The Pomp Podcast - #1582 Jordi Visser | AI Boom & Bitcoin Will Lead To MASSIVE Bull Market

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Starting point is 00:01:34 of his personal opinion. This podcast is for informational purposes only. What's going on, guys? We've got another great episode with Jordy Visser today. He's a 30-year veteran of Wall Street. And in this conversation, we break down what's going on with Bitcoin, artificial intelligence, and the macro economy. We specifically dig into why so many companies are beating on their earnings, how recursive learning is going to lead to an explosion, both from an economic standpoint, but also for individual businesses. And then we talk about Bitcoin and why an incoming rate cut is going to be so bullish and push Bitcoin much, much higher. Today's conversation, like always, is amazing and full of insights you're not going to be

Starting point is 00:02:10 able to find anywhere else. Here's my latest conversation with Jordy Visser. All right, Jordy, I thought a great place to start the conversation is it seems like Jerome Powell not cutting interest rates is going to play very well into the hands of investors. we just got the jobs revision data. And we basically went from over 140,000 jobs created in both May and June to both of them have now been revised down to less than 20,000 jobs created in both of those months, which pretty much means that the jobs data no longer can be believed. But it also means that maybe Jerome Powell is going to cut interest rates here coming up, and that should juice asset prices. How are you looking at the jobs data

Starting point is 00:02:44 in relationship to the Fed interest rate cuts? yeah one thing we've done on here uh at least the last three or four months is we've talked about the weakness that was showing up in other places the one thing is jobless claims are still sitting near all-time lows so people are not getting fired there has basically been some sort of a hiring freeze now i think the last three months uh people were surprised that there wasn't more let's say, non-job creation, because the uncertainty in the economy was showing up in all the soft data. And the one thing about soft data is if businesses don't know what the future is going to look like, you expect them to at least pause on hiring. The one thing I've mentioned

Starting point is 00:03:30 repeatedly, and this continues to come across, is that the only job creation that's really been going on at all this year has been in two areas. Now that the government has been kind of put in check through the Doge stuff. It's not a big negative number, but they've really frozen the ability to hire people. You've had leisure, which again, is a travel thing, very heavily driven by the baby boomers, very heavily driven by social security. So it's a government subsidized area. And then the healthcare services thing has been it. If you take out healthcare services the last three months, it's negative. If you take out those two over the last five months, it's negative. So the job picture didn't just get weak. And that's why I have been pretty steadfast that I think the Fed should be cutting rates based on the fact that their mandate is to help people across the country.

Starting point is 00:04:18 It's not sitting there to fight with Donald Trump. And the reason the labor market is going to be remain under this pressure, regardless of what happens, is that we have the negative factor of AI coming up soon. So we've now taken the probability of a Fed cut from below 50 percent, which is where it was after the quote unquote hawkish Fed statement this week, which I would just categorize as less dovish than than what people thought could happen. You've now taken to the point where you're up as we go on here at about 85, 86 percent. So the market is building in a cut. And I just want to remind people that September of last year, the Fed cut, they surprised in terms of how much by doing 50. The back end terms of rates went higher and all of the stories started coming out, which are going to come out again. If the Fed cuts into a point where you don't have a recession, stocks usually do phenomenally well. I personally believe this is with with Trump now basically in the position that he says he wants rates 100 basis points plus lower. He's even said as low as as one percent.

Starting point is 00:05:26 I think what people need to start paying attention to is we're probably going to have a cut into an OK economy. And if I'm right and PMIs are about to go higher, cutting into a accelerating economy means you can basically go pick your favorite beta assets. Now, we got the Q2 GDP number. it came in at 3%, which is significantly higher than what the economists thought. I started yelling and screaming saying, hey, we should be cutting the rates. They're not cutting rates. I had a bunch of people yell back at me online and be like, you're a moron. The fact that we are growing GDP with higher rates means that the economy is strong. We don't need to cut rates, yada, yada, yada. My point, I think, is, well, if you were to cut rates whilst

Starting point is 00:06:07 growing at 3%, why can't we grow at 4% or 5%? Why can't we actually try to juice the economy? because if we're going to give up on the cutting of expenses, then we should do everything we possibly can to accelerate our growth. Is that similar to kind of how you're thinking about this? And asset prices are just kind of the output of those decisions in that machine? Or do you think that the rate cut could potentially have a positive impact on asset prices, but actually GDP just for whatever reason can't go above 3, 3.2, something like that on a quarterly basis?

