The Wolf Den #1154 - Trump Wants Lower Rates
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In This Issue:
Trump Wants Lower Rates
Bitcoin Thoughts And Analysis
Legacy Markets
Michael Saylor Has A Bold Plan For The U.S.
Is A Recession Coming?
Coinbase Is Launching Futures In The U.S.
Strategy Is Searching For Ways To Buy Bitcoin
BIG WINS for Bitcoin: Strategic Reserve & Crypto Summit: SO WHY IS IT CRASHING? | Macro Monday
Trump Wants Lower Rates
It has to get worse before it gets better.
I think this quote perfectly describes what's happening in the broader markets right now, and it's entirely the result of Donald Trump’s policies.
Trump likely knows that it would be nearly impossible to sustain a market rally over the next four years, given that he took office following two exceptional years – +24.23% in 2023 and +23.31% in 2024. Consider this: the S&P 500 has only recorded back-to-back gains of 20% or more five times in history.
An economic downturn provides ample material for crafting a new narrative. Trump would have relished the opportunity to inherit a beaten-down market, allowing him to control the discourse and position himself as the instant hero – not one at all-time highs, with the looming threat of a recession on the minds of every investor.
At some point soon, the market needed to cool off – not necessarily by entering a bear market or even posting a negative year, but simply by slowing down. And it didn’t matter whether it was Trump or Kamala at the helm; that’s just the nature of the beast.
Trump likely saw an opportunity – not to squeeze out a small margin of gains, but to shape his policy and create just enough chaos to bring down the markets to where he wants them, setting the stage for the ‘worse’ before the ‘better.’ Sure, none of this was obvious at the time of Trump’s election, but in hindsight, the playbook seems fairly clear.
And this is the only time that Trump can stomach a market downturn - when he has the mandate to lead, control of the entire government, and no reelection concerns hanging over his head. A downturn during midterms would be a disaster for his party.
This leads to the question everyone is asking: Is Trump trying to crash the market? It’s a tricky question because Trump wants to measure his presidency’s success by the market’s performance. If he could deliver four years of an incredible bull market, he would. But he knows that he has to take a step back before taking two forward. So, the answer is ‘kind of yes,’ but there’s a thought process behind it (hopefully).
Before taking office, Trump had been calling for lower interest rates. He reiterated this stance over the weekend, stating, “I’ve been saying, let’s get interest rates down. Nobody ever gets rich when the interest rates are high because people can't borrow money.” Last month, he added, “Interest rates should be lowered, something that would go hand in hand with upcoming tariffs!!! Let's rock and roll, America!!!”
This is my best take on Trump’s thought process – read it slowly.
The U.S. faces a growing debt problem that needs to be addressed, which is part of why Trump created DOGE – the Department of Government Efficiency. Instead of refinancing the debt at high interest rates – especially with the 10-year bond nearing 5% earlier this year – Trump knows he must drive down yields to lower interest rates, making it cheaper to service the debt, a goal that typically requires an economic slowdown.
Investors, sensing uncertainty in the markets – ranging from tariffs to the risk of a recession – are increasingly buying bonds, which in turn lowers yields. This behavior puts pressure on the Fed to lower interest rates. Trump argues that lower interest rates will make people richer and help tackle the initial debt problem. However, while the cost of servicing the debt becomes cheaper, this strategy ultimately just postpones the biggest problem of them all: fiat debasement.
First, read the two paragraphs above again. They’re complex, and even then, it's still a vast oversimplification of a much more intricate process. People often say Bitcoin and blockchain are confusing – that’s because they’ve never tried understanding how dollars, inflation, and debt are managed. Bitcoin’s algorithm is fixed and not influenced by the competing interests of the Fed, Treasury, and the presidency.
Second, you have to understand that Trump is stubborn. When describing his plan with tariffs, he said the following about his decisions, “nothing to do with the market. I’m not even looking at the market, because long term the United States will be very strong with what is happening here… This is very much about companies and countries that have ripped off this country, our country, our beloved United States. And they’re not going to be ripping us off anymore. So, you know, I think that has an impact on the market.”
Trump is looking at the market and calculating his decisions based on their impacts. Behind closed doors, he’s satisfied to see markets coming down because he knows it will back Powell into a corner. What Trump really means (about not looking at the market) is that he doesn’t care about asset prices being down in terms of their value. What he does care about is that they’re down because it serves a larger plan – lowering interest rates.
Third, both Trump and Bessent have been aligned on their goal to lower interest rates for some time now, but Powell has made it clear that he won’t budge until the data tells him otherwise.
“As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry and are well positioned to wait for greater clarity.”
Powell is more concerned with the bigger picture – inflation. “What really does matter is what is happening with long-term inflation expectations.”
