The Pomp Podcast - #1579 Jordi Visser | Why Bitcoin Will EXPLODE During The AI Era

Starting point is 00:00:00 What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat

Starting point is 00:00:40 any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. What's going on, guys? Today, we got a great conversation with Jordy Visser. He's a fan favorite. He's a 30-year veteran on Wall Street. And in this conversation, he explains what's going on with Bitcoin. If the Fed's actually independent, will they cut rates? How should we think about the Azoria lawsuit against the Fed? Then we talk about the PMI, how there's such an inadequacy of labor for all of the things happening when it comes to energy production, the U.S. grid, robotics, automation, and AI. This conversation covers a lot, and we go

Starting point is 00:01:21 through in great detail what happened in the past week when it comes to financial markets and the business world. Our goal is trying to help you better understand what's happening in the world and what you can do in your portfolio to actually better position yourself for the future. Jordy does a great job as always. Here's my latest conversation with Jordy Visser. All right, Jordy, I thought the best place to start today's conversation was around the White House and President Trump are now talking about potentially eliminating capital gains tax. This would be a massive boom to anyone who owns assets, Bitcoin, stocks, anything. Do you think that it's possible that we could actually get zero percent capital gains tax moving forward?

Starting point is 00:01:57 OK, so the main point that I think got emphasized is on the housing market. So he's talked a lot about eliminating capital gains. I think it gets harder once you get into a broader framework, considering that the Democratic side was looking to have a wealth tax. So I think if you go through what he said, where I do think there's a possibility, and we've talked about it over the last few weeks, that I would watch Bill Pulte, not just in his post, how emphatic he is, but this focus that the administration has had that they need to unleash the housing market. They need transactions to be happening. They need people to be able to sell things. So one of the problems in the country with the housing market is obviously that people have locked in rates at lower levels. So if they sell their house, they have to pay the capital gains tax on the appreciation, and then they have to go buy another home, and then they have to get a mortgage at a much higher rate.

Starting point is 00:03:00 So the question is, how do you unlock that logjam where people aren't getting hurt? Well, one of the ways clearly that they they've come to is a possibility that if we eliminate the capital gains tax on housing, it's not like every house, every person would go out and get rid of their home. So it wouldn't unleash, let's say, an expense side to the government that was huge. But what it would do is kind of release the ability of people to do this, because if you have to reset your mortgage at a higher rate, but you're foregoing capital gains tax, you obviously have the money to be able to do that. You have the money to put more money down. So I think they're trying to find something. I think the message that's really important out of this is the administration has not forgotten the Main Street versus Wall Street scenario that they talked about at the beginning of the year. The interest rate side, they're very focused on. They need to get rates down. I think most people

Starting point is 00:03:53 have viewed that primarily as a deficit situation. But I think the housing component sits in is too, because if you can get rates down and you can get rid of the capital gains tax on housing, you're talking about a very, very large stimulus part. And I think this becomes important because we've talked about the re-industrialization, what the government is clearly able to do already, the capex spend that's happening, the energy, the power needs. Unleashing the housing market would be a huge PMI boost. And that's where most of my focus is as a surprise going forward. Okay. You wrote this piece about PMI. Can you explain that for last week's conversation? There's a couple of people who are like, why is PMI important? What is it? Can you just explain

Starting point is 00:04:32 kind of like a 30 seconds, you know, very dumbed down version of like what PMI is, why you find it important. And then let's talk about this piece that you wrote and kind of why you're so focused on PMI right now. Yeah, it is funny that there's two things. There's it's the ISM PMI. So it's the Institute of Supply Management Purchasers Manufacturing Index. So this is just a survey of how people feel about the manufacturing side. So when it's below 50, that means less than 50% of the companies that are asked for this survey believe things are good. When it's above 50, the majority of industries see this as good.

Starting point is 00:05:17 So we've been in a time where this level has been below 50, which historically is during recession periods. And it's been below there since 2022, except for two months at the beginning of this year. A lot of this year, the beginning was a combination of enthusiasm over Trump taking over and people believing that business on the manufacturing side was going to get better. And then the second part was the front loading ahead of the tariffs where people ordering things ahead. The reason this is so important is that the PMI has a very, very high correlation with

Starting point is 00:05:53 earnings in the S&P 500. And there's a reason for it. If the manufacturing side is good, think of that as you're producing more goods. Well, the demand side must be there to produce more goods. So you have the demand and supply side, basically both in growth form. What we've been having for a long time, and this has really been, and this is my thesis, we have not had a PMI that's gone up because of industrialization since before the great financial crisis. So we came out of that. The housing market obviously was horrible for the next seven to eight years. We've gotten a little bump in housing, but nothing dramatic.

