Bitcoin & Dollars Will DOMINATE The Future

0:00Hello everyone, we've got a lot to discuss today. Stablecoins are eating the world and everyone is bending the knee. The Federal Reserve refuses to cut interest rates once again, and a housing expert gives us a deep dive into what's happening across the U.S. housing market. We're live today from the desk of Anthony Pompliano.

0:27Stablecoins are eating the world, and it seems like every single market participant is jumping headfirst into the deep end, and they want to get into the game right now. Here's just a couple of examples from the last week. The Senate passed the Genius Act in another step towards a federal framework for stablecoins. Stripe announced a deeper partnership with Shopify. It's going to help businesses in 34 countries immediately start accepting stablecoins. Coinbase announced Coinbase Payments. It's a full stack stablecoin payments product that is built for commerce platforms. Founders Fund from Peter Thiel, they invested in Ubex, which is a clearing system for stablecoins that was built by a 20-year veteranite Citigroup.

1:02JP Morgan announced JPMD. It's the bank's alternative to US dollar stablecoins. And the Wall Street Journal is reporting that Walmart and Amazon, they're both exploring how to launch their own stablecoins as well. That list, it's not even exhausted from just the last week. And it highlights just how quickly companies are embracing this new technology. Even Treasury Secretary Scott Bessett, he was pushing the stablecoin narrative in a recent interview. He said that stablecoins could reinforce dollar supremacy. Take a listen to this. Because crypto, I mean, that seems to be a threat to the dollar, doesn't it?

1:36I think it's the opposite. Oh, really? I think stable coins could reinforce dollar supremacy. Because with stable coins, stable coins could end up being one of the largest buyers of U.S. treasuries or T-bills. So all of a sudden, if you are using a stable coin in Nigeria that's backed by the US dollar, you don't actually have to have dollars. It's on your phone. You can transact. So I think there's a very good chance that crypto is actually one of the things that locks in dollar supremacy. And is that why it was crucial that Donald Trump get involved in crypto rather than trying to constrain it like Joe Biden was?

2:23Well, I think constraints too mild a word. I think make it extinct. So this administration's commitment to digital assets, it's innovation because there's so many other things that happen around digital assets. And also, it's one of those things that it's one of the most important phenomenons that's happening in the world. And the U.S. just ignored it. Now, it doesn't get more serious than the leader of the United States Treasury saying that stablecoins are essential for the U.S. dollar to continue winning on the global stage. I agree with him. Castle Island's Nick Carter, he reminded us that he gave a speech last year on stablecoins.

3:05In it, he talks about the crypto dollarization has happened already in Venezuela, Argentina, and Nigeria. Nick believes that it's much more aggressive than conventional dollarization, which is often limited by the availability of the physical banknote. Now, Nick believes that in a decade, there will be many fewer sovereign currencies and most weak nations will be dollarized. But he doesn't think it's going to be through the government intervention, but by a spontaneous bottom-up process. In effect, the consumer will engage in currency substitution and that will force the government's hand. Stablecoins eliminate the power of borders in currency choice and it allows network effects to actually take hold.

3:40That's why we see the dollar representing more than 99 % of stablecoins, but only 40 to 60 % of international reserves and financial flows. Stablecoins make currency substitution much faster and more aggressive, and they are also impossible to stop. In almost all cases where nation states have attempted to prohibit flows from your local currency into stablecoins, they've eventually relented. Now, I completely agree with Nick as well. Bitcoin's going to win, and U.S. dollars in stablecoin form, they're going to aggressively win as well. This means the weakest fiat currencies are going to fall at the feet of Bitcoin and dollars.

4:11They'll be the losers. It's crazy to watch this play out. Technology has built better payment rails for all currencies, And now the legacy players, they got to bend the knee to adopt the dollar stablecoin. And don't expect that trend to slow down anytime soon. Jerome Powell and the Federal Reserve, they held their big meeting yesterday. And boy, did they have a lot of updates for us. There's a great summary from our boy, Adam Kabisi. He says that the Fed is likely to get to a place where rate cuts are appropriate. The Fed also said that they will make smarter decisions if they wait a couple of months.

