we've been in this cycle that hasn't really ever happened before is this PMI usually goes above 50 and then sustains it, right? And that's our bull market. So if you look here, you know, 2020, 2021, we had this crazy bull market. 2016, 2017, crazy bull market. 2013, 2014, right? These are the bull markets we all know and love in the crypto world anyway. And then of course, as the business cycle comes downwards and and falls, that's when we go into these like pullbacks or bare markets, etc. We've been in a three-year long sort of like up and down chop in the in the business cycle which has never

happened before. This is the longest we've ever been held down here uh in I believe in history since the 60s or something like that. And so this to me tells me we are still early days in the business cycle because I think at some point we will have this big shoot upwards. Maybe we don't and it's just a grind upwards for good here which would be a great thing for markets. It would mean just slow and steady as I kind of talked about earlier. Slow and steady up and to the right. I'm okay with that. I've been very happy over the last three years. As long as you've been holding things like Bitcoin and good assets make seven, you've done really well. It's when this shoots up is when we go super risk on and your altcoins do well or your Russell uh you know does well and

all the like early stage companies do well. Um and we haven't gotten there yet because the economy hasn't really been able to pick up. Why? Well, the dollar has been uh strong for many years, right? That's finally started to come down. We've had oil pretty high for many years that's started to come down as well. Uh and then we've had rates been really high uh and has kind of remained and we haven't gone down so much. The dollar has started to come down finally. Oil has come down pretty much uh and and should remain there. And then I think we have interest rates which I think will start to come down. And so that to me tells me that this is going to more than likely start to pick up. Will it have this huge shoot like we saw in 2021? I don't know. that was because of a lot of

money printing. Um, but likely we should see it come much higher at least above 50 and and I would say sustain above 50. I think that's coming. I think that's what we have to look forward to in here in Q4 and into 2026. And so I don't think it's early early days in a bull market. Like I don't think we've got a few years ahead of us by any means, but I do think by saying it's, you know, inning three-ish or inning fourish does kind of make sense. But the thing I would say is the last few innings tend to be pretty quick. Uh and so uh in terms of timing, like I would say we're definitely 50% through what I would call this bull market. Whether you'd call it a cycle or not, I don't know what is the best word to call it these days. Um but

I do think we are in for the economy picking up probably due to continued uh you know the dollar going down uh and interest rates beginning to go down maybe starting in September. Looks like what is it? An 85% chance it's going to happen now. Um, so I do think that that that begins. Um, and so I think the rest of the year and then early 2026 is going to be watching that PMI go much higher, you know, uh, into the high 50s. Um, we'll see how high it goes. I don't know. Are they really going to cut rates down to zero? I have no idea. Um, are they going to print a bunch of money?

Again, no idea. I know China probably is. I think they really need to. So, I think there's just a lot of um you know, I put out a poll yesterday and asked, are we at the top of the cycle right now or is it going to be at some point the end in Q4 of this year or is it going to be in 2026? 10% of people thought that we were already at the top. Uh and I was like, wow, that's wild. I think there's no way we're we're at the top yet. I think we still need a lot of things to go up more um before it starts to roll over. Uh and I mean that in terms of liquidity. I mean that in terms of the business cycle. Um, and so I don't see uh a lot of top signals right now and

and I see this looking a little bit different. I know if you were to look at the the four years previously, we should be ending around September, October, and that should be it. If at least in the crypto world, that's how it would look. I don't think that's going to happen this time around. And so I think uh the business cycle is about to really pick up. Um and so that's kind of what I'm I've been watching for the last few months. >> Gotcha. Yeah. I think uh I'll also say like for for our viewers um we're launching Milk Road Macro Pro and we have a pro report coming out this weekend that gives I think there's over 45 different charts we have in this that really walks through a lot of things related to liquidity conditions, the business cycle, labor markets, everything. Um to really kind of give

