Yesterday's FOMC meeting gave us the exact fireworks that we expected, and those fireworks came in the form of Kevin Warsh saying he was going to effectively give us absolutely no information. Markets reacted poorly. We saw the stock market broadly going down, and of course, Bitcoin retreating. We're going to talk about that and everything else in the news right now on the Daily Wolf. Let's go.
Good morning everybody. Welcome to the Daily Wolf on Yahoo Finance. I'm your host Scott Melker, also known as The Wolf of All Streets. You can check me right out right down there on X at Scott Melker. So, the big story right now, once again, is less crypto native and has a lot more to do with what's happening in the macro world. Now, we were all watching with baited breath as to what Kevin Warsh would do in his first FOMC meeting. Now, you've seen our Warsh memes, we're going to bring them up. Was he going to be
this Warsh, the sock puppet who Donald Trump was controlling. I think actually we got a little more of this Warsh, Daddy Warshbucks, the rich guy worth billions coming in doing exactly what he wants to do. So yeah, the story, you know, Bitcoin slides as Fed says it will deliver price stability under Kevin Warsh. Yeah, okay. So what we actually got was exactly what Kevin Warsh told us we were likely to get, which was basically cancelling forward guidance,
him not providing a dot plot and refusing to answer almost any question about what the Fed was likely to do in the future. Now, he did say he was going to focus on the actual mandate, which is price stability and jobs. Those are actually the Fed's jobs for those who don't know. So they held rates unanimously, 12 to 0 at 3.5 to 3.75%, but if you looked at the other members dot plots, we did get a lot of them saying that they were likely to hike. We can look at the summary right right here actually,
want to bring that up. Summary of Fed decision. Fed leaves rates unchanged. Nine out of 18 officials expect at least one rate hike this year. By the way, six of them said two. The Fed lowered its median 2026 US GDP projection. The Fed see PCE inflation not returning to its 2% target, blah, blah, blah, blah, blah.
Right? And so maybe one of the most interesting things was that he was asked directly whether he believed that the 2% inflation target was accurate and his thoughts on that. And he made a very curious comment. He said, we're more concerned with what's on the left of the decimal point and not on the right, meaning that 2.0, 2.1, 2.8, 2.9, all kind of the same. And many critics of the Fed have said that the 2% target is a myth. It was made up if you've ever heard the story which we've told on this channel actually before,
it was effectively from a press conference in New Zealand where somebody just made them up, made the number up live on TV and everybody around the world adopted it. But let's call the 2% target uh the consistent one for no reason. Uh but now saying maybe we'll float that rate between two to 3%, right? That's sort of what he alluded to here and I think that the market absolutely did not love that. Also, there were some strange sort of conflicting narratives, right? They obviously have mentioned that the war in Iran and oil prices were a temporary
inflationary spike and that that was likely to come down, but still was given as a reason by many of them for rates not to come down right now. But curiously, by that meeting, we've seen massive disinflation in oil prices with a peace agreement in the works, and we're already with back to having oil trade before uh back to the prices where it was before the conflict. So, listen, I think this is probably good news for the Fed, right? I think uh everybody knows that we should not be reacting to the coughs and sneezes of the Fed chairman.
We shouldn't have 10 speeches every two weeks from the other Fed governors who all conflict with one another and watching markets react to all of this nonsense. So if we get a narrower mandate, the one that is actually mandated by Congress and we get less noise and more signal from the Fed, that is probably a good thing. But that said, right now, it does not look like he's going to do exactly what Trump asked him to do and put him there for and we are likely to see a pretty, I think even
uh keel here where we don't see a rate cut, but probably also, if we're being intellectually honest, don't see a rate hike. Now Trump, who obviously nominated him expecting cuts, actually said the hold seemed all right and that a hike could happen. At the end of the day, though, if we expect the dollar to go up and rates to remain here or go up, that's generally bad for risk assets and could put some pressure on Bitcoin in the future. Now, the next story here kind of builds on uh the tension that we've talked about between the CFTC
of one, that's the one Mike Seelig and effectively everyone, seemingly. So obviously we've talked about prediction markets and the lawsuits with the CFTC. We've talked about the fact that CFTC approved perpetual swaps for crypto, uh, without really having a mandate necessarily to do so, or certainly not the five people in positions of power at the CFTC to do it. We got the CFTC of one. Well, CME, who is obviously the largest incumbent in futures trading, Terence Duffy,
their CEO says the exchange operator will sue the CFTC over perpetual futures. So the CF CFTC obviously spent years here not offering perpetual swaps. They watched Kalshi and Coinbase and Kraken beat them to it and now they've magically discovered this week that those products are horribly illegal.
Right? I mean, they've been out competed here. These things were approved. Everybody's known they were coming forever, but now all of a sudden, of course, the CME who is the largest incumbent and has the most to lose by these products becoming popular is out here saying that they're going to sue. So his legal argument does maybe hold some water. He says under Dodd-Frank, when two parties exchange payments to each other, that is a swap and not a future. And to be fair, these are called perpetual swaps, right? So if it's a swap
and not a future, then calling these a future and approving them based on futures' law, in his mind is wildly inaccurate and there are a lot of problems. So maybe that's true, but this wasn't a concern for him until these were actually recently approved. So, this is going to be an interesting story to watch. To be clear, they have not sued them yet. They are saying that they will sue them, but the CFTC has been under constant pressure from the states, from the incumbents, from other institutions,
uh, for their actions here. Now, perpetual swaps are going to continue to exist. They're going to continue to become more popular. Every exchange is going to add them. if this plays out, it's going to take a very, very long time. But it is interesting to consistently see this pushback. Now, the next story we have is another one of institutional adoption.
