what's going on guys today I've got an excellent episode with Phil Rosen he is the co-founder and editor-in chief of opening bell daily in this conversation we talk about Bitcoin the Federal Reserve housing regulations what's going on with home affordability why you sitting at home have to become an investor why Savers are losers and why the Federal Reserve is not actually in control but instead the market is telling the FED what to do this conversation covers a lot I really hope that you guys enjoy this please let us know what you agree with what you disagree with and what questions you have for the next episode here's my latest conversation with Phil Rosen all right Phil what's the first topic you got so every single investor in the world is about to gain exposure to bitcoin because micro strategy was just added to the NASDAQ 100 and that's QQQ which pretty much every retirement account goes into it's the most popular fund for Passive investors what did you make of this news well it's really just kind of an algorithmic decision that uh if micr strategy gets big enough and meets certain criteria gets included in the index if it doesn't meet that criteria then it won't be in the index um I do think that uh micr strategy has appreciated a lot right the market cap is much larger obviously it qualifies to now be included what is interesting to me is uh everyone is talking about it in terms of like oh now every investor is going to know that they're investing in Bitcoin I don't think that most people could name 20 stocks in the NASDAQ 100 I don't think most people could name you know 50 stocks in the S&P 500 they're buying an index they're just saying hey you guys are smarter than me just give me the 100 stocks and uh that's what I want exposure to uh what I do think is pretty interesting though is more so the impact on micro strategy more than the impact on the investor so that persistent bid of you know tens of billions of dollars that be flowing towards micro strategy is a very big deal and so it will continue to give Michael sailor the ability to sell stock buy more Bitcoin Bitcoin goes up sell more stock and kind of play the game that he's playing and so while it's a good narrative or a good story to talk about the fact that like now every Investor's going to have exposure to bitcoin uh I think they're going in there like half a percent right like sure they kind of sort of have exposure um but I don't think you know 99% of the people that are holding NASDAQ 100 could tell you uh how what's the percentage or it's not like they're making an active decision I'm going to go buy the NASDAQ 100 because micro strategy is in there so passive indexes are more valuable to the company I think than a company is valuable to the people holding the index yeah I think that's a great point because even you know for us we look at the market all day so we might not we think it's obvious that holy crap this is you know micro strategy being added but most people wouldn't know or or recognize that uh one so one analyst told me this improves how micro strategy is viewed from a credit perspective so ratings agencies will say okay now they're more credible or legit of a company so I think that impacts the cost of capital for what micr strategy can get in the market and just how um the market perceives them to a degree yes um he's unique in that uh he's had a pretty good cost of capital so far like he's been issuing 0% convertible notes that are converting at 55 60% premiums to his current price um I'm not aware of anyone who's able to get better terms than that so um in a weird way uh yes getting into the NASDAQ 100 does improve credit rating and does improve kind of your position if you will kind of is like a stamp of validation uh in the traditional Financial system um but actually Bitcoin gave him that already and so it's like Trad five being like Oh now we think that this is validating right uh but if you look at the market the market determined that Bitcoin was more important than the NASDAQ 100 uh because having the underlying Bitcoin exposure gave him the ability to raise these converts at very very attractive terms and so uh if you go and you ask an analyst on Wall Street they're like oh he's now in the NASDAQ 100 right but if you go and you look at the convert Market actually they don't care like they've already been giving him you know pretty insane pricing terms because they're like hey what we want is not another company in the NASDAQ 100 what we want is we want a company that's got giving us exposure to bitcoin and so this is like a classic Paradox of uh kind of traditional Financial system and Bitcoin system meeting each other is that uh where the market clearing price has been is actually in favor of Bitcoin but there's still a lot of people in the traditional system that they're waiting for these kind of traditional Milestones to be hit so there's some investor somewhere who didn't have exposure to micro strategy but now they're excited because like now they're in the NASDAQ 100 it doesn't matter though right uh in the grand scheme of things um and so uh again I just go back to like if you look at all of the ramifications of this you just zero in like what matters it is that there's now a persistent bid from passive investors into micro strategy at a size and scale that they previously didn't have that will likely Drve the price higher and also give him the ability to get more Bitcoin which will then drive his price higher and so my expectation is that let's call it a half a percent or whatever allocation in the NASDAQ 100 will grow over time and so one of the most interesting questions is you know at the end of 2025 what percentage of the NASDAQ 100 is micro strategy I don't know right and I don't know if I necessarily have done enough work yet to have a strong opinion on it but I do think that that question is going to tell you a lot about the NASDAQ 100 a lot about micro strategy Etc and so if it's you know half a percent to 1% okay fine what if it's 5% that'd be a pretty big jump right and so that's the type of stuff that uh is pretty interesting because now you're talking about relative comparisons to you know other compan that are in the index and I I think one piece of that too if it gets to 5% what does that do to the price of Bitcoin uh and Bitcoin just hit $18,000 today as as we're recording um and pretty much it's hit a new high every week since the election and sometimes multiple times a week do seven weeks in a row yeah greatest winning