people a much more in-depth overview of where we are because I think right now this this is this moment in the market is marked by a lot of confusion, right? Like some people think it's the top, some people think we haven't really started. Um, and sort of what I think is really interesting is that whichever thesis you have, you can sort of find something to build that case, right? So, I think getting that deep dive is really helpful right now. Um, yeah, I think, you know, look, something we kind of said before a little bit about the K-shaped economy. Uh, the reason why it's so important to, you know, have the economy strong right now and to keep this running is because the the administration, the Trump administration views winning the AI race as a matter of national security. So they like in some sense a bull a bare market is a little

bit outlawed right now right like we might have some things where they need to step in and steady the ship but they can't really allow us to go into an economic uh recession or collapse and China's in the same situation. Sorry go ahead. >> Yeah I just wanted to say and this kind of goes back to this but then also back what we talked about before in terms of like what's happening with AI. You just said you know the US wants to win the AI race. A lot of people are very afraid I think that AI is going to take all the jobs and and I don't know if that's why you said that you think You said unemployment is going to skyrocket. I think the thing to understand is we are still many years away from AI taking away all the humans jobs. To get AI to

the point where it can take away our jobs, we have to do a lot of things first to um get energy right, to get our hardware right, to get robotics right, to you know even just to get the the processing and compute needed to get AI right. So there's just a lot of things that we still have to build globally um in order for AI to to kind of like succeed. and its big promise. So, I think we're still a long ways away from AI taking over everyone's jobs. And I think it's actually going to create a lot of new jobs first before it gets rid of jobs, which is I mean how technologies usually work as well. Um I just think the for a long time we've been told you should go into software development, right? You should go to school to be a developer and learn to

code. That now I think is a really bad idea and unfortunate for all the the kids that have done that over the last 10 years. I think now you need to go to school to be a an engineer, a hardware engineer, right? Because there's so much that we have to build in terms of infrastructure to produce robots that can, you know, actually take action with the AI that we're building and to produce factories to be able to compute and process AI. So, I think that is the the route that Trump uh is trying to bring into the US. I don't think he's trying to like get iPhones made in in America. They're never going to do that.

It doesn't make any sense. but they're trying to bring in these huge factories, right, which we're seeing already, these data factories and compute factories. Um, and they're going to need a lot of employees in the US to do that. So, I I do think there's I think what people need to understand is the world is changing as it always is. And the data and the areas you used to look at are are very different now and and it's going to continue to change. And so, we just you need to keep updating what's the data that you look at, what are the sectors that you look at. There's just a lot that's always changing and it's it's picking up and going faster and faster than probably it ever has before, right?

Like Trump is making moves that at a speed that I don't think any president has done for many many years. So I just think people need to update their priors, update, you know, what they're looking at because the world the world is changing. And if you keep looking at the old world, then you kind of miss where the world is going or maybe even where we we somewhat already are. So I just want to make sure that's a clear point because I think a lot of people miss that. Um that AI is just not going to take away all of our jobs. It's gonna create a ton of jobs at least for the next however many years. >> Yeah. So, I think there's a lot of wisdom in that. I'll say that something I've been trying to um keep front and center for our audience in a lot of

these podcast episodes has been this idea of being adaptable, flexible, and not being dogmatic about what must happen, but paying attention to what does happen because every paradigm that you go through is different. Every uh macro environment, every economic environment is different. Um, I I think I've told you this in the past, Kyle, but I I did I studied economics at the University of Virginia when I was in school. And in all of my, you know, questions when we had to like write out these long answers to things and show our work and everything, we always had to write setus parabus, which means all else being equal. In other words, the economic analysis you do only holds true if you hold all these other independent variables the same. But in real life, that's never the case, right? So like all of these economists, all these

people who are doing this analysis, they're very likely you, you know, very well informed and educated and experienced, but they've experienced a lot of things that don't don't really apply to this environment because this is unprecedented in a lot of ways, right? So I think that's an important perspective to keep in mind, right? like you want to take in information and perspectives from a lot of people, especially people who are experienced or experts, but then also be open to, you know, saying like, hey, you know, I just, you know, keep taking it in as information, but don't get dogmatic about any of that. Um, okay. I I wanted to Oh, sorry. You want to go ahead?