Starting point is 00:06:31 Commercial real estate is not moving right now. And the auto production side has been hurt both by the tariffs, but also by kids are less likely to buy them. And once interest rates went up in 2022, you kind of knocked everything out because those groups are very sensitive to interest rates. for the last 18 years, this economy has been driven by software. It's been driven by the MAG-7. They've dominated stock market performance. Everyone who has a pension fund has benefited from the software side. But everyone in the middle part of the country that's been based on the

Starting point is 00:07:02 manufacturing, they've seen it be hurt, partly by the globalization and China labor. But China labor has now normalized to some degree. But the discontent for many people, whether it's students in cities who are discontent because they have loans and they can't get affordable housing, or the manufacturing side of the economy has suffered by us not having a true manufacturing cycle. I believe, and I wrote a paper that that is changing. And for the next decade, investors at the institutional side and hedge funds and asset allocators need to be focused more on a re-industrialization, which is happening. It's happening because now for AI, we've exited the software time, which was about the LLMs, which are still software.

Starting point is 00:07:45 But now we've reached the point where we're getting into the embodiment side, the putting the brain, the software into physical hardware. And the easiest way for people to think about this is drones, which are fighting in wars right now. But eventually humanoids, which you've heard a lot of stories on, robo taxis, which are now spreading across the country. All of these things obviously need hardware, but the biggest need is the data centers and then the power to supply it. So without those things being built up, there's an issue. And this has been a long, normally I don't try to talk for this long into one of your questions, but I think you asked me to describe the PMI. I'm trying to give people not only the importance of it across the country,

Starting point is 00:08:26 but also just kind of the think about where this fits in. So from a geopolitical basis on the tariffs, there was clearly a recognition by the administration when they ramped up the tariffs on China. And then after about six weeks, not only reverse course, but you don't hear any negative conversation, negative rhetoric from the U.S. around China the way it was before. And part of the reason was we recognize the dependence that the country has on rare earth minerals and that China is responsible for processing 90 percent without going through the wonky details of that. The way people should think about it is we are at the mercy right now from a manufacturing basis from China in terms of critical components that go into everything that we use today that has semiconductors, which is almost everything from washing machines to refrigerators to your car, but also from a military basis, from an AI basis. we need rare earth and so and they need chips and so that's where the truce came in we talked about

Starting point is 00:09:30 it on here way before people on wall street did in in my opinion uh and now i think it's become a focus and you're seeing more and more deals between the department of defense and rare earth both in the u.s there's only one real company if people want to go to look at it's mp materials you can go see the dod did a deal with them this month as an investor now and apple did a major deal with them as well. So the PMI is really critical to, let's say, a tide ride, getting the tide to lift all boats. So far, the only boats that have been lifted over the last 18 years have been software companies. We're about to get into the energy, materials, mining, power, everything. So let's talk about the U.S. grid system. There are a bunch of data points that these AI

Starting point is 00:10:15 kind of data centers or energy production, there's just a massive strain on the grid. We saw in certain areas, the megawatt per day pricing started to skyrocket. We have seen people say that there is just literally not enough data center space. We see companies pouring tens of billions of dollars into this. We also see there's companies like Base Power in Texas, who is trying to build a decentralized grid so that people can actually store energy, either sell it back into the grid when it's needed or power their home when the power goes out. I mean, there's all of this technology, energy in terms of mental energy and also capital going into this sector.

Starting point is 00:10:57 Can we actually solve this problem? Like, is this a solvable thing where if we put enough people on it and enough money, we can build a grid that will be able to handle the pull of both the consumer and kind of these very, very energy intense AI models? uh that is the big question that i think every uh technology person is uh is focused on i mentioned last week the interview that eric schmidt did on moonshots where he literally started off the conversation by saying the limit to or the limit and constraint to artificial intelligence and its growth is not semiconductor chips it's electricity he gave a uh he testified uh before congress I believe it was in April. It was. It was before the tariff situation, the Liberation Day. And he specifically talked about this issue that we need approximately 90 gigawatts of power

Starting point is 00:11:54 in his estimation by 2030. The probability of getting that is extremely low based on just what we know today. So there's two parts, I guess, that are answered to your question. As an investor, I love situations where demand outstrips supply. And that's what we have in the power industry right now. So it's great for jobs in there. Goldman Sachs put out a report this week that they think the industry needs $500,000 solely for the power side of the electricity grid. So forget the increased energy we need to go into the side. So coal stocks were doing well this week out of nowhere. There's a bunch of reasons for it. But fossil fuels have had a lack of investment now for the last six, seven years because of the climate deal that was

Starting point is 00:12:39 put in place. So you've had underinvestment in fossils. You've had a lot of fossil fuels. You've had a lot of pressure. You've had the renewable side that's gotten strong, but the one beautiful bill kind of put down on it. So we're at this log jam. And the best way as an investor to see is to look for not anecdotal things, but like big stories that are happening. And most people have heard the headline stories like someone's one of the hyperscalers basically invested in Three Mile Island. So you hear Three Mile Island for the first time in a long time and for the reasons of we need to do something. That's because we've used up basically all the excess capacity. So the pricing that you mentioned is from an excess capacity side. So for everyone out there in,

