Forward Guidance: The AI Trade Is Finally Cracking | Weekly Roundup

Sourced by podcast-ingest on 2026-07-13. Auto-transcribed via AssemblyAI (universal-2, en). Speakers identified by AssemblyAI Speaker Identification using the per-podcast host/regulars hints; the resulting label→name mapping is in the frontmatter. Duration: 46m. Episode page: (not provided). Audio: https://traffic.megaphone.fm/BWG2362163340.mp3.

Show notes (from RSS)

Markets can look strongest just before their underlying assumptions begin to crack.

This week, we examine whether the AI-led growth narrative is beginning to unravel as positioning, macro data, and market structure all shift at once.

We discuss the AI momentum unwind, yen intervention, NFP & labor market weakness, Fed policy, gold, Bitcoin, and what we think is the next major trade. Enjoy!

TIMESTAMPS:

00:00 Intro

01:40 AI Momentum Starts To Crack

07:14 What Triggered The Selloff?

10:21 Is The AI Boom Peaking?

12:24 Why Gold Still Looks Attractive

14:19 Breaking Down The Jobs Report

18:06 Could Inflation Stay Sticky?

24:56 Is The Market Misreading The Fed?

27:54 How We're Trading This

32:47 Is Bitcoin Turning?

38:42 Why Gold Beats Tech

40:36 The Next Phase Of Crypto

44:17 July 4th And The World Cup

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› Felix – https://x.com/fejau_inc

› Quinn – https://x.com/qthomp

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RESOURCES

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DISCLAIMER

Nothing said on Forward Guidance is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only. Any views expressed are opinions, not financial advice. Hosts and guests may hold positions in the companies, funds, or projects discussed.

Transcript

Quinn: There's a lot of cracks forming where the things that were pumping this to the upside aren't really working anymore.

Jack Farley: That's all you needed. These two headlines and suddenly you just have this, like, momentum factor implosion that we're seeing.

Quinn: Yeah, I would be very cautious here if I was loaded to the gills with tech risk. You're reaching this crescendo. What I think is peak growth and peak inflation for the economy. There's just no reason for the Fed to act in either direction right now because of the labor market.

Jack Farley: A lot of things are coming together to me that it's just like I want to be focused on. On trades that express nothing said on. For guidance is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests and the Blockworks team may hold positions in the company's funds or projects discussed. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. All right, what's going on, everybody? Welcome back to another Roundup edition. Forward guidance. Just the duo this week, Quinn and I. Tyler is on a road trip for the fourth. He is. I don't even know where he is right now, but he's got a car full of kids. I'm sure he has enough going on in his life rather than just dealing with us too. So just. Just us two today, taking us into the long weekend. What's going on, Quinn?

Quinn: Not much, man. Pumped. Long weekend. Always trying to fit. Bunch of the same amount of work in the shorter days, but we get a reward on the back end. So it's nice.

Jack Farley: Nice. Yeah. The market's also trying to do this job of fitting in multiple days of rotation into one day. Dude, this. So yeah, let's talk about market structure and this factor implosion going on today. So this is just. I just read this out a few months minutes ago, but momentum seeing like a 44 Sigma 4 standard deviation unwind today. Total factor implosion today. You know, always feels like these happen right around. You know, it's funny like the last one, I feel like that happened like this was right around the. The yen carry trade unwind there just. It always seems to be that when the factors unwind is the same time that we see something happening with the yen. And we had that happen today or at least overnight. We finally saw that. That yen intervention that we've been. We've been talking about. So let me just show on slide 23, it looks like we finally had this happen. It's been overdue, but the Ministry of Finance does look. It's interesting that they always seem. I actually. So this interview isn't quite out yet. It's coming early next week. But I interviewed Brent Dolany who's just like a FX maven, and he was talking, he's like, I think that they're going to try to time it around the NFP because they like to have a catalyst to really get some movement in. So it's interesting to see that happen. So, yeah. Curious to get your take, Quinn, on market structure, these factors and it all happening at the same time as this job spread that we'll get into and this intervention.