Starting point is 00:06:37 Well, I think the first thing is GDP in the second quarter ended up up three percent, but it was negative in the first quarter. So because of all the tariff disruptions, especially the inventory builds and to the trade numbers, which really were the volatility between it, we're still averaging about one and a half percent. So I wouldn't say the economy is going gangbusters. So it matches up with the weaker jobs number. And I think those two are in line now. They were a little bit out of line. We're creating a lot of jobs, but at the same point, you've got this factor of GDP. I believe, and I'm becoming more certain of this as time goes on, that the build-out, which we'll talk about earnings, the numbers are pretty staggering in terms of the data center side.

Starting point is 00:07:25 We have dramatic supply issues that have come up. There's a lot of things to me that are all suggestive, not only of a PMI going up as we're building out data centers, building out power plants. We're also going to see inflation moving higher, too. Now, this is not some call on much higher inflation because I think there's offsetting forces like AI and like the weaker jobs market, which will kind of keep things in check. But I do think the reason that matters is the only way to get three percent real GDP is you got to have nominal GDP at five and then you have to have the inflation component stay below three. I don't think that's going to be easy for them to do. I think you're probably talking about GDP numbers, which are more in the one and a half to two and a half percent range going forward, but with very strong nominal GDP hanging in there and a little bit of inflation going forward. Now, when we go and we take a look at that earnings that you mentioned, we saw Microsoft

Starting point is 00:08:19 and Meta report, they were up like 7% to 10% each after hours. It feels like people are capitulating all over the place saying, oh, wait a second, maybe these companies aren't overvalued. Maybe they just are some of the greatest companies ever created in human history. How do you look at, at the moment that everyone starts to capitulate, sometimes that's the top versus these are pretty aggressive and attractive earnings reports that are suggesting like the substance underneath the valuations is still driving this more so than speculation or froth. Yeah, this is not speculation. This is not froth. In fact, I was going through the numbers

Starting point is 00:08:59 this morning with 22V. If you just take the five companies, Google, Amazon, Meta, Apple, and Microsoft, those five companies beat revenue forecasts by a combined $18 billion. The number 400 company in the S&P 500 has a market cap of $18 billion. You are talking about some staggering numbers. Companies that are that big should not be beating revenues by that much. But in particular, this is in a half where, again, GDP averaged 1.5%, where we had tremendous trade uncertainty. This, again, is an indication of how massive the AI trade is distorting everything else. So every time I hear the tariff thing from page Wall Street Journal, Ford has losses for the year that will probably be two billion dollars because of the tariffs. So think about what I

Starting point is 00:09:59 just said, $18 billion in revenue beat by those companies. So everyone that's been following the tariffs and focused on something that Donald Trump has said, Besant has said, Americans spend too much money on things. We've been over consuming for a long time because of certain things. They don't want that. They want the manufacturing jobs to come back. They want to build stuff here. They want people in the middle part of the country to benefit. This is what is going to happen. There is a revival that's happening. It's an industrial one, but it's being fueled by those MAG-7 companies. But in particular, those $518 billion, most of that revenue gain is coming from the cloud. And the one thing I want to say, NVIDIA dominated the last four or three years since ChatGPT because the infrastructure build-out, we needed chips.

Starting point is 00:10:50 We're seeing the MAG-7 benefit from efficiency gains, but they're also starting to get the cloud gains. we're going to start to see the PMI gains, which are going to come from the build out of the data centers and the build out of the power plants. The one thing that people are not saying, if the cloud is growing that big, that means we're at the AI adoption phase, which means bigger companies are starting to use it more. You're going to see profit margins for financial companies, for healthcare companies, for all of these service-based companies, which have really underperformed technology going forward. They're going to start to benefit. And I think a lot of the SaaS companies like Salesforce.com and places like that, that have had this kind of competitive advantage

Starting point is 00:11:26 because of the fact that they were on the cloud. Remember, Mark Benioff left from Oracle. Oracle's now killing it right now on the hardware side in terms of the build-out. So I think there's a very powerful story here that, again, people have not grasped on. Ford, old economy stock, it's not part of the new economy. AI is part of the new one. Now you're going to start seeing it in the adoption phase and the build-out phase. So one of the things that becomes interesting around this whole AI story is we obviously see these massive pay packages. In the last week or two, we've gotten reports that Meta has actually offered a billion dollars for certain AI engineers. I saw a clip from Jensen Huang at NVIDIA saying, that's not crazy. He basically walked through the

Starting point is 00:12:06 math and he's like, if you're willing to pay $30 billion for an AI lab, what's the difference between paying a bunch of the AI researchers and ends up adding up to less, but you get the same people that would have been building that lab. So are we in a new kind of paradigm here where it's like spend whatever you want to be able to win this race? Or do you think that there still needs to be some sort of prudent capital allocation, both in terms of talent and also on the hardware data center side? How much is this just like, take the governor off, spend whatever it takes to win? Versus do you think the market is going to hold some of these capital allocation decisions and really judge good or bad?