>> Well, I was just going to ask you a question. So, I I've kind of explained I think, you know, this this cycle continues. We're still in, you know, let's call it inning four or five or whatever you want to call it for the bull market. Um, we still have the big part of this bull market left. is is is my opinion. I'm curious if you agree with that and if you do agree with that, help me try to take the other side of that, right? So, what is the other side of like, hey, maybe we have taught maybe the 10% that I had on Twitter uh were right. Walk me through, you know, I mean, first your opinion and then we can try to take the other side just to to you know, it's always good to play both sides.

>> So, I think this is a great question. Um, and I think it's it's important to do this, right? No matter what you think your thesis is, it's important to steal man the other side. I generally tend to agree with you that we have a lot more left of the bull run. There's a lot more catalyst still to come. The fundamental backdrop of uh the economic situation, particularly the digital asset space, has changed in a dramatically positive fashion. There's a lot of capital that's already earmarked to continue to come in. So these digital asset treasury companies, which I also want to ask you a little bit about, they have a lot of capital that's already been raised and they're bringing in more capital all the time to support not only some of the bigger, you know, assets like Bitcoin and Ethereum, but a lot of other ones as

well. So, I think there's a lot of reasons to remain bullish and to say that, hey, this probably isn't over. There's there's room to run here. I think this could carry us comfortably into Q1 of 2026. However, um the problem with that is that anytime I find myself saying this time is different, I get very nervous and suspicious and I like to stand in front of a mirror and explain it to myself until I feel stupid, right? Um, but yeah, so I think that historically speaking, if you look at the the prior liquidity cycles we've seen play out since 2008, a lot of them would seem to suggest that there were going to there's going to be some sort of a top, either a local or macro top sometime in fall between September and November, right? So that is something I'm watching carefully and I think to me

it's going to depend on what I see in terms of market behavior. Right? we do see like say for example we see not a labor market collapse but a spike in unemployment that would indicate hey the there's a strong risk of recession that could pivot Fed policy really strongly in a bullish direction and we could get some kind of like market sugar rush euphoric spike that could be a top or local top at least so I I don't know exactly how I see all these things playing out and I'm not going to go through all those things but really what I'm watching for is what the market behavior is if we continue to grind slowly without any sort of euphoric sugar rush Um, I I'm going to kind of stick with the thesis that it seems like we're just in an elongated and structurally sound bull market that's going to

continue to play out. If, you know, I wake up on, you know, Thanksgiving and Bitcoin's trading at half a million dollars, I'm probably going to take some profits. Um, but, you know, that's that that's just kind of how I'm going to play this. Yeah, but like I just to me everybody is saying this time is different and it is, but it also makes me nervous. And so that's just kind of my thinking on that. I don't know if that makes sense to you, but I'm I'm always nervous when someone says the time is different. >> Yeah. So, I always like to take the contrarian take, too. However, I don't think that everyone believes we're going into a bull market into 2026 yet. I don't think that that is the like um I've seen a lot of people. Yeah, a lot of bears. There's been bears through

this entire bull market we've had over the last three years, right? Like it's just non-stop bear. It doesn't feel like um 2021 when you had that kind of more euphoria moment, everyone was like, "Holy, this is the most bullish thing in the world. We're going to Valhalla, whatever." Right? And we've just never had that moment yet, which is exactly that chart that I showed of of the business cycle. When that business cycle really goes up, that means everyone's making money, right? And so like everyone's pumped, everyone's feeling good, they're buying Rolexes, and like everyone's just, you know, going ham and we're just not there. And so that's why I think we have, you know, half the people think bull market continues. Half the people think we're not in a bull market and, you know, this thing's going to crash tomorrow. And so, um, that's what makes