Quinn: Yeah, I mean, it's funny because when it unwinds, everybody notices, but. But when it's going up and building, it's kind of like the like humans, right, where like when everything goes our way, we're the best, we're awesome, we're amazing. And then when things don't go our way, we're super unlucky. Right. So it's the same thing in this case, right? So the yen, you know, has been weakening against the dollar. The Korean wands, the Korean been weakening against the dollar. You've had flows, tremendous flows into the AI semiconductor, US equity tech trade that have been fueled reflexively by these, these actions and these loops and then it reverses and it's all intertwined and happens together on the downside because it's very correlated and intertwined to the upside too. So I agree with you. It's funny to me, you know, the U.S. rescinded the, the fable model ban from anthropic no effect market did not give a shit, which. And then Trump's out here tweeting multiple times about micron, probably because he loaded up a fat position and is pissed that his manipulation tweets aren't working. So there's a lot of cracks forming where the things that were pumping this to the upside aren't really working anymore. And, and I think that frankly, we've been talking about this for weeks now where the Meg 7's been sucking wind and everyone was, you know, pushing back a lot of people anyways that, well, once they, you know, they're so cheap they're gonna bottom, then they're gonna take leadership and, and they're gonna blast NASDAQ to new highs. Well, what is actually more likely I we've been talking about is, well, they started the weakness. And then eventually people catch on and say, oh, wait a second, they're going to stop their share price decline by cutting their capex to improve their cash flow, lower their leverage. And then you get this announcement from Amazon and then the cracks start to spread outside of the Generals into the semis, the AI into Korea, into Taiwan. So I think that it is oddly similar to July 24th where you have the yen you have back then. Remember, I specifically remember on this podcast when we were like, the Fed is making a hawkish pivot mistake. We were, we can go back and look at those. We were like, we got the cold CPI in June or July. It was. And then the Fed came out and they were still hawkish. They ended up reversing at Jackson Hole and then cutting, as we know, very similar setup. Oddly where committee pivots hawkish, they throw out all these dots. Potentially three hikes in this year. And just at the time where today we see labor rolling over, we're going to see inflation rolling over. We know what oil is going to do and can project that out multiple months. So yeah, I would be very cautious here if I was loaded to the gills with tech risk. The. There, yeah, it doesn't need to, you know, collapse today or imminently. But you know, just going from like two hikes priced in to one hike or, or no hikes is marginally better for liquidity, but liquidity is showing tons of signs of, of not a great environment. And so we're going from worst to bad to neutral versus like, wow, rate cuts are coming and the markets are going to get pumped. So I spoke a lot there, but that, that's.

Jack Farley: No, I think that's a good, it's a good overview. What I want to specifically look at is just the, the catalyst. Like it's always interesting to look at the reflection between positioning and news catalysts that occur because you need, you need the positioning to be built up for these news pieces to matter. Like, it's just so interesting how that always occurs. And so we've just had so much like the momentum factor has just been ridiculous the past, like just outright absurd outperformance. So obviously when you have that sort of leverage and positioning in the system, it doesn't really matter what the news is, just as long as there's like a steady narrative to grab onto. So you have, this is all, this is all the memory drm, AI trade stuff and then you have that as the baseline and then you just get a couple news hits. So the first one we got over the last couple days was Meta talking about trying to sell their access AI compute. I mean, they're only just considering, but still that was enough. It's like, wait a second, like if there's infinite demand for compute, but now we're talking about Meta wants to sell some of the compute. Maybe we have too much compute suddenly and like it doesn't even matter if that's true or not. What matters is the positioning that this news goes into. So who knows if this is actually going to end up being true or not. But all that matters is that it's just enough with where the positioning is for everybody to start. The second guess. So that's the first hit of Catalyst. The second one was this tweet about talking about. I'm posting this prediction now so I can quote it later. There has been a significant breakthrough in architecture, specifically around memory efficiency. Not by one of the big labs, but by a team that was spun out of OpenAI. They'll probably announce it soon. So like, look, this got 2 million views that going into the tape of like what these memory companies have been doing. All you needed was one account. I mean this is a super reputable account. He's like sort of anonymous, but like he has some good predictions. So this does this validity to it. But man, you just, that's all you needed. These two headlines and suddenly you just have this like momentum factor implosion that we're seeing and like here we are.

Quinn: That is. It is. You're so right, man. Like the market always loves to surprise both sides in the. In moving to extremes and not just like sitting in equilibriums, but shaking out both sides of the trade before actually making its mind up. And when you think about it, it's right, it's like what was the. What, what's the like fair value of, you know, these semis and, and these AI related trades?

Jack Farley: Right.

