Trump, Bitcoin Rocket, & the Fed | This Changes EVERYTHING.

Bitcoin's breaking out now over $117,000

as Trump issues more tariffs or revised

now higher tariffs on Canada. At the

same time, there's a lot of new talk

about the Federal Reserve potentially

being so incompetent because they're now

losing money. How do we unpackage all of

this and make sense of all of it? Well,

that's what I'm here for. So, make sure

you get some free stuff by going to met

kevvin.com/weble

and sign up for the same brokerage app

that I use when I show you those

beautiful lines on Weeble. Uh, and take

a look at that nice breakout that we

just had on Bitcoin right here, right

off 102. Been on this downtrend

consolidation. Nice breakout here. Why?

Well, we're going to talk about that in

just a moment. So, first let's talk

about the Fed and then we'll hit Bitcoin

because it'll make sense in a logical

flow. uh Donald Trump's VAT, so big

heritage foundation project 2025

individual is now coming out limb basing

the Federal Reserve for quote unquote

losing money. And a lot of people are

worried that this is Donald Trump

basically setting up to undermine the

credibility of Jerome Powell by any

means necessary. First by calling him

Mr. too late. Then by saying he's

incompetent or a really bad Fed chair,

and now by having other sort of people

from the White House come out and say,

"Hey, the Fed's also now sucking at

their job." Now, why would the Federal

Reserve lose money? Well, little bit of

history on how this works is this is the

Federal Reserve's balance sheet, and

it's basically the total sum of all of

the bonds that they hold, which pay the

Federal Reserve a yield. The problem is

the Federal Reserve's balance sheet

exploded

during COVID when interest rates were

really low. That means they bought a

bunch of bonds that yield very little

money, maybe 1 to 2.5%.

Which is relatively low, especially

since today the Federal Reserve is

paying banks

somewhere around 4.5% on the overnight

rate. So this means the Federal Reserve

is now paying out a lot of interest on

the short-term bank deposits that they

hold. Whereas

in COVID, they were paying out zero. So

even though they were earning very

little on their long-term bonds, 1 and a

half to 2.5%, they were paying out zero

because rates were dropped to zero. And

so the Federal Reserve was collecting

billions of dollars annually in revenue.

Now the opposite is happening. And it

started in 20 well frankly 2023 when

rates started rising uh and it continued

in 2024 and now the Federal Reserve is

trying to sell off these Treasury bonds

as evidenced by their balance sheet

shrinking. They've done a great job

already. They've already shrunk the

balance sheet uh to $6.6 trillion from

the previous 8.9 which is about one

quarter of their balance sheet has been

run off. but they're still paying higher

yields than they're actually earning.

This means the Federal Reserve is

technically operating at a deficit. Now,

that doesn't necessarily matter to the

function of the Fed because the Federal

Reserve is not a for-profit institution.

So, when they make money, they give all

the extra money to the US Treasury. When

they lose money, the Treasury pays them.

However, it's perfectly politically an

opportunity for Donald Trump right now

to seize on and say, "Look how crappy

the Federal Reserve is. They're losing

billions of dollars." They're doing that

in pursuit of their congressional dual

mandate of maximum employment and stable

prices, right? Stable inflation.

Now the problem is

you've also now got Kevin Hasset coming

out saying hey you know we're going to

look into a reasonable size for the

Federal Reserve which is fascinating

because just in the last Fed presser we

had Jerome Powell say yeah you know

we're going to start hiring fewer people

and you know letting natural attrition

shrink the size of the Federal Reserve

which is coming at the same time as now

Kevin Hasset is saying we're going to

look into the size of the Federal

Reserve and maybe reducing it. Kevin

Waller, who's basically applying to be

the next Fed chairperson, he says he

thinks he could see the uh Fed balance,

this balance right here, drop another

almost trillion dollars down to about

$5.8 trillion of Fed balance sheet. That

would put the Fed somewhere right around

here where my mouse is, which would be

leveling off higher than where we were

before COVID, but obviously down

substantially. That would be a time when

you might actually start seeing easing

from the Federal Reserve again where

they start contributing to money

printing because right now they're just

doing the money vacuum. They're taking

money out of the economy. That could be

why we're seeing some weakness in jobs.

Who knows? It's hard to say. Markets are

at all-time highs and Bitcoin is

exploding again. Why? Well, coming up.

So, Donald Trump also this morning said

he wants interest rates to be three

points lower. So a full 3 percentage

points lower, which would mean instead

of 4 and a.5% it would be 1 and a.5%.