me feel really good about continuing to think that there's still lots of room left. Once everyone is in agreeance that we are in a bull market and like it's up only from here, that's when I'm okay, time to take the other side of it. >> Makes sense. Thanks for that. I think that's important thing to to give the audience that context. I do want to pivot now to talk about the third pillar of the Milk Road macro. macro framework which is the market itself and market opportunities. Um you know I think you you can kind of come at this any way you want. I wanted to kind of start by asking you your thoughts on digital asset treasury companies as they pertain to this particular market cycle and the opportunity there because you're more so than most people I know very plugged into that space. Um Bit Mine has

accumulated a huge huge amount of ETH. Michael Sailor's getting some criticism now on on strategies performance. um where do you think the the digital asset treasury company phenomenon kind of plays into this market cycle and do you still see that as a big opportunity and just what are your thoughts on some of that right now? >> Yeah, I think um I think we had a bit of a at least in the crypto world a bit of a stunted cycle let's call it last cycle because of regulatory issues. uh and so a lot of institutions a lot of capital that wanted to come into the space whether it was allocating or building etc um they weren't able to and that actually got worse from you know 2022 to 2023 etc with Biden basically this choke point 2.0 you know, uh, and and just not

allowing this industry to flourish in in the US at least, which also hindered the rest of the world, let's call it, when Gary Gensler was sort of kicked out in was it January of this year? Um, and and we sort of replaced the SEC, they became pro crypto. All of a sudden, everyone who's wanted to allocate or wanted to build or want to do something in crypto over the last however many years, they finally got the green light to do so. And we also got the market structure bill, the stablecoin bills, um, which have came about over just the last couple months here, which are sort of not just giving the green light, but kind of giving rules and guidelines on how you can do it. And so I think this is a massive trend or tailwind for the crypto space. Now, of course, crypto is

still only going to move based off of business cycle, liquidity, etc. that we talked about. Um, but this is just a huge, let's call it like almost like a steroid for the crypto market. And I think it's the reason why these digital asset treasury companies have all come in so much over the last few months is because Ethereum, Salana, all the others were basically thought of as security and they were illegal to to hold or to allocate to. And so none of them could do it. So we've had strategy and Micro Strategy been doing this for 5 years now, right? Buying Bitcoin, taking public market capital, buying Bitcoin with it. To me, that's probably the reason why Bitcoin has outperformed the rest of the market so much over the last three years. Um, and now finally we've opened up the door to all the other

tokens, all the other smart contract platforms to be able to do this. And so I think the digital asset treasury companies are a big step for this um for crypto for the industry because it brings a lot of capital that exists in public markets that can't necessarily go on chain. Even though we've got the green light for crypto, we've got the green light to build in the space, there's still just a lot of capital in pension funds and endowment funds, in sovereign wealth funds, etc. that just can't buy like an actual digital asset and custody it themselves. And so they could use ETFs, but again, there's also a lot of funds that aren't allowed to buy ETFs, but they are allowed to buy companies that exist on the NASDAQ. And so this is kind of this roundabout way for companies to allocate capital to Ethereum, uh, to Salana, to Bitcoin

even, um, and do it in a way that they're actually allowed to. And so I think there's still that's only just getting started. Like, um, Sharp was the first, I think they've been at this for like what, two and a half months, maybe three months. Then you've got Tom Lee who's been at it for about a month. The guy's already bought like what is it like three billion or something? I don't even know what the number is today. Five. Yeah. Five billion. Six billion. Yeah. It's a lot. >> And I think they're they're still just getting started, right? Like they haven't really been able to um unlock all the different ways that they can raise capital yet. Like if you look at Micro Strategy, they've got he's got like four or five different like avenues now or like capital assets that you can you can buy or allocate to in different