Starting point is 00:13:21 I'm sure, Texas for sure, you've probably seen your electricity bills go up sharply in June and July. The reason is because the demand side from AI is accelerating. There's two things about that. unless the states put in some kind of cap to help individuals, this pricing is going to continue to go higher because the demand side is just enormous. So the answer to your question on the solution is it's going to take some novel solutions. Elon Musk bought and is importing a power plant, which highlights he doesn't find a way to get it through the permits and everything. So he's doing that. He also bought some land in Mississippi this week that's been dead for a while that used to have a power plant on it with Duke Energy. And he did that for the same reason. He's trying to

Starting point is 00:14:08 find any possible novel solutions by buying existing equipment where maybe he doesn't have to go through the regulations, the permitting and all the stuff to be able to get it. But this is a major problem that will be a major story. I started talking about this on my videos about eight, nine months ago that we'd get to this point at some point. I think we're at that point now. Now let's talk about the human capital component to this, right? So you and I have talked in the past about, um, okay. Uh, I saw Bernie Sanders. He just tweeted, uh, I think it was today or yesterday or the day before where he said, um, there's a picture of remember like the old school drive-in restaurants where, uh, like somebody would come out on roller skates and they would

Starting point is 00:14:47 like serve you food. So he had a picture of a woman on the roller skates with the food. and then he had one of the tesla humanoid robot also serving food uh doing the same thing and he was like you know elon musk's vision of the future is this like how many jobs is he going to kill blah blah you know like clear fear-mongering of like the robots are going to take your job okay that's going to happen in some areas i don't think that there's a shortage of people who want to work at a fast food restaurant or something now you go talk to some of those people they would say maybe there is a shortage but for the most part i think that they're trying to figure out you know where to find those people energy physical world manufacturing blue collar companies

Starting point is 00:15:27 like there's a massive shortage there so in a way robotics is actually not going to displace workers it is going to fill the gap that the workers are not willing to fill because people don't want those jobs and then on top of that i'm an investor in a company called dorin mining where mineral extraction a very large percentage something like 60 70 percent of the cost of extracting the minerals is actually in the human labor. And so what they are trying to do is they are trying to build a technology company that will allow for automation. And so it starts out with, my understanding of it is, there's somebody in the actual machine, they're doing it, the software is merely monitoring what they're doing. Every time they push a button or control

Starting point is 00:16:06 or whatever, and it's learning, it's using machine learning to understand what they're doing, why they're doing it, what are the conditions they're doing it under, etc. Eventually, potentially there's a potential world where from a remote location, they will be able to control these mineral extraction kind of machinery to actually go and do all of this. You don't need a person sitting there inside of the machine. Now, whether that future actually comes or not, it is obvious that's where the world is going across a lot of these industries. And so is that really what America should be leaning into? Like we saw the White House come out with this AI action plan. Should we just go put all of our time, energy, money, et cetera,

Starting point is 00:16:40 into let's go build robots to solve this stuff? Or is that 500,000, you know, kind of human capital or human labor need? Is that where we should go and spend it on training? Should we go spend it on recruiting? Like, how do we fill the gap and do so both in the short term and then what's like the long-term solution as well?

Starting point is 00:16:58 What's going on, guys? One of the most important trends in all of finance is the rise of the retail investor, what I call a self-directed investor. These are people, they don't have a financial advisor or a stockbroker. They simply go and learn on the internet and then they direct their own capital directly into the market.

Starting point is 00:17:13 These people are taking Wall Street by storm. And so I'm going to bring all of us together on September 12th in New York City for the Independent Investor Summit. It's a one-day event that I'm hosting where I'm going to have a bunch of my friends come together and talk on stage, explain what their thoughts on the market are, what their best investment ideas are, and how they think you should change up your portfolio to better position yourself for the future.

Starting point is 00:17:34 I've got Jeff Park, Jordy Visser, Darius Dale, Chris Camelo, the Nigerian brothers, and many, many more that are all coming. These people are incredibly smart. They've made lots of institutions, lots of money throughout their careers, and they now are going to bring this information and share it directly with you, an independent, self-directed investor. So September 12th, the Independent Investor Summit in New York City. Please go into the description, click on the link there, get your ticket, and I'll see you in Manhattan on September 12th. So, you know, you brought up a lot in there that I think is important for people to hear, I'm going to use a couple of things for people to listen to.

Starting point is 00:18:12 So Mark Andreessen, these two podcasts are both on A16Z. Anyone can go listen to them. But Mark Andreessen in particular did an interview at the Reagan Economic Forum back in June with Joe Lonsdale. And you have two technology people talking about the reindustrialization of America. And Mark Andreessen is a great historian. He studies this stuff. He spends a lot of time.

