Open Book with Anthony Scaramucci - America’s Debt Problem, Bitcoin, Gold, & Silver Collapse, Overpriced Stock Market, Fed's Next Move

Episode Date: February 4, 2026

Michael Novogratz is the Founder and CEO of Galaxy Digital. He was formerly a Partner and President of Fortress Investment Group LLC. Mr. Novogratz served on the New York Federal Reserve’s Investment Advisory Committee on Financial Markets from 2012 to 2015. He serves as the Chairman of The Bail Project and has made criminal justice reform a focus of his family’s foundation. Follow Anthony on X: ⁠⁠https://x.com/Scaramucci⁠⁠ Follow Novo on X: ⁠⁠https://x.com/novogratz⁠⁠ Anthony Scaramucci is the founder and managing partner of SkyBridge, a global alternative investment firm, and founder and chairman of SALT, a global thought leadership forum and venture studio. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Conditions apply. The American people don't really understand it. If you ask the man or woman on the street, Mike, about the deficit, they don't understand it. They want their Social Security payments. They want their Medicare health insurance. And they don't understand the imbalance that has been created that's we, in my opinion, and perhaps yours is unsustainable. That was just on a call with the senator from Louisiana, Bill Cassidy. And he has forwarded a bill on Social Security reform.

His bill basically is we're going to take a trillion and a half dollars of the Social Security Trust Fund and put it into market. And, you know, in 40 years, he thinks that takes 20% of the U.S. debt problem away. Politics need to be the art of the possible because you're right. You're not going to convince people. I need to take your benefits away for the good of the nation. We just are not a nation that has that DNA. Welcome to all things markets. I'm Anthony Scaramucci. And I'm Mike Novogratz. All right. Mike Novigratz, man, a year has taken place in the last week. You know how that sometimes happens in history. So let's start with the macro gold, silver, and continued pullback in crypto.

What do you make of all this? Then we'll get to Gavin Warsh. And then we're also going to talk a little bit about the Fed and what's going on in the world of legislation. Let's start with the macro. When you're in macro as long as I am, you get to understand and sense and see what market tops look like, right? We had a market top in silver and most likely in gold. I would say we had a market top in gold and silver. What does that mean? It means for the foreseeable future, we're not getting back to those prices. What are tops, the characteristics of tops? One is a spectacular

spike in volume, which we had in both silver and gold, a spectacular spike in narrative, right, which we had central banks buying tether buying $4 billion of gold, all the story out. If you add one basis point of allocation to gold, you know, how much it moves to price, perfect narrative and just price action, right? Silver is 35% off the highs. Silver had gone to 85% above its 50 day, I'm sorry, 15 week moving average. If you look back 30 years, it had never been more than 55%. And so on any momentum indicator, any overextended, it was as over-extended as it's ever been by almost double. And then you get a trigger. The trigger happened to be Kevin Warsh, and I'll get him in a second. And you see the unwind. What normally happens after this unwind is you'll bounce up and

you'll try to look like all the people that missed it the first time will buy it. And it will get about two-thirds of the way and it'll roll back over. At that point, it's a better short, even though the story doesn't change, the basement of currency. So what happened to create that final surge and then spark? The surge came out of Davos. It came out of the Carney speech. It came out of Pierce Stomber saying you can't trust the U.S.

It came out of the U.S. saying, in lots of ways, we're going to be a lot more isolationist than not globalist, really strongly. And people say, okay, then you're not going to be the reserve currency. And because we can't buy China and the other currencies aren't great, our outlets gold and silver. And so gold and silver became the easy reflex of buy to, you know, bad U.S. or at least different U.S. in Davos. Now you have a fire all set up just for the spark to reverse, and that spark was Kevin Warsh. And Trump is savvy, right? He was losing control of the market a little bit.

