The Pomp Podcast - Bitcoin Fear Hits All-Time High - What Happens Now? | Jordi Visser

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Starting point is 00:00:55 Learn more at volvocars.ca slash safety. 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

Starting point is 00:01:35 are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat 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. And I think for Bitcoin and for people that are focused on altcoins, yes, from a trading perspective, it's been bad. I've lost money. This has not been fun. I wake up every day and I go, OK, here we're in for another battle. But I've been through enough of these battles to realize that when it feels this bad and there literally is no hope and I'm getting signs of really intelligent people calling me scared to death, I just.

Starting point is 00:02:17 What's going on, guys? Today, we've got a great conversation with Jordy Visser. Prices are down, investors are scared, and everyone wants to know, is a bear market here? Did a bubble pop or is this just a normal healthy drawback? Jordy's here to explain what he's seeing in the market, where he thinks there's opportunity, why he thinks different asset classes in different industries have different answers.

Starting point is 00:02:37 And he also gives us a little bit of optimism and explains where he thinks that we'll actually get a reversal in the market and what to look for through the end of the year and into 2026. All that and much more in our latest conversation with Jordy Visser. All right, Jordy, there's a big sell off this week. There is fear everywhere. I saw the stock

Starting point is 00:02:54 market fear and greed index hit six. I've never seen it that low. I saw the Bitcoin fear and greed index hit eight. Never seen it that low. What is going on and what are we supposed to think about where we're going from here? You didn't even ask why I'm in Maine. I'm hiding here. So this is the best place to be. So I've run out of town. Yeah. What's amazing about this one, and what I think is both surprising but also enlightening, the S&P is still only about 5% off all-time highs. So when we went through this, and you're naming how sentiment in some measures is lower than it was on Liberation Day, yet we're nowhere near that in terms of just the S&P fall.

Starting point is 00:03:42 So this has really been speculative retail names, and obviously, Bitcoin. These have been the areas. And for everyone who's also lost money in altcoins, this is all of crypto. So this isn't just there. But I will say this, for everyone who's watched me here or on my weekly, I always say the same thing. And I think it gets boring to people, but I really do believe that we will be climbing a wall of AI worry forever. And I really do mean forever. Behind the scenes, as we're seeing

Starting point is 00:04:19 speculative names fall off, and I've highlighted that, I created an index which had the names that I think were heavily speculated on that really didn't have any revenues that were based on things like nuclear, which may be a solution five years in the future, but nothing in the near term. And Bitcoin obviously falls into that camp where it doesn't have a normal valuation side to it. So we're at a point where people have basically bailed out for the time being, and they're getting stopped out. And as someone who, let's say, I had some really nice trading profits going this year until recently. And then about two weeks ago, I started to increase my regular buying of Bitcoin, of which there's always regular buying. Then I started doing some increased buying below $100,000.

Starting point is 00:05:06 So, you know, between MicroStrategy and Bitcoin, they've eaten up a lot of my semiconductor profits and now my Eli Lilly profits. And we're kind of sitting here and I can feel that the narrative as prices are going down, I'm seeing more and more panic on the AI side. More and more people kind of beating their chest that this is artificial intelligence unwind and that the bubble is popping. And that's where this is really going to come down to it. I don't hear many people when I speak to them that use AI or that do as much research as I do across kind of what's coming. And I just feel like in a week like this or a month like this, a lot of this is just losses on top of losses. We were going to see corrections. That speculative name basket has given up the entire year, and it was up significantly.

Starting point is 00:05:56 Bitcoin's given up the entire year. We've knocked retail out. So I wrote a piece this week that there is light at the end of the turbulence. I wrote one with a similar title back in Liberation Day, and I hate for people to ignore it. But the message is the same, which is when those fear and greed index get to these low levels, my historical kind of belief is unless the economy follows it and goes down like it did after the housing bubble and like that, that's the only way that it's justified. If not, and we're in a bull trend, and I will remind people, every market around the world is up double digits. So even the S&P 500 and earnings growth is happening faster outside the U.S. than it is inside the U.S., and U.S. earnings are growing faster than what the market's up this

Starting point is 00:06:42 year. So under the hood of everything, AI is still pushing things forward. We'll find a bottom in six months from now. People will look back and really not remember the panic that ensued. You know, it's funny to me. I saw the stock market fear and greed index at six. And I literally, I was like shocked. I've never seen it that low. And I went and I looked. Is that the CNN one?

Starting point is 00:07:01 Yeah, the CNN one. And I went and I looked and the NASDAQ's up 15% this year. Right? I mean, like, how do you balance those things, right? It's like everyone is fearful, but we're up 15% for the year. And then you look at S&P, same thing. How much of this is that gap between expectations and realities? where unhappiness lives, but also that is kind of where panic lives in financial markets.

