Bitcoin Had Its Best August in Years - Now Everything Gets Harder

**Dave** (0:00)
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**SPEAKER_2** (0:01)
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**Chris** (0:24)
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**Dave** (0:28)
New York, drink responsibly.

**Scott Melker** (0:30)
Bitcoin just had its best August in years. Now everything may get harder. September is historically a very difficult month for markets, although there is some nuance there because the best Septembers tend to be in midterm years, which is where we're at now. We're going to discuss that and everything happening in the macro today because it is after all Macro Monday. We of course have Dave and Mike, but we also have Chris joining once again because he likes me so much from Franklin Templeton. Let's go.
Good morning, everybody. Welcome to Macro Monday. We're not going to waste time listening to me. Let's bring on all of the guests. Good morning, gentlemen. Chris, welcome back. You made it through the first audition. Congrats.

**Chris** (1:26)
Good to see you guys.

**Scott Melker** (1:28)
You might get the part. Just kidding. Mike, morning meeting. Let's get into it.

**Mike** (1:34)
Good morning. Now, Ana came out swinging this morning. She thinks Warsh redeemed himself. She gave five issues. We can talk about those later if you want. But she did get to the non-farm payroll. She expects 12,000, which is small, 4.2 percent. And she pointed out August is the month of anomalies. The pattern is usually typically can disappoint by 30K. So she thinks there's substantial downside risk to this payroll number. State and local governments are reducing federal funding. The American Rescue Act has been depleted. And so she thinks it's a potential trip in Miami and then she pointed out never in the modern area of the Fed, have they hiked rates with two consecutive payroll numbers going negative. So she still thinks they're unlikely to hike, even though the market's priced for 50-50 in the next meeting and then 90% for the SEP meeting. And the CPI, she thinks will be the week after, will be 0.3%, expects the core to drop to 2.4%, which is the lowest in five-year basis. So those are not environments for the Fed to hike, even though, as Ira Jersey pointed out, they're priced 50-50 for a hike at the SEP meeting.
And he thinks if they do hike, it's unlikely they go just two times. They go back, take back 100 base points, which means a two-year would end up around 4.5%. And we'd have pretty substantial flattening of the curve, which would mean probably the bond yields would maybe spike initially and then drop. Now, he's not expecting that, but he thinks that's typically how they do it when they do it.
And he did say he disagrees that markets are mispriced because of what Mr. Warsh said about fundamentals. He said they're fairly priced. He's mentioned he's been using his 6% nominal GDP growth. Chris Kane, our equity person, came on and pointed out stocks are not overbought on an RSI.
The breadth has not been great. It's all mega caps.
And then he said earnings are unadjusted. 51% are just crazy blowouts. Davidson Santana, our FX person, spoke of Colombian pesos, the best performing. He's in Latam, performing Latin American currency. He points out Brazil's got an election come up. They're doing well, but there's probably going to be a lot of deleveraging before that. And then I piggyback on Ana and pointed out, if she's right about this, that's probably good for gold. But overall, I just point out the macro and commodities. This is just a bad environment for gold and Bitcoin. They're saying exact trajectories, expecting 50 base points of hikes in one year. It's typically not a good environment. And then I point out it's all about oil. That's up to Mr. Trump. He needs lower prices by midterms. And by the way, he's getting into natural gas. That US January natural gas contract is still below four. It's the lowest level since Russia invaded Ukraine. And that's one measure of heat, electricity and fertilizers. So I ended with this. I just point out this year is all about energy and commodities, but the Bloomberg Energy Spot Index is the same price as 20 years ago. And precious metals have been the best studs, but they look almost as expensive as energy in 2008 Back to you.

**Scott Melker** (4:36)
There's so much unpacked there. It's hard to know where to start. I just want to show this really quickly because I happened to check the Cal-She markets, and they're way more bullish on a rate hike than even obviously the Fed is. So before 2020... Okay, those are irrelevant. But before 2027, 71% after his comments on Friday. And you can see that's been obviously steadily rising here with time. So the public starting to really believe that there might actually be a hike. I'm still not personally buying it. Dave, you were about to jump in there.