Below is the full unedited transcript of this interview:

0:00

Well, of course, all eyes on tonight's US nonfarm payrolls report and what that means for the fed. Let's get insight now to Ilya Spivak from Tasty Live, who joins me now. And of course, tomorrow. Your time. Ilya. We're a little bit ahead of the future here, but I'm happy New Year to you. The new year. The debate here really about the rate cut, cut path continuing. What are we expecting from the nonfarm payrolls?

0:26

Good to be with you once again, Julia. To start 2026. And you're absolutely right. The debate continues to rage on, despite seeming evidence that the US economy is doing quite well at the moment. Of course, we got that third quarter GDP report late last month. It was very encouraging on the rebound in consumption and much more balanced relative to the first and second quarter, with those wild swings in inventories and imports around the front running of the tariffs. So good news there. We got ISM service sector data just this week. That was a ten month high on the service sector's activity growth with a strong strong surge in hiring which is certainly not lining up well with the Fed's logic that we are looking at a labor market that needed support. But of course, if we look at, let's say, the S&P 500, it hasn't really gone anywhere since October, at the end of the month, where the fed told the markets they were over

1:26

extrapolating on rate cut expectations. And we still need a resolution because as we've had the fed and markets misaligned here, the fed only calling for one cut this year and the markets calling for two risk sentiment can't seem to get off the ground. Nasdaq hasn't revisited even the early December highs. Russell the smallcap index in the US is back at that starting line after a pop, but we can't really seem to get directional progression unless the fed commits, despite this positive economic data, which you might think the markets might embrace and say, oh, good earnings growth, we don't really need rate cuts. Apparently they really, really want them anyway. And maybe that's uncertainty, concerns and wanting some sort of insulation with cheap money around things like Venezuela, things that may sort of go bump in the night. Unexpectedly, I don't think the

2:25

Venezuelan news has really bothered anybody. And crude oil and surging Latam stocks are there as evidence. But it could. And the markets want those cuts. Yeah. As you say the Venezuela move very much sort of ignored by markets. But what about some of these other uncertainties and what that means for stocks for the US dollar, particularly as we've been seeing the Dow and S&P at records?

2:51

Absolutely. So I think we start to see really the strongest evidence for what's going on in the fact that the markets want these rate cuts in that where the dollar has become suddenly perky and hasn't really set a fresh low since July of last year, it's been kind of consolidating right alongside with policy expectations. And perhaps most tellingly, the amount of uncertainty around trade policy. There's a trade policy uncertainty index that measures this put together by fed economists. And certainly uncertainty has cooled since the April Spark last year, but the amount of fuzz, the amount of erratic behavior in this data is unlike anything we'd seen since the first Trump administration and greater. So I think what the markets want is insulation against a globalizing world where more things might potentially go wrong unless things are predictable. I think

3:51

the relentless rally we've seen in gold, seemingly ignoring of what's going on in yields and the dollar over the past year, is very much an expression of that. And the other precious metals, too. So I think when the markets want these rate cuts, if they're not going to get a sign that the fed is going to have a little bit more urgency out of this jobs data, I think the dollar heads higher for risk off reasons. Mainly not so much even yields. But then stocks might get a little bit soggy. And other risky assets like crypto too. Oh yeah. We're about to have a big deep dive into crypto in a moment. I just want to take a little step back into what you mentioned about gold, because you're saying it's sort of got its own globalization narrative. What occurs in 2026, when it was one of the standouts of 2025?

4:40

I think something very similar. If we finally get data that's good enough to convince the markets that actually the fed is right and that they're only getting one rate cut this year, then we could see an uptick in yields that could give gold a little bit of a downside nudge. But ultimately, I think the larger story remains the further that U.S. and China are going to move apart. And the more we get these episodes where the two sides clamp down on things. For example, we just saw China clamping down on rare earth exports to Japan. The more that this kind of stuff occurs, the more I think the markets are going to think we need a go between asset in the event that these spheres of economic influence start to rupture, even temporarily, and we maybe can't settle things in dollars and do business with China at the same time, that makes a non-sovereign alternative like gold, silver, and so forth

5:39

attractive to hold as a hedge. And I think that's something that's going to continue.

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Ilya says US markets are waiting for the Fed