Starting point is 00:18:35 But it helped shape kind of the divide that's in the country, definitely the divide that's in the city between the issues of people that are left in the city, like who can afford to be in the city. He talks about all of that. He talks about the need for reindustrialization. He talks about technology being a part of it. Second one, later this week, A16Z had a person who left Tesla from their battery division who's starting a similar company to what you described, which is a mining company. I mean, he talked about his background and how he always wanted to get into this. So I think one of the things people have to realize is the blue-collar worker of today is going to involve the robotics of technology. We need to build out the industrial of finding the materials and then servicing the materials.

Starting point is 00:19:24 So my father, a construction worker, he was a core driller. And so he was an engineer, incredibly brilliant person, but was a construction worker. He invented his own equipment. We're going to need more people going that way. And Jensen Huang, the CEO of NVIDIA, was on CNBC this week, and he said, kids need to go into physics instead of coding. And that's the transformation that's going. We are getting into needing to work in a world with robotics as opposed to them being scared of them. It's not replacing all of jobs.

Starting point is 00:19:56 The robots are not fixing the robots. We're barely, by 2030, going to have that many humanoids in here. They're certainly not going to be replacing all the jobs because we have a labor shortage that gets worse every single year as well. So we need them to fill the gap. And plus, we need them to do the horrible jobs that lead to my father losing his hearing from being a cord driller, from people losing their backs working in a warehouse. Like, there's certain things that the humanoids are going to be replacing that actually help

Starting point is 00:20:21 allowing humans who are working in these physical labor jobs to not be as hurt as they were during steel plants and stuff. So this is a major change. It's something that's big. I think people need to think about this more the way they probably knew someone who worked at GE, who is a really, really smart person, went to college, but was involved in thinking about the way GE could build these massive things back when we needed the industrialization. We're having a reindustrialization and college graduates need to focus on the physical side as opposed to the coding side. Let's talk about the Federal Reserve, which has kind of a background impact on a lot of things that are happening in the economy and where capital is being invested. There are now questions

Starting point is 00:21:01 about the Federal Reserve's independence and kind of what is happening there. We also saw this week a lawsuit from James Fishback and Azoria that the Fed has been conducting all of their official FOMC business behind closed doors. There's this sunshine law at the federal level that says if you are an official government entity, then you need to do that in public. What's your take on the Fed? I mean, the Fed's under attack from everywhere. They're under attack for their innovation. They're under attack for interest rates. They're under attack now for having private meetings. I mean, it feels like they are the punching bag of the finance world right now. It's just funny that every week there's seven or eight new people out, new approaches.

Starting point is 00:21:41 is, I think Bloomberg called it flooding Powell at this point. And yet Trump will always come out at the end of this saying, I'm not going to fire him. So I think there's a couple of things here that people should realize. Number one, I said last week, and I'll continue to say the Fed independence is officially over. Now, people can think that it'll come back at some point, But the reality is there's no way to to miss that. What has happened is that we have a fiscal problem where we have a massive debt situation and we have a deficit of six to seven percent. The reason people need to connect these two things is that fiscal dominance has become a story that when the size of the government gets so big and with the interest, which is a transfer from the public sector to the private sector, meaning the government's

Starting point is 00:22:35 interest expense is going higher and their net over a trillion dollars now a year. That money is going into the savings accounts. That money is going into money markets. So there's a transfer that happens, which is one way for the economy to still have this kind of growth. Now, normally you get heavy inflation, which becomes the negative. And right now we don't have that. So they need rates to get lower to bring down that interest expense to prevent the fiscal spiral from happening. And on the flip side, if they didn't want to, you know, if they gave up, which they did on the expense, let's kill expenditures. Let's see if Doge can work. We don't even hear Doge anymore. They basically said, we're going to grow our way

Starting point is 00:23:15 out of this problem. Well, to grow your way out of your problem, here's what you need. You need 5% nominal GDP, which I think they're going to get because of the changes in the one big, beautiful bill towards bonus depreciation, which will front load some things. The AI CapEx, which is happening, the power needs which are happening, plus consumption still running ahead at, let's say, 1% to 2%, even if it's down there, you'll still get the close to 5% nominal GDP. Well, they need interest rates to be below that. That's the way you grow out of your debt. You keep the interest rates below the nominal GDP, and you grow your way out of it. Well, for that to happen, we need a bigger cushion. And he wants rates down to 1%. If you got them down to 3%,

Starting point is 00:23:53 doesn't matter. If I'm right and the PMI is going higher at the same time they're looking to cut rates, that means you've got fiscal on your side, you've got monetary on your side, you've got AI profit margins on your side. This is the reason why the stock market is going higher and why it is not a bubble, because we haven't seen anything like this. The only thing that can hurt it at this point, which I do think, and I'm going to go back to this, I've been wrong on this, but if I'm right about the PMI and I'm right about the power side, you're going to start to see inflation move higher from here. I don't think it's going back up to levels that are too concerning, but I do think you're likely to see inflation over the next 12 months go higher than it is today. And if it goes

Starting point is 00:24:32 back up to four at the same time, the Fed is cutting rates. That's a different investment environment. That's more of an inflationary boom scenario. And during that, you want to be long commodities. You don't want to be long technology. And that's the momentum shift that I see happening in the market early right now. There's a meeting this coming week that they are going to hold, Whether it's on a live stream or not, we're going to find out. If for some reason the Fed decides to cut rates, what happens? If for some reason they decide not to cut rates, what happens? For this meeting, there's not anything built into the market that they would cut rates.

