Scott Melker on Trump's inauguration, the Fed and the market outlook

Transcript

GM good morning welcome to the milk Road show The Daily crypto show where our insights are as crisp as the sound of opening a fresh can of beer at the end of a hard day of work I'm your host Jay Hamilton Bitcoin is above 106,000 markets are green generally responding well to Trump's first day in office although did Trump forget about us no executive orders yet nothing seems to be happening on the crypto front maybe that's due to our unreasonable expectations that we are the only thing that matters in this world but Al we're going to talk about what we think Trump might be doing the rest of this week coming days as he gets settled into office US debt what is going on here it is past the $36 trillion ceiling what is this ceiling why is this the danger zone

what does this mean for the US and for markets and macro here to break it all down with us today is Scott milker the one and only longtime crypto educator investor The Man Behind The Wolf of all streets podcast and the Wolf dead newsletter few amazing resources for everybody that is investing in the crypto space before we jump in here from Scott we need to take a moment to hear from our sponsors who make the show possible meet odos the defi aggregator that makes your token swap smarter faster and a whole lot easier tired of trading like it's 2019 odos finds the best prices for your swaps across 900 liquidity sources and 14 blockchains so you always get more bang for your crypto Buck whether you're

swapping setting a limit order or just avoiding gas fees like the plague oos has you covered it's like having a genius Trader in your pocket minus the coffee addiction join 3 million wallets already using odos to power over six billion in monthly trades start making smarter swaps today at milroad docomo Scott welcome to the milk Road show thank you man I think you're gon have to Rebrand the milker road show why do you say that Scott no well yeah when I was a kid they would make fun of me and call milker but you know milker Road quick dad joke pun C hot sorry we could go with dad jokes I'm

just I'm a young dad so maybe I'm not quite a year I need a couple more gray hairs before I get to that level I got a lot of them okay let's start with the biggest news yesterday was Trump's inauguration uh although Trump's meme coins sort of stole the show over the weekend uh but just first thoughts inauguration how Marx responded so far markets have responded well I don't think that that's a particularly large surprise I think the sell the news event a lot of people were looking for sort of happened the weeks before uh the inauguration itself with people sort of anticipating what was going to happen we know that markets hate uncertainty and you know we saw yields kind of rising during that time a lot of conjecture as to what Trump would

do in his early days and I think you know just a general wait and see attitude uh for the inauguration itself so I think no surprise that we sort of had a bit of a correction and now things are back underway to the upside you know we're we're talking here on January 21st as you said bitcoin's above 106,000 S&P is rising people seem to be risk on and greedy at the moment I think uh as far as the crypto side uh people have been disappointed because they're whiny little children who live in an echo chamber and believe that they're the most important people in the world um and they're not you know things like uh immigration tend to be more important I guess than what's going to happen to

Def and meme tokens no way but you know here we are I think that there was an expectation we would get some executive orders uh related to crypto or at least that he would mention it in the inauguration speech I think that was a pipe dream um but I do think in these first 200 executive orders that are coming whether that's today or in the coming days we are going to see some mention of crypto and some movement and frankly the appointments he's made uh the fact that he launched a meme coin For Better or For Worse the things that he's done and the signals we've seen show you exactly what it's going to be like for crypto in the next four years the United States whether we get a direct executive order or mention in these first days or not I would love to

see Ross Al pardoned here as he said a day one expectation that would be awesome to see on day two or day three otherwise I'm really not holding my breath I think we'll get some super F super official mentions uh and then see some really you know comprehensive policy down the road uh so short term do you expect volatility because I think what what Trump brings is he does bring maybe we have certainty on the whole of the next four years and what this Administration will look like I mean certainty might be a strong word but we certainly have directional idea and we're definitely different than we've been for the past four years so anything's an improvement

upon that uh but I think you know launching a meme coin his his behavior is quite erratic the things that he tends to do what do you expect to see over the just short term next week few weeks I expect volatility right uh for the same reasons that I sort of outlined before I think that the Market's going to have an overreaction to every word out of his mouth right because we're starting to get a or looking to get a feel for what he's actually going to do once again you know in the coming months and certainly in the coming years will we get a massive correction I have no idea but I do think we're just going to be on a roller coaster here as the dust starts to settle so Bitcoin up