different ways. I think the ETH treasury companies, maybe the Salana ones will all do that eventually as well, but it just takes some time to do that. And so I think there's still a lot of tailwinds left um and demand left that's going to come from these treasury companies. And then I think even better is um especially like the ETH and Salana ones, they're going to go and deploy that capital in DeFi in Ethereum and in Salana, which is going to teach you know the Wall Street what not just Ethereum and Salana are all about, but also like what DeFi is all about and how you can do all the things on chain. And so I think there's just a lot of education, a lot of demand that's going to come from these companies. So I think it's a it's a massive catalyst for the space and I

think it's still only just getting started at least for ETH and Salana. Bitcoin obviously they've had it for 5 years. So like I wouldn't say that's just getting started, but like the ETH and Salana ones still only exist in the US. You know, there's still going to be ones in Japan and in other countries around the world, right? And they're still going to have these different financial assets that are going to come out. And so there's there's just a lot left, I think, in those. Um, which combines with my thesis around, you know, macro still being somewhat early in terms of the business cycle. Um, and so that just means I think there's still a lot of room left for for certain crypto assets to run. Yeah, I think that this is a a great Trojan horse way to sort of like turn Wall Street against

itself, bring these assets in in a a vehicle and a rapper that they're more familiar with and then just like you said, the big unlock I think is bringing in capital that's going to be more sticky, more staying in the digital asset space and then also educating a lot of new people who've never been involved before on how all this works and the advantages of it. Um, so there's a lot of changes that come from that. Um, >> I just want to add one more thing. the my thinking around crypto and with AI and with the economy. We talked about this K-shaped economy where there's certain parts of the economy doing well. If you work in tech, if you run your own business in tech, you're doing really well. If you don't, you're basically getting crushed right now. And then it's like if you're a company and you use AI,

then you're probably doing really well. If you don't use AI, then you're kind of falling behind. And I think in crypto there's also this sort of similar K-shaped thing where if you're one of the good companies, one of the good assets that is available in public markets like Ethereum and Salana we just talked about your assets probably going to do pretty well. But then there's a bunch of just crap that's been in the crypto space for many many years that just has no adoption. They're not building anything new. They you can't access them in public markets. And so I think they're not going to do as well, right? And so when the PMI and the business cycle really picks up, everything just goes up. But again, we haven't been in that world for, you know, a long time. Not since 2021. And so until that that happens, until you

see the PMI jump above like 55 or 60, you're going to continue to see this sort of K-shaped movement in stocks, mega 7 will go up, the rest will just continue to to die out. Uh crypto, the good assets like ETH and Salana and Bitcoin will continue to go up. The rest will continue to lag and die out. The same as what we're seeing in the economy with those that use tech and those that don't use tech. Um, and so I just think until we get to like 0% rates and a bunch of money printing, if we even do that, which I don't know, and I'm not confident we are, um, then I think we'll continue to see the sort of K thing in each industry. Uh, which means that you need to be more strategic in where you invest and where you put your capital.

It's not as like easy as it was in 2021 where you could just like close your eyes, put a blindfold on, and just buy anything and you do well. So, it's a again, it's a little bit of a different market than I think we've been used to um, than previous cycles. Yeah. So, this kind of gets you've kind of already answered a question I was going to ask, which was like, you know, there there used to be this alt season or version of alt season in the digital asset space where it was like everybody's a genius season, everything goes up and we all celebrate and get 10x, right? Um, now, like you said, it's more about who has fundamentals, what's a real quality project that has product market fit and and actual revenues, actual users, and actual adoption. Um, a lot of people have said that we've already gotten a

major alt season. it's just been a digital asset treasury company season instead of alts. Do you think, and I think you kind of touched on this a little bit, but do you think there is still an alt season to come? Or is alt seasons, we've known it, a thing of the past? Like what are your thoughts on that? >> Yeah, this is the thing I'm I actually I'm not 100% sure of. Um, it depends. If the business cycle really picks up and we do get, you know, 55 60 in the PMI or, you know, then I think yes, we probably will. Um, but again, that's going to take a lot for it to happen. And as we've talked about when we talk about this K-shaped economy again, there's like, you know, whatever percent 10% of the economy has money and is willing to invest and the rest doesn't.

