Bitcoin Fell Just 2% As AI Stocks Lost $1 TRILLION - What's Holding It Up? | Brent Donnelly

Scott Melker (0:01)

Bitcoin fell just 2% and is holding strong, even as AI stocks lost a trillion. What's holding it up? We also had massive volatility over the weekend and last night on the South Korean stock exchange. Oil all over the place, yields all over the place, inflation all over the place, jobs all over the place. Luckily, I don't have to talk about it today because I have three amazing guests unpacking for you. Of course, we got Dave and Mike, but also very special guest for the first time, Brent Donnelly. Can't wait to get into this one, guys. Let's go.

Good morning, everybody. That is a much calmer way to start the show with the new music. Honestly, I like it. We're going to keep it. That's what we got going. We're going to bring on everybody right now. We got Dave, Mike, and of course Brent. Good morning, gentlemen.

Morning. Morning. Morning meeting.

Mike (0:57)

Mike, morning meeting.

Scott Melker (0:57)

Was it all Korea?

Mike (0:59)

Ah, really, not even a mention of it. And by the way, hello, Brent. I've listened to your programs forever.

So it's good to be on. We can knock heads a little bit, you, me, Dave, and Scott. But from, and by the way, I think you have the nicer hair.

From Anna Wong, our chief economist, light dated this week, but she had some pretty substantial statements. She's pointed out expecting that core PCE to be 3.2 year-over-year.

And Warsh is showing no urgency to hike recently. Their team view is the Fed will not be hiking the rest of this year, which is counter to the market. She's pointed out the key indication to sell off in Treasury bond yields. The key lesson, I think she mentioned, Bernanke did a paper years ago, that every 25 basis points in Treasury, in long bonds, hiking are jumping up, increasing the equivalent to almost 25 basis points of the short and actual hiking. So she says the equivalent now so far of the long bond going up this year is about 150 basis points of hikes from the Fed and the short end. AI trade is part of the tightening of financial conditions she expects might happen, but there's a long backlog that's still strong and positive. And she just pointed out, borrowing costs are rising, economics are getting wobbly, and the midterms may be a key risk as Democrats, potentially landslide might push against more data centers. Maybe even some cancellation of data centers. And that's key thing, she's looking for potential political backlash, but expects her bottom lines, expect overall financial conditions to continue to tighten and why we might not see more bedhiking. To me, that read is the best way to tighten financial conditions is stock market going down. She didn't say that. Chris Crane, our stock market, pointed out, we're within 3% of all times high, it's really not much to offer. It's a really weird market from his factor standpoint, some of the weakest time of year for some of the factors he watches.

Earning season, financial so far, not so great. JP Morgan, Bank Of America basically missed, which is that was kind of expected. And it's nothing to do with the overall AI and those earnings so far, which are going to be really kicking this week. Will Hoffman, Fixed Income, pointed out, he thinks the Fed is going to, they've lightened up a little bit in their hawkish banter, but fully expects that maybe a little bit of bull steepening and the Fed will remain aggressively jawboning. And pointed out, we do have a 20-year auction this Wednesday, and they've been seeing strong demand for long bond, for long paper, US long paper. David and Santana pointed out the Brazilian election is potentially leaning towards both scenario, but if Lula comes back, expect a plunge in almost all risk assets, most noted in Brazil, Riel going from about 5.5 to about 5.6. I'm sure Brent will be over that, FX Trader. And then I came on, I just pointed out, it's a pleasure to come in and not see maybe major Iranian offensive damage this morning. There was some, but not as much as most people expect, which to me is, it's their vested interest. They're influenced in election. The number one issue in France with the protest is affordability. Certainly in this country, it's the war and affordability. And Iran has the upper hand. If they can pound hard right now, they can launch the election, get the backlash against them. But so far, it's been good. But I like to point out is that WTI crude oil contract right around 100 It's been a pretty significant pivot since 2008 when it first traded there. And by the way, it's never ended the year above 100 If we do end the year above 100, it's significant political, financial, economic implications. I think it's unlikely. Crack spreads have come in. Diesel is the key thing. That wholesale price of diesel got above five, like corn got above five, and they've all kind of rolled over. I might just point out what I did before the Bloomberg.