4:41They expect meaningful amounts of inflation in coming months, whatever that means. Unemployment remains in a reasonable place, according to the Fed. They think it will take time to see how large inflation effects will be. And the Fed's inflation forecast for this year is higher due to tariffs. Now, of course, this Fed meeting, what was the end result? Nothing. They didn't change the interest rate. By definition, it was just a Fed pause. But here's the thing that I really took away from this whole idea. The Fed's behind the curve once again. Remember the whole idea that they think that tariffs are gonna bring all this inflation?

5:13well, that doesn't seem to actually be happening. On top of that, yes, there's money printing, but if you go and you actually take a look, that's being created by the government, not by the tariffs. And so naturally, what I expect to happen here is that the Fed is going to remain very steadfast and not cut rates, but they should be, because ultimately, if inflation is at 2 % or lower and people need access to cheap capital, both as individuals and as businesses, the Fed's responsible for that. And if you also take a look at things like employment, employment is still pretty strong. And so naturally the Fed is simply saying, well, we don't need to cut yet.

5:49But as we've seen time and time again, the Fed is using backwards looking data. It's telling us what already happened. It's not telling us what's happening right now or what's gonna happen in the future. And so if you use backwards looking data to make decisions today about predicting what's gonna happen in the future, you are set up for failure. It's exactly what we've seen the Fed happen over and over and over again. Remember, they told us that inflation was transitory. They were wrong. They then told us they were going to keep interest rates low, near 0 % for a number of years. They were wrong.

6:16They ended up hiking interest rates at the fastest pace in history and literally caused three of the top six bank failures in US history, all because the mismanagement based on what the Fed had told those banks. So naturally, anytime the Fed starts talking, you can do one of two things. You can believe your lying eyes, or you can listen with your ears. For me, I choose to just believe my lying eyes and see that inflation isn't a problem right now. The Fed should be cutting interest rates. They're behind the curve. And as mounting pressure comes from the executive branch and many people in government, I think eventually the Fed will relent.

6:52Today, we've got a special treat for you. I've got Lance Lampert. He's the co-founder and editor-in-chief of ResiClub. ResiClub, they're your gateway to the U.S. housing market, and Lance is the number one residential real estate reporter in the country. He's here to give us a breakdown of what's happening in the U.S. housing market. So here's my conversation with Lance Lampert. Lance, I thought a great place to start this conversation is recently Lenar came out and they shared a bunch of information, but one of the things is this idea of these incentive programs. Can you describe what the incentives are, why these builders use them, and then what has been the change over time in these programs?

7:25Yeah, so Lenar is America's second largest home builder. They have a huge presence across most of the major home building markets in the country. Their typical price is kind of around the 400K price point. So a good number of entry level homes. And what has occurred for Lenar is that they've really chosen to chase after maintaining sales pace and sales volume and not margin. So they've been willing to give up on margin and allow their profit margin to compress. During the pandemic housing boom, these builders were making boatloads of money. They had full pricing power, prices were ripping, and there was just so much demand.

8:11They could sell more homes than they can build. Coming out of the pandemic housing boom, and as mortgage rates shot up, builders use some of that margin to deploy it to mortgage rate buy downs, other incentives to really kind of meet the market and bring in buyers. Well, that worked for a while and builders kind of still maintained profit margins above pre-pandemic levels. But recently with active inventory rising in more of these markets, more of these markets softening and weakening, builders have had to make a decision. Do they chase volume still and give up on margin, or do they try to protect margin and go down on their sales base?

8:53Lennar's decided, you know what, we don't want to give up any market share and said, we're going to take market share while everybody else is scared. And so they've come down further on their margin and thrown it at sales incentives. And I'm going to give you some eye-popping numbers here. So at the height of the pandemic housing boom, Lennar was spending 1.5 % of final sales price on their typical home on incentives. Today, it's 13.3%. So it's gone up 10x, the amount that they're throwing towards incentives. And that's the highest incentives rate that they've spent since 2009. And normal for them is around 5%, 6%.

9:33And so to put that in perspective, on a$450 ,000 house, they're spending around$60 ,000 in incentives. Now, a lot of these builders, instead of doing outright price cuts, because they want to protect comps of their communities and they want to protect their backlog. People aren't going to feel great if they've just bought a home from Lenar and then somebody else comes in and gets a lower price. Right. So they try to protect that backlog and they throw money at these buy downs. And so how the buy downs work is maybe they'll take the 60 grand and they'll get the mortgage rate down from, you know, a 6.8%, maybe down to a 5%, maybe down to a four and a half, maybe even down to a three for the first year.

