Speaker 1:

From the New York Stock Exchange at the corner of Wall and Broad Streets in New York City. Welcome Inside the ICE House. Our podcast from Intercontinental Exchange is your go-to for the latest on markets, leadership, vision, and business. For over 230 years, the NYSE has been the beating heart of global growth. Each week we bring you inspiring stories of innovators, job creators, and the movers and shakers of capitalism here at the NYSE and ISIS exchanges around the world. Now let's go Inside the Ice House. Here's your host, Lance Glinn.

Lance Glinn:

Welcome into another episode of our Markets and Focus series in partnership with Opening Bell Daily here on the Inside the Ice House podcast. As we get ready for our last conversation of 2025 here at the New York Stock Exchange, Phil Rosen, joins us once again to talk market trends, market insights, and the markets that sit just a few floors below where we record. Phil, as always, thanks so much for joining me.

Phil Rosen:

Thank you, Lance, for having me.

Lance Glinn:

So now many have been anticipating the Fed's December meeting and I know a lot of our conversations have to do with the Fed, but it's always in the news, it seems like.

Phil Rosen:

The biggest thing.

Lance Glinn:

Especially over these last few months. We've seen expectations swing wildly from near certainty of a cut to serious doubts over the last few weeks. Before we get to your thoughts on what might happen, how do you just interpret this back and forth leading up to next week's decision and what it tells us really about the Fed's mindset right now?

Phil Rosen:

I think what's interesting about this time of year and just the Fed decision in general, we suddenly have prediction markets to tell us what the market can do. And I think that's a really interesting variable that we didn't have a couple of years ago. So before we had to go on CME data, which is also very reliable, but there's a different texture to that type of data. Now we have Polymarket have Kalshi, there's some other platforms and they can pretty much tell us what people think is going to happen.

And my sense is someone always knows on these platforms, someone has a gut feeling and that gut feeling is usually exemplified in the market. So we've gone from something like less than a third chance for a rate cut in December to now I think like a 90% chance on prediction markets. So these swings to me are indicative of how divided the Fed is. You have the hawkish and you have the dovish policymakers and you have this ongoing debate whether inflation is too high, whether inflation is enough at the level where we can ignore it and let's just focus on the labor market.

And I think it was Governor Waller who came out and he said, "Let's do a cut," essentially, or he's suggested that and that's really what swung the odds in the last few days. So I've been saying for a while now we're cutting in December and I think that's what we're going to see. And I don't think there's any contrarian take there because I think prediction markets reflect that, CME data reflects that.

And even if we have a divided Fed, the expectations are also pricing in the next Fed chair who's going to be dovish, he's going to be a Trump appointee, he's going to be more willing to tolerate inflation and more willing to compress rates to zero than Powell.

Lance Glinn:

And so as you said, as we get closer to that decision in mid-December-ish, it seems now like investors are pricing in a rate cut for December. You just mentioned obviously the data from those prediction markets from CME are pointing towards a cut happening. If that is the case, how could that decision impact markets moving forward as the year ends and potentially into 2026?

Phil Rosen:

It's a great question. When the Fed cuts rates generally that's pretty good for asset prices. So you could make a very broad and general prediction, when the Fed cuts stocks will go up. That I would say applies across decades. But right now what's interesting is that we're about to get the Fed cutting and there's been no recession. So the Fed's cutting into a scenario where there's no recession and the Fed is cutting where stocks are within 2% of record highs.

And in both of those instances, stocks have been higher 100% of the time in the separate instances but together that's an even more, I would say, bullish outlook. So to me, there's a lot of reason for optimism. You have the Fed that could catalyze these two bullish, let's say historical patterns. And look, I don't think that the Fed is the reason asset prices are going higher, but it just so happens that this falls into a very bullish pattern that we've seen in the past. So to me, a lot of reasons to be optimistic for 2026.