Fidelity joins Wall Street's race to manage stable coin reserves. Following State Street Fidelity is targeting reserve assets that underpin the expanding stablecoin market. So it's a bit misleading to say following State Street because Fidelity actually, as has been reported consistently on this channel, is the sixth entity to do this, not the second. So they're they're launching the Fidelity Reserves digital Fund, and this was uh today, which is a money market fund managing the reserves that back stablecoins under the genius
Act, right? And so this is basically a stable coin that wants to launch saying that it is going to have an entity behind it to manage the reserves because if a stablecoin is going to exist, then it needs obviously for somebody to manage that Treasury, to handle redemptions, to handle creating new stable coins, all of those things. Well, we've seen BlackRock do it for Circle. We have Goldman, Bank of New York Melon, State Street, Morgan Stanley, now Fidelity, and of course, J. P. Morgan and Franklin Templeton, both exceptionally heavy in this
market right now, right? So this is a story of plumbing, but it's interesting because everybody's cheered for the genius act and the clarity act and all the legislative clarity that we've been looking for for the industry. But what's actually happening is institutions taking over some of the functions that probably would have been popular for the crypto industry itself. The this is all plumbing but the money uh backing a lot of crypto is now funnelling its way directly here into the largest institutions on the planet. Now we have a second sort of uh part of this story,
which is actually about Moody's and not about um, and not about Fidelity. And that's this story right here. Moody's ratings expand token integration engine with alpha ledger, bringing credit intelligence on chain to Solana. So, this is actually really, really interesting story and it continues with the institutions adopting these things, the pipes getting bigger, but flowing towards institutions.
What they're going to be doing is here is Moody's going to be embedding their credit ratings directly onto the Solana blockchain. This is not a credit rating for the blockchain or for Solana itself, but institutions, pensions, insurers, asset managers, they're mandated to hold only debt that is rated. So this actually embeds that actual rating for the asset before it is tokenized on chain so that this removes the key barrier to trillions moving to tokenized assets. So this is one of the big things that we needed to see starting to happen,
and it is now happening here in real time. Now, we had another pretty crazy story here. This one and there's back and forth on this exclusive, Binance set to lose permission to operate in European Union sources say. So, to be clear, Binance is pushing back saying this is not going to happen. But this is putting a major spotlight on Mika regulation which was passed years ago for Europe, many uh said, hey, it's amazing their regulatory regime is far ahead of us. Well, the deadlines for becoming compliant
have slowly crept up. They are the end of June. And so this exclusive says that Binance is not going to get the permission to operate in the EU because they targeted Greece to get this done. and if true, Greece is set to reject basically their application and if they get rejected in Greece, they basically get kicked out of the entire European Union. So, uh this is really interesting. They're obviously the largest exchange on this planet Earth where we live. And if you take a look at what Mika has been doing, it's a massive culling. It looks something like about 210 to 220 firms
are getting the authorization out of 3,000 that operated in Europe. So basically 75% of pre- Mika firms may be cut off after June 30th. Coinbase, Kraken, Bitstamp, all of those did the boring work to get the licenses here over time. So if Binance actually loses the ability to operate in the European Union, then those uh
exchanges which are, you know, primarily United States exchanges are set to step in and capture that volume. Now, to be clear, once again, Binance is pushing back on this, says that they're going to get the licensing. But once again, this snuck up on us and the environment in the European Union, the could look very, very, very different in the coming weeks, especially for finance. So, you know, this is kind of a preview to what might happen if we get a clarity act and certain actors are not compliant and others are or what's happening
with the genius act that I just told you about, which is that the institutions are positioned well to operate under this new regime. Same thing sort of happening over there in Europe. Now, the next one probably like I I love Sailor. I own STRC, I'm a fan. I think it's going to be fine, but starting to verge on people being very angry and saying this could have been one of those how not to invest segments.
not going to say that it is yesterday. Maybe we'll make a new segment that's like, everybody hates us. Uh and we'll talk about, you know, how Scarimucci says nobody likes Bitcoin, him and Novogratz and all those things and how people are turning on Sailor. I don't know, we'll we'll work on that one in the future. But here's the story. Strategy's STRC hits $89 record low. Is Peter Schiff's death spiral warning coming true? No. As I've told you before, these preferred equities, uh they can trade below par
for quite a while, but it's starting to get into concerning territory. There's obviously a sentiment shift about strategy and about Sailor and about trust in the products that he's created. and I did a whole story yesterday so I don't want to be too redundant on how maybe Strive's competitive product Seta is taking a little bit of the shine off of STRC. So there's a different product in the market, it has maybe less baggage attached to it and it has a higher yield and pays dividends daily. Well, clearly, right now if you view this as an opportunity, you could get
STRC at an 11% discount with that yield once it goes back to par. If you think this is going into a death spiral, obviously, I would say that it's entirely avoidable for you right now. I think that that is hyperbolic. I don't think that's going to happen. I think that the levers are already built in for STRC to raise the dividend and bring this thing back to par, regardless though of my opinion, the market is clearly very, very, very concerned with what's happening at strategy right now, and the current price of STRC reflects that. So,
moving forward right now, I don't think that we can expect much information from the Fed about what is coming. I lean towards that probably being a good thing because they're historically always wrong about what's coming. Their dot plots are wrong, their predictions are wrong, their governor's speeches are wrong. So why should markets react to false information? Why shouldn't we wait until we actually have the real data and the real information to price in likely decisions. I think that's a good thing. Meanwhile,
a lot of the things crypto used to do are now being done by the biggest institutions on the planet. Six of them creating funds here to back stable coins. at the same time, as we're closely watching what will happen in Europe. That's all I got for you today. I'll be back tomorrow for the next Daily Wolf. Peace.