10:16And then it kind of changes over time as they try to get in some of those buyers. And D.R. Horton CEO came out recently in April and told investors that there's arbitrage in the market and that a dollar spent on buy downs creates a greater monthly savings for the buyer versus the dollar actually cut in price. And that's a narrative that a lot of these builders have shared. And so what does this really mean? What does this tell people? It tells us because builders, unlike existing home sellers who really fight every dollar down on price, the builders are telling us that this market has shifted.

10:56And if you're a buyer out on the market or you're an investor, you might be able to go to them if your key is seeking greater affordability and find some discounts that you're interested in. Now, if you're an investor and a builder in particular, and you're out in the market and you're building near these communities that these big box builders, D.R. Horton, Lenar. And by the way, the big builders back when I was born, they were around 15 percent of the market share publicly traded by GFC. They were 25 percent pre pandemic 2019. They were 35 percent of the market. Now they're 53 percent of the market and going up to 60 percent.

11:36But if you're near these big box builders who make their money on volume and it's really a commodity, that can be dangerous for you as a really small home builder because you're going to be competing directly with them if you have a similar product. And it might cause you to do, you know, bigger price cuts, bigger incentives. And just the way that these big builders are set up with their financing and also their cost of capital, you know, they can go lower than you. And they also have, you know, greater market share when it comes to getting better deals with vendors and getting better prices on materials.

12:18So that can be a lot of competition for small builders. One of the things that people have been talking about for the last couple of months is the idea of tariffs having a huge impact on material costs and ultimately kind of falling into these home builders and them really struggling. Was there any conversation around tariffs or material costs that's noteworthy? Yeah. So the only thing that we've heard about tariffs from the builders' earnings calls, which keep in mind they're now around 60 % of the market, so they give us a pretty good proxy of what's happening, is that there's not really an impact from tariffs.

12:51on cost. Lennar's CEO said this week that they're not seeing any impact from tariffs at the moment on material cost. And if they did, they would probably be able to negotiate with their vendors. I was at a private event of around 50 institutional players in New York City recently. Toll Brothers CEO spoke there at the Bank of America Housing Symposium, and he said that they're not really seeing an impact from tariffs. And he doesn't expect it this year in terms of the impact on material costs. Now, he did say that what's more concerning for him is potentially just the impact on consumer confidence, right?

13:33People kind of getting scared what they're reading in headlines, and that can have an impact. And for a builder like Toll, they're on the luxury side. Their typical price is$900 ,000,$1 million. And so a lot of their buyers are having to sell off stocks as their down payments. And so when the market has a bit of volatility, that can create a concern. But in terms of directly tariffs to material cost, we're not seeing a lot of it at the moment. And right now, material prices year-over-year basis are up around 3%, 4%. That's pretty normal. For perspective, during the pandemic housing boom in 2021, one, material costs were up around 30, 35 % year over year.

14:15And one of the things that I do find pretty interesting is another conversation people are having are obviously these ice crackdowns or these ice raids. I've seen videos online of them showing up to construction sites and literally arresting 50, 100 different people. I got to imagine that there are significant pressures in some areas on labor for these construction sites, for these home builders. Has there been any talk of that across the housing industry and these earnings calls? Yeah. So on the earnings calls, which they're a little lagged because Lenore is now the first to report of this earnings cycle.

14:46So the past one, I would really be going off of March and April comments back in March and April. Wasn't really a big issue for them. And I think heading forward in terms of the deportations, one thing to keep in mind is that the labor market in general is not as tight as it was back in 2021. If you were having more concerns about deportations in 2021, when builders were really scrambling to find labor, that would be a bigger concern. Right now, multifamily construction is rolling over a bit, and there's more softness of late in single-family construction. And so year-over-year job growth in residential construction is pretty much flatlined.

