Open Book with Anthony Scaramucci - Inflation Crisis, Market Predictions for 2026, Trump's Federal Reserve, Crypto's Future

Episode Date: December 29, 2025

This conversation dives into inflation, affordability, and why the Federal Reserve’s next moves will shape markets heading into 2026. We unpack Trump’s pressure on interest rates, the politics behind choosing the next Fed chair, and how global liquidity—from AI-driven growth to the yen carry trade—ripples through stocks, currencies, and crypto. Along the way, we explore why Bitcoin’s stalled momentum may be a contrarian signal rather than the end of the story. 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

Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my out of office has a forever setting. An IG Private Wealth advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IG Private Wealth.com.

This episode is brought to you by Tellus Online Security. Oh, tax season is the worst. You mean hack season? Sorry, what? Yeah, cybercriminals love tax forms. But I've got Tellus Online Security. It helps protect against identity theft and financial fraud so I can stress less during tax season or any season.

Plan started just $12 a month. Learn more at tellus.com slash online security. No one can prevent all cybercrime or identity theft. Conditions apply. Visit BetMGM casino and check out the newest exclusive. The Price is Right Fortune Pick. BetMDM and GameSense remind you to play responsibly. 19 plus to wager.

Ontario only. Please play responsibly. If you have questions or concerns about your gambling or someone close to you, please contact connects Ontario at 1-866-531-2,600 to speak to an advisor. Free of charge. BetMGM operates pursuant to an operating agreement with Eye Gaming, Ontario. inflation really is the club that will beat senselessly the Fed governor or the Treasury Secretary because it just eradicates wealth and spending power from working class, middle class, and even upper class.

It's a regressive tax, Michael. I feel like Trump is one of the luckiest people on the planet. I'm going to predict that inflation trends down. Even if he wins or loses the tariff thing, it's not going to really matter. If he wins, though, I think it'll be positive for him, you know, in terms of him, being able to get these rebates done. If he loses, it'll be positive for the market because you'll see more cash flow in the market.

So I think he's going to get lucky either way. And he's got an AI boom coming. Welcome to all things markets. I am Anthony Scaramucci. And I'm like no regrets. Michael, it's a couple days before Christmas. So we're going into prediction season. Okay, I know you like prediction markets.

And 2006, you know, you sent me a text today. I want to start there. You said, you know, the first text, 10 trading days. The first two weeks of the year are super important. So why is that? And you say, people come out of the gates hard. Tell us what you mean. Even though maybe it shouldn't be this way, many people, almost everyone in investing, are graded year to year. How you do this year? I'm up 16%. I can't believe I'm only at 4%. Oh, I'm getting crushed. I'm down 27%. And we have this annual cycle where, start fresh. Now listen, if you had a year where you make 38% and you get paid some incentive fee,

let's say you're a hedge fund, you get paid 20% of that, you take that fee. Hey, if you're gone from 38% to 30%, that's not the end of the world. But when you start at zero, if you instantly go down to 8%, oh, that would really suck. And so getting off to a good start, being laser focused is wildly important for every professional investor. And a lot of people will have taken down risk in the last three weeks of the year. They want to lock in their year. They're going to do their tax loss selling. They want to make sure they don't lose that incentive fee that they've already spent on their

white's diamond earrings for Christmas, whatever that situation is. And so you come back and you're like, oh, I got to get back in the game, baby. And people put on a lot of risks the first few days of the year. You often see the existence. existing trends accelerate. And then three weeks, four weeks, five weeks later, there's a correction because everyone kind of gets into the same mindset. And so you're crazy if you're a professional trader not to be in your seat, Jan 1.

You don't have to trade, but the first day, whatever the first, if Jan 3, Jan 4, whatever the first trading day is, you got to be in your seat and you got to be focused. I don't know you know I have spent the last three weeks asking all my you know hedge fund and crypto friends what do you think about 26? Like what are the big themes and so like how are you

if you were framing how you saw the big themes of 26 what would you start with? Well I mean listen I'm I'm a big believer in the end you know you and I go up the same way right We both got started at Goldman. Bob Rubin said to me something, I still take the heart. Don't fight the Fed. If you're telling me the Fed's coming down, and remember, the President wants 1% interest rates.