Which is fantastic

for people who want rates to be lower,

real estate owner, stock investors or

whatever. The question is why would

rates go down that low? Well, according

to the Fed, only if there were a large

amount of stress in the economy,

according to Donald Trump, because well,

probably it would push asset prices up,

right? So, you've got these sort of like

dueling priorities here, but it gives

you a little bit of color on why you

have these dueling priorities. At the

same time, Donald Trump is bragging

about how his tariffs aren't having much

of an impact, which if you remember when

his tariffs and his liberation day

tariff announcements were causing the

stock market to sell off by 20 to 25%.

Donald Trump bluntly told everybody that

this is Biden's stock market. Now,

yesterday on Truth Social, Donald Trump

is bragging about how his stock market

is doing so well in spite of tariffs.

The downside of this is it does create

more of this cavalier attitude from

Trump to issue more tariffs. And I think

that's why we're seeing some of these

aggressive letters going out to

countries that are basically bringing us

back to Liberation Day tariffs. And

there's now talk that Donald Trump sees

a new floor not of 10% tariffs, but of

20% tariffs. I partly think that's

because the market is doing so well that

Donald Trump is getting more cavalier

because he can be. You know, if the

market were panicking, he'd be getting a

lot more phone calls, pissed off and and

he'd probably U-turn more. But now he's

actually getting more aggressive because

the market is doing quite well. A 20%

floor eventually causes problems when

TBD. But what is softening uh these

tariff impacts and how does this relate

to Bitcoin? Well, what's softening the

impact of these tariffs? And I'll keep

this short because it could get

complicated, but has to do with foreign

exchange rates.

All year the dollar has lost about 13%

of its value, which is interesting

because that is slightly more than the

10% tariff rate that we're implying.

Now, this is something interesting

because if you say, "Hey, I'm gonna buy

something uh or the United States is

going to buy something from a certain

country at a 10% tariff for $1,000."

Then we're spending $1,000 to go buy

something from that country. If we pay a

10% tariff, we have to pay $100 in

tariffs. But the dollar just lost like

13% of its purchasing power. So all of a

sudden you get a little bit of this

offset to where it's almost like that

money is worth less and it's absorbing

the impact of that tariff already for

other countries because other countries

are appreciating relative to our dollar.

So it's really not the other country

that is paying for these tariffs. it's

us in either the form of corporate

margins, which is a little bit more

blurry to to pinpoint, but more likely

in the loss of the dollar's purchasing

power. You know, now if the if we want

to go buy something for $1,000, but our

dollar becomes weaker by 13%. It

basically cost us 13% more immediately

in the currency markets to go buy you

know now more expensive euro or you know

yuan denominated money right

okay so what is a tool that hedges or

protects against currency depreciation

not talking about like a riskoff hedge

and I'm not talking about inflation

hedge although you could incorporate

inflation in this depends on if you're

referring to inflation as the value like

the supply of money or prices like

people have different definitions for

inflation. So we just put that aside for

a moment because again it could be oh

the price of milk is going up. Oh that's

inflation. Oh the supply of money is

going up. Oh that's inflation. Right?

People have different definitions. So

just ignore that for a moment and just

look that the dollar losing purchasing

power which is yet another form of

inflation. The dollar losing purchasing

power can be hedged how? By just moving

to a different currency. And a lot of

corporations are now moving their dollar

assets to Bitcoin. And in my opinion,

that's why we're seeing a lot of this

breakout here recently since sort of

this this liberation day. Oh, okay.

We're going to stay with high tariffs.

Yes, stock markets have moved up nicely.

We've been in a little bit of a

consolidation here since May. But one of

the reasons why I think you could see

corporates jumping in and buying Bitcoin

is because while risk assets are uh

frankly pricing in no impacts to

tariffs, the dollar is deteriorating

which makes Bitcoin look even better

because risk on is the environment that

we're in and US dollar depreciation gets

hedged by Bitcoin as well. So you got

this sort of like double impact of why

Bitcoin is doing well. So in other

words, cheat sheet. The more Trump is

aggressive on tariffs, the more Bitcoin

probably does well until

a recessionary environment. Because if

you end up moving into a recessionary

environment because you have a sudden

spike in layoffs or joblessness or, you

know, a collapse in corporate earnings

or whatever, then Bitcoin tra tends to

trade like a risk asset. But not only

does Bitcoin tend to trade like a risk

asset where it goes down when the stock

market goes down, but it also is worth

mentioning that the dollar usually

strengthens in a recession. Because if

the US goes into recession, the entire

world will probably be in a recession.