15:29And if you look at contractors, it's actually went down. And so labor is not the biggest concern right now for builders. Now, keep in mind, it is true that homebuilders do get a lot of their labor from immigrants. And it's also true that around 13 % are undocumented. But if you pull back the numbers, the more specialized labor tends to be American citizens or on actual visas. And it's more of like, you know, the roofers and less specialized labor that is a higher share of the undocumented. Now, in terms of what could be the bigger thing in terms of immigration that could be a bigger impact for builders is not necessarily the actual deportations.

16:18It's more of just we're really having a very hard deceleration in the amount of border crossings and the amount of immigrants flowing into the country. And so if you look at the numbers, we had a ginormous spike in net international migration in 2023, 2024, back at the second half of 2022. And a lot of that was really just that surge through the border. That was that is now decelerating very hard. It's pretty much gone about as close to zero as you've seen it. And so if it stays there for a prolonged period of time and that pipeline of labor is kind of cut off, maybe over time it creates a greater impact.

17:00But right now, in terms of a 2025 story, I don't think it's a big story. Before I let you go, you have this great piece that you wrote for ResiClub Pro members, which I know is kind of the sophisticated folks that you create a lot of the content, the graphs, the charts, and the data analysis for. And it was talking about the supply-demand equilibrium across the country. Help us understand kind of how is that shifting throughout this year. Yeah. So the amount of homes for sale in a market, what they call active inventory for sale, I think of that as a proxy for the supply demand equilibrium. So just like how a car lot, if you were to drive by that car lot and it's 2021 and there's like four or five cars for sale, that's because that market is red hot, a lot of demand, and the demand is just absorbing everything for sale.

17:50Right. And so prices are ripping. They're soaring up. If you drive by that car lot and it starts to get more full and more cars, what that probably tells you is prices aren't going up as much. And maybe that car dealer is starting to offer bigger incentives trying to get people. It's the exact same way in housing. So if you see the active inventory for sale in your market starting to rise and rise significantly, that's an indication of softness and weakening. just as if it were to fall really hard. That's a sign of tightening like we saw in the second half of 2020, heading into the boom in 2021 and spring 22.

18:29And so right now, active inventory is rising nationally, but in some markets, it's rising faster than others. And in some places, it's hitting this important threshold that has seen the supply-demand equilibrium move into a place where prices are falling. And ResiClub, we believe that we have been on top of this the entire cycle and it pinpointed that level and that threshold. And so if you want to find that report, you could go to ResiClubAnalytics.com and you'll be able to locate that report. And the reason that this matters so much is that some of the traditional metrics and traditional rules of thumb in real estate, like six months of supply means that it's a balanced market.

19:14Above that means it's a buyer's market. Below that, a seller's market. Those rules of thumb have really struggled in this environment where we've seen affordability deteriorate to a 40-year low. Home prices went up 40, 50 % nationally and just an 18, 20-month window. Mortgage rates then went up from 3%, 4%, 5%, 6 % to 7%. Incomes didn't keep up with any of this. Affordability is just really strained. And then in some of these markets, they've seen a pullback in some of the migration flows into places like Florida, into places like Texas, a deceleration of the net domestic migration coming in. And because those places saw prices move up more during the pandemic housing boom, that means that the local fundamentals there are more strained.

20:02And because there's less of this domestic migration coming in of higher income folks, it has to rely more that local market on local incomes, which were already more stretched. And so it's created a bigger swing in that supply demand equilibrium and pushed up active inventory more for sale and caused a greater softening and weakening for prices. Pretty crazy to kind of see how this has played out over the last couple of years. And I agree with you. You guys have been all over this. So you said to send people to resiclubanalytics.com and that's where they can find these reports that you have been referencing.

20:34Exactly. And if that's too much, if you just Google Resi Club, you'll be able to find us. Amazing. All right, Lance, thank you so much. We'll definitely do this again in the future. Thank you. Anytime. Man, I got to say, I really love talking to Lance. And anytime that he can break down all the details of what's happening in the housing market, I get excited because housing is such a big part of the economy. And also it has a material impact on people like you and what you can do with your financial life and all the decisions that come off of where do you live? How much do you spend? How much money do you have left over?

21:03So it's great to hear Lance talk about all that. Now that's it for today's show. I hope you guys are enjoying it. I'm having a blast putting it together every single morning and make sure that you are following us on X. Please, please, please subscribe on YouTube and we will see you guys live from the desk of Anthony Pompliano tomorrow.