Let's just remind everybody of that. The President wants recession level, deep recession. He wants rates jammed down to 1%. He's interviewing these guys. He's telling him, so is 100 basis point cut in the cards. and they're all gulping at them, Waller, Walsh, you know, acid. And you know they're all saying the same thing, you know. So to me, I don't want to fight the Fed.

I'm long. We're positioned long. I also think that the negativity in crypto is a contrary indicator, Michael, unless you tell me differently, we were set up, super bowled up. I talked to all the same people you talked to at the beginning of 2025. We're going to the moon. Okay. Bitcoin, please.

go to moon. Yeah, and it stalled, my man. It didn't, it didn't get off the loin. It was like Apollo 13. We basically got the command module back intact. But so to me, I think we're going to have a great year. So, and I think we're going to have a great year because a lot of people are in a risk off position vis-a-vis crypto.

And by the way, macro sentiment on crypto, retail, Twitter, crypto, Twitter, dead. Go look at Google. and look at conversations related to Bitcoin searches, related to Bitcoin near all-time lows, Mike. Okay, so that makes me positive, too. Am I wrong in thinking that way? So, listen, I'm not thinking that different than you. I think we're going to get a new Fed governor who's going to be dubbish, and the Fed's going to cut. And what does that mean?

It means to me the dollar sells off. To some degree, I think that the easiest trade is probably staying along the Aussie dollar, the euro, you know, euro goes from 118 to 130 over the course of a year. And so we have the next leg down of the dollar. That would be one of my trades. You know, gold and silver have had such monster moves. I'm preparing for a reversal at one point. If you're not in them, it's hard to be in them here.

You can buy gold with the tight stuff under the old highs, which I did today. but I think you wait to reset gold and silver for a major correction. You always get a correction, right? One of the great tricks in trending markets is you buy pullbacks to the 50-day moving average. So that's the price, average price over the 50 days. Markets always correct there at one point. And so you don't have to pay the highs of everything. I think crypto has been such an underperformer.

it's got the same story as gold and it hasn't been gold at all this year that there's a real fear I think the more the painful trade is crypto higher not lower for all the professional community so if it gets moving

it could really accelerate it's got all the ingredients of getting moving other than it's not moving yet and so I'm watching it really carefully I don't want to be pessimistic down here I need to see it start gaining momentum and break 100, and now I would get really excited.

But I think crypto could be a good 2026. And stocks are be interesting, right? Again, the Fed's going to be cutting. You still have this AI story. Things like Google and Microsoft and Facebook meta aren't as expensive as they were last year because their earnings are growing so quickly. And so next year's trades feel a little bit like this year's trades. That's always a little scary.

But that's kind of, I think, what the fundamentals and the technical say your portfolio should be. Again, because things are extended, you've got to be careful and you've got to pick your spots, right? You don't have to always be invested. You want to be invested from good levels. Okay. So what I did this morning is I sent out a circular to our viewers and listeners. And I said, we're going to make some predictions. It's the end of the year.

What would you like this to predict on? Okay? And so if you're willing, if you're comfortable commenting on it, great. If not, you don't have to. So the first one was one stock that you would recommend this year other than the mag seven stocks. Okay. So that was one.

All right. So I'll go for. Am I allowed to use Galaxy? Because I've CEO, I've got to. No, no, no. You can use Galaxy. Tell us about Galaxy. I'm going to let you talk about Galaxy, but before you go there, the one stock that I would recommend to people this year is IBM.