down and all around but nothing new there for crypto but I would expect generally kind of the same for for markets I mean there's a lot of uh speculation as to what tariffs would look like you know we know that uh he's a shrewd negotiator and loves to throw out big numbers first and see where he lands but you have you know him saying to Canada and Mexico who are neighbors and partners casually at 25% tariff and then you know Trudeau coming back for as much as his voice is worth at this point you know we're going to go dollar for dooll uh with them on on tariff so impressive actually that markets just continue to rise sort of in the face of all of this uncertainty here but at the end of the day I think people are just expecting deregulation uh you know that Doge will step in and

cut some government waste I think most likely everyone believes that the M money printer will go bur and that generally we're just going to see a hell of a lot of liquidity coming in the market I mean we even have the debt ceiling as you said today you know I had it at 36.3 trillion on the debt clock but uh you know ballparking at 36 trillion being the debt ceiling expiring today we know that the treasury and yelling saying they're going to have to take Extraordinary Measures well that me usually means uh dumping a lot of liquidity into the system which historically has been really good for risk assets as well so I think there's a lot going on here it's really hard to parse what single thing is sending markets in any direction at a given time clearly though sentiment is very risk on let's let's chat about the the debt

ceiling uh since you brought it up for for our listeners who don't understand it can you just explain that quickly yeah it's just how much uh it's a meme as much as the uh as much as the Trump uh meme coin is a is a meme because every time we have this dramatic debt ceiling will they raise it what's going to happen they just raise it right there's never been a question keeps going up I think Trump has even said before being president this time just get rid of it like why do we even have a debt ceiling it's it's a joke you know I think it was introduced in like the N 1917 something like that it's basically the total legislative limit on the amount of national debt the US treasur Treasury can incur how much debt can we take on

to fund all the liabilities and programs that we have in the United States and we know that our budget just keeps getting bigger right and more importantly we're at a debt spiral because the debt service on the debt that keeps increasing is larger than any other single line item on our liabilities anyways right it used to be that the military was the biggest spending item at you know 800 850 billion well now just paying the interest on our debt is over a trillion dollars a year and that is only going to grow there's no way out of that except for to just continually print money and debase the currency and I think that's what people are expecting now listen it's great that Elon Musk is going to come in and they have the department of government efficiency and they're going to try to cut uh waste

where it is I don't I don't see how that's a political issue I think every American should rationally cheer for transparency from where their money is going from taxes and to see the you know sort of all the excess spending cut but it's going to be a drop of the bucket literally no matter what they do like I cheer for it but I don't expect it to cure the the debt crisis but the bottom line is the debt ceiling maybe there'll be some sort of negotiating or some sort of mainstream media panic but they always just lift the dep debt ceiling they always take on more debt there seemingly is always a buyer for that debt and the uh the scam keeps going I appreciate I appreciate your

your blunt perspective because it's very true like there is there is every time we hit this de and this time when we hit it what do we hit we hit this like a week ago didn't we like nobody's talking about this nobody I I had it at 36 trillion like just watching the dead clock like a month ago so you know we're we're 300 billion past that I remember when 300 billion was a lot of money yeah now it's it's nothing and and and as you said it's it's just it's the the cycle is clear here of it's going to lead to you know risk assets are going to increase inflation is going to increase and we're going to continue going down this path uh but it doesn't feel the concern isn't there Trump feels like he

wants to eliminate it Al together like there it's it's crazy it's totally crazy for you and I to sit here and talk about this so casually but I've always been surprised especially over the past few years with the recession that never happened and all of the sort of negative economic indicators that should have led to a downturn I had a guest Matt Hogan from bitwise uh my show and he made this quip that went viral he said governments have made recessions illegal right I mean it's basically like they'll just find some lever to pull to make sure that that doesn't happen that's artificial and we all know that you know if you don't uh burn out the brush in the forest the fire inevitably will be bigger down the road but that fire can be kicked uh pretty far down the road