Starting point is 00:12:46 First of all, it's a good question. I think everyone should be thinking about it. I think the answer lies in between. This will eventually be a problem. You're betting on the fact that you're actually going to get the revenues relative to the CapEx and the spending that you're doing. The spending makes sense based on the way these guys are looking at it. And like Jensen said, you're dealing with companies that are just massive. So these numbers sound big, but Otani, billion dollars. Soto, billion dollars. You're getting baseball players that are getting to numbers like that. And so when you read these numbers, you start thinking, okay, what's going on? But this just highlights again, the story behind the story, which is we're racing to AGI. And

Starting point is 00:13:30 I try to give people podcasts that they should listen to, but I thought this week's Moonshots podcast with Peter Diamandis was just fantastic in terms of breaking down really how historic this is, but also how much closer we are to AGI than people realize. And what people have to understand is we are at that point where it actually goes exponential. So AI feels like it's been moving at an exponential pace, but it's been humans doing the work so far. At some point here, it actually becomes the computers learning from the computers and everything starts to accelerate at a pace because they're a lot more efficient and they work more hours. So we're getting closer and closer to that point. So I think people just have to understand that this,

Starting point is 00:14:14 the dollars being set out, what is going on, the startup numbers. I mean, we haven't talked about it here, but XAI, private company worth about latest valuation, 200 billion, Anthropic this week, 170 billion valuation. The latest round on OpenAI, which was still weeks ago, 350 billion. You're talking about these companies being worth a trillion dollars. They're not even public right now as a combined number. So the AI move is so violent and so big that I think the the pays for these are just fitting in with how fast these things are growing. Now, what's interesting to me is Alexander Wang, who was at Scale AI, is now going over and he's going to lead the super intelligence team at Meta. He has confirmed that they have code now learning from code like they are starting to see it internally.

Starting point is 00:14:58 And so the first thing I saw, I'm not as familiar with kind of the Microsoft story. I worked at what was Facebook, now Meta. And so I like to pay attention and, you know, wonder whether I should have held my stock or sold it to buy Bitcoin and, you know, do some of the calculations everyone always does, which, by the way, Bitcoin outperformed. But when I look at that specific earnings report and kind of how significant it was, both in terms of aggregate number, but the beat, I got to think that we're going to start to see this way more often because it is going to be nearly impossible for Wall Street analysts who historically have thought in linear terms to start thinking exponential terms of how quickly the acceleration. If code is learning from code, that's like hiring a thousand people, but not spending the money to do it, right? You get to this world where the productivity and hopefully what translates into revenue and profit is going to accelerate at a pace that we just have a hard time as humans wrapping our head around. And so maybe this is going to be the new normal is these significant run-ups in performance. Is that how you expect this to play out maybe over the next two or three years?

Starting point is 00:16:05 I think that is the major story behind the valuation argument in the market. So let's get back to what you said, because I didn't finish up on the last part. I do think this will be viewed as overspend at some point, because we just don't know where the revenue side is going to come from. But to your point on how fast this goes, this is the reason why there's this race going on and why it's a certainty that over the next three and a half years, this is going to happen. So with inside the AI action plan, when you go through the numbers, it's pretty much spelled

Starting point is 00:16:37 out that what the Trump administration attempted to do is to ensure that we don't lose the AI race, which means he's got three and a half years for this thing to run. He's doing everything he can, throwing money at it, getting the private sector to throw money at it to make sure we have the compute, focusing on the energy side to make sure we have the energy and making sure that the government is most importantly not stopping the path. So one of the things that people have probably not put into context. You're going to have exponential computers learning from computers. At the same time, you have the government fast tracking permits for a lot of the energy side, for a lot of the data center side to make sure that they can make it through

Starting point is 00:17:20 this. At the same time, he's put changes in the one big, beautiful bill to make sure that the CapEx accounting side, that there's favorable tax treatment to allow these guys to get this stuff in here. This is a combustible situation. And I think people are underestimating how quickly and how stable things are going to be from the earnings perspective with one caveat. The only thing that worries me, and I see this showing up in almost every single thing, all those companies we mentioned, the cloud providers, whether it's Amazon. By the way, Amazon is down, I think, $15 today, something along those lines. It's actually down for the year. They beat revenues by five billion this quarter so amazon microsoft and google the three major cloud groups that