And then the dollar will look like the

best and strongest asset of all the

other crap all around the world because

frankly people want to buy US treasuries

in recession as a safety asset, which

means they have to buy dollars to buy

the treasuries. So simple bottom line to

all this. The more cavalier Trump is,

the more aggressive he gets on tariffs,

the more he lights the fuse of a ticking

time bomb of damage from tariffs, which

so far has just been delay, delay,

delay, delay, and eventually causes

problems. But in the short term, it's

fantastic for Bitcoin because you've get

this dual risk asset ups, Bitcoin up.

Currency depreciation because of more

tariffs, Bitcoin up. you get this sort

of double-edged pump towards Bitcoin

along with this more corporate adoption

of Bitcoin. It's very interesting. So,

when you consider foreign exchange,

what's going on with the Fed, what's

going on with Trump, it kind of all ties

together obviously until we get to a

riskoff environment, which would likely

be driven by some kind of actual

fundamental deterioration in our

economy, which we're just not seeing

right now. Now, some of that could

stress you out, but you could always

balance that out by getting life

insurance by going to medkaven.comlife.

That's mekevin.comlife.

Uh, because now you've met me. And, uh,

you can get the same life insurance Lord

and I have. And you can apply in as

little as 5 minutes. And you can Apple

Pay or Android Pay for it, which we do.

Uh, so now, what else did we hear? Well,

we heard from Waller. We heard from

Ghouls as well this morning or actually

last night. Goulsby last night told us

that tariffs are having a limited impact

right now. Not a surprise because of the

amount of delays that we've seen. Now

Goulsby is also somebody who might be

trying to get a Fed job. I don't know if

he's going to be able to pull it off. Uh

Waller, we heard we talked about Hasset,

we talked about VA, we talked about

firing Powell. on firing Powell. Donald

Trump did this morning reiterate that he

does not intend to fire Powell, but I do

expect that he's going to try to

minimize the impact of the Federal

Reserve uh and what it what it can do

for markets. Uh and then Donald Trump

also mentions that he plans to make a

big announcement on Russia on Monday. A

major statement coming on Monday. It's

unclear and Donald Trump even teased

this morning that you'll see big things

happen soon. Unclear what this means. So

far, oil markets have just been flooded

with more oil. So, I don't know that

we're really in a place where we're

worried about oil prices spiking to the

point where they're really going to

affect the economy. I think they'd

really have to go up to about $100 to

see a a major effect from oil. Uh so

far, we're still under $70. So, I'm

really less concerned about oil markets.

And when we look at the 102 yield curve,

we uh we see we're just at a casual at

the start of kind of the shock territory

of 50. But we've been here frankly since

we got liberated and have not

experienced shock. So, so far so good.

Knock on wood. That's kind of like the

MO for markets right now. Uh, which if

we take a quick peek at the Q's, the Q's

almost went positive, which this morning

in the uh in the alpha report, I

mentioned the most bullish thing that

could happen today would be we fall and

bounce off of 552. And we talked about

this in the course member live stream as

well this morning. If we bounce off 552,

557 is in play. So far, it looks like

we're trending straight in that

direction. Hopefully, that keeps going

because it's bullish for overall

markets. And the more money everybody

has, the better. Remember, this is

Weeble. You can sign up for this

platform at kevin.com/webble. But my big

goal is the more money you get to go

make in markets means before we close

our fund raise, the more money you have

potentially to diversify into my real

estate startup, House App, where we've

got a big AI announcement coming within

about the next week, which will be

really cool. And uh we'll set up some

time frames for closing our fund raise.

But learn more over at househack.com.

You earn 5% yield paid monthly on an

annual basis obviously uh and you get

all the upside in the stock and downside

protection. So that gives us a little

bit of a an outline in terms of how

Trump coordinates with the Fed, why

there's so much aggression against the

Fed and how it affects Bitcoin prices

and asset prices and stocks. again that

what you really have to pay attention to

to see okay but like what are the odds

of a recession then because people keep

bringing that up. The odds of a

recession

are really hard to tell because it's all

predicated on the job market but the job

market can change very very quickly and

it's a massive lagging indicator. So, it

does you very very little good to

speculate on whether you'll have a

recession or not because you're waiting

for indicators that will tell you you're

in a recession already when it's too

late. So, Bloomberg actually did a

little piece on this. They say the

near-term US recession risk is low, but

there are pockets of weakness that could

mutate into a downturn later this year.