Kick the Can down the road and listen Donald Trump I don't know what levers he can pull or what will happen but he makes no like leaves no lack of clarity as to how he judges the success of his presidency and that's on a booming stock market and even now he said you know Bitcoin at $150,000 in the first few months of my presidency that's his expectation that's how he's going to gauge his success so you can just know whether he can pull it off or not that that's going to be what he's trying to do and that only comes through further inflation money Printing and uh raising that dead seal okay so let me just squash one thing here though his meme coin is not some master plan to raise

capital in order to pay off the debt some people speculating about that which that's not called speculating that's called coping it's a different phenomenon it's it's people who don't want to believe that they're watching the griti grifter do the biggest grift in history which is exactly what it is listen I got a lot of lot of a flak for calling it a grift if you want me to tone down the rhetoric I'll say grat ous cash grab right it's a gratuitous crh grab to enrich himself and his family and insiders you can decide whether you are comfortable with that or not that's up to you I would say it's a net negative sort of for Humanity but a huge net positive for the crypto space because as I said it's showing you what

you will and won't be allowed to do in the next four years and if he can you know thread the needle on launching two meme coins between SEC chairman the day before he would be violating the Constitution by abusing the office to enrich himself that's in the ement Clause of the Constitution this guy is uh going to take the governor off on all things crypto related listen the positive view is that he's doing it because he wants to deregulate and believes in the technology and thinks that people should be able to build and that entrepreneurship should come back to the United States and even the most cynical view is bullish and that cynical view is he just did it he's going to make sure it's not illegal he's going to make sure he pays as little taxes on the profits from doing it as possible he has

now nfts World Liberty financial and a mcoin and if you think about that that's like the entire range of web 3 right an nft was a collectible we're calling the meme point a collectible because we're ridiculous but the nfts were Collectibles and then they launched the world Liberty financial and to be fair they tried to do that in a regulatory compliant way in the United States which very few people do like it was only accredited investors it was launched as a security offering effectively and now you just have the complete like degenerate side which is this thing has no utility it's a joke which was why mem coins went so crazy in the first place it was sort of raging against the SEC machine saying it's not a security

because we're not telling anyone they're going to make money and it's never going to do anything and so he's really I won't even say him so his team maybe his sons have experienced the entire sort of breath of web 3 now and to be honest I think he has a team like he does for everything else he says go do whatever you want and send a tweet for my account if you feel like it right I don't think that it was a master plan but but the people were saying like that he's going to just donate all this money to like knock 50 billion off the debt ceiling first of all that's like a few days of spending it's drop in the bucket uh it's just it's not happening it's not happening he did this to enrich himself you know or or his team did this to enrich

themselves yeah it's it it feels feels obvious that that is the case I mean we're talking about Donald J Trump here you know not not he's been launching memes forever Trump steaks Trump water Trump shoes Trump whatever you know what I mean he's a master at you know at uh releasing things with his name on them and making money once again for Better or For Worse it's just that this is a turbocharged version of it you know in 20 crypto is a is really amazing for a lot of very legitimate use cases but it also enables I won't call him a bad actor but it enables just the same things on that you see in every other market right I mean this guy basically at the top which we know that fully diluted

valuation is nonsense he could never sell $50 billion dollars of this onto the market it will never actually be worth that but the very idea that on paper he had that much wealth was probably five to 10 times more than he collectively made on every other Venture in his entire life and he was able to do that with one tweet in 24 hours shows you the power of crypto and the danger of it I think at the same time and and as you said he has a team he knows exactly what he's doing maybe not him personally but his team knows what they're doing and they are they're capitalists that are incredible at being capitalists and at raising funds to put in their own Pockets so you know love it or hate it they they certainly know what

they're doing in order to increase their wealth and that's that's exactly what they're doing here no doubt about it uh how from if we zoom out and look at macro where we sit right now there's been there's been a lot of concern with bond yield rates uh there's definitely I mean there isn't really concerned about debt we've talked about the debt debt ceiling uh we have the fomc has their next meeting coming up next week you know what will they do with interest rates when you zoom out how do you feel liquidity is being slower than we all expected we thought liquidity would come early in 2025 doesn't look like it's going to come till later uh when you resume it what are your what are your

thoughts right now I think there's liquidity it's just misdirection I think they find different ways to do it so I think that like first of all we have an obsession with the FED uh but what Jerome pal and the FED do uh is very limited and much less impactful than it has been in other Cycles I think because of the debt and the policies of the treasury we're in a period of fiscal dominance and not monetary dominance so I think that's been something I've been talking about for a long time much smarter people than me have been talking about it for a long time but has been clearly exemplified and proven when you see that the FED started their cutting cycle and rates went up that's literally