Starting point is 00:18:06 reported all of them said that demand is outstripping supply when you go to gas turbines demand is outstripping supply we don't have any turbines for the next five years transformers the same thing cooling systems so bottlenecks are the issue for how fast we can go but in terms of the earnings growth and everything there if code is learning on code you're right it is very very powerful for any business that's able to do that because they're hiring then infinity employees working 24 hours a day. And those employees are essentially spawning new employees, right? I think the part, it goes back to like this exponential growth is very hard for humans to identify is it is not hard to see an AI agent creates an AI agent, which creates an AI agent. And next thing

Starting point is 00:18:50 you know, you know, when I was at Facebook in 2014, I always tell people this story and it kind blows your mind. I joined and it was somewhere around 3,000 employees. I left two years later, we were at 12,000. And that was like hyperscale growth. How do you go find 9,000 people that meet your hiring bar and you do it in two years and all that kind of stuff, right? Now, that may be like a week. You can just write some code and start spawning up all these tasks and doing this. And so you can get that kind of productivity boom, but it is with leverage because you're not necessarily spending dollar for dollar for each new employee that you normally would have had to do. You're doing it with code. And so it's like an efficient scaling of

Starting point is 00:19:27 productivity that we just never seen before. I'm trying to think of where else have we ever seen this? And I cannot think of a single time. And to me, that says like the AI profits, the AI, you know, kind of reward is going to go to the companies, whether they're big or small, who understand this exponential productivity idea. And they just go and put everything behind being a winner there. 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 rates starting at 9.9%,

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Starting point is 00:21:47 And so you can just ask, ask what Eric Schmidt has said about the point of recursive learning. And you'll get all the details you need on what we're talking about. So you have to think about this, that we're already in exponential growth period. But what we're literally getting into is that a world that is already functioning on code, the employees will be immediately overnight created in the millions. Now, we're not at that point yet. What the personal intelligence post that is on the Meta site that Anthony's mentioning from both Alexander Wang, Zuckerberg put it out. But they're basically saying that they're seeing signs of it. So it's happening, meaning they're starting to get closer and closer.

Starting point is 00:22:27 If you go to that Moonshots podcast and you listen to the most recent one, they talk about it. They're seeing signs of it. And one of the people on there who's got, I forget how many degrees from MIT, basically said, we're already there. It's just a question of how you measure it and how fast it starts going. The reason this is important is every time you hear someone say the economy is headed towards a recession, this is going to happen.

Starting point is 00:22:48 This is going to happen. This is the point where you just have to sit there and realize that profit margins are going to explode because we're literally going to be able to hire millions of employees for close to zero. And that's where the profitability goes. It's the transfer for all companies from the labor side to the market cap side. I mean, it's going to show up in profit margins. So you just have to start to get your brain around the fact that A, this has never happened. And secondly, we're on the cusp of it, whether it's this year, next year, or the year after. But it sounds like it's much closer to this year than it is three years from now.

Starting point is 00:23:22 Now, one other earnings story I want to talk about is Strategy, what used to be known as MicroStrategy. They reported historic earnings. I think it was like $32 of earnings per share, and the expectations were supposed to be negative. It seems like it was one of the largest beats in Wall Street history. A big reason for that is not because all of a sudden their software business got revived from the dead,

Starting point is 00:23:46 but the fact that Bitcoin went up, and they obviously have a sizable number of Bitcoin at this point, over 600,000 on their balance sheet. How do you evaluate a company where it's still the same business that it was been over the last two or three years? Yeah, it's bigger. Yeah, Bitcoin's going up. But like, they really didn't change the underlying fundamentals. But now with an accounting change this year, this business looks completely different. And so how are you looking at this? Are you still excited about strategy? And maybe even what do you think some of the risks are moving forward with a business like this? So, yes, I'm an owner of strategy and I still

Starting point is 00:24:21 believe in the business. But again, it's because I believe in Bitcoin and because I believe that they have an advantage of being the first mover and having the ability of doing exactly what they're doing, creating new products, diversifying everything, making sure they're running it from the basis that a fall in Bitcoin is not going to hurt the share in a major way or put the company and some kind of a leverage problem. So leaving it as that, I don't think the majority of people who invest will ever be able to think about strategy

Starting point is 00:24:51 in the way that I think about strategy. I just don't think that day is going to come. You think of it in a certain way. I literally think about the total disruption of all companies from the moment that artificial intelligence gets to that point. So when we talk about AGI and recursive learning, Recursive learning, by definition, means we'll be heavily in the agentic world because you can't have that without that.