Quinn: It's nothing close to what we've seen. You can be the biggest bull on the industry and AI in the world, but when you look at the data of what's moving the market and it's $100 billion of triple levered ETFs, that's obviously completely removed from fundamentals, but you sort of have no sense in when that's going to stop. So like anybody who is bearish, just blown out to the upside and then it starts to crack and then you know, at the same time everyone's kind of getting bowled up because there's shortages for years to come and everything else and then all of the dominoes start to come together. Yeah, I think moving like how that intertwines with the economic data is really interesting to me too because we went from this time over the last year we've been in and out of AI is the singular driver of the economy 24 through 25 it was like man the economy sucks. It's just AI so like if this falls apart, you know it's kind of over for near term economic growth. And then we got this, the OBB immediate capex expensing then we got the tax refund rebates that supported the consumer. In the first half of the year we saw a little stabilization in hiring, job growth, manufacturing surveys picking up capex booming. And so you started to see these pockets improve that weren't just AI and so that's really fed into especially with oil coming down that's fed into manufacturing industrials. All the capex related activity and the broadening out so small caps and the Dow have been outperforming tech over the last few months and trends like that. But that's still, there's still within those sectors has been a lot of AI related stuff like the John Deere's and the power side of things and the build out stuff. And now you're reaching this crescendo. What I think is peak, we've talked about this too. Peak growth and peak inflation for the economy at a time when the AI trade is kind of showing some of the bigger cracks it has in a very long time. And so that's why the setup to me is very dicey because everybody's piled into the economic re acceleration trade whether you're an AI bull or you're not. And then you have the AI bulls and I think the risk there is that they both kind of unwind at the same time over the next few months as liquidity wanes. The Fed's too hawkish. Labor data comes down, inflation comes down with it but that doesn't really stabilize things so that there's a lot of risk factors I think out there aside from just like the record yen shorts, dollar length, you know. So for shorts like all these things kind of are colliding in a weird way.

Jack Farley: Yeah, I, I think that's why I continue to like it has the trade hasn't played out yet but I continue to really like gold and like these like it's just, it's all been washed out all the momentums in these other sectors and at a time where it looks like real yields are starting to to peak out here. So just want to go through couple others. I'm not in my traditional multi monitor setup so I need this on one screen. So I'm a bit slower right now. You can see like most of the treasury yield change has been around real yields going higher. So if that is true and we also assume that this, this re acceleration surge and inflation surge is all peeking out right now, which I think it is. So this is a good one. We had the ISM PMIs come out yesterday and they're a bit weaker and you can see namely that the leading aspects of it have started to turn down lower. So new orders versus inventories that's starting to curve downwards and you can see like manufacturing PMIs with a 2 month lag will follow that lower. So that's super interesting to me. And again wage growth is just down in the dumps. This is probably a good time to talk about the draw support we had today which was quite mixed. But overall like to me that was an important signal to look at for understanding what might happen in this July Fed meeting. So a lot of different data here on the drops report as well that just looks like this re acceleration that we talking about is, is starting to peak out. So interestingly the unemployment rate is the biggest one that bucks is trend like that came lower but at the same time pretty significant myths in the NFT NFP jobs report side of things. So I don't know, it feels like yeah a lot of things are coming together to me that it's just like I want to be focused on trades that express the fading of this hawkishness which to me is like gold is just a really good one. Also like the SOFA complex. But yeah, curious, what do you think there.

Quinn: Yeah, I, I agree the there was this divergence in the unemployment rate going down but for bad reasons because the labor force participation shrinking and that takes us back to the low hire, low fire supply constrained ideas that we've been. The Fed was talking about a lot of last year and I just can't for the life of me interpret that as like a hawkish data point because like you said wage growth showing no signs of revitalization. And if you're, if you're the Fed, that's really what you're concerned about here in terms of like preventing you know, sticky and persistent inflation is if wages were to pick up which all forward signs show that's not the case. And it's also not the case that the demand for labor is, is over exuberant. Right. Like participation rates falling is not a healthy labor market, if the job market's booming, if wage growth is healthy, if there's great opportunity out there that pulls people into the labor force from outside of it and you see rising labor force participation, obviously there's demographic and immigration and all these other things, but generally speaking that's something to watch and it's not pointing towards health. And frankly, what can the Fed do about this? So if you're sitting there thinking, okay, well the unemployment rate's low, but it's because the hiring rate is low and the participation rate's falling, why in the world would they hike into that? Why, why would the Fed say no job growth at 50k or 60ks is still too much for this economy, we need to hike into that and bring it down to like zero. I mean that, that's just totally not what the Fed is supposed to do in these situations is cut a market or hike into a market to reduce activity that's already tepid and trembling along. So the labor market is, there's just no reason for the Fed to act in either direction right now because of the labor market. So it just puts more attention on inflation in my view. And yes, the Iran war and some of these acyclical things moving through Core have elevated it, but all forward looking indicators show it's coming down meaningfully and particularly if the equity markets stall out here we know how reflexive that feeds into the economy. There's just a very. And then you don't even, you know, that doesn't even consider the actual political pressures going into elections. You know, remembering who appointed Wash in the first place. Like forget all that kind of emotional, you know, subjective political argument sake because everyone's going to have their view. But just looking at the data, I just can't make a case for hikes right now.