Now, IBM had a big move, okay, this past year, but IBM is still at the forefront of quantum computing and still, you remember Watson, I remember Watson. It was one of the big leaders in AI, and IBM is coming around and their consulting business is exploding with the Fortune 200. companies that are trying to figure out ways to use AI. And yes, had a big year this year, but it's only a $282 billion market cap compared to the MAG7, which are hovering in the trillion. So can you smile?

Why are you smiling like that? I just love the fact that we're at only. You know, I think about Alibaba at a $340 billion market cap as the second largest stock in China. That feels wrong to me in that China's got to have a trillion dollar stock. if we have so many trillion-dollar stocks. Alibaba owns all the cloud.

There's only one cloud provider. And so trade on a much lower multiple. You know, listen, there's a Chinese discount because of it. But 280, that's a big company in any other world than the United States tech world. So, yeah, mentally, it's 4P is only 25 times earnings in a 40-ish market, Michael. So anyway, that's my pick. Let's talk about Galaxy. Listen, I, you know, people know I'm the CEO of Galaxy.

We have two businesses, a data center business and a crypto business. Well, I also want to be fully disclosed. I own Galaxy and I've got lots of my Bitcoin with you, Michael. So you know I'm a big believer, okay? I appreciate it. Listen, I think the data center business has legs. I think there's a demand for power that's not going away. next year or the following year

or quite frankly the following year. As we get further out, you know, it's harder to predict. But I think there's a good runway left. We constantly are in conversations with, you know, people that use power. And let me tell you there's demand for power. And so I think that's going to be the bulwark of our valuation. And I think there's just so much optionality,

A, that crypto prices go higher. but B that crypto as an industry is going to become more relevant and important because we're going to tokenize real world assets. They're going to, over the next 18 months, the blending of trade-fying crypto happens, and we're going to try to make sure Galaxy is a part of that future. We have a really strong brand. We have a lot of strong relationships with institutional people. And it's our challenge and our job is to turn the,

those into, you know, financially lucrative businesses. And so this has been a challenging year in terms of a lot of progress on the building. Prices of crypto are, you know, are down on the year. But I think next year we might have choppiness. I think Bitcoin prices are going to go higher, but I'm sure the activity around building infrastructure is going to accelerate. Michael, do you ever envision a day where Galaxy is, not affected by the crypto prices. You know, I mean, we never got there with Goldman, right? Goldman was always impacted by market forces.

Yeah, listen, I mean, Galaxy, the data center business, you know, is probably equally important or even a little bigger from a market cap perspective than the crypto business. And it could get substantially so. And so we get asked all the time, we'll split them in two at one point. We'll take it as it goes. Right now we're one business. I certainly could see a world in 12 months where there are two businesses because they have different cycles and different capital needs. The crypto business itself, I think, is at least three to four years away from not being impacted by crypto prices.

And that's because all the revenue in the asset management business, in the staking business, in the trading businesses, is, some percentage of the underlying asset. And in the asset, it's not in dollars. It's in Bitcoin. So a Bitcoin price falls 30%. Your revenue goes 30% off it, especially in the proof of work where you make a lot in staking. If it's staking salon or staking something else, price goes down, you make less staking. And so we're just too correlated still to price, even if we held no crypto on our balance sheet, which we do. And so we're a few years away from that. But I think as a whole, even this year, we've been less correlated to price of crypto because of data center. Well, I will go to the next question, but I want you to explain staking to our younger people that may not understand what staking is.

All right, sure. So this is going to be a simplistic description first of blockchains. So what blockchains are, right, Bitcoin was the first blockchain we heard about, are big databases that instead of, being owned by one person, where the one person puts all the inputs in, they are kept up by a community where different communities put the same data and look at the data and then validate that, yes, that's the right data. And then they put a big stamp of approval on it. That stamp of approval in Bitcoin, which is a proof of work blockchain, comes from the Bitcoin miners. They mine a new block every 10 minutes. That block gets mined.