Starting point is 00:25:16 So when we're in the agentic world, I don't think people realize how much volume is going to transfer from individuals in transactions and it's going to go to computers. How much will be in stable coins and all of those dollars, the opening of it, the whole network effects that I've believed in, they're going to start to go exponential as well. So in the same way that you talked about, it's hard for humans to comprehend how quickly and what it means to have all these profit margins show up. I view it as another way, too, which is, number one, AI agents are transacting all over the place and that will be accelerating every day. But number two, the ability of having a moat around your business is gone as far as I'm concerned. Now, maybe there's one company that gets so far ahead that they dominate all other companies. But I believe that you're going to have at that point a decentralized world where more and more and more businesses will be disrupted. And like I talked about before with the 2030s, I just don't see how there'll be Fortune 500 companies.

Starting point is 00:26:18 I think there'll be boom-bust cycles of ideas that come up and then something replaces it. And in that world where people are looking for stability in what they invest in, Bitcoin to me is the only thing that has proven that it has a moat around it. I don't believe in any of the innovation side because I just think there are ideas and better ideas that you actually need to invest in something that people believe in. And I believe Bitcoin is that. And so I think MicroStrategy just has an advantage on already preparing themselves and thinking about what the capital structure of the world will look like going forward. And I think with the AGI input, recursive learning hitting now, to me, that is the explosion point for the network effects of crypto. Now, we also got the kind of crypto project or project crypto announcement from the SEC. We've got the White House publishing a book, essentially, 180 page report or whatever it is on this.

Starting point is 00:27:12 It feels like in one decade, we went from people saying the government is going to ban Bitcoin and it is going to be criminal to participate in this to now Bitcoin may save the traditional financial system. right? Like Bitcoin, stable coins, crypto, all of this is now going to become the bedrock of what is the future. You have the SEC saying that we're going to modernize financial markets. We are not going to force people to use these intermediaries. We are going to change the rules so that this technology can prosper. The White House seems all in on it. The Treasury Secretary is talking about stable coins, continuing dollar domination on a global basis. this, it really does feel like the White House, SEC, Jamie Dimon saying they're now going to offer it to the JP Morgan clients and tokenized stocks. I mean, I don't know if there's a single

Starting point is 00:28:03 retail focused investment firm that has technology at its DNA that has not announced some effort in tokenized stocks. Like crypto is going to take over Wall Street, it seems like. And I think more importantly than people who are still having a hard time with this, This is a global thing. And now the rest of the world, I mean, China three weeks ago released something where they said we have to have a plan in stable coins. The ECB, you know, the ECB is going to be the caboose of anything in terms of going down something like this. They literally said we are at risk now to being overwhelmed by the dollar. So this story of stable coins, but also the fact that the U.S. is taking the lead and most of it is dollar backed. it's forcing all countries to heavily get involved in stable coins because they don't want the dollar

Starting point is 00:28:52 to be, again, the dominant kind of transaction point, even more so than it's been. So I had said a long time ago that all the central banks of the world can decide that they want to transact in whatever currencies they want. They can transact in anything. But if the people of the country decide that they're going to transact in dollars because they don't either trust their currency, They don't trust their banks. They don't trust their government. Whatever it is, if stable coins and backed by dollars are the choice, that's the reason that the U.S. has made this decision very quickly since Trump took over to take the lead on this. And if this was a strategic Bitcoin reserve announcement, then every other country would be sitting there going, well, we have to join in, too, because they're involved. So far, it's just happening at the individual level. Now it's spread to the company level. We're not hearing the announcements from the government on the strategic Bitcoin reserve, but we are definitely seeing the push from the stable coin side. And as I've said, I just think the stable coins lead to massive network effects. So you not only have the AI push, you have the government support.

Starting point is 00:29:53 And I agree with you. Whenever I talk to anyone who is still negative on this, I'm like, I believe that the government would fight forever on not allowing stable coins and Bitcoin to reach the level that it has. The second that the US government decided that they were going to support it, that should have been the trigger point for everyone to get more involved. So we haven't really been able to move up. We're at the end of July.