Jack Farley: It's just so weird that, I mean this is a good chart from Andrew Stano Larson, just looking at comparing inflation swaps to Fed reserve sentiment through an LLM and like yeah, they just turned, they turned hawkish right at the pivot.

Quinn: I mean 24 in there. It's literally the same exact thing, what we just said. June and July 24th.

Jack Farley: There you go. And it's so funny because that's also around the time that we just had these like factored implosions, we had like yen stuff. Although it was on the other side of things. Yeah, I don't know. Yeah, time history is just repeating itself and it seems, I don't know when it's just obvious, I'm just like, what am I missing what. So we're both on the same camp. Why don't we just try to play devil's advocate here for a little bit? Like why? What, what could lead to inflation not rolling over like we know headline is, but like say core PC, like what would, what would stop them from actually being dovish here? Like yeah, play devil's. I'll try after.

Quinn: To me, it would be the wealth effect. Okay, so let's just say a lot of these AI things are, these bottlenecks are flowing through into inflation. So let's just, let's say the, let's say the administration is able to keep propping up and manipulating equity markets via, you know, taking stakes in AI companies preemptively before any weakness or all these sorts of things that keep the NASDAQ and SPY zooming to new highs. Okay. You might then start to see the labor market stay high up here. If you know, unemployment rate starts to even go down even closer to four. That's, that's then, you know, but you'd, you'd imagine you'd have to see month over month job growth like 75 to 100,000 consistently. And then you start to look at the picture and you're like, okay, that's kind of hot. And core now supported by lower inflation or lower oil prices is, is not really budging lower at all. But on the other hand, like that, when you look at the breakdown of cyclical versus acyclical, what the Fed can control or, or influence, they can't control any of it. But what they can influence is the cyclical components of inflation. So if core is hot because of these supply shocks that are working through the system, but all the cyclical components, like that's what the Fed's job is to manage the business cycle originally what they were set out to do and that by definition is cyclical things. They can't control the acyclical. So for me, I guess the labor market would have to meaningfully improve and take a step, function higher. But I just, we're reaching the seasonal point that always kind of shows a dampening plus the waning of the fiscal impulse into the second half. I don't think is so appreciated. Where you have the tax rebates falling off, you have a lot of the capex and there's an argument to be made there was even a pull forward around the Iran war due to supply scares kind of in the same way there was for the tariffs that you see a give back in these coming months and quarters. So the composition of the Fed and the people who are voting for the holds, like it's going to take a lot to sway them in my view. And historically in inflationary periods, there's a lot of dissents. If you look at the 70s and 80s on average in those meetings, there's two, three, sometimes four dissents as to what the Fed should do. And it wouldn't surprise me if that's sort of the case going forward. But at the end of the day it is the chair's decision. And I thought his comments this week where he won't give forward guidance, but he says, well, the inflation risks are falling, the Iran risks are falling, inflation swaps are falling, that's kind of forward guidance. But to his point, when you eliminate these dots and you let the market practitioners see the data and react to the data in the rates market, instead of all this convoluted reflexivity, realistically you shouldn't get those big divergences where inflation swaps are plummeting and all these forward looking indicators are falling. But then they're still saying no, they're going to hike because they said so. And it's like, well, they should have the ability to change their minds with incoming data, which they haven't been because the dot plots and et cetera. So it's kind of making his point here in a way. I don't know, I was pretty balanced there, man. I'm just really having a hard time seeing the case for hikes too.

Jack Farley: I mean it's just like, like to your point about the cyclical parts of inflation, like to me that's, imagine a business cycle, like what better representation than wage growth, right? And like we looked at a chart of wage growth. It's just, it is completely different from end of 2021, like just categorically different. You cannot make the argument that there's a wage price spiral. And like that is like, if you really boil it down like that is why monetary policy exists, like it does is, I mean we've talked about some of the criticisms associated with this that like they exist so that real wages do not accelerate. But, but the fact of that, but knowing that and know and assuming that that's not going to change into war, like you just look at that one metric. You don't have to go down the semantics of all the million other ways to measure inflation. It's just like, look like we don't have that systematic wage price spiral. So why would we really hike right now, Especially knowing that oil's back below 70.

