Today Jack welcomes Michael Kao, retired hedged manager and private investor, on Forward Guidance for a wide-ranging conversation on liquidity, energy markets, cryptocurrency, and convertible bond arbitrage. Kao argues that risk assets have benefited from a “liquidity lottery” of quantitative easing and low rates, and that as a result financial markets are in a huge bubble that reminds him of the dotcom bubble of the late 1990s. Kao explains why he is skeptical about the value of digital assets, and he does a deep dive into the capital structure of MicroStrategy ($MSTR). Important disclosure: Kao recently entered a short position in $MSTR. Kao is a veteran investor with a wealth of expertise in options pricing, commodity trading, convertible bond arbitrage, and global macro. He has over three decades of investing experience at Goldman Sachs, Canyon Capital Advisors, as well as Akanthos Capital Management, his own hedge fund. Nothing in this podcast should be considered as investment advice. Filmed on June 2, 2022. -- Follow Michael Kao on Twitter: https://twitter.com/UrbanKaoboy Follow Jack Farley on Twitter: https://twitter.com/JackFarley96 Follow Blockworks on Twitter https://twitter.com/Blockworks_ Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletter To get in touch with Jack Farley about sponsoring Forward Guidance, email jack@blockworks.co. -- (00:00) Introduction (00:46) Michael Kao's Background (08:30) The New Dotcom Bubble 2.0 (22:50) The Rho Hedge War Story From 2008 (29:16) Will The Fed Pivot? Can The Fed Pivot? (34:45) MMT (42:05) The Energy Crisis (49:16) The Black Swan For American Oil (59:09) Speculative Bubbles As Inflation Capacitors  (1:02:12) How Do You Value Crypto? (1:10:05) Housing Bubble? (1:11:14) Will QT Steepen The Yield Curve? (1:14:38) Digital Assets (1:18:00) How MicroStrategy Funds Its Bitcoin Purchases (1:28:58) "He's Not In Trouble Right Now" -- Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.