Starting point is 00:30:17 I think Bitcoin and all of crypto is now looking for that one catalyst to get everyone to jump in. I think all the things we're talking about, everyone's fully on board with on the traditional finance world. They're just looking to break out of this range and go. What has happened during this range is the chat GP team moment, which was circle happened. I think people were worried somewhat about maybe rates were going to shoot higher. Well, if the Fed's going to cut rates and PMI is going higher, I've talked about this before, that's about as good a time as you can have for crypto. So all the things you mentioned are now coming out day after day. And I'll just end this on one more note to people. Substack is producing a lot of great content right now

Starting point is 00:30:58 on stable coins and on crypto. It seems like Substack has been the place that people like to write about it. You can't get it as much in traditional finance. And even if you do, like Wall Street Journal, Washington Post, what they write about it still has a negative tilt towards it, I would go to Substack and start reading some of the better macro minds that are writing about what this means for everything around the globe. There's been a lot of things that have come out in the last week for sure. Now, when I go and I take a look at a lot of this crypto and kind of Bitcoin bullishness, it feels like the Wall Street firms now realize the government is okay with us doing this. We have to participate. Let's go figure out how to stop

Starting point is 00:31:40 this in every corner. You're talking about a tailwind coming from this rate cut. What I found interesting about the FOMC meeting was there was two dissenters. I think this is the first time since the 90s that we got two different people at the meeting dissenting. They pretty much had told the market that they were going to do this. Do you read anything into the fact that they actually did it? And it's been 30 years or so since we've seen something like this? well first of all historically when you get dissensions especially in this type of scenario where there's dissensions for cutting uh we've ended up cutting not too long after so the history is on the side of there being a cut but i think the interesting thing is this is the problem we're

Starting point is 00:32:23 going to be in in a world of ai so i mentioned the positive side i think there's a big build out coming on on the pmi side okay we have electricity prices that are going higher now I don't know how the administration is going to deal with some of the inflationary pressures that are going to come. Electricity prices are a real, real big thing for a lot of people in the country. Car insurance has gone up and just sat there. Homeowner's insurance has gone up and sat there. They have a lot of things on the inflation front that still have people kind of angry and sitting at these levels. But now you have the uncertainty over the jobs market. And even if people aren't losing their jobs, they are all worried about what's to come. It's not just the digital

Starting point is 00:33:05 employees that we mentioned, which are virtual. You've got the humanoid side coming as well. And whether or not the labor shortage that's out there because of demographics allows people, the lack of immigration that we're trying to get across creates a scenario that really we never see job losses of any meaningful side. Those two dissenters both realize, hey, inflation is back down at these levels. The jobs market is at levels that historically are around a recession level. I didn't mention this before, but I look at the diffusion. They released the diffusion index for the labor market, which takes all the industries that make up. There's a lot of industries that make up the jobs number. We're now at 46 percent on average that are actually positive. So think

Starting point is 00:33:50 about this in the PMI, which is a survey, the diffusion thing is actual numbers. Only 46% of the industries are adding jobs. Historically, that's been a recession. So again, I think the Fed has a job. It has a dual mandate to watch inflation, but also deal with the labor market. And right now the labor market is weaker and the median voter in the country is angry because of inflation being at these levels. It's a very difficult dynamic. And that's why at the end of the day, debasement is the only thing that I can see. The government has to make sure they're finding ways to print money and have nominal GDP be above the cost of capital, which is rates. And so I think that's where they're going to err. And that's why I think when the Fed cuts rates in

Starting point is 00:34:31 September, Trump is still going to want rates to be cut, even if the PMI start rising higher, because I don't think you're going to see the inflationary pressures broaden out maybe until we see oil prices go higher, which will be a lag. And that means for a period of time here, I think the market's going to bring inflation expectations higher at the same time that rates are going down. One of the aspects of Bitcoin that I've always been fascinated with is it is an automated monetary policy. It was set.

Starting point is 00:34:59 It executes based on code. It does not care what goes on in the world. And the world has to bend to the reality of that Bitcoin monetary policy. So we know that monetary policy can be automated, but it is not a dynamic monetary policy. it is a static set, forget it, it just executes. We've talked about AI now for months, how good it is, how incredibly kind of effortlessly is able to take information, synthesize, make decisions, create content, create some sort of productivity profits, et cetera, for these companies. Are we at a point now where we can start to actually automate the Federal Reserve?