The graph below shows the odds of various cuts in 2025. It will be interesting to see how bettors price all of this in. The key lines to watch are the blue and purple lines as they increase (if they do)
CME FedWatch shows little chance of a rate cut before May, and even then, the likelihood is only 44.7%.
We've seen some progress with the U.S. 10-year Treasury yield coming down. It's a step in the right direction for Trump.
One way or another, Trump will get what he wants. If he has to twist Powell’s arm until it snaps, he will. Trump knows that for there to be a Trump-sized boom in the markets, he’ll have to dictate the path ahead his way, which will require one step back before two can be taken forward.
Trump squaring off against Powell is a game of chicken, and these are the kinds of games where Trump thrives. Investors likely got ahead of themselves, aggressively bidding up markets immediately after Trump was elected, assuming he would be good for them – forgetting that this is a four-year game. This probably explains why World Liberty Financial is down so much on its crypto portfolio. Trump will be good for markets, just on his own terms.
They’re ripping the bandaid off, which is painful.
As for crypto, the road ahead in the short term is uncertain. Crypto will remain at the mercy of equities and larger forces as long as there is perceived weakness and concern in the market. At some point, I expect crypto to wake up before equities, acting as a leading indicator for markets returning, but until then, all we can do is wait.
It’s no secret that Trump will measure his success by market gains. We got a glimpse of this when he first took office, wasting no time in an early speech:
“Since the election, the stock market has surged, small business optimism has soared a record 41 points to a 39-year high, and Bitcoin has shattered one record high after another.”
This rhetoric will eventually return, in much greater force.
Trump will get his way with interest rates. The process will shake out a lot of weak hands, but that’s exactly the recipe larger players need to re-enter with force. In the meantime, cash holders have been handed a golden opportunity if they’re willing to seize it. I’m buying what I can the whole way down because I have no idea when the music will stop and markets will resume their upward march. On this dip, Bitcoin is my asset of choice – a return to $100,000 is inevitable and easily achievable. It’s a 28% increase from $78,000. Not bad.
The longer this current state persists, the more likely it seems we’ll see a V-shaped bottom: sharp, painful, and quick. It might drop just deep enough to get Powell talking fast and acting even quicker. Time will tell – I'm holding and buying.
Is this all “good?” That is up to you to decide. I believe in Bitcoin because I think that these games of economic chicken are damaging to the average person. This is all a path to more money printing and monetary debasement. That’s why we Bitcoin.
Last point, I promise: While all of this is going on, Trump is continuing to make all the right decisions for crypto to come back stronger.
Despite all of the drama, it’s really hard not to be very bullish long-term. It has to get worse before it gets better.
Bitcoin Thoughts And Analysis
Bitcoin’s daily chart is showing a strong recovery from the recent low around $76,500. I have had standing bids at $77,000 for weeks, which finally filled.
The chart is now presenting an unconfirmed bullish divergence — price made a lower low while the RSI held a higher low and is now turning up from oversold territory. This is a classic reversal signal, indicating that downward momentum is weakening and buyers are stepping back in. We need to see price close with this clear elbow up on RSI. This also exists on the 12-hour, with smaller divergences on lower time frames.
Additionally, today’s candle is forming a bullish engulfing candle, which fully engulfs the previous day’s bearish candle. This signals a potential shift in momentum toward the upside.
The 200-day MA (red line) was lost and is currently acting as resistance. A reclaim of this level would further strengthen the bullish case. Immediate resistance lies around $85,000 and $91,000 — a close above those levels would suggest that the recent downtrend is reversing.
For now, the key levels to watch are a clean breakout above the 200 MA and continuation of the bullish divergence signal on RSI. If RSI remains elevated and price starts making higher highs, the bulls could regain full control.
Legacy Markets
US stock futures rose as investors awaited President Donald Trump’s meeting with business executives for potential signals on trade and economic policy. Nasdaq 100 futures gained 0.4% after Monday’s steep 4% decline, the worst since 2022, while S&P 500 contracts rose 0.3%. Tech stocks recovered slightly, with Tesla up 2.4% in premarket trading. Bitcoin also rebounded after a five-day losing streak.
Trump’s meeting with the Business Roundtable, which includes top Wall Street CEOs, comes amid rising concerns over the impact of tariffs and broader economic uncertainty. Investors are hoping for clues about potential shifts in trade policy or government support for equity markets. Aneeka Gupta of Wisdom Tree noted that the market’s initial optimism about Trump’s return to the White House is fading as investors focus more on potential economic downsides.