Starting point is 00:25:10 So if they cut rates, it's a massive surprise. I do think the interesting thing that people will be looking at at the next time, either there's a rate cut or they acknowledge. Because in September, we're still just above 50%. If they kind of guide towards cutting, everyone's going to be looking at two things, the dollar and long-term yields. And I think that will probably be the issue that kind of starts to spook the market a little bit.

Starting point is 00:25:40 Without that happening, so far, the earnings season's been great. I think this thing that you mentioned with Fishback on Monday, it's probably a bigger story than people are making it out to be just from, again, not just the independent side, but Besson specifically was talking about the way the Fed works today. So I think one of the things that the media has done a bad job of is I happen to agree that academics at a time like this using historical data, it's garbage in, garbage out in a world of artificial intelligence. Using data from the 1980s to make a decision on monetary policy does not make any sense to me whatsoever. We don't have a credit situation. So when they talk about their mandate, which is inflation versus labor, we don't have a credit bubble. We have credit spreads at all time tights. So on the one side, you could say the economy is fine.

Starting point is 00:26:38 They don't need to lower rates. But that's a question of what is their job right now? The country has a deficit and has a debt problem. Shouldn't they be focused a little bit on that and changing their views? So I actually do think there's an argument that the philosophy and the academic nature of the Fed should not be the same as when we have a debt and deficit problem of this size. Now, there's been pressure for Powell to resign. I continue to say I don't think he's going to resign. I don't think they're going to fire him.

Starting point is 00:27:05 I think he's going to finish it out. But let's see. Most of the people calling for the resignation, frankly, have been on the right side of the political aisle. most of them have been either in the administration or tied to the administration in some form or fashion and so i think that there's a lot of folks who are just like eh you know it's a political kind of angle of attack whether you agree with that or not is just that's what you know some people are saying this past week though there's somebody who is not very political who started to say i think it's time um muhammad el erin um who's like a storied economist and you know very

Starting point is 00:27:43 well respected i think across the political aisle in finance on wall street um him saying that powell should resign feels like a breaking of the dam a little bit and like oh wait a second this may not be a political story this may actually be like a finance story yeah so i i agree when i saw it and i'm gonna use it in my video this week because i think it's more important it didn't get enough press, that someone who I would put as, he is an academic, he is a Fed person, he's someone that you could see in that role. When I was in Brazil, he was one of the more important people that I listened to back in the late 90s regarding the emerging market crisis. He is very well trained at his times at various places. And for him to come out and say that,

Starting point is 00:28:30 at basically saying, I think now for the future of Fed independence, it's important for Powell to step down. So it's an interesting take on the situation that at some point, if the president of the United States is pressuring you in every way, including creating a shadow Fed, you already don't have the job. So let someone else take it over at this point. And maybe this problem can go away the Fed independence can still be there. In some ways, it's like if the administration, if someone came in and immediately cut rates, well, then that just highlights the fact that there is no Fed independence at this point. We're going to have a dissent at this meeting, most likely from Waller. So you're really in this point where, especially for the people on Bitcoin,

Starting point is 00:29:17 on anything in crypto, I mean, this is a really important moment in the history of the country to even be talking about Fed independence because central bank independence is a global developed market thing. It's considered banana republic stuff when it's outside of that, where the government just says what the central bank policy is going to be.

Starting point is 00:29:36 So this is an important part, I think, for the way people view markets and in particular the dollar and crypto because this gets into, if you don't have independence with the central bank, then we really need an independent thing to invest in that isn't kind of dealt with this because really will, to me, create a lot of people speculating how this could lead to a bubble

Starting point is 00:29:57 if rates were taken lower as growth is picking up. Bitcoin feels like it is just primed to explode higher in the coming weeks and months. We're now getting data points that a lot of the maybe sanctimonious people on Wall Street have been preaching something that is not true now for a decade. I will pick on Warren Buffett only because he is kind of the, he's the king of this viewpoint.