Lance Glinn:

And so you mentioned something in one of your previous answers talking about how soon we will have a new Fed chair, Jerome Powell's term as Fed chair ends in May of 2026. President Trump as we record today, has already mentioned that he's chosen a successor, hasn't announced it yet, but has mentioned that he's chosen one now. When this comes out, there may have been an announcement, there may not be. But regardless of whoever it is, how significant is this leadership change for the Fed and how could it alter US monetary policy even if it's before May comes?

Phil Rosen:

At one point President Trump was calling for 300 basis points of rate cuts and we're not going to see that all at once, but the new Fed chair, whoever it might be, they're going to be much more willing to flatten rates because that's what the administration wants. And when you flatten rates, it's very good for asset prices. President Trump has also come out and said recently he's going to try to keep the stock market at record highs. We've never had a president say that so explicitly.

So that's obviously one of his mandates or goals that he's keeping top of mind right now. And the chairman of the Federal Reserve can actually have a pretty big say in how that happens because when they lower interest rates, it's good for asset prices. But when they forecast that they're going to continue lowering interest rates, that gives markets even more room to position for riskier assets, riskier bets, just a general optimism and exuberance for markets.

So right now, I don't know who's the next Fed chair, and there's rumors that Kevin Hassett is the leading man for the successor of Jerome Powell. I don't know that much about him, but I do know he's generally more open to let's say, innovative technologies, new technologies, and he almost has a bias for the future, let's say. And I think a lot of policymakers generally have a bias for the past and they'll reflect on what's happened before and that's what they'll lean into. But Kevin Hassett, I think is more the opposite direction, and maybe that means that's why Trump wants him because he's going to be open to keeping low interest rates and that's what the administration wants.

But I think what's also interesting about Hassett, he has ties to Coinbase, I think he was a former advisor, which is really interesting because we've never had the leader of the most powerful monetary policy institution in the world with ties to crypto. So that is a whole new Wild West variable that I have no idea what that means, and I don't think anyone really knows what that means. But you can at least assume he's sympathetic to Bitcoin, cryptocurrencies, deregulating digital assets, all that is very fascinating to me. And if you're a Bitcoin investor or a crypto investor, you should probably be pretty optimistic if he is in fact the new Fed chair.

Lance Glinn:

And so I want to pivot the conversation to crypto and Bitcoin right now. Recent weeks have seen it dip from a all-time high of 126,000 to now under six figures. Now that's certainly obviously drawn some attention, right? Brought some less than ideal chatter around Bitcoin and to the crypto space, frankly as a whole. But look, we're optimistic here, Phil, what do you make of this sort of Bitcoin is crashing noise amid obviously this pretty significant recent price decrease?

Phil Rosen:

If you liked Bitcoin at 125,000, you should like it at 85,000. That's the general sentiment of long-term holders because the fundamental story or maybe the structural narrative hasn't changed. Well, the price, the price is going to be the price, but long-term, generally speaking, you can expect it to go up and it's never not gone up over a four-year period. So right now we might be in a bit of a downtrend and it's only been a few weeks and it's like, yes, Bitcoin is in a correction, it's fallen more than 20%. But I don't think that serious long-term holders are even paying attention to it because in the last decade we've seen probably a dozen, 30% more declines. We've seen a handful of 50 to 70% declines. So this-

Lance Glinn:

Do you just gauge this as a normal correction type of thing?

Phil Rosen:

I think the massive volatility in Bitcoin, in the eyes of traditional finance and traditional investors, that is something to be concerned about, something to write about in the papers. But for crypto investors that have been in the market for a very long time, this is just another day. This is just another year, and we've almost seen a 20% drawdown per year in Bitcoin dating back for 10 years. So I don't think that there's really much to say about it but when you look in the media, you see words like crash, you see words like Ponzi, you see collapse. These words don't fit in my opinion because they're describing the sensationalization of the moment.

But if you look at the thesis to Bitcoin, the way I see it's the long-term inevitable currency debasement and the inevitability of governments printing money forever, that's not going to slow it down. If anything, it's probably going to accelerate in the coming years. So that should strengthen the thesis behind Bitcoin.