streak since 2021 what what has changed in this week versus the week before if anything have you noticed any new drivers or maybe it's just micro strategy I'm not sure well I think last week or the week before uh Paul Atkins being named as the SEC chair is a pretty big deal uh people realize hey you know kind of uh Trump is following through with his Pro Bitcoin Pro crypto stance pkin seems to be you know kind of a good Tailwind uh you also see Howard lutnick being named the uh Secretary of Commerce I think that's a big deal he's obviously very Pro Bitcoin in crypto uh Scott bassant uh he been coming in as treasury secretary that's obviously very Pro Bitcoin Pro uh crypto and so you know you're kind of putting the the puzzle pieces together uh for the administration you're realizing like hey these people are actually uh people who seem to understand the technology and the assets uh and they're going to be friendly to them rather than abrasive so I think that's a big deal uh second thing is 100k is a pretty big psychological uh I think Milestone um you know there's a lot of people who said uh hey I think this is going to zero hey I don't think it's really that valuable whatever once it gets to $100,000 you're kind of like you know there's not that many stocks that reach $100,000 now of course stocks are constantly doing you know splits and and kind of all these different things but like you know Burk shear couple $1,000 stock and so you start to get into this like rarified err where people are like hey I can't ignore this thing and so I think that that's a huge piece of this is um uh just seeing the price of the asset kind of cross that threshold is pretty important um and then lastly is uh we're now in the end of the year and so the last two weeks of December in uh the stock market is usually a pretty good time um but December through March uh of having years so you know kind of having happened earlier we get December we go to March uh um I think is historically a really really good time for Bitcoin and so if price continues to go up Trump Walts his way into the White House you know he'll be saying you know you're welcome the whole way there and um I think that him claiming that he's the Bitcoin president and let's say Bitcoin you tripled that would be you know pretty powerful I think so if you know by March Bitcoin is 130k well Bitcoin you know basically doubled um that'd be a pretty big deal yes that would be um and I I think the sort of the macro component here with Bitcoin hitting all-time highs the stock market is hitting all-time highs that sort of undermines the Federal Reserve who's trying to cut interest rates right now and now there's talk oh they may slow down in 2025 and then I've also seen shatter of stagflation risks so uh High inflation essentially coming back what's your read on these next 12 months from a macro perspective today's episode is brought to you by Ledger they're celebrating 10 years as the most trusted name in crypto security with over 7 million users in 20% of the world's digital assets secured Ledger continues to lead the way in protecting your crypto and digital ownership their latest devices The Ledger stacks and The Ledger Flex feature the world's first secure touchscreens making managing your assets easier and safer than ever plus the new Ledger security key app offers a secure alternative to traditional passwords 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you're going to keep jacking up the Federal uh debt and you're going to continue to devalue the currency right by the best case analysis that I've seen not probably was actually accurate but the best case using the government data the US dollar has lost more than 25% of its purchasing power since 2020 it's insane so you look at it and you say the stock market Bitcoin all these things they're just responding to the change of the money supply so if you are watching this stuff go up you're saying yourself what's happening you're not smarter than the market the market is understanding what's occurring and so uh inflation is not 2.
7% 2. 7% is bad and it's still real inflation is higher than that and so if you're an investor and you're sitting in cash you're getting screwed it's like very simple and so I think people want to make it very complex like oh the fed's going to cut interest rates do this like dude the FED has no choice but to keep interest rates lower and to print money because if they stop doing that bad times come and so we now have a Federal Reserve that because they broke the market they are being dictated what to do and so if you're an investor it's a very binary decision if you lived your life in our generation and you did not invest you suffered if you invested and had half a brain you thrived that's the game but the Federal Reserve they're sitting like oh maybe we should slow interest rates maybe we should do this they have no clue they have zero clue you're telling me that they're looking at data from a month two months three months ago they're goingon to make a decision today and they're going to predict the future stop it because guess what they're also making decisions without any sort of uh allegedly uh input from politicians so the interest rate decisions and the monetary policy decisions they're making in October they claim that they're not accounting whatsoever for who is uh likely to win the presidential election they also claim that the December decision that they're going to make is taking into zero account any political uh kind of influence hello Donald Trump is coming to be president people are going mega long in the stock market assets are flying right now but we're Central Bankers we don't pay attention we're independent so it calls into question uh are you actually taking a holistic view of the economy I don't know somebody smarter than me will figure that out but uh all I know is regardless of whether the FED Cuts fed stays fed hikes fed prints or fed drains asset prices are going higher and so this is a very simple test did you invest or did you not that is a I think boiling it down to investors and non-investors is a great way to think about it I'm also wondering is there and I don't know the answer to this maybe there isn't an answer is there a best case scenario for what the FED should be doing I think that the FED um is in a lose lose situation because if inflation is higher than 2. 