Um, and in a in an altcoin season, you need everyone. You need the the retail people to have money and be able to invest. And unfortunately, that's not the world we live in today. And I don't know what necessarily makes that unless we start to give handouts or we do bring interest rates. It's like if we bring interest rates much much much lower over the next few months um then yeah I mean most people who own houses it's going to be a lot uh a lot cheaper to own their car and to own their house and so they're going to have extra cash. We just don't have that world right now. The demand that we do have the reason why crypto continues to go up is because you have public markets you have the the institutions and the funds the ones that are already going to allocate. You have

them being able to allocate to these assets. So that's why the the good assets are going up. And when I say when you said altcoin season, there's also like there's been an altcoin season not just in in treasury companies, but also just in crypto equities, right? Because again, we don't need retail to buy Coinbase and Robin Hood and to buy Bullish and Circle. We just need, you know, where the capital already is, the institutions to do it. And they've been doing that. We've seen that already over the last little while here. So, there's been demand for crypto. It's just not from the like all the retail people, you know, the millions of like less wealthy people that are coming in to gamble and just like have fun like they did in 2021 or 2017. That's what you need. You need those people to come in to have this

like crazy altcoin season that we're used to in the crypto world. I don't know when or if that will happen. I'm unsure. Uh which is why I continue to say I think you need to be a lot more strategic in where you're investing this time around because we're we're not really having that. We're gonna need to see a lot of money being printed, handouts, or interest rates going much, much much lower to get that crazy altcoin season everyone's hoping for. Now, that doesn't mean altcoins won't do well. Some of them will because a lot of them, or not a lot of them, some of them are starting to actually get real fundamental adoption, right? There are DeFi protocols that are like finally breaking out into mainstream, you know, and I think that's really really exciting. And so, those assets should continue to do well, but it's because

they're making a ton of revenue. But, you know, most things in crypto, just like most stocks in the world, are basically zombie stocks, right? And so, no, I don't think they're going to do good unless you have a bunch of retail that has extra money. And that's not happening today. And I I don't see that happening anytime anytime soon. >> Gotcha. Yeah. No, I I think that's it's wise. I think there's a lot of people a lot of analysts that I'm hearing are trying to be heroes and calling the top or calling the bottom and like they they want to act like they they have some clairvoyance and insight, but I think your answer to this question was was I think the right answer, which is it depends, right? And I think that that mindset of being open to like what the market tells you is like a really

important takeaway for the audience and something that I think is a big focus for us here. Um, and uh, yeah, it it it plays out in so many different ways cuz like for myself, you know, coming into the macro space to to lead this podcast, there's a lot of macro content that is just like just bearish analytics that make you sound really smart and flaunt your air addition, but aren't necessarily tied to reality and and doesn't necessarily mean that the market's not going to just keep being bullish, right? So, um, yeah, I think that's it's an important thing to remember. There was a study that came out, this is a little bit off topic, but I think just, you know, on this third pillar of the market opportunities and how people think about this, this caught my eye. I think it was a JP Morgan

study, but they said like from the year 2000 up to 2022, the average investor made about a 3% return. And over the same period, the S&P 500 return was around 9% and the debasement of the dollar was about 4%. So on average since 2000 most investors have have lost value against the dollar and radically underperformed the S&P 500. Uh I think there's a lot of reasons for this. I think the big one though I think is that people overtrade their book. They get bearish. They get out of the market and you know so if you're if you're you're worried about oh are we going to top or not just also bear in mind that there's a big risk to not participating in this on the macro trend right like just there's a reason why buy and hold is a good strategy because over the macro and