And you pivot away. And you got to feel bad if you're Rick Reeder because you're thinking, what if they pick me? No one was going to trust me. Like Rick and Kevin are pretty similar guys, right? They both are men of integrity. They both have a lot of market experience. a lot of market respect. I would say Rick more than Kevin because a lot more people know Rick than know Kevin. You know, Kevin has been an analyst in Stan Druckmuller's office, quite frankly,

since he left the Fed, professor at Stanford as well. And so what did Kevin's appointment do? Really simply put, it took the tail risk of inflation away. Kevin's dovish. He's going to cut rates. Trump wants him to cut rates, so that's convenient. But Kevin has never. He's not. He's not going to hand over the reins of the central bank to Donald Trump or any president, right? He gets a six-year term. He can't get fired, really. And so it's a little bit like a Supreme Court justice just with a truncated term. And people know him, no, know and think of him as a mini-drockmower, as a man of integrity. And, you know, if you want to be conspiracy theories, He's going to say he's married to Ron Loner's daughter.

He's in the pocket. No, he's his own guy. He is disciplined. He taught me about intermittent fasting. I wish I could have that discipline because, you know, it seems to eat one meal a day and you'll lose a lot of weight and stay healthy. Do you do intermittent fasting? Only when I'm too busy to eat.

All right. I like at least two meals a day. Oh, man, come on. Novo, let me tell you something. We're getting up there, man. Let's enjoy our meals. Okay. I'm your Italian brother.

I enjoy my meals. And I like to drink after. I like to drink after. Kevin Warsh on like food, okay? Yeah. Call your Italian brothers on food. I like to drink after 8 p.m. There's no drinking after 8 p.m.

in the interview. You got to be kidding. All right. All right. So I lasted a day on that. But listen. So what did the market say? Everything you were saying about Warsh was going beautifully.

He told me about the eating habits. Now it's going this way. But so he took the tail risk out. Right. Right. We're not going to have turkey. He's not going to allow turkey. no one thinks Kevin Worsh will allow turkey.

And listen, he doesn't have complete say, right? The government, treasury, and Congress, you know, has control over the budget. But it's an important leg of the stool. And in some weird way, if I was president or my favorite Democrat was president, you very well might pick Kevin Warsh and Scott Besson to be one and two, right? like I was calling it the dream team. Listen, Besson has become far more political than I ever thought he would, but that's the job. Warsh took the job that's by definition apolitical.

And so, you know, it's a good thing for America that Warsh is in that spot. So I don't know Kevin as well as you know Kevin, but believe it or not, I was in the Trump orbit when they interviewed Kevin the first time. And Trump, there were three picks, okay? there was Kevin Warsh, Jerome Powell, Janet Yellen. Okay, he dispatched Larry Lindsay. Unfortunately, he didn't like Larry Lindsay's appearance. Okay, we're just talking very honestly on this podcast.

Larry, Larry likes to eat the Italian food just like you. Larry, like you and me, is not intermittent fasting. But anyway, to make a long story short, those three, he said Warsh was too hawkish. and he said he couldn't pick Yellen because Yelan was a Obama pick and so he went with Jerome Powell at the suggestion of Mnuchin. One of the reasons why Stephen is on the outs with Trump is he blames him for Jerome Powell. Why are you laughing?

I'm just telling you everything I know. I'm giving me the good dad. That's good skinny. Okay, so, but Kevin I like. I met Kevin through Professor Neil Ferguson and I've read a lot of Kevin's stuff and I think he's a great pick for the Fed, and I know you agree with me. But let's go to market valuation. And let me just read you these facts and then you respond, Mike Novogratz, right?

S&P at all-time high. Dow Jones, all-time high. Current PE ratio, Schiller PE ratio, 40.32. Historical average, Mike Novigrat, 17.3. Okay, we're trading at a wide. wild.com bubble peak valuation, okay, which on March 1st, 2000 was 44.19. This is the second most expensive market in 155 years. Okay, I'm just reading the stats. You're the macro guru guru, so I now want you to respond to all of those stats. Go. Yeah, there is enough to get you really

worried and at one point there's a shot we'll have a big correction. On the other hand, you've got a technology in AI that we've never seen the kind of productivity gains. It's such a powerful story. I said this last podcast, I really think it's going to create a bubble beyond the tech bubble, right? Bubbles are created around stories that you can't take your eyes off of. and this is one of them. And it will end just like the tech bubble did.