Starting point is 00:35:40 Like that is the ultimate irony of this, is that if the AI gets good enough, why do we have humans who are making these decisions? Shouldn't the AI be able to take all of this data, synthesize it, and then come out and say, here's where the interest rate should be? What's going on, guys? One of the most important trends in all of finance

Starting point is 00:36:00 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. 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

Starting point is 00:36:17 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. I've got Jeff Park, Jordy Visser, Darius Dale, Chris Camelo, the Nigerian brothers, and many, many more that are all coming.

Starting point is 00:36:40 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. Well, now you're starting to get into a topic that

Starting point is 00:37:04 so if I'm spending 20 hours plus a week listening to podcasts and I'm only listening, and this happened again this week, I made the mistake of putting on, I won't name the podcast because people have jobs if they do this for a living, but I started to listen to three people talk about the FOMC meeting. I made it through 15 meetings of what was an hour podcast and I got bored. And the reason I got bored is because everything they said assumed that we were still living in the industrial world. So when I listened to Sergey Brin or Demis Hassabis, and Sergey Brin in particular has said, to answer your Fed point, the best manager is already AI, meaning he believes that decisions made by AI are better than any manager because it's doing

Starting point is 00:37:56 it without bias. It's doing it without political side. All human beings have biases, all of them, and they make decisions, unfortunately, based on those biases. And so a computer has no bias. It's just using the facts that are coming through. So theoretically, in the same way that it beats all doctors in terms of now looking at MRIs, it beats the diagnosis, artificial intelligence will be running the most complicated things. I don't think setting monetary policies as complicated as you know, as seeing if someone has cancer or not. So I would say yes, based on every single smart person that I listened to, they're already starting to use AI for that. And I've said this before, all people before they make any decision, not like any complicated or simple decision,

Starting point is 00:38:42 but any complicated decision, like, should I take this job? Should I do this? Should I drive it this time? Or should I drive at that time? Just get in the habit of asking chat GPT on all of this and think about the answers that you'll get. And if you follow it up with another question, you'll get another response. At a minimum, I think AI should have a seat at the FOMC. I tend to think that that's table stakes at this point. Like if you're not using the tools to better inform the humans making the final decision, that seems negligent and maybe even they could do a better job. One, I don't know if you follow, there's a guy on Twitter, Signal, S-I-G-N-U-L-L. and I was in early in terms of following him.

Starting point is 00:39:24 I thought he was doing a fantastic job. He was kind of sharing all of these insights and it was like the beauty of a small account online is that they don't feel like they are held captive by the audience or have to perform. And so they say the truth and you get like the raw intelligence, the raw thoughts,

Starting point is 00:39:39 you get the kind of honest evaluation of certain events. As the accounts get bigger, there's a bifurcation. Some people can keep doing that, some people can't. So one of the things that he said, and he's done a pretty good job of staying kind of true to how it was when the account was small, he now has started to listen to a lot of AI music. And he was talking about the fact that AI music, I think, has now charted a couple of songs that were created by AI have actually hit on some of these charts. that feels like a seismic earthquake in an industry that they don't do so well when people

Starting point is 00:40:18 kind of step on their toes you can go back to napster and kind of all you know they start playing this game of like oh you want to train on our music to create new music that we're not going to get paid on that feels like that's not going to go over so well but what i think is kind of the the blind spot i don't think a lot of this music is like let me train on drake's voice and then create a song that sounds like Drake. That obviously has a lot of intellectual property things that probably are going to be difficult. What a lot of the AI music that's hitting is like, it's a voice of nobody. It is just a synthetic voice that's been created. The music is from scratch. Like there's no intellectual property issues. And if the machines can better understand

Starting point is 00:40:55 what you like from a music perspective, they probably are going to be able to create better music. And so maybe we can use this kind of music example to show like this is going to happen in every single part of your life but it feels like there's a world in the future where i don't know half the chart could be ai music i'm sure that's gonna happen and i'll i'll say it this way if you think about restaurants so let's just say ai music has no soul meaning humans can't connect with it they can't oh this person is someone i well we have restaurants like that if you go to mcdonald's There's no soul at McDonald's. It's just cheaper.

Starting point is 00:41:35 And I think when you get through AI and you get into, if you can get free choices, if you can customize your own and you say, hey, make me, this is what I like out of these 10 songs, make me songs. But the human connection is still an important thing. I know for me, I write. I don't write anything that I don't personalize, meaning part of my life is involved in it. I wrote a sub stack this week on how fast AI is moving and disrupting things. And it was on the carousel of progress and kind of my experience at being in Disney World and sitting on a ride that was horribly, you know, boring for my kids. And I normally went in there when it was raining out. And I tried to literally be honest about the fact I went through it.