7% and you cut inflation probably comes back okay if you sit there and you do nothing then what you really are betting on is that you have some minute control of the economy and they don't if you hike you basically lose all credibility with the market and you probably push us into a recession so if you think about how do you solve this problem it's not in the fed's hands because the FED broke the market it's like um you know if you are uh out with your dog and you're going for a walk you're the fed the dog's the market and the FED used to walk the dog now the leash broke off and the dogs running wild guess what the dog's walking you even though the dog don't got a leash on you you're chasing the dog all over the neighborhood right Who's laughing now that's basically what has happened and so when you see that you say to yourself well how do we get out of this situation it's got nothing to do with monetary policy has everything to do with we have to innovate we have to get GDP cranking and so the best thing that we can do is deregulate Empower entrepreneurs make massive Investments technology and grow our way out of this problem because it's a structural issue and so the FED actually they can have impact on the short term but they're chasing the dog all over the neighborhood and so what you need is you need that dog to run home that's what you need that's the only way you're going to catch the dog right yeah and so how do you do that get GDP growing and I think that's why putting a bunch of business people into the government it's a really fascinating experiment is it going to work I don't know but it's our best shot yeah I saw uh Jerome pal he said himself at dealbook he said we need to grow our way out of debt and uh Ken Griffin agreed with him he also said we need to grow our way out of debt um yeah these people are smart they they know exactly what's going on the challenge that somebody like Drme Powell has is he can't actually say the truth right imagine if he showed up to the to the next uh um press conference he said no matter what we do it's on you guys you guys got to grow you guys got to build technology you guys got to get GDP going people would lose their minds oh my God the Federal Reserve chairman just said that he has no control over the economy right and we' be mass chaos so instead what they have to talk about is data points use the FED speak and play their whole game which is fine like they're doing the best that they can but at the end of the day the solution is not in the hands of the FED it's in the hands of entrepreneurs I think that's the message that Trump has pretty much been pushing cuz he has put a lot of Doubt on the Federal Reserve in his first term and also coming into his second term and he's in the progrowth camp that he says we need to grow our way innovate Etc um I think he's pretty much saying what the FED cannot say because Trump has no filter he's going to say oh the FED has the easiest job in the world they show up and make a coin flip every quarter and Drme pal of course will push back on that but I I do think there's something there where the market is controlling everything anyway so the FED is sort of just a figurehead at this point let me flip around on the table and give you the best argument for why the fed's done a good job so um Co happened we locked tens of millions hundreds of millions of people in their home velocity of money goes to zero businesses are shut down huge huge huge problem Supply chains break all the stuff by the end of the year asset prices are up how they did it obviously it's going to have long-term pain but they Ser they uh solved the short-term problem okay so we know you're going to get an F on the long term but you get an A+ on the short term tradeoff then you look at 21 uh November 21 they realize Market's frothy were they late of course but better late than ever and they say we're going to hike interest rates they're able to hike interest rates up over 5% and they don't push us into a true recession nbe they're full of we did have a recession for two quarters but in terms of like a massive crash a big crisis Etc we don't get that again solve the short-term problem probably cost us more on the long term F on the long term A+ on the short term so they were able to navigate basically four years they were dealt hand and they dealt you know figured it out now they're starting to cut interest rates you can see Capital flowing back into the market you can see asset prices going right the question is going to be can they do this without reinf lating inflation probably not M maybe they're they can do it less inflation but probably not and so at some point remember when they were getting an F on the long term how do you measure the long term you got to pay for your sins you didn't study for the test you don't pass the test question is this 2025 the test time does the FED have to take the test finally we're going to find out and the crazy part is it's like taking a test with a partner and you don't know whether they studied or not cuz the politicians they don't give a right they've been printing money this whole time so they're making your job harder and so I think that again did the FED do a good job or not it depends on how you measure it but there's a strong argument that the ability to overcome you know the the Public Health crisis to then get interest rates up and not crash the economy severely and then to start to cut again and kind of have this you know asset price boom you know a lot of people who say actually you know what they're doing an okay job but if you're an investor you don't look at what's going on today you're constantly looking in the future peeking around the corner what's coming it's going to be a hard one I think the ones who pay the most as far as deal with the most pain will probably be everyday Americans and uh people that want to buy a home and you you shared a chart on X recently that showed purchasing a home now cost $1,000 more per month than renting the same property and the historical average is about 230 bucks if the FED goes back into raising interest rates that will probably worsen um what do you I don't even know what the question is but what do you make of that today's episode is brought to you by polka dot polka dot offers secure scalable and decentralized blockchain technology that perfectly aligns with the needs of innovative projects it was developed by Gavin wood one of the co-founders of ethereum and the creator of solidity polka dot aims to build an internet where users have full control over their data and their 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