Bitcoin SHOULD Be Falling - So Why Isn’t It?

**Scott Melker** (0:01)
Bitcoin should be failing, so why isn't it? We're in that point in the market where seemingly we have nothing but bad news, but Bitcoin remains resilient. That's just one part of the conversation today. Obviously, we're going to dive into everything macro, where markets stand, what our predictions are, for the rest of the year, with Dave, Mike McGlone, and special guest from Franklin Templeton, Chris Gallipo. Let's do it. Happy Macro Monday, everyone.
Welcome to Macro Monday. We're going to dive right into it. Mike McGlone will be joining in a bit. He was supposed to be here to give us his thoughts on the morning meeting, but he had called off to be on actual TV.
So he prioritized that over us. I'm not saying that I'm feeling personally an affront or anything, but that is what happened. Mike sometimes, duty calls. But it's good, because we can't talk about Bitcoin yet, Dave, because we need to hear Mike tell us it's going to $10,000 and that there's millions of cryptos and unlimited supplies.

**Dave** (1:14)
Please, dear God, try to steer the conversation away from that nonsense.

**Scott Melker** (1:17)
We won't do that yet. Chris, listen, so we've got you here, obviously, head market strategist at Franklin Templeton. Welcome to Macro Monday for the first time. Maybe you can set the table for us as to where you're generally feeling about markets. I read your most recent research. It was great. I don't think there's Barish as McGlone.

**Chris Gallipo** (1:38)
Well, listen, let's remember that the world doesn't end that often, right? Despite the constant negative heartbeat of that. Look, I think the backdrop here is fine. To be honest with everybody and with your audience, we've been bullish since the lows in COVID, and we've maintained that through 22 and really haven't flinched through all these different pullbacks. And there's been some challenges, right? But I think the economic backdrop is fine. I think way more important than that is the earnings picture, which is more than fine.
Tape's not expensive. I can't say it's cheap either. Tape is broad. Earnings power is broad. And so those are the conditions that set the stage usually for a pretty good environment for risk assets, and that's what we've seen.

**Dave** (2:21)
So, Chris, let me ask you a question, because Mike's always pointing something out, and I'm always counter pointing it.
The thing he points out is market cap to GDP is off the charts, all time highs. Thing I always point out is earnings compared to GDP is also at all time highs. And there are structural reasons for that, in my opinion, but I'm curious, you know, when your clients ask you, what do you, what is, what do you think are earning or market cap to GDP? Is it bubbling? Is it this? Or is it simply a reflection of liquidity in the marketplace? Because we've had decades of fiscal dominance and accelerating, you know, money production, basically, however you want to call it, printing, you know, however you want it to define, whether you define it by M2 or you define it by broader markets, you define it by debt, however you define it. I'm just curious because that is really the fundamental tension between Mike and I on the macro side has been for the better part of, I don't know, how long have we been doing this, Scott? Three years?

**Scott Melker** (3:21)
Three or four years now, yeah.

**Dave** (3:23)
Yeah, so I'm curious what you see there.

**Chris Gallipo** (3:27)
Is that the so-called Buffett indicator that you're referring to?

**Dave** (3:30)
Well, I mean, I don't know what he hasn't named. He just uses Bloomberg charts and he talks about market cap to GDP.

**Scott Melker** (3:36)
Yeah, I think that's what... That scares the hell out of him.

**Chris Gallipo** (3:38)
I think that's what Buffett uses. That's Buffett's indicator of when to take risk and when to not take risk.
Check that because I'm not sure it's the exact same definition, but I think it's close. So if we take that as a starting point and you look at market cap to GDP, it might be slightly different than that. But Buffett was worried about that. And look, we can't argue with the guy's long-term track record. And by the way, his investment horizon is different than anyone's in the world probably except for an endowment.
That was strong in 2022, right? That's where he raised all his cash. S&P is up 100% since then. So market cap to GDP, okay, like you're talking about the best companies in the world here driving that, and that is earnings-driven. Let's also not forget that the stock market is not the economy, and the economy is not the stock market.