Quinn: Yeah, no, true and central banks don't. Every time they hike into energy supply shock, they reverse it in less than a year. Your ECB's done this and you know very well that I mean we're Trump administration is doing everything to get price of oil down. They're giving iran triple, quadruple 10x what Obama gave them. You know, and forgetting about it, they're refunding all the tariffs. We have a tariff, tariff deadline coming later this month that there's no talk. Maybe they keep the tariffs, maybe they don't because they want to try and add, you know, provide more stimulus to the market and corporate profits going into the elections. So there's a lot of levers out there. I think that we've already seen this to be one of the most interventionist administrations in history. For them to continue intervening to also ensure the data kind of aligns with a no hike environment going into midterms. So I think there's now like I said earlier, I don't think that means I still think it's a very murky outlook for the equity indices even with no hikes. So I think adding hikes onto the case, it's the steepness of the yield curve that's the problem. Which is what war knows and talks about. The problem is not the front end. The problem is the suppression of the long end. And so they have the tools to tighten via letting the long end price appropriately and reduce the duration of their balance sheet. That would tighten and that would be a warsh ideologically aligned, way too tightened. But that, that's way different than, than the front end rate policy.

Jack Farley: Yeah, yeah, I agree with all that. Yeah. I mean based on all that I just so looking at what's like priced in right now in terms of the July meeting coming up, like we're still not even at 100 odds of a cold. There, there is like a very marginal pricing in which I feel like needs to come out especially in light of these recent comments. And I don't know, that just feels like a good comparison of how at odds the rates market is towards like I don't know if like that's why I'm just trying to go through this idea of like devil's advocate because I'm like okay, why are, why has it not been rectified yet? But I mean this is also the classic trader thing where you, you see what should be happening over the next few months and then you go all in on the idea and you expect it to happen overnight and then it takes too long and you get like, tested in the other direction and then you get stopped out. And then, and then the actual thing that you think is going to happen, happen, happens.

Quinn: And you're like, yeah, it's funny because it just, it's just one of these environments that takes, it's like the, the holding two opposing thoughts at the same time and netting those out and finding the path forward. Because what we're not saying is, we're not saying we believe inflation's going back to two or two and a half anytime soon. We're not saying, you know, oh, the Fed is going to be less hawkish, therefore risk assets are going to boom. We're not like a lot of people sometimes hear, oh, the Fed's not going to hike, bullish, or oh, you're, you're calling for no hike. So you, you know, you, you think inflation's done. It's like, no, it's, Inflation's here for secular, period. And, and I think the, the market just wants more comfort, especially on the front end, the long ends leading because they're saying, well, growth and inflation aren't, aren't going to be that bad if you're hawkish or that good for growth. But the front end's very tied to what the Fed communicates. And so I think, I think moving through the next one or two inflation prints will really help assuage concerns because we're going to see that, that, and then you get the reaction, you know, from the Fed later this month and they got a break. But it's probably not helping that the, the amount of speeches which we talked about last, the other week from, from Fed governors has declined a ton. I mean, they were yapping all the time, every single week, like five to 10 Fed speeches, and now you're barely hearing anything. And to be honest, it's probably better for everyone. It just, there's this teething period where going from a very talkative Fed, any chance they got to, like, none. You just expect a little, you know, the market to need to get, take some time to get comfortable with that.

Jack Farley: Yeah, 100%. All right, so how are you playing this factor? Wash it. Are you chasing rotations? Are you buying dips? How are you thinking about it?

Quinn: I'm, I'm more of a rip seller than a dip buyer. And I, I do think that the, I mean, when you look at it in the mag 7, I think the mag 7 are, are, are sort of in the hurt locker for a while. Like, they're definitely getting some relief this week. And, but I don't think it's a situation where the outlook just like rapidly improves because Remember, if the AI trade starts to unwind these hyperscalers, 30% of their income earlier this year is from the markup of the AI labs private valuations on their balance sheets. So it's very reflexive in that if the receivers trade on lines, that's also not good for the payers, which is the hyperscalers. So I'm kind of looking at them as selling, selling those bounces. You know, sentiment got really crushed on them. And then actually next week SpaceX gets included the QQQ inclusion date, which is also just a wild thing. So you know, probably some of that selling was making room in the, in the mags. But yeah, I, I, I have a negative bias on, on NASDAQ and tech and long bias on gold and sulfur and those, those kind of fading the hawkishness trades and also just generally think like the next two months are probably the most treacherous going into the back half of the year where, where people are sort of too crowded in, in this risk on view. So yeah, I'm pretty cautious here, but more, more of a seller on, on bounces than, than a buyer like. But I also wasn't in the memory trades and all that, that sort of thing on the way up either.