I just don't know if we're there yet. Now, that said, right before this podcast, I went out and bought 400 million bucks of 1%, 4% out of the money puts for the end of March. I just think every portfolio should have some disaster insurance in it. Because you're not going to know when it happens. My base case is still stocks higher. and that's mostly driven by a strong economy, the fact that inflation is falling and so Warsh is going to be able to cut.

So we're going to have a Fed cutting rates into a strong economy and you have a story that's powerful. So Michael, you didn't live through the nifty 50 and I didn't live. We're both the same age. But tell the viewers and listeners what the nifty 50 was. What were the nifty 50? Yeah, the 50 biggest names in the. stock market and during the original bubble, right, the one we all read about, 1929, 1930,

this was where all the volume and all the frenzy and all the story showed up. So we've got from the nifty 50 to the powerful four. It was the mag seven and now it's like, well, yeah, well, let me do it because I did the math on the mag seven. So let me just give you the mag seven ready, 35.7% concentration of, the S&B 500 in the MAG 7. In the dot-com era, again, March 2000, the top 10 names were 24%.

Okay. So current MAG 7, 35.7%. And you say, Yeah, I think, listen, they continue to make money. They continue to beat earnings. They have the growth story of the world. Now, they're not all going to win, and at one point something's going to fall, right?

Everyone, I think if you ask macro and equity long short to predict what ends it, it'll be a problem with, you know, open AI. You saw Elon now is going to take GROC, right, XAI and merge it with SpaceX. And then people, people, at least speculate that one day he'll merge that with Tesla and it will be the new Berkshire Hathaway of the future. We'll see. But, you know, Elon's got so much momentum in his following. It's hard to think the SpaceX, which already has cash flow from the satellite business and from the renting out, you know, pushing up rockets into space. It's hard to think that that doesn't trade well, right?

I'm guessing all of a sudden that's a $2 trillion company. You know, out of nowhere, two private companies merged together. than you had a trillion-dollar company. Now, outside of nowhere, SpaceX is, I think, 15 years old, right? Yeah. Or maybe even older. Yeah, no, SpaceX is 2002, so it's 24 years old. 24 years old, right. So, you know, you didn't see the memo.

Maybe you misplaced the email, but it says right here that Mike Novagratt is the Fed chair for the following two meetings, okay? June 16, 2006, and July 28th, and, July 28th, 29, 2006. So you've been named the Fed Chair. And oh, by the way, you have carte blanche, Mike Novogratz. You have no committee that's going to vote. You're going to make the decision on where rates are going to go. So go ahead, Fed Chair, Mike Novogras. What would you do with rates? Because the next couple are stole Jerome Powell's. That's March and April. But in June and July, those are yours. What do you do with rates, Mike? You know, it all depends what Powell has done.

assuming Powell has done nothing, there'll be so much more data by the time you get to June, right? Inflation data, jobs data, we'll be getting closer to the midterms. Why I say that is important because I think Trump realizes his poll numbers fell more in the last four weeks

than they have, I think, anytime in his career. And so they're going to do something to try to juice the economy, right? that's not just because it's Trump. Any politician who's in power coming into election tries to, you know, juice the economy. And so my guess is you're not doing a thing. You're sitting there. Okay.

So, okay, so now we're stopping in the play acting. Chairman Kevin, he gets approved, assuming Tillis, everybody gets on board and the criminal proceedings go away for Jerome Powell. chairman Warsh, no rate cut in his first two meetings? I think he cuts rates in his first two meetings because he really books. Listen, there's a real fair debate about inflation and what causes it, right? So I'm going to take you back to 2012. We have Bernacki does QE2. And everyone was worried about inflation.