the market just saying the fed's you you're wrong we don't care right you say don't fade the fed the the bond market has been aggressively fading the FED since the cutting cycle started right and so I just don't I know it's like a it's a data point and people deeply care and trade around it on the day but I don't think it's driving markets as much as as we we think it is certainly not what Jerome pal says or if they do 25 BBS or zero right I mean it's pretty clear that if stock markets were at an all-time high and unemployment was truly at a pretty much an all-time low that they didn't really need to cut rates rationally in fact that's the environment where you would generally raise rates right I'm assuming there's a level of PTSD from transitory inflation and way overshooting in the other

direction and the FED having a long history of over shooting in every direction that they want to get ahead of in right or whatever would would likely be coming and you also have this sort of environment where the economic data if you believe it and I'm not a tinfoil half conspiracy theorist they they revise the data when you're not looking last year every single time the data got significant the whole Market holds their breath for like job numbers and then it trades up and down and then quietly three weeks later or six weeks later it's like those job numbers were wrong and then quietly a year later the whole year was wrong 850,000 jobs or something they were off by at the end of the year which was what was bullish for markets in the first place right so I think

there's a skepticism about the data in general I think that people doubt the way even inflation and CPI and PPI are calculated what you feel in your heart on the street on a day day-to-day basis when you look at the prices of things does not align with the data or what they're telling you about the economy and so I think we have this situation where the data is so muddled and one day it's good news and one day it's bad news and we don't really know if bad news is bad news and good news is good news because you actually want bad economic data so that they'll cut and then you'll get more liquidity so bad news is actually good news right this is the kind of like the the thought process that I put together for it like imagine if Jerome Powell had to walk down the

street and just to every 10th American say you lose your job for the good of the uh stock market right because you got to we need like unemployment to Skyrocket so we can cut rates you know what I mean um and people are literally cheering for like job numbers to be bad more people to lose their jobs so that the FED can cut and stocks can go up so if just it's like we're in The Stranger Things upside down right and I think that people are just can I say bad words here sure I think people are just calling on the data and calling on the fed and right now it's Donald Trump and the fed's going to matter L you know and so don't really care what they decide to do at the next

meeting I think we obsessed over that for long enough we know that whatever they're doing is not working bottom line like I you know I I I think rationally people are like cool they're going to cut rates my mortgage should come down if I'm buying a house and mortgages are like the hots you know over s% just doesn't make much sense so what what are you watching if if we're in this fiscal regime versus a monetary regime if that's the perspective for macro what what matters to you as an investor dude I've given up trying to predict what's going to happen in six months or a year I like take the surfer mentality man you know you you ride the

wave that's given to you you know that that wave is going to end but you enjoy every second of that wave and you know there'll be future waves to ride when you uh paddle back out it's really how I have to view markets right now it's very clearly bullish and risk on and we all know that as investors and Traders the last thing you want to do is try to find the top you know like aggressively try to short the dead top of the market you could be right directionally but six months or a year early and it eventually crashes listen we will get a recession one day whether it's this year 2026 2028 I have no idea probably get a Great Depression you know one day because markets come in cycles and there's booms and busts but right now there's a lot of

optimism and I'm not going to short into that optimism right because listen you could short Bitcoin thinking that it's at a top and theoretically you're right but it comes at 125 instead of 106 and you're wrecked and poor right and so I'm going to ride it until there's some clear reason uh not to so my view right now is it's risk on like I'm gonna always have my eyes wide open looking for bigger signals um but uh I don't see them want the stock market to crash now it's going to get ugly at some point I mean we all know that yeah yeah and the timing it very difficult to predict that timing like you know could be you said 2026 27 28 could be 2030 could be 2032

like it really it supposed to be 2023 last I checked yeah did if you look at the and if you go back actually to just show how bad humans are at this even the the smartest ones I think it was in 23 like at the end of 23 we were supposed to have already had three or four rate Cuts if you were looking at the Bing markets and the dot plots and how analysts were viewing it and you know just never happened right we were supposed to be in a recession we were supposed to be cutting they probably shouldn't even be cutting already right and they might be realizing that now so maybe we get a pause and then that Spooks markets and you know we get a correction but like what happened to like simple normal 10 to 15% stock Corrections should still happen yeah R yeah and and

