Welcome back to The Breakdown with me, NLW.

It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.

What's going on, guys? It is Friday, December 12th, and that means it's time for the Friday 5. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, another solo Friday 5 today because of scheduling issues,

we are talking Fed Day, market structure bill, Bitcoin Treasury companies, a trimming of the bull case,

and a sentencing from the 2022 vintage of crypto criminals. Starting with the Fed, the major headline

for Fed Day has to be the silent dissenters in the breaking of consensus on the FOMC. All-month rate-cut odds had been fluctuating with Fed speakers contradicting each other and whipsawing the market. It was clear heading in that there was a power struggle playing between Doves and Hawks. That battle playing out at headlines isn't new, but the level of dissent that was formalized in the voting was. We had two Fed President's dissent in favor of holding rate steady. In addition, four

non-voting members cast their ballot on dot plot penciling in zero cuts for next year. There hasn't been

this level of dissent since 2019, and it says a lot about where the Fed is going into 2026.

It's pretty clear that Powell's lame duck period started earlier this week. Throughout his tenure,

Powell has been seen as a consensus builder.

There were several meetings during the hiking cycle and again during the cutting cycle,

where he implied strong disagreement behind closed doors, but those FOMC meetings never resulted in open dissent. It seemed the FOMC members valued putting up a united front more than taking

a stand. That idea is now completely out the window and seems unlikely to return next year. Regardless

of who Trump selects as the next Fed chair, we're likely to get even more dissent as the White

House tries to ram through rate cuts. That has a couple of big implications. First, forward

guidance is likely going to become unintelligible as the Fed splinters into factions. The market is going

to have a very difficult time getting its bearings without clear direction from the Fed. Second, it makes monetary policy outwardly political.

There's always been a sense that politics plays a role behind the scenes, but FOMC members

at least try to maintain the facade of Fed independence. Now, in specific, it makes it impossible

to get a good read on where monetary policy is going next year. Right now, the markets are pricing in two rate cuts as the highest probability path for 2026 at 32% odds, but there is a really widespread between zero and four cuts, and even a little tail risk priced in that rates get slashed all the way down to 2%. That's going to make it difficult to operate, especially in the first half of the year while the transition to the new Fed chair is underway. Now, aside from rate policy, we got the new Alphabet Soup liquidity program in the form of the reserve management purchases or RMPs. The Fed is going to be buying $40 billion worth of treasury bills each month until April, with the expectation the program will continue at a lower pace after that. Officially, the purpose is to grow liquidity in the system in line with GDP growth, and as much as some people want to push the narrative, it doesn't really seem like QE. Probably the most important signal from this program is that the Fed is paying close attention to liquidity conditions and saw fit to do something about them. Notably, the program started immediately, so the Fed didn't think they had any time to wait around. By itself, the program isn't money printer go burr, and if liquidity conditions recover, we probably won't get to that stage. But the Fed program is now in place, and they stand ready to provide as much liquidity as necessary. Next up, we get an update on the market structure bill. All week, we've been tracking comments from lawmakers around getting that bill done. At the start of the week, it seemed like negotiations had come off the rails. Senator Moreno said the talks had been decently frustrating, and Senator Warner threw some barbs at Republicans for deferring to the White House on ethics issues. It wasn't looking great, but after another meeting, Senators, Lummis and Jillibrand sat for a joint interview and said things were back on track. Lumas promised to get a draft out by the end of the week and said we're still likely to get a markup hearing scheduled for next week. We haven't seen that draft yet as I record, but what we did get was a written counteroffer from Democrats leaked via Punchbowl. Dems are asking for three main things. Stronger safeguards in the commodity security delineation. Essentially, there's concern that companies

will issue security-like tokens through the commodity definition. Dems also want a lower cap on the

amount of money that can be raised without SEC registration. This one feels the most amorphous,

...