Starting point is 00:30:29 Do not own non-productive assets. Instead, you should own cash flowing companies. Gold has now outperformed the S&P 10 years and 25 year timeframes. Of course, you can pick any timeline. You can put five years to 15 years. Like there's all these different data points, but 10 and 25 are pretty well accepted timeframes to look at gold is outperforming the S and P 500

Starting point is 00:30:52 Bitcoin video game number, like just destroying all of them. Right. But going forward, I do wonder if this whole idea of cashflow and companies being able to outperform these nonproductive assets, if that starts to change, because people start to say, wait a second, it's all about dollar debasement and dollar debasement is going to inflate Bitcoin and gold's prices at a faster rate than it inflates the earnings of these companies. I don't know if that's true, but that feels like a backdrop. You then overlay the fact that bonds are basically trash and just getting destroyed left and right. And then you add in the fact that we now have over 100 different public companies all buying Bitcoin. We have the ETFs exploding in terms of AUM. You now are starting

Starting point is 00:31:40 to see JP Morgan talk about, well, maybe you should take that nice little Bitcoin you have and put it here and we'll lend against it or we'll custody it. And like, it just feels like Bitcoin has now arrived. It's the main show on Wall Street. Wall Street's full undivided attention is on Bitcoin. And there's only 21 million. And so if you increase capital flow, price has to readjust higher. You disagree with any of that? Today's episode is sponsored by Figure, the largest non-bank home equity lender in the United States with over $15 billion unlocked on their lending platform. They are now in the crypto-backed loan space, and they offer industry-low interest rates when you use your Bitcoin as collateral to get cash. You can access interest

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Starting point is 00:35:10 I've said this a lot. I've done it on my YouTube. I've talked about it here, but I've never really explained a little bit. So I'm going to take what you said with starting with Warren Buffett, and I'm going to bring back this whole thing to Bitcoin for people that they have to think about from an investment standpoint of their portfolio,

Starting point is 00:35:27 not in the next couple of years, but over the course of the next decade, which is what artificial intelligence allows to have happen. Eventually with humanoids, eventually with all this stuff, if people aren't working as much, the question is, what is a public company?

Starting point is 00:35:44 Because Warren Buffett has made his money investing in public companies. There is a reality that the lifespan of a company has continued to climb for a long time. As we get into the digital world, everyone who has children has seen them switch apps so often. Like they come out of nowhere

Starting point is 00:36:02 and TikTok destroys this app and Facebook, oh, that's an old person app. You like these things and the loyalty and how quickly that happened. Now that happened at a time with moats. My argument has been that with AI, people are underestimating how quickly a business can be set up.

Starting point is 00:36:18 You've seen it personally, you've invested with entrepreneurs for a long time, But you're seeing these companies grow rapidly. They also will peak rapidly. And you'll see that they might get to 500 million ARR overnight. But the question is, can they go to 1 trillion or 1 billion or 100 billion? Can they get to 200 billion, 300 billion, a trillion, 2 trillion? And the question that really comes is, how much of that is based on speed and competition? If competition can replicate your idea instantaneously, then you're disrupted overnight. And it's not that the business goes away. It's that it doesn't become an investable asset, meaning there's no growth anymore. And that's what I think is going to happen in a world of AI, is that over the next decade,

Starting point is 00:37:02 and that's why I talked about the 2030s are going to be a disruption to all public companies. the S&P 500 companies, they will be disrupted. So when you mentioned that gold has outperformed the S&P 500, let's say the S&P 493, it's total destruction. It's seven companies that kept the S&P afloat. So for all of you that are looking at your portfolio, you didn't make money from great investments in stocks. You made it because the MAG-7 actually took over and outperformed. I think that's going to be very hard going forward. And most of the great companies of the future will never go public. And so this is where tokenization becomes important. It's what Vlad at Robinhood is focused on. It's what everyone is going. Understanding the new capital

Starting point is 00:37:43 structure going forward to me is really important. And I've said it before, I think Bitcoin relative to the S&P and Bitcoin relative, especially to the MAG7 is the most important chart for the rest of the year. I hit your point. I do think it's going to break higher. I think we're doing the typical thing, which is we get to a new level. We run into resistance, but a lot of it has to do with the options expiration. 120 is the big expiration price. We break through it, which I think will happen shortly before the end of the month. And we start to break higher. Ethereum now is going to have to get above 4,000 for this to roll. But above 4,000 in Ethereum and above 120,000 in Bitcoin, I think this is going to move a lot faster than people realize. And I'll just leave

Starting point is 00:38:24 people with one thing they should think about. Two years ago, Bitcoin outperformed gold by over 100 percent. Last year, it outperformed it by 75 percent. This year, obviously, gold has done extremely well. Everyone's talking about it, the tariffs, the wars, everything. As of last night's close, Bitcoin relative to gold was near unchanged for the year. So it made up all of the stuff that had gone on in the outperformance. For all the gold bugs out there and the people who have just not accepted Bitcoin, it's catching up again. Do you think that gold is an attractive asset to hold in a portfolio for the next 10 years? I think gold should be part of a portfolio law. Anyone who owns Bitcoin to me should own some gold. If for no other reason, just if Bitcoin for