I think there's and that's a very likely scenario is that they pause we get a correction next week that seems that seems like the most likely I me that's what the Market's bet on and by the way like the for the Trump presidency if you're taking the most cynical view again like they rationally know you can't just go straight up for four years better to correct at the beginning and have it completely forgotten by the second or third year than to crash in the fourth year well especially when you know Trump's got the midterms circled on his calendar for 2026 and that is he is not losing that so he that timing matters way more to him than the timing right now and whatever part's in power power almost always loses that and loses one you know loses total control like they lose either the house or the senate

or or some aspect of it because it's really really hard to govern when you're fully in power we've seen that over and over again really easy for either party to scream from the sidelines what the other ones are doing wrong and then the minute they get in there it's like dysfunction and you know 70 votes on the uh on the speaker of the house or whatever it was 63 whatever it was just very very hard to govern even when you have a majority because then people start to get greedy and so I agree with you I think that uh things are going to have to be good right before midterms for them to win and things are going to have to be very good at the end of the cycle so right now would be logically a good time if we were going to get a 10% correction I'm

not saying we will but make a lot of sense because it'll be long forgotten by the time it matters even just the correction that we got to start the year was pretty small that was a correction for ants like I really thought I thought for sure Bitcoin would drop 25 30% and we only got down I think like 18% was like the and that was like a candle that we hit 89,000 for like a minute like yeah I mean we just haven't had like that was that was while I was recording my Monday show eight days ago and like it was funny I had people going Scott's really distracted today it's my macro Monday show with Mike mclone Dave Weisberg James lavish they were commenting like what's doing and I like at the end I was like I was buying Bitcoin

9,500 and buying Sal and buying Sal at 175 and sorry guys like this is my chance you know um that was an irrational dip to me like I knew I kind of had a very good gauge of what was coming and I aggressively bought like very publicly while live because me those are just here's my question do we do we still have that that correction coming then like in the next I I and I know you don't have a crystal ball and it's a question to answer but like let's break down the facts here Trump in office brings volatility right certainly upwards momentum but definitely volatility uh we don't we we most likely will see an a standstill

from the FED on the rate next week we don't really have any we don't have a lot of short-term catalysts not from the macro side right we have the debt crisis so it feels like but then at the same time also q1 historically is one of the best quarters for Bitcoin especially in a bull market so I don't know I mean I I I can't decide which all systems go I mean listen we just got as you said an 18% correction but this summer we did go down 34 35% right I think we topped at like 74 and then you know dropped to just below 50 that was like a healthy Bitcoin bull market correction you used to get five six seven eight of those in one bull market at this point we've seen

that in both CS we've had some dampen volatility and I think that's because of the institutional involvement and the ETF so I think like on the way up and down so maybe that caps the upside as well by the way rationally but um you know up and down what used to be 40 45 50% now becomes 30 25 20 18% right so I think we just had the dip um you know we went from 108 to effectively 895 right it's a pretty good high beta to what was happening in other Market dip uh which is why I bought it you know like I kind of just looked at the chart I saw it happening it's a good day um but yeah I think that uh we should be

heading up I mean AI view Bitcoin largely except for in certain moments when everything correlates naturally black spawn events or downturns people sell what they have to not what they want to and Bitcoin you can sell at midnight on a Saturday when you can't sell anything else so Bitcoin always kind of suffers worse on those downturns but we have nothing but Tailwinds for this industry that we've never seen in the past and listen it scares me to be so bullish it feels like I should be my own counter indicator but like and there's Market you know there's whales who know that are going to take advantage of it but like we're we're finally getting a crypto-friendly Administration we even have talk of a strategic Bitcoin Reserve which if that happened by the way even in very small

amount even if they didn't buy and just held that forces the game theory of every Central Bank in the world because the United States did it to add Bitcoin to their balance sheet that's Bitcoin 500,000 in a matter of months right just by sheer Supply demand Dynamics right I mean you have a pro Bitcoin SEC chair Pro Bitcoin cftc chair Pro Bitcoin or at the treasury who literally had to divest his Bitcoin position to become the Secretary of the Treasury even in the non-bitcoin related positions you have RFK at Health and Human Services potentially Elon Musk V Gramma Swami I mean all these guys are literally bitcoiners and the election was effectively won by the crypto industry and technologists and billionaires in general mostly named Brian Armstrong