Treasuries steadied, with 10-year yields rising three basis points ahead of the latest US labor market data. The January JOLTS report is expected to show some cooling in job openings while total employment remains steady. Corporate earnings also reflected signs of weakness, with Delta Air Lines and American Airlines both cutting profit forecasts, leading to premarket losses.
European markets underperformed, with the Stoxx 600 index down 0.6%, but have held up better than US stocks year-to-date, supported by Germany’s increased defense spending. Citigroup downgraded its view on US stocks to neutral from overweight, citing weaker near-term economic performance relative to Europe and China. The euro rose 0.7% as German lawmakers moved closer to a spending agreement, while the dollar fell 0.3% against G-10 currencies. Gold held above $2,900 an ounce.
Key events this week:
US job openings, Tuesday
Canada rate decision, Wednesday
US CPI, Wednesday
Eurozone industrial production, Thursday
US PPI, initial jobless claims, Thursday
US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.3% as of 8:21 a.m. New York time
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average rose 0.2%
The Stoxx Europe 600 fell 0.6%
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.7% to $1.0907
The British pound rose 0.4% to $1.2930
The Japanese yen fell 0.2% to 147.54 per dollar
Cryptocurrencies
Bitcoin rose 3% to $81,625.51
Ether rose 1.9% to $1,903.89
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.24%
Germany’s 10-year yield advanced five basis points to 2.88%
Britain’s 10-year yield advanced two basis points to 4.66%
Commodities
West Texas Intermediate crude rose 1.2% to $66.80 a barrel
Spot gold rose 0.8% to $2,911.16 an ounce
Michael Saylor Has A Bold Plan For The U.S.
Saylor presented a document to Donald Trump, government executives, and global crypto leaders at the White House Crypto Summit on March 7, arguing for the U.S. to acquire a massive amount of Bitcoin. I, along with most people, believe the U.S. will never come close to acquiring 25% of the supply. However, starting high in negotiations makes settling for a lower amount a smart strategy.
It would be a massive success if the U.S. officially held just 1% of the supply in a reserve it designated not to sell. It will be interesting to learn exactly how many Bitcoins the government holds over the coming weeks and months.
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The Strategic Bitcoin Reserve (SBR) has the potential to generate $16-81 trillion in wealth for the U.S. Treasury by 2045, offering a viable pathway to offset the national debt.
Never Sell Your Bitcoin! By 2045, the reserve should be generating $10+ trillion annually, continuously growing, and serving as a perpetual source of prosperity for the American people for generations to come.”
Is A Recession Coming?
This topic goes hand-in-hand with the intro, but I carried it down here since it’s a single thread by The Kobeissi Letter. In the thread, it’s argued that a recession would guarantee Trump gets his way with cuts. According to the thread:
“US consumers believe inflation will rise to +6.0% over the next 12 months, the highest since May 2023. This marks the 3rd consecutive monthly increase in expectations. Inflation is RISING, rate cuts were DELAYED, but rates are FALLING. Markets are pricing in a recession.”
One point The Kobeissi Letter stresses that I didn’t dig deeply into above is the cost to service the debt:
“The maturity schedule for the $9.2 trillion of US debt is heavily weighted to the front half of 2025. Between January and June 2025, 70% of it will need to be refinanced. The average rate on this debt is set to jump by ~1 percentage point.”
It will be an easy talking point for Trump if he can brag about how cheaply he financed the debt.
Coinbase Is Launching Futures In The U.S.
U.S. futures markets have fixed trading hours, leaving traders sidelined during key market moves. With the launch of 24/7 Bitcoin and Ethereum futures, this gap is being eliminated. U.S. traders can now trade anytime, access various contract sizes, and benefit from institutional-grade infrastructure, with CFTC-regulated clearing and seamless market access through a partnership with Nodal Clear and Coinbase Financial Markets.
“Derivatives are a cornerstone of global crypto markets, accounting for over 75% of all total trading volume. Yet, much of this activity has taken place internationally, where markets operate 24/7 and offer futures contracts that aren’t confined to traditional expiries. US traders have navigated fixed market hours and expiring contracts, which can create inefficiencies — particularly for those managing crypto exposure.”
Strategy Is Searching For Ways To Buy Bitcoin
Strategy announced it has a sales agreement to issue and sell up to $21 billion worth of a special type of preferred stock called 8.00% series A perpetual strike preferred stock. These shares pay an 8% dividend and can be converted into Strategy’s Class A common stock. It’s complicated, but in essence, it’s one of Strategy’s genius ways to raise money to buy Bitcoin. “Strategy intends to use the net proceeds from the ATM Program for general corporate purposes, including the acquisition of bitcoin and for working capital.”
BIG WINS for Bitcoin: Strategic Reserve & Crypto Summit: SO WHY IS IT CRASHING? | Macro Monday
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.