It stamps that spreadsheet to become permanent. And then the next 10 minutes, a new spreadsheet gets a new stamp with new data gets put on top. And so it's almost impossible to change the old one because there's one on top and then one on top. And so when people talk about the immutability of a blockchain, it's the immutability of a database. I can't change the data. Proof of stake, which is the other way people validate the data on that spreadsheet, on that theoretical database, came up, one, because it would be cheaper, we would use less energy. It's used in Ethereum.

It's used in Solana. But you have validators who validate what's on that blockchain. and they get staking rewards to do so. Those staking rewards are the payment for running these big computer systems. And they're also the inflation level of that underlying ecosystem. So if it's Solana at six and a half, seven percent,

that means there's six to have seven percent new tokens made each year. So that's quote, would be inflation. There's a debate should that come up or down. And so those are really the two different ways, crypto ecosystems, ensure that the data

that's put on blockchains is inliable. Okay. Follow-up question of that. A lot of people ask me this. I'm going to ask you it. Is that staking inflationary? Does it hurt the overall

weighted average of the market capitalization of the token? Well, it certainly is inflationary relative to zero, right? Is it inflationary relative to the dollar? Well, if the dollar's got a high inflation level, no, right? But right now, you've got 7% new tokens being made in Salana every year. And so that's, that's inflation. Now, you can still see a wild appreciation if the growth rate of activity is higher than 10%. Right? Ethereum, that levels come way, way down.

you know, Bitcoin had its own version of inflation, just how many, how big the mining rewards are. And they have it every four years that it gets cut in half. And so it's, it's becoming de minimis. But yes, it is inflationary. I need, I need 7% to break even with my purchasing power. Right. Well, you know, it's just important for people to understand, but it is a form. You certainly want to stake your tokens to the extent that you're a long-term holder because you do participate in it. And so therefore, you're giving away 7% of your return.

Exactly. And so on your tokens, it's actually non-inflationary if you're staking because you'll stay, you'll stay in sync with everybody else. Another big issue. Okay.

I'm going to go first. And I'm going to be the contrary, I bet. But another big issue, people, I text of people, come back to me, who's the next feds here? The rumor is he's going to make

this announcement at the first of the year, just right after the holidays. He's interviewing people this and next week. And so I'm going to say Calci right now has Hassett at 55, worse at 23, Waller at 11. Rick Reader's not on the radar screen, but he's being interviewed this week down in Moralago. Of course, you and I know him well. He's ahead of fixed income at Black Rock. All right, but I'm going to go first. Okay. I'm saying is Waller. And I think it's going to be a shocking thing that is Waller. You know, I love the fact that we're getting so close that You can eat the bagel with the locks and tomato and wanted it in front of everybody, right?

No problem, right? At least you're not wiping it on your scarf. Okay, that's a good, that's a good sign. Okay. It's a good sign that your wife has trained you well. But I'm going with Waller. Okay, hear me out for a second. Bassant wants Waller.

Waller gave a great interview. Trump likes Waller. He nominated him last time. Waller has voted for interest rate cuts the whole way. and he makes a pretty cogent argument as to why there should be. But the most important reason why it's going to be Waller is, hear me out for a second. If Waller moves to the chair, it opens up a seat on the board of governors for another Trump MAGA nomination. Moreover, Jerome Pallas told people privately that if it's Waller, because he likes Waller, he'll likely step off the board earlier than expected.

And guess what that does? that opens up another potential seat on the board of governors for Trump. The other three, okay, Hacet, who's at 55 percent, Warsh at 23, you don't get that action. You just get the replacement of Jerome Powell, and Jerome Powell likely stays till May, okay, which makes it less savory for President Trump and Scott Passett. Okay, that's my pick. I want to hear your pick. Okay, push back.

Tell me who your pick is and why. He's got midterms coming up in 10 and a half months. And right now would make you nervous if you're in his seat. So he's going to try to goose the economy. We know that. Most presidents, well, that's not a Republican or a Democrat thing. That's a, your president, you got elections coming up. You want to make people think you're working for him.