Starting point is 00:39:15 any reason, especially with quantum and stuff that went on, people would, I think, look for some other alternative that maybe didn't have anything related to the ai disruption there will be times where gold will outperform but i think more importantly i i just don't see the investments in bonds the investments in anything really as being as stable of an investment and non-disruptible there can be a disruption to gold eventually over time if we can figure a way to make gold at a very easy way but that's way down the line and not a focus for people uh in the technology world so i think gold should be a portion of the portfolio uh this is all about the debasement story as you know and i think governments until the debt and deficit is taken care of around the

Starting point is 00:40:00 globe people need to protect themselves from uh governments trying to get their money and you know we've got capital gains tax now but on the other side you get a new administration and all of a sudden it's a wealth tax side and there's no better way to kind of hide your money than get it in gold gold bitcoin two very obvious things that people can put in their portfolio is there anything else that you think um mixes the defensibility against dollar debasement with maybe some of the things that younger people care about in terms of liquidity and uh kind of asymmetry of investment well i think we talked about it at the beginning i mean this is more of a tactical thing for the near term but i really do think people need to focus on the fact that

Starting point is 00:40:41 We have right now weightings in the S&P 500 at over 50% technology, weightings in the power side when you combine utilities and energy are about 6%. We're just out of whack from where we are. I don't think it's going to shift in energy and utilities will go up to 50% and tech will go back down. But I do think over the next couple, let's say two years, I do think focusing on industrialization, steeper yield curve, weaker dollar, that should all be good for commodities. It'd be good for foreign countries that are focused on commodities. That's why I've written things on Brazil, which continues to have a lot of things going on. If you have a weaker dollar and you have higher commodity prices, countries like Brazil do well. But those are tactical things. Honestly, at the end, I would overweight those things relative to the current weightings. One thing about passive investing that people have moved a lot of money into, you're assuming the winners of the past will remain the winners of the future based on the weighting.

Starting point is 00:41:41 And I think for the next five years, if technology stocks have trouble going up too much and they're disrupted, I mean, you've seen what's happened to Tesla this year. You've seen what's happened to Apple. Those are not the same kind of disruptions. But I do think AI is going to have some shocking disruptions from tech companies going forward. So I would overweight foreign countries that have commodities and commodities at this point. And then when you look at the market today, one of the stories I just can't stop looking at is this whole idea of the retail investor, the self-directed investor.

Starting point is 00:42:13 We've seen Opendoor. Eric Jackson is a one-man army pulling together a whole bunch of people who think this thing's going much higher. There's obviously an explosion of volume there. Whether it actually goes to $82 or $8 or whatever, it's obvious that there was a trajectory change in that stock. Sidney Sweeney, the ad campaign I wrote about it this week, I think everyone's focused on the photos, the videos, the woman, all that kind of stuff. To me, the most interesting part was really simple meme. Sidney Sweeney has great genes up 20%, you know, hundreds of millions of dollars of value creation, uh, kind of this memetic warfare that really resonates with the

Starting point is 00:42:53 self-directed investor. And when you go online, um, our friends over at liquidity, uh, came out and he said, Hey, look, look at this post on, uh, Reddit where somebody literally saw the ad campaign immediately went and bought, you know, I think it was hundreds of thousands of dollars of shares and was just like, I understand memes, like the meme is going to work. I'm in stock price goes up. They make money. It feels like that is driving the market more so than anything else. It really does feel like there has been this this sea change.

Starting point is 00:43:24 And I don't know if we're at the point where if you ever watch the movie Captain Phillips, where he's like, you know, I'm the captain now. Right. And the pirates take over. I don't know if we can say really retail or self-directed investors have taken over, but it feels like they got way more influence. They got way more capital in the market than they did five years ago. And so in a weird way, everyone's always talking about like, what's Wall Street doing? I've started to pay more attention to like, what's retail doing?

Starting point is 00:43:51 Because they're the ones who actually may be driving the market and Wall Street is just supercharging what retail is doing by following retail. This has been a big change for a while now, but it really accelerated after 2020. Um, I, I, again, that's when I got involved with crypto because my son had done really well trading it. He was 13 years old and I wanted to understand why. And I thought it was just gambling, but it wasn't. And it was the mindset again of a kid who two years later was playing Fortnite all the time and had no interest in baseball because it was boring and it took too long. I think this gets back to the Fed question, which is, is the Fed able to

Starting point is 00:44:34 manage monetary policy in a world where gambling is a big part of PCE. And it's a consistent growth period where meme coins are something people invest in that are no different to me than people investing in memorabilia, baseball cards, whatever the case is. You're assuming these things go up, they go down. There's no value attached to them. The value is attached to other people buying them. It's just that it moves faster. So if someone buys a Babe Ruth card and over the course of a decade, it goes higher. Then there's a, you know, uh, all of a sudden a big fall in all baseball cards and the Babe Ruth call card falls 50%. Meme coins have a lifespan. It's just shorter than what people would recognize for most of them. And kids attention span is shorter. Uh, so again,

Starting point is 00:45:20 when you're using too much history and too much thought on what should entertain people at the end of the day, consumption is about entertainment. And if people find something interesting, like Sidney Sweeney's meme, then it goes viral and then it becomes something real. I mean, we've watched the Kardashians become billionaires. We've watched all this stuff happen over the last 20 years. I think people just need to accept the fact that what Warren Buffett talks about, I mean, no offense to Warren Buffett, but he has no context for what the Kardashians do or this and they're billionaires.