The weaker dollar, though, will be key

as to whether the US avoids that fate

and stocks avoid a significant decline.

for now. It's gone quiet on the

recession front. Not long ago, everybody

basically everybody was talking about

recession. They they show a little chart

of mentions of like how many people are

talking about recession versus not. And

basically nobody's talking about

recession right now. The clamor has died

down, but that doesn't mean there

couldn't be problems by the end of the

year. We're under recession activation

thresholds,

but we're starting to see some data

points that have given us false

positives in the past. So it's really

hard to say like what to believe right

now. Uh they also say that we might see

other signs of coming weakness. One

point to focus on might be whether the

rise in war notices which is uh the

advanced layoff notices uh is is an

indicator of weakness to come in the

labor market. Some people like to use

warn notices but those could also be

very volatile. So, it's just it's hard

to be a bear because for you to be a

bear, you have to rely on what may never

happen, right? We may never get a surge

in layoffs. Again, if we get a surge in

layoffs, we're screwed because the

beverage curve will normalize, which in

English just means the unemployment rate

is going to skyrocket to like 10%. The

federal cut to zero. But remember,

cutting rates does not mean good. It's

this that is good. The money printer.

Okay, you got to print. You need the Fed

going, "We're buying everything, baby.

Nothing's gonna fail. Everything is too

big to fail." That's when you get real

confirmation, right? Not rate cuts. But

anyway, so that's the problem with being

a bear is you're basically betting on

something that you have no visibility

into. We could see trends weakening in

the labor market, but you have no

guarantee that you're going to be right.

None of the As I say that, that's funny.

The very next line here, and I didn't

pre-eread this, but the very next line

is none of these guarantee a recession.

Exactly. Uh let's see. The drop in the

US currency could also translate to a

boost for US earnings, right? Because I

mean, basically, you're offsetting the

impact of tariffs here. It makes it more

desirable for people to buy American

goods, which is another thing that Trump

wants, right? Trump wants I mean

secretly Trump wants a weaker dollar

because it incentivizes people to buy

American which is what he wants in the

first place. It becomes cheaper for the

Saudis to go build a factory in America

when the dollar drops.

Uh

the more there are effects from the

pipeline blah blah blah through the rest

of the year might be enough to forstall

a recession for now. Okay, they didn't

really tell us everything but that's the

point. like they're basically saying the

same thing that it's way too early to

say because the only thing that really

tells us if we're in a recession or not

at this point is the labor market. But

that is something we recognize in

hindsight. So for now, make as much

money as you can. And I always say if

you're nervous,

uh mostly if you're in margin, okay, so

if you're in margin in my opinion and

you're nervous, the way to play it is

let's say you're investing in the Q's or

whatever it might be, right? And we're

at alltime highs. you know, you set a

trailing stop loss of $14 on the QQQ as

an example, not personal financial

advice, it's just an idea, right? That's

about a 2.5% loss. Or set it for, you

know, 520. 520 would be a uh $35 delta.

It's about a 6% loss. That's great, too.

So, you set a $35 trailing stop. So, you

go buy the QQQs right now and if the Q's

drop $35, it automatically sells and

pays off your margin. You know, if the

market goes up 35 points and then goes

down 35, you're out break even. If it

goes up $70 and then down 35, you're up

35 as an example, right? So, that's why

good to cancel trailing stops are

really, really interesting because they

sort of automate that for you. And I

just find too many times in investing,

we can kind of get married to a really

good idea that at the moment feels like

a good idea. But if you don't have

trailing stops, you just sort of like

diamond hand to zero. And there are some

risks to keep in mind in that. Uh so

anyway, uh with that said, that gives us

a little bit of an update on what's

going on with Trump with Bitcoin

explosion and the Fed. Remember to go to

househack.com to invest uh before uh we

end up changing our fundraising in the

future to reflect our AI. Uh if you want

check out Weeble at

medkevin.com/weeeble. They're a paid

partner of the channel and met

Kevin.com/life. Paid partner of the

channel as well. That's me T. All right.

Very well.

>> Why not advertise these things that you

told us here? I feel like nobody else

knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations, man. You have done so

much. People love you. People look up to

you.

>> Kevin Praath there, financial analyst

and YouTuber. Meet Kevin. Always great

to get your take.