Oh, my God, we're going to get inflation. Oh, my God, we're going to get inflation. You can't flood the market with this much money and not have inflation. And guess what? No inflation. Japan was QE infinity. No inflation. We didn't really get consumer price inflation until COVID.

And that very well could have just been because of the supply shock. And so, Anthony, we might look back 20 years from now. I have studied these 40 years and said, technology measured or unmeasured and globalization did such an amazing job of keeping consumer inflation low that there was nothing that could raise it that the only thing that got it up was supply shocks right tariffs were a version of a supply shock

but as tariffs go away the the pounding of productivity a pounding of excess labor, you know, with productivity gains, with outsourcing, with, you know, water falling to its equilibrium level, if you want to think about it globally, as opposed to just in your own little pond. Maybe that's just the mega deflation trade. And that's what everyone got wrong in 2013 and 2014 and 2015 when they thought inflation was coming. And so if that argument tends to be the right one, worse can bring rates back down. to 2%. Now, what no one talked about is that's the environment for spectacular asset inflation, right? Inflation of stocks and properties and collectibles and things that rich people own.

That's the formula for wealth inequality, which we see and benefit from the two of us because we own assets. And that's the formula for revolution. If it's tax revolution, if it's revolution like you're seeing in streets and places. We agree. But so Warsh might, you know, have an environment where even though the economy is doing fine, if inflation is still low, he's going to cut rates. Okay, so I'm going to make a prediction for you because he is obviously a mentee, a mentee, a Stan Trucke and Miller or they say their business have been business partners. And about seven, eight years ago, Stan was on a college tour. You may remember this. What was Stan talking about

on the college tour? Well, the Jane clicks back. The generational theft of baby boomers taking money from their children and grandchildren through this deficit spending. So I'm going to make a prediction that Warsh is going to go on a campaign once Trump has been neutralized effectively or lame ducked completely, he'll go on a campaign to discuss deficit reduction and how to try to contain the deficit. Let me push back a little bit. What say you? Go ahead.

I'm going to push back a little bit. Go ahead. Let me hear it. So there's two key roles, right? There is there is Treasury Secretary and Fed governor. Traditionally, Fed governors have said, hey, that's not my lane. That's the administration and Congress's lane. I can tell you what I think about it, but it's not my lane.

My lane is inflation and jobs. I got a dual mandate. I'm going to put one in front of the other every once in a while based on context. But that's my lane. And yes, lots of deficit spending needs to get funded in the long. long run, that's not great. It creates inflation, but I don't see the inflation. I'm just inflation. And so I think if you gave him both hats, you're 100% correct. What is surprising is we would have said the same thing about Bessent. And the reality of politics has not allowed Besson to carry

through on that commitment to, you know, he was trying to get the deficits down to 4%, let alone, I'm sorry, 3%, let alone 3% by the end of his term, right? I think we're stuck at 6.5 or 7 right now. No real change. Anthony, when I worked at the Office of Management and Budget as a 19-year-old GS-4, I learned that 4% deficits were code red. And you only should run them in times of big structural recession, right? This is Keynesian economics. When the economy sucks, you should spend extra. And you should run a surplus or tighten one, the economy's hot.

Right. Now we're hoping to get to 3%. He's now changed that to 4 by the end of the term, hoping for what used to be code It's not completely apples and apples because we didn't have the entitlement spending that's continuing to grow that we have right now. Right. Social Security, Medicare, Medicaid is literally 50% of total federal spending. I think that's the right number. You can check me on it. And so, but we've gotten too comfortable with spending other people's money. And that's hard to fix. And I don't. know what's going to fix it. Okay, so I would have to leave that part here. We just have a few minutes

left, Michael. I want to go to the 9-1-1 distress calls that you got on the Galaxy Bitcoin hotline over the weekend where people were looking at their Bitcoin melting like an ice cube going from the mid-80s to the mid-70s. And what's your response to that? Oh, the pain, the pain, Listen, Bitcoin has been so frustratingly painful. This was our moment and, you know, we have not performed the way we would all have hoped. I think a lot about what we got wrong. Like I said this on the last episode, I think what happened was post 100. People started selling and it became a little bit of a virus.