Jack Farley: Yeah, yeah, I'm like, I want to buy a dip, but I don't think it's time to yet. Like, I don't, I mean this whole thing, like navigate, I've tried to explain this a few times about like, how do you navigate these parabolic cycles of, of rotations and like memory? Like, first off, you need to decide if you're investing or trading. Then you need to decide on your time horizon. Like, are you trying to trade these rotations week after week? Are you just trying to like buy a bunch and hold on knowing that these explosive tops like we've just seen and then these pullbacks are going to happen? Do you just hold through them? Do you steadily sell? Like, do you try to just not necessarily get at the first inning, Maybe you get in at the third inning and then you ride the seventh inning or do you get on the third inning, see the spike and then you look to sell? You know, maybe if you just think through like a cycle, like after the game is over and you're starting to come down the other side, do you sell around where we were yesterday in the memory architecture? Like, those are all things that are different to each type of personality. So like me personally speaking, I like to, you know, buy Maybe the second or third inning and then hold on and then maybe sell, sell a bit in the seventh inning and then maybe hold like 10% of the bag knowing that we might be seeing this blow off top and get down onto the other side of things. So that's what I've been up to is on a multi year basis I think these ideas of Jevons paradox still hold true. If we see more memory efficiency Fable this model that just came back, nobody can even use the damn thing because there's just no compute available and there's all these things that says that's about to go to use this credit. There is still these bottlenecks and new use cases I think will come up. That was the whole trade of going from January to today was just like oh wow, suddenly we're in this agentic world and we need 100x the amount of inference compute than we thought six months ago. I think those things will keep happening but I think we're in that phase now of questioning the thesis like I that that and all you needed was that one tweet saying oh you know, some random company figured out how to increase efficiency. The whole thing unwinds and you have to, you have to have a plan going into these moments so that you don't get freaked out in the moment because like if you're reacting now, you've already messed up. You should have had that plan. You should have been managing your risk and understanding what kind of game you're playing. So yeah, the game I'm playing is this. I'm mostly on the side now just watching. But I'm not writing the whole thing off either. But it's yeah, we need to heal from this unwind and at the same time there's like a lot of these important questions that are being questioned around like what the hyperscalers are doing. Why is meta renting out excess compute? Like why did OpenAI delay their IPO? These sort of questions need to be answered and yeah that'll take some time. So I don't know that's what I'm thinking about about it.

Quinn: I think it's also interesting a little to the side of of of the semis is is crypto and bitcoin how it just actually is is been inverse on this unwind where it's you know it's clear there was some level of fading it and we, we was it last week where we said you know, people might want to temper their bearishness on the sailor and micro strategy complex

Jack Farley: and yeah I asked if he'd be a buyer and like, yeah, it's. Yeah, it got a bit much.

Quinn: Yeah, yeah, it. So I'm, I'm not sold that it's totally out of the woods. I think just like, like I've been saying, the liquidity outlook is not great. I think there's still some risks over the next few weeks, but it definitely got very peak bearish sentiment and especially around strategy. I still want to see how it trades over a number of weeks and months where strategy is not a buyer and active at all in the market. Because I think that that would be a true test to see where the natural kind of participants step in. But that's been interesting biotech and home builders, a lot of these other trades that it's just this crowding gets so extreme in both sides, in both directions. And it's just so wild how like for example, in some of these assets, like you could have been longed them while they're just getting tossed to oh, home builders, bitcoin, biotech, no one gives a shit. Software, get out of my portfolio. All I want is semis. And you're just sitting there. You're probably like, God damn it. You might have a thesis on the AI benefits to the, the, you know, the tech that benefits from it, etc, and it's just so wild how the market can move into these extremes and throw out all fundamental, you know, views and get so crowded and then you like, based on the, the magnitude of the. These last few days unwind. Like some of these stocks in Japan and Korea and Taiwan and in the semi space are reversing like two to three months of price action in days. It's just that is, that is characteristics of a bubble. I don't, you know, offend the bottle.

Jack Farley: I mean the bottleneck bro stuff was getting ridiculous. Like one of my favorite thinkers like Gavin Baker who was like calling them out is like, man, like some of the stuff I'm seeing in these mic, there's like these pump and dump shillers that are just like this is the new bottleneck. And then they push it onto their followers and it's like, it's like a $2 million market cap thing and they. And they pump it and it's just like total pink sheet pump and dump crap. Like, man, if you're seeing that stuff, it's. This is ridiculous.