And so for him, the faster he gets rates down to better. I still think he goes with one of the Kevin's. It won't surprise me if he goes with Kevin Warsh because Trump likes to take, you know, Worse is more respected than the rest of those guys as an economist. Maybe, you know, Rick Reader's got a lot of respect, but I don't think Reader's a real candidate. And Warsh is really dothish right now. On his own, he'd put rates down in, I think, the low twos. And so he might get the best of both worlds with Warsh.

But he likes HACET. He talks to HACSID all the time. Hassett's been close to him. And so I'm 60, 40 Hassett over Warsh. I don't think he's going to go with Waller, and I don't think he's going to go with Rick. And in some ways, it doesn't matter that much. You know, Trump has made it ultimately clear he's going to have a voice. He's going to be loud.

You're not interviewing for that job if you're not willing to accept that. Right? You're just not. Okay. Let me, let me ask you. question, okay? How political is this and how much more political has it been under Trump's tutelage? I feel like 90% more political.

More political, right? There seems like a whole jacking going on. He loves the apprentice. He loves putting people in a public forum and interviewing them and keeping us, I'll maybe I'll make my decision next week on three week. The drama is fun for him and that's, that's, and it's fun for his followers. this stuff was always negotiated backdoor. And quite frankly, in the first term, when Powell got reappointed by Biden, right, there was Biden and Janet Yellen and Powell was coming in.

And Yellen's pick was Lael Brainerd, right? And everyone thought Lail was going to get it. And even though Powell was a Republican, there were some backroom politics and he out negotiated. And he got the job, right? Biden picked a Republican. So that's how unpolitical it was. That Biden picked a Republican. But let me stop you for a second because that's also happened where Greenspan was a Republican. He got picked by Clinton. Remember, he got re-appointed.

And it's gone back and forth that way with respect to Fed chairs. Yeah. And so this is very different. We, again, we have not had a president who has crossed that, you know, that imaginal line of saying, I think my opinion matters on Fed policy. Trump is very clear. I think my opinion matters on tread policy. First one in my lifetime.

And I think it's dangerous. But it's more than that. I am smarter than you on interest rate policy. You know, I have a very big brain. It's not just he wants to say. He wants to be the Fed chair is what he really want. You know, he's got his name on the, on the Kennedy Center now. And what Trump has learned

This is not a political podcast So we're going to stick to the We're going to figure What does Trump learn? Go ahead. What is he's learned Which is really fascinating Is

because it's a skill set That actually works in business I'd rather ask for forgiveness than permission Right? He doesn't ask for permission anymore He learned that Well, no one's got a police force

That's going to arrest him The Supreme Court said he can do What he wants to do So he's just doing it And so he is much more emboldened than he was during his first term, right? People said, well, oh, you need Congress to change, you. I just changed it. What are you going to do about it? And so that behavior is showing up. Now, there's some real advantages to it because they're getting shit done. Well, in their policy

agenda, they're getting stuff done. Right. You normally, there's a committee that debates about the committee should even think about. And, you know, change happens really slowly often. And in this administration, it's happening in the lightning quick. And so I think Democrats are learning from that, saying, how do we operate faster? I know talking to lots of governors. That's the lesson they've taken from this administration. You want to make change, make it. But I think because of it, he's breaking norms that we haven't seen broken. And we're not sure what the consequences will be of all those. I am worried. Again, I said this, I think two podcasts ago, the last president that got really engaged in monetary policy of his country was Erdogan, and that didn't

end up that well for Turkey. Just pull up the Turkish lira on your chart, and it just looks like death, straight down. The opposite of Turkey would have been the Bundesbank, which had, you know, the old German central bank, which had complete autonomy on setting rates for the country and monetary policy. Further from the Bundesbank model, you get a much higher chance of inflation. Okay, this is the last question of the prediction cycle, and it has to do with the yen carry trade. Okay, you're a macro trader. A lot of young kids are texting me, what is the yen carry trade? How does it affect macro hedge fund in particular? How does it affect stocks? But also now having an impact on Bitcoin in its current price. So start with the yen carry trade. And they give us a