And you see the volatility that's not new. And I think we have more people than ever paying attention to it because there's so many more institutions that are participating in Bitcoin now and you have these ETFs, so they're in a lot more everyday retail accounts and retirement accounts even. So people notice when Bitcoin drops now, but I don't think if you've been in the game long enough, these fluctuations are just part of being an investor in Bitcoin. So I don't think it's that much to worry about.

Lance Glinn:

And you've mentioned in previous conversations this institutional adoption that Bitcoin now has, right? We've talked about some of the large companies that have invested and make Bitcoin part of their portfolios. You mentioned obviously it's placement in 401Ks and ETFs, so on and so forth. Does that ease the tensions for you knowing that those tailwinds are still there? While we've seen this pullback, while we've seen this decrease as late, those tailwinds haven't gone away. These companies and these institutions are still invested in Bitcoin.

Phil Rosen:

This was supposed to be Bitcoin's biggest year ever was the prediction at the start of 2025. You had a pro Bitcoin White House, you had BlackRock and other Wall Street firms buying tons of Bitcoin, and you had these ETFs getting adopted all across institutional and retail investors. They're in 401Ks and Bitcoin has not gone anywhere. It's actually negative year to date, I think like 7% as of this morning. So that's been sort of narrative violation this year. We haven't done what we expected to do.

I saw a lot of outlooks we're saying Bitcoin would be at $150,000 this year, $180,000 this year. I don't know if we're going to hit that before the New Year's, but all this is to say we're only at, let's say 85,000 right now, 88,000. That is an amazing price for this asset, which was not long ago, laughed out of every room on Wall Street.

Now for one Bitcoin, it's almost six figures to purchase one Bitcoin or to own one Bitcoin. And keep in mind, just because we're down over 12 months, I think, down 7%, let's say, over 13 and a half months, we're up from 69,000 to 85,000. So that's still a very good appreciation. I think over the last three years, Bitcoin has averaged an annual gain of 70%.

Lance Glinn:

Wow.

Phil Rosen:

So it's an astronomical asset and the performance should speak for itself. But every time there's a three to five to 8% dip, the media's going to go crazy. People are going to say, "Look, I told you this asset doesn't work. It's not a store of value, it's not a hedge against inflation, and it's not where you should keep your capital." I think the long-term picture is very bullish, and I'm certainly bullish on the asset. And the day-to-day stuff if you're paying attention to the fluctuations, you're probably in the asset for the wrong reason.

Lance Glinn:

So, Phil, as we begin to wrap up our conversation, moving away from Bitcoin, December just has a reputation for being a really strong month for stocks. Walk us through what you think drives these seasonal strengths. We've all heard of the phrase, right, the Santa Claus rally as we get closer to the end of the year. But what do you believe allows the year's final month to historically be so strong and so productive?

Phil Rosen:

I'm very optimistic for stocks right now because one, we have the Santa Rally in the last week of the year, and two, December is the third-strongest month historically in the calendar year, I think it averages a 1.4% gain dating back in 1950. And three, we're in a very unique situation this year in particular because when stocks are up through December as they are right now, and it's the first year of a new presidential cycle, stocks have been up 100% of the time a year later, 13 out of 13 times.

So we're in a uniquely bullish December compared to all other Decembers. So all of that together tells me asset prices will probably be higher, not only on January 1st, 2026, but in a year from now. So I think there's a lot of reason to stay bullish and believe that the bull market has plenty of room to run. I don't think that the recent pullback and the tech fears or AI bubble fears, I think that's all noise. And if you look at what's right in front of us and what it means for a year later, I think we're going higher.

Lance Glinn:

Well, Phil, I appreciate all the months that you've come to the NYC to talk about the markets in 2025. I look forward to all our conversations in 2026. Thanks so much for joining us Inside the ICE House.

Phil Rosen:

Thank you, Lance.

Speaker 1:

That's our conversation for this week. Remember to rate, review, and subscribe wherever you listen and follow us on X at ICE House podcast. From the New York Stock Exchange, we'll talk to you again next week Inside the ICE House.

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