that's what matters. the big picture, you know, you not participating is a big risk. Um, so I think that's just something to to pay attention to as you think about the markets. >> Well, from those stats, John, my analysis from that is that it must mean that most people are not subscribed to Milk Road Pro. Otherwise, they would be beating the market. You would be beating funds. You would be beating to basement of currency. But if you're not subscribed to Milkroad Pro, and now we have Milk Road Mac Pro to add even more value to that subscription, uh, then I don't know what you're doing. you must be lost out there. But, uh, like you said, if you're if you're a sub subscriber, a pro subscriber, you're going to get all the things you need to make sure that you can handle these markets. Um, and, uh, and buy and hold

is is definitely a good um, a good tip. >> Okay. So, to to tie this together, uh, on in terms of the monetary system, there's a lot of changes there to keep the dollar strong. Um, so watch that as that continues to grow. I think I would also say in terms of monetary things that aren't currency, gold and bitcoin have been very strong. we probably expect those to continue to be. Um, in in terms of the economy, we've seen this K-shaped trend, as Kyle pointed out, I think really insightfully. It has been a trend in the economy for a long time. It's getting more exacerbated as we move into this AI race. So, continue to look for opportunities there. Try not to think about all the crisises that are going to come from it, but look for the ways you can use it to empower yourself

and to, you know, guide your investments and just play that trend to your strengths. Uh, and then as the market plays out, right, like we have to pay attention. This is why we have community. This is why we have the pro subscription service. Um, and why we pay attention and create this content so we can get smarter together and and stay on the right side of the market as it moves forward here. Um, Kyle, any final thoughts? Anything to add to that? Uh, anything else you want to share with us from the macro perspective today? >> Yeah, one thing I was just going to say is I know everyone's so worried about um trying to find the top and I think it's because at least in the crypto space, people are so worried about the 80% pullbacks that we've had in the past when you know after the top occurs. And

I think the one thing to remember is like the the the way that we have been grinding upwards isn't really setting up for like an 80% pullback. You get an 80% pullback when you have like a you know so for example last cycle in 2020 2021 in 6 months Bitcoin went up 500%. Right? It went from $10,000 in I think September October to like almost 60,000 by May. Right? So those kind of moves, those are the euphoric moves that we were talking about earlier, that could create crazy pullbacks, right? We haven't had that. And so to get this like huge massive like pullback where it's 70% or whatever, let's say we even get that, you need these big euphoric bull markets. And again, we haven't had

that. And so you don't necessarily need to even be too worried about a crazy pullback. You should expect pullbacks. We we are going to have 20 30% pullbacks, maybe 40% pullbacks in things like Bitcoin and ETH all the time. You should expect that multiple times a year. We've literally had it two or three times every year for the past this entire bull market we've been in, right? Uh and so like that should be expected and you don't need to trade around that. And so like that shouldn't worry you too much. It's when things go and they triple in price in a matter of weeks and it's already a trillion dollar asset. That's when you're like, "Okay, now this thing is something I might need to take profits on and get out of because a pullback is going to mean something more than 20% now, right?" Uh, and so I just

think um we are all glued to the 2021 cycle and we we tend to have a bias towards that thinking that that same thing's going to happen and like right now we're not set up for a world for that to happen. Um, maybe it will. Uh, but right now, as we've both John and I have said, like we haven't had that euphoric craziness, uh, where everyone has gone risk on. And so, I'm I'm actually less worried about finding the top right now because I I'm just continue to accumulate, you know. Um, you only want to stop accumulating and start, you know, worrying about that when things get too crazy and we just we haven't gotten there. We've had no sustainable craziness. We've had weeks or days of craziness, but that's about it.

>> Kyle, thanks so much for being here. This is really great. I enjoyed this a lot. Thank you. Thanks for having me. This is fun. >> All right. Thank you everyone for joining us today on Milk Road Macro. Uh until next time everyone. Stay safe, stay informed, stay bullish, and we will see you next time on Milk Road Macro. Thanks for being here. Bye. Want Insights on what's really moving markets and how we're trading each event. Subscribe to our channel, then join the Milk Road Macro and Macro Pro newsletters. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.