prediction directionally, given what's going on with rates in Japan, where that holds out for 2026. So traditionally, because Japanese economy was so weak, they were not producing people, right, they were high savers. They had the lowest interest rates in the world for a long time. And so you could borrow in yen at roughly zero or even negative for a while. And you could lend in other currencies, Brazil at 14% at one point. So you would go long Brazil in short yen or long the dollar in short yen. And even if the rate did it change over a year, you'd make 5%. But often you would have dollar yen weakening. So this year, dollar yen has weakened a lot. We're 156-ish. Let's say today we are. Yeah, 157. I'm sorry. Even though the dollar is weakening, it's not weakening

against the end. It's straightening against the end. As people are, leaving the yen and moving their money outside. What's getting nervous, nerve-wracking is as it's happening, you're seeing Japanese long-end, because inflation is picking up in Japan, the long-end rates have went from basically 10 basis points in 10 years all the way to 2%. So the single largest move in Japanese long-end rates that we've seen in years, 15 years, that's maybe the canary in the coal mine, which might happen in places like the U.S. Right. And so now Japan has making, do we need to raise rates to stop capital from leaving our country? They have a huge amount of reserves and they probably have 200 billion that they can sell against the dollar to

intervene to keep dollar yen from going higher. But if you look at the chart and you look at the story, it won't surprise me to see dollar yen at two, 200 by the end of next year. And so the single best currency trade this year that you could have had on, was short the yen and long the Mexican pace out, right? Mexico's got a really good president and Mrs. Scheinbaum. They've got a lot of good things happening there, connecting close to the U.S. economy. And, you know, the onshoreing out of China

is some Mexico gets some benefit of that. I'm sorry, the offshoring from China. So Mexico versus yen, who had 20% plus the carry, right? which was probably another 7% or 6%. And so that probably carries on. So good for Bitcoin? You know, the Bitcoin story is global liquidity.

And so if Japan decides, oh, no, we need to start buying our bonds again. We can't afford. We have to monetize this bond thing. It's dangerous because they have inflation. Like this whole monetization works until there's inflation. Trump knocking rates to 2% is possible maybe because right now inflation seems like it's going lower, even though affordability doesn't. And so the real, if you can give me one silver bullet of knowledge, I would want to know what both core PCE, core CPI and really a survey of 15 Americans. in different classes, what's affordability done a year from now? Like, that's the $69,000 question.

What will all this do to inflation? And if it's a combination of AI and a softer economy and keeps inflation low like this last print, hey, the Fed can push rates lower, the government can spend more money. Like, inflation really is the club that will beat some. senselessly the Fed governor or the Treasury Secretary because it just eradicates wealth and spending power from working class, middle class. It's a regressive tax, Michael. You know, I feel like the, I feel like Trump is one of the luckiest people on the planet. I'm going to, I'm going to predict that inflation trends down.

Even if he wins or loses the tariff thing, it's not going to really matter. If he wins, though, I think it'll be positive for him, you know, in terms of him being able to get these rebates done. If he loses, it'll be positive for the market because you'll see more cash flow in the market. So I think he's going to get lucky either way. And he's got an AI boom coming. He's got people like you building data centers, okay, and putting a lot of electric power on the grid to help improve all this productivity. All right, that's a wrap. Any other predictions before we wrap out of here for the...

I think it's going to be a joyful Christmas. A joyful Christmas. All right. Well, Merry Christmas to you, Mike. And we'll see you in calendar later, too. When a country's productivity cycle is broken, people feel it in their paychecks, their communities, their futures. What does this mean for individuals, communities, and businesses across the country? Join business leaders, policymakers, and influencers for CGs national series on the Canadian Standard of Living, Productivity and Innovation.

Learn what's driving Canada's productivity decline and discover actionable solutions to reverse it. 206.