Quinn: Yeah, totally it. Yeah, you're getting everybody change your ticker so it's got AI in it. Say you say you're a data center hoster. It's yeah, man, it's just signs of pretty frothy behaviors. The other thing is the, the profit and EPS expectations are just con. Have been mooning across the board, across all sectors. That also is very peak, you know, peak profit cycle type behavior. So, yeah, it's going to be interesting to see what the administration does over these next few months because it's July and they're going to want to keep this thing propped up through November and Trump's out here fleecing retail for a billion and a half on crypto gains and there's a lot else that hasn't been so popular they've done. So I think it's going to get spicy because as we approach this key midterm election date, things are wobbling already and the importance and magnitude and all these, all the things riding on it increase and kind of reaches fever pitch. So I'd expect more, a lot more sort of those socialist, interventionist type, AI stake type of policy announcements to come to try and sway people.

Jack Farley: Yeah, 100%.

Quinn: Yeah.

Jack Farley: Going back to the strategy thing in bitcoin, I think one of my favorite ways to think about these markets these days is just these beach balls underwater in both directions. All we needed for where bitcoin was at and the fact that you're pushing it and it wasn't going below 58k. We got like that one liquidation wick like some guy got liquidated for like 700 million or something. Wick down 50 and then, and then right back up and then. Okay, if it's, if, if strategy is the thing pushing the beach ball underwater, all they needed to do was just remove their hand. It doesn't even matter if they figure it out. And it doesn't matter that it's going to be an issue in a year's time. All that matters is suddenly for the next six months, it probably is just gonna fade out a little bit and that's all you need for a pop. You don't even need to have the consideration of whether they're going to be buying anymore for that. Obviously, like that's already kind of playing out and is playing out. And like we, I think we have like a bit more Runway to go. But obviously like the distinction between can we get back to 100k higher bitcoin without sailor? Like probably not anytime soon. But can we get this bounce just from moving their hand off the beach ball? Like, yeah, probably.

Quinn: Yeah, I'd agree with that. Like sentiment. Positioning is just, it's been, it's been the laughing stock asset now for a year effectively. And it's, we're coming up on the year anniversary since he launched his, his so called free money printer and stretch and yeah, there's a shot clock on these things. Like you don't want to be the last bear there. You're going to be susceptible some nasty squeezes even if it doesn't mean the assets out of the woods. I just, yeah, Warsh. It's. He's gonna have a tough situation. I think he's a little vindicated because he actually people interpreted that press conference as the, as him being hawkish when in reality, yeah, it was him communicating the committee's views so that he could earn their respect and confidence. Although himself, if you actually read anything he said, is not hawkish at all in this position. But so he'll have probably a little bit of an I told you so moment coming here in the next few months, which probably helps his credibility in the committee. But it also doesn't change any of the facts that are around the fiscal situation of governments. Right. Our deficits are still 6% of GDP, the debt is still climbing. They're still manipulating issuance. All the things that make for example gold and when liquidity is booming, bitcoin and this debasement trade generally attractive. I think that the fundamental case is as strong as ever and you just got a nasty, nasty rinse of positioning. And so I totally like those expressions better than NASDAQ here. I think as economic and growth and inflation slow with sticky inflation still you're gonna want the debasement stuff back versus the oh my God, AI bottleneck stuff.

Jack Farley: Yeah, yeah. I mean, yeah, you can kind of do. But like obviously I'm saying that I eventually want to be a buyer again of these dips of the memory stuff. But yeah, I also really quite like the debasement kind of trade stuff here and like I'm done being cynical about crypto. Like we've had our pieces about it. Like whatever is going to be coming out of like whatever Phoenix is going to be reemerging and I think there will be some sort of Phoenix reemerging. I'm going to be excited about. I think, I think there will be some interesting things that come out over the next year or two. Like there is that shift, obviously a lot of the tourists are all in the AI stuff now. But I, I think there'll be something there and I, I don't wanna, I don't wanna miss it. I mean I don't wanna be the idiot that like works for a crypto company and then Just like fuds the bottom like you know.