Starting point is 00:42:17 And I think it resonates with people who've been to carousel progress. They've been on that. Now, will AI be able to do that? Yes. But somewhere behind it, I think people are going to always try to connect back to the human and try to understand what it is. And over time, maybe 50 years, 100 years, maybe people won't care about it. But I do think, A, there's a room for AI stuff that is not based on humans because if it's good and it makes you feel good, that's great. But the whole concept of kind of remembering the past, getting emotions towards other things, connecting dots, I think for people that have that kind of breadth,

Starting point is 00:42:52 And that usually comes, in my opinion, from being in nature and doing lots of things and traveling and being like, I remember when I went there, that was great. I remember when I did that with my kids, that human element to me and that connection is still going to be there. So I think it's going to be a world where the two are integrated more and more together. You know, it's funny is I was talking to one of my friends about this music thing, and he said, DJs are like EDM DJs are the first step towards this. And I said, what do you mean? He goes, how many of the DJs, their voice isn't even involved, right? They just like mix a bunch of music and they stand on stage, jump around and play the music. People love the music and they associate the human with the music, but the human, you know,

Starting point is 00:43:26 kind of technically created it, but is not actually doing kind of what you would think of as traditional music and, you know, singing or anything like that. And so his point was, you know, you got to respect it, right? It's a skill, it's a talent, there's expertise there, but it is one step closer to AI generated music than let's say, you know, Taylor Swift goes on stage and sings and dances and plays the guitar. And so I just think that you're going to see this over and over again. And maybe the last thing we can talk about is, I don't know if you saw the video from

Starting point is 00:43:54 Figure AI of their humanoid robot doing laundry in the founder's home. But again, I think we've all kind of said, hey, they're going to walk your dog. They're going to do the laundry. They may watch your kids, whatever. I did not expect it to be able to do the laundry already. That feels like we're getting faster here, right? And so how do you look at kind of the humanoid component? We've obviously got Tesla, although not humanoids. They've got their self-driving kind of robo taxi out in Austin.

Starting point is 00:44:21 They're now testing, I think, in the Bay Area. It just feels like the intersection of AI and hardware has hit kind of another level of acceleration, just even in the last maybe six to eight weeks. Yeah, and this is all obviously part of the trend that we're talking about is that the build out for all of these is going to be enormous as time goes on. And the scale, you know, I've heard Chris Camillo talk about this, both in a conversation he and I had, but also in a lot of the podcasts he's done. And I know he's been on with you. In fact, I think we're both participating at your event in September. Two smartest guys I know how to be there, of course. It's going to take a while for the humanoid thing to really scale to the levels that are necessary. It's also in that video with Brett Adcock, it's going to take a little bit of time for humans to actually trust it being in their house.

Starting point is 00:45:17 Maybe a single person by themselves will have it there. I think they're trying to get it to the point where for elderly care, it can be there to make sure that everything's taken care of. But if you've got kids in the house, I mean, think about how much longer it's going to take. So the one thing about the humanoids, I would put this in the again, I call it embodied AI, because before that, you're going to have drone deliveries, you're going to have robo taxis, which are rolling out more and more. And I think that's where people have to get comfortable with living with machines that are doing things based on their own brain and their own learning curve. that's here, that's accelerating. And I think that's a big part of, again, robo-taxis. If someone buys a Tesla and they're not using it, then it becomes an Airbnb on this. These things are going to be data centers. They'll be constantly updating and doing things and providing that back for training. People just can't comprehend what the world's going to look

Starting point is 00:46:17 like five years from now. And that's the thing that I think people have to deal with. The next three and a half years for certain, because we have one person in charge who has basically put executive orders in that are going to be in place for three and a half years. The hardware transition side is happening. We are leaving an 18 year software dominated and we're entering a period where hardware and software and humans and hardware are going to be merging together. It's going to be a very different world in the 2030s. I love it. Where can we send people to find you? Institutionally, they can find me at 22V Securities and Research in particular right now because of the PMI stuff. I'm very busy with helping people because I believe this is an

Starting point is 00:46:56 important transition. They can always find me on X, on Substack, on YouTube, on every Sunday and here with you every week. Amazing. People love it. Thank you guys so much for watching. Make sure you subscribe to the channel. Jordy, rule number one of content, don't tell them to pause a video in the middle we got a bunch of people i'll see you guys all next week see you

The Pomp Podcast - #1582 Jordi Visser | AI Boom & Bitcoin Will Lead To MASSIVE Bull Market

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