Remember Bitcoin was like I used to call it a religion. And the tenant of one of the tenants of the commandments of the religion was hoddle. Hold on for dear life. This is not even a financial investment. It's a long-term wealth investment. Right. And I think as that got shipped away out a little bit for various reasons, for profit-taking, for, oh, my God, I'm worried about, I'm worried about quantum. Oh, my goodness.

I'm worried about the too much concentration in ETFs. I'm worried. Like, people made excuses. And we've had more sellers than buyers. And the question I asked myself last night, have we hit sellers exhaustion? Right. Ethereum on the chart, 2150 looks like it should be support, but it's fallen a long way. So most likely now we bounce between 2150 and maybe 3,000 and consolidate in that range for a while.

Then we'll see the next leg. Does it go higher or lower? Bitcoin, you know, it, it, it, it, it, broke all its moving averages. It trades poor technically. People were hoping there were two legs of the cavalry. One was the market structure bill. The other was a really doveish fed share. Like, quite frankly, when we knew Hasse it was out, we should have, you know, gotten much more concerned. Because I'm not sure that if Rick Reeder had been appointed, the market reaction would have been that different, right?

You know, maybe Rick wouldn't be seen as hawkish as Warsh. But, you know, Rick understand what the bond market means. So, you know, now we got two legs, one and a half legs left of narrative. It's, will market structure pass? And does that give us a little bit of juice? So over the weekend, you were aware on that. You've been balancing a little bit, right? the Polly market, 63% on that.

You think it's more better than half? I'm a little better than 63%, but I'm not a ton better. I do think it'll pass. I was talking to one of the key Democrats literally two nights ago. And he said, come on, we're on the putty green. And this is a lot of tactics now. They would have rather, Dems would have rather not had the Senate Ag Committee forced it to a vote. So all the Dems voted no.

They're very close. There's a few issues left. I think there's been a change, though. Like Trump's and the Republicans' polling is so bad, the Democrats feel like they've finally got a leg to stand on in negotiation. Right. And so even though the gap is between, call it, 180, instead of the Democrats taking, you know, 82, they want 90. And so there'll be a little more negotiation. It'll happen over the next, you know, one.

to four weeks. And I think we'll get a bill passed. I really do. And so I'm probably 70, 75% chance. But I mean, if I read you correctly, you think the bill gets passed because the Democrats honestly don't want the hassle and the midterms of being vulturized by the crypto packs. Am I wrong in saying it's so cynically? And people have worked for 18 months on this damn thing. And I think there's pride and ownership of all the work that's been done. If it's on the Republican side, you know, with Cynthia Lummis. This is her last term. This is her signature, signature piece, right?

Tim Scott, who runs the banking committee, has got a lot of political capital tied up in this. And so that, you know, senators have a lot of ego just like hedge fund managers. And so they want this to get done. But the Dems want it off the table, right? reported election coming up in the midterms they don't need. And, you know, the crypto pack was flexing its muscle. They actually printed, hey, we have $195 million of dry powder. That's a war chest, right?

Remember, Elon changed the whole election with $250 million. Right? The crypto pack is $195 million of dry powder. And nobody wants that pointed at them. That's a bazooka. There's a lot of people, not me, but there are a lot of people that say we've had this sort of crash down 40%, frankly, a garden variety down 40%. You know, Richard, co-CEO of Binance, said to me that he thought that this is just

four-year cycle stuff. You won't really see a new high in Bitcoin until we get through October of this year. One of his partners, no longer CEO of Binance, CZ, is saying that we're heading for a Bitcoin super cycle. Where is Mike Novogras? Well, I hope CZ's right. Yeah, well, I hope he is too, but where are you? Listen, the one thing I would say about crypto is of any asset I've ever been a part of.