Starting point is 00:07:25 Everyone was expecting a really strong close into the end of the year. Everyone was expecting, you know, us to end up 30% for the year, you know, these kind of really bonker video game type numbers. So that's one aspect is, you know, kind of, we had these big expectations and maybe we just get kind of above average returns, but given the expectation, you feel disappointed. But the second thing is, I saw a bunch of data from Ryan Dietrich over at Carson Group. And what he talks about is we have only had since 1950 six times in history where the stock market peaked in the month of October. So it's happened, but just not very common. And then on top of that, he has continued to talk about this idea of November is actually seasonally weak a little bit. And it

Starting point is 00:08:08 happens that the market usually is one of the weakest parts of the year is November 18th through the 20th. Well, guess what Thursday was? It was the bottom of that 18 to 20, you know, kind of sell down that we've seen this week. And so, again, does history repeat? Does it rhyme like there's all these questions I think people have. But there is kind of this historical seasonality or cyclicality that in hindsight, it's much more obvious than maybe if we were talking two or three weeks ago, you and I are like, hey, we're going higher. You know, all of the Fed and kind of macro environment is setting us up for a for a fun end of the year. Yeah, so I'm not really that big into seasonality, particularly in the environment. But you did make me think about one thing. So

Starting point is 00:08:51 let's go back to the fact that the fear and greed index has gotten down to these levels. And I want to use an analogy for people to connect that back to what I said, that you're going to be climbing a wall of worry for a long time. Anyone who thought that all of a sudden, the economy is going to get better, meaning everyone's going to be doing well, that doesn't happen in a world of AI. And this is the thing that I've talked about where the K-shaped economy, if you want to use something, imagine if we didn't have weather cycles, meaning seasons. So seasons, to get back to your seasonality, let's assume it could snow in the summertime. And let's assume we didn't have the weatherman to tell us what was coming. So you drive your car

Starting point is 00:09:38 one day, it's San Diego outside, it's 80 and beautiful. And the next day it's 22 and there's six inches of snow. With seasons, you get the time to prepare for the snow. You get to go through it. In a world of AI where we have a K-shaped economy, I really do believe the seasons are going to be shorter, meaning they're going to be one month or two months. And out of nowhere, you can make a bearish argument. And what people have to understand, this fear and greed index is about narratives. You see that in the University of Michigan consumer confidence level, which is at all-time lows. And so I've highlighted before that the all-time peak in UMich consumer confidence was in March of 2000 or December of 99, that period in there, which was when everyone was

Starting point is 00:10:21 doing well. This is a very different time period where we have a K-shaped economy. And in a K-shaped economy, it's very easy for people to get negative very, very quickly. When you're very polarized, that means it starts from half the country hates the president. It's a very, very different situation. And I think as long as we're in a K-shaped economy, people have to realize that that situation creates these issues where people can get negative very quickly. And I think AI is forcing this. Exponential innovation did it. And so that's why I keep saying to people at the end of the day, what'll matter for AI is NVIDIA blew out numbers this week. There's nothing wrong with what's happening with AI. Then you add in that Gemini came out this week, the best model ever.

Starting point is 00:11:05 And it's amazing what it can do. You're just, you're continuing to make progress. You're going to continue to have profit margins going higher. People just are going to have to get used to this trading activity. And I'll say it again. I think retail is better positioned to deal with this. And I think the crypto space is as well. NVIDIA numbers were excellent and they raised guidance.

Starting point is 00:11:26 Beat and raise, beat and raise, beat and raise. We sell off. Is that actually a bad sign? Like you would, you know, I tweeted. I said, oh, Jensen Jensen outperforms. Recession is canceled, you know, type thing. Right. It's kind of like, hey, the man in the leather jacket is here to save us all. But then we sell off pretty aggressively. I think, you know, one and a half percent on Thursday in the S&P, two and a half percent Nasdaq. How do you look at, OK, we got the great earnings, but we still sold off. Is that like telling us there's something that is even worse? Like it's more bearish, the fact that we sold off or is that just a coincidence? is? I definitely think it's a sign where there is some forced selling going on and some hedging going on. So I saw this morning, because the biggest thing yesterday, as someone who is up in Maine, is doing a lot of other things, I looked at the market. I saw it was up 1.5%.

Starting point is 00:12:19 And then about two hours later, I looked and I'm like, wow, we're down a percent now. That doesn't happen too often. And then I read this morning and saw some posts on X that went back and highlighted that there's only been three other times in the last 30 years that the S&P or the spiders did what it did yesterday. So for SPY to be up over 1.5% and then finish down over 1.5%, there were three other times. One of them happened to be the day that I wrote my light in the end of turbulence, which was back in April of this year. And then the other two times