Quinn: Well we've, we've been, we've been bearish for like that won't be us I don't think. But I agree. I mean it's just finding where the value occurs cruise to because like with this new stablecoin thing that just launched too. Right. I don't want to be circle in that case. Yeah. The whole pie is going to keep growing but where does the value flow to? I mean the case for Bitcoin is kind of easy. We know every six or nine months, 12 months, we get a liquidity risk off. They need to add more liquidity. Bitcoin's going to rise on that. The rest of it. Yeah, we'll see. I agree. It just yeah the old like everything pumps together is kind of gone by the wayside. But I do think that like yeah,

Jack Farley: it's, it's good and I think that's a confusing part. The industry is going to get better. But not necessarily all the tokens like because most of these tokens are worthless. Like I don't know if you've seen what's the discourse the last couple of days about this Venice thing.

Quinn: Yeah, yeah.

Jack Farley: Around like the equity. Yeah. And like this is like I don't know, selling a. Blockers are trying to really push hard but it's just like they're double dipping like you, you have the equity in the token and then like all the equity owners own the token but the token doesn't represent any claim on equity and they can just sell the token while keep. It's. It's a whole mess. So there is endless like there's some really great protocols in crypto where the token represents nothing even though it has the name associated with it. And then there's like the equity and then there's like the, the foundation that has this like worthless governance token. So like all that stuff needs to be washed out. But I think once it does like there's going to be some cool stuff. We just need to stop with this nonsense.

Quinn: I love how everyone's surprised when another scam comes about in crypto and it's like ah, got you again. And it's like wait, that's the norm. It's the opposite when you're surprised when a non scam comes and it's like, I mean I think I don't really know anything about the guy Voorhees and you know his. He's obviously been around a long time but I don't think it's new that he's also had a lot of projects that have left people maybe not the most happy with their token holdings like Shapeshift and some of these other things.

Jack Farley: That's the thing. It's a cool protocol. It's just like, do you want to own it?

Quinn: Yeah.

Jack Farley: I mean that's probably, that's probably why something like, like this industry and these, this holder base has been so abused for so long that the fir. The one time like something like hyper liquid comes up, they're like, oh my God. They turn into a religion because they're like, oh my God. This guy isn't trying to ruin my life.

Quinn: Yeah. No. And just steal from me into my face and. Yeah, yeah. Enough, enough rebellion against it over time and people will. It's, it's capital allocation, man. Like.

Jack Farley: Yeah.

Quinn: When you need efficient capital allocation to flow to the properly structured assets, because when it doesn't, then you just proliferate more and more, incentivize more and more people. I guess it just is going to take longer, as you say, to rinse it out, but it'll, it'll come around.

Jack Farley: Yeah, it's coming all right. I don't know if you have much else, but maybe we can cut a little early before the long weekend.

Quinn: Yeah. Give people some of their plans.

Jack Farley: Yeah.

Quinn: Time back. Not really hanging around. Got, got some travels the rest of the summer. So just getting together with friends and, and people down here. So you.

Jack Farley: Yeah, not much, man. Hanging out, watching a lot of World cup, man. That's been awesome since I. What'd you. That the usa you guys lost. Your, your boy got red carded. That was kind of insane.

Quinn: I, I mean, I, I, I'm a newly. You know, I don't watch European football that much, but it's a little weird that the guy was totally fine and he still gets a red card and he can't play in the next game. And then you see like, like if that was Messi or Ronaldo, no. No chance they would even got a, a penalty.

Jack Farley: There's in the group stage. Messi did that exact thing, studs on somebody's leg and he didn't even get a yellow card. So it's like, ah, man.

Quinn: Yeah, it was tough, man. I felt bad because. But then we like completely manhandled them regardless, which was sort of embarrassing for them. You know who I felt bad for though was Senegal. Like, it felt to me like deciding

Jack Farley: the game for the penalty like that.

Quinn: It felt to me like the EU made a phone call in to rig that one because just, you know, the 83rd and 89th minute goals, and then to get to lose in that fashion, that didn't sit well with me. And now we got to play them with our key striker out. I. I don't love that, but hopefully we can pull it off.

Jack Farley: Yeah, hopefully. Anyway, Morocco, it's gonna be. It's the game. I mean, expectations are low, pressure is low. We're just happy we made it. Like, I. I know I've been a. So I've been a long time, huge watcher of soccer. I never expected Canada even being the World Cup. The fact they're in the round of 16, like, this country is euphoric right now.

Quinn: So that's like, man.

Jack Farley: Yeah, yeah, they've been playing well. I'm excited. We'll see.

Quinn: Morocco's good. I liked watching them play.

Jack Farley: Yeah, they play a cool game. Very fast.

Quinn: Yeah, yeah, yeah. They're athletic.

Jack Farley: All right. Cool, bro. Yeah. Have a great long weekend.

Quinn: Happy.

Jack Farley: See everybody later. Yeah.