Starting point is 00:45:49 So the world has been changing for some time. I just think people's attention span and the movements are only going to get shorter and shorter. And that's why I think investing in a company is different than making money through trading. Kids and younger investors are using options on this because the market goes up 83% of the years, guys. And the amount of hedge fund people that talk about bubbles and trying to predict the next crash is off the charts. It goes up 83% of the time. This is just the normal part of life. And they've just said, wow, the odds are in my favor. I make money doing this. I'm going to

Starting point is 00:46:21 keep trading it. And when the market goes down and I lose money, I'll just get back up and do something again, guess what? You've seen crypto people do that for a long time. Crypto people are way ahead. I mean, we've talked about it, you know, bank runs in the traditional financial system. Crypto people were out of there before anyone even knew the bank run was coming. They could smell that stuff coming from a mile away. Now they got experience, right? If you just think of, I remember writing a, I remember writing a piece that there's an investor who I think is very good investor i think that he um you know was issuing a word of caution a big crash is coming blah blah whatever and he was so worried he's like all this risk taking in 2021 2022 whatever

Starting point is 00:47:02 and i remember just being like no man the people the young kids they got way stronger stomachs than you in the traditional world they've got the true you know kind of diamond hands and i went back and i looked and i'm like they're coming from the crypto world where they're used to 80 percent drawdowns that happen every four years right a 30 drawdown is a buy signal to them right like like they buy the dip is a crypto mantra and we went through 22 23 sure of course no one wants to see their portfolio go down but you know who was selling and who was selling around liberation day oh it's usually older people the more sophisticated people like they're the ones who almost outsmart themselves. And it's kind of like, you know, the, um, the people who pushed West

Starting point is 00:47:49 on the American frontier, they were either too dumb or too courageous to not go kind of same thing in investing. It's just like, there's a group of people who are just like, you cannot shake me out of my position for better or worse. I'm going down with the ship or I'm going to hold through, you know, the storm. And I just think that that it's really hard to compete against those people because there is nothing that is going to happen that is going to convince them to sell the asset. And so that's why you see some of these things, you know, kind of come flying back. And now if they start going into the stock market, I, you know, open door to 82, I guess, like, I don't know. Well, I'll finish the one point left that when I said the PMI and I connected

Starting point is 00:48:33 back to everything that's happening, I believe we are at the beginning of a re-industrialization where the focus is going to be not just on getting the power and the data centers built to fund AI, the robo-taxis, the drones, all of this stuff is happening over the next decade. There's absolutely no question about it. The issue that people don't believe in is,

Starting point is 00:48:55 oh, well, the Mag 7 will be fine. They're going to benefit, which is all well and good, except for one thing. I believe we are at a 18-year turning point in the market where the winners of the next five to 10 years will be very different than the winners of the last five to 10. It's about hundreds of winners

Starting point is 00:49:09 as opposed to seven winners. And that change in the marketplace means people are going to have a bunch of commodities, which are very cyclical. They bounce around. Their earnings are very dependent on things. And even though I think this is a structural change, people have to remember,

Starting point is 00:49:23 if you run out of power or we have shortages of gas turbines, we have shortages right now of transformers. Elon Musk is buying power plants. There's going to be bottlenecks and bottlenecks in supply chains mean earnings can miss for a quarter and you have to look through them.

Starting point is 00:49:36 the only technology investment of the digital economy that I think is going to be able to work in that period, which is why I say Bitcoin over the mag seven. I will continue to say it. I think this inflection point of the PMI is very good for crypto because the Fed is going to be cutting rates at the same time. You have to make sure that you understand that the winners of the last 18 years to me are going to be under pressure from all these trends that are happening at the same time where can we send people to find you on the internet uh well the pmi piece was in substack at visceral labs um for the institutional people who want to talk to me about the pmi and the types of names and stuff in the power thing i'm doing a lot of work for them on the power side and with

Starting point is 00:50:16 some of the people there so they can find that at 22v securities or 22v research and then my x side the youtube uh every sunday morning whatever my friend it's all there you're doing a great job keep it up people love this uh by the way for all you people who keep writing comments this is a saturday morning viewing experience subscribe to the channel come on let's get these numbers up so that jordan can get uh get more people watching this uh exactly go for it i appreciate it and uh we will do it again next week see you then bud

The Pomp Podcast - #1579 Jordi Visser | Why Bitcoin Will EXPLODE During The AI Era

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