quietly behind the scenes right so it's all systems go from that perspective we're already seeing Rumble buying Bitcoin and you know metap planet in Japan following the micro strategy Playbook mainstream like view of uh micro strategy and what they're doing and seeing it uh for now be exceptionally bullish we know Fidelity saying five more nation states at least will adopt Bitcoin this year so listen you got corporates you got Nations you're going to have uh Sovereign wealth and endowments and pensions all these people coming in through the ETFs and the new regulatory environment like I just maybe I just don't see it maybe I'm

blinded I don't think so but like that's a hell of a lot of buying pressure not saying those people can't sell I'm not saying we can't get corrections but most of these people still can't even buy yeah yeah yeah we' we've talked about that at length on the show so let me ask you this uh the the question I think is on a lot of people's mind is typically at this point in a bull run is when we would move from Bitcoin dominating we would move into altcoin season right there's this question is on everybody's mind it's like is it different this time oh buy ethereum right now okay no Financial advice not Financial advice every counter indicator I want for an asset exists right now for

ethereum and okay and if this cycle is like the last ones which it doesn't have to be you see Bitcoin then ethereum then everything else right and so I think ethereum and the ethereum ecosystem are beaten down there's fun about vitalic there's fun about the governance and what happens with the ethereum foundation price has hit a just incredible zone of demand I've literally been watching for 2021 on the ethereum Bitcoin pair which I've had marked for now three years to buy if it ever came back to there and people are saying salana take eating ethereum's lunch but listen last time I checked all the tvl in defi is on ethereum

everything else is a droing the bucket they're exciting they're dropping the bucket and black rock you saw what happened when Black Rock adopted a Bitcoin spot ETF and got that approved well in the same breath sary Fink has been talking about tokenizing everything and black rock is tokenizing their funds on ethereum right so I think it's just like the Beaten Down redheaded step cousin middle child that is just going to absolutely boom but no I do not think things are different the timing will be difficult as it always is it's very hard to beat Bitcoin very hard because you can only go into altcoins at that perfect moment right before Bitcoin rages again and steals everything you just made at least if you're trading you know with Bitcoin as sort of your standard a lot of people now because of

stable coins they say I'm up in dollars but they don't realize if they had just stayed in Bitcoin they'd be up in more dollars you know with time but yeah I think we're going to see a massive massive altcoin cycle there are things that concern me a ton of Supply coming on the market unlocks too many tokens memes capturing sort of the Zeitgeist which is certainly sucking liquidity we've had this sort of Bitcoin and memes barbell with not much else performing in between I think that's going to change I think that uh I think that these uh Wall Street Guys these hedge funds bigger degens than any of us when you really get down to it and they're going to follow the same path they're going to see Bitcoin steady out they're say what there's other things and they're gonna

go like dude if xrp and harar and algarin can pull five6 X's after being you know dead dinosaurs for so long coins come on man it's gonna go it's gonna go nuts well Mike drop I'm going to end it there because uh that's a great spot to end it Mike Mike Scott it's been an absolute pleasure thanks say Mike drop Scott Mike Road the milker show uh appreciate you joining us today Scott thanks so much for your time everybody listening in appreciate you uh Scott mentioned Matt Hogan Matt Hogan's on the show later this week check back in on Friday he'll be on the show we also got James saart so we'll be talking about

ETFs which is a big part of this coming cycle I think getting his input on which ETFs might be approved next and which ones will fly uh Scott thanks for for your time today thank you man have a wicked awesome day everybody thanks for listening in as always if you liked today's episode please hit subscribe and make sure you follow us so you don't miss out on the next one there's also a link in the description to our free five minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your crypto investing game we're going to also leave a link for milk Road Pro you get access to our portfolio where you can see exactly what we are buying this is your number one resource to help

you invest successfully in crypto one final note this show is for educational purposes only and nothing we say is financial advice investing in crypto or any asset is risky and you should never invest more than you can afford to lose thanks so much for listening in my friends have a wicked awesome day