When everyone declares it dead, there's lots of opportunity, right? We bought Helios to do Bitcoin mining. When Bitcoin was at $16,000, we bought Bitcoin there. We bought a bunch. And every one of those are some of the best trades we ever made. And so there's a lot of pessimism right now. It's going to take something to change the narrative. I was kidding around.

I was like, dudes, it's time to get new storytellers because I've heard from Michael Saylor and Mike Novogretz too often. And I was half kidding and half serious. Like, Bitcoin is a narrative technology. Right. You've got to convince your neighbor and institutions and people look wrong. the world that this is a safe place to store your money because we think fiat currency will get debased. And Pat had worked spectacularly well for a while and it hasn't worked for the last six months.

And so, again, it's been through this before. I don't think fiat currencies are all of a sudden not going to be debased just because Kevin Warsh took the job. Again, I think he's going to do a great job, but it's forces larger than himself. like we can have the dream team but landing $40 trillion a debt is almost impossible right Ray Dalio is out there publicly saying it is impossible game over and Ray three years ago had hope right he called he came up with his term of beautiful de leveraging or maybe that was Ken Rogaugh off one of the two of them but there was this idea that you could beautifully de leverage it was indifference in

Washington they don't care about that stuff but you know the the the real The real problem for me when I'm watching this is that the American people don't really understand it. If you ask the man or woman on the street, Mike, about the deficit, they don't understand it. They want their Social Security payments. They want their Medicare health insurance. And they don't understand the imbalance that has been created that's we, in my opinion. And perhaps yours is unsustainable. You know, it's interesting, Anthony.

I was just on a call with the senator from Louisiana. Not Kennedy, but... Cassidy, Bill Cassidy. And he has forwarded a bill, a bipartisan bill, on Social Security Reform. And I've studied Social Security Reform for 25-odd years, I'm sure as you have. You know, the levers are, do you move the age out? Do you mean's test? Rich people don't get it.

There's lots of different, but there's really only two levers. And, you know, you can move the age out for people that haven't been born yet. people that are 20. There's all kinds of safer ways. Nothing's ever passed. And his bill basically is, we're going to take a trillion and a half dollars of the Social Security Trust Fund

and put it into the market. New Zealand style. I'm sorry, Australia style. And my God, if we had done that 10 years ago. And, you know, in 40 years, he thinks that takes 20% of the U.S. debt problem away. But it was so interesting. I was like, politics need to be

art of the possible because you're right. You're not going to convince people, I need to take your benefits away for the good of the nation. We just are not a nation that has that DNA. There are others that do. You can do it in Japan. Well, Mike, you were there when the BOD crisis, the Thai Bacrisis took place. The Koreans were bringing their gold to the Korean treasury. They're having it melted to help the country. You remember that? I remember. I was trying to collect it first. I looked at my, I have, the only silver I had left in the market, having sold my silver way too early was a 100 ounce silver bar I got for an anniversary present.

And I rubbed it last week before I went on the, for good luck before I went on my trip. And it went from being worth, whatever, 13,000. to $80,000 really fast. I mean, $8,000 really fast. I was like, man. But that puts it in perspective. All right. Well, this has been another phenomenal discussion for all things markets.

We'll be back next week. I even dressed up. I even dressed up for this one. Yeah. To me, I'm in, I'm in, you know, I may be in a barrel. If we keep it up with crypto, I'll be in a barrel and suspenders. I was thinking that. You know, like, God.

Yeah, I'll have to get crypto working again for you. Right now, this is fashion by Amazon for me, but who the hell knows? All right, but we'll see everybody next week, and Michael, it's been a great conversation. Instacart knows that some people go bananas about getting the perfect, well, banana. Some want them green, some want them ripe, some want them ready right when they hit their doorstep. But with Instacart's preference picker, available at most retailers, you can choose to get your groceries just the way you like. That means perfectly right bananas, deli meat sliced just the way you want, and avocados that, aren't still hard as a puck in the third period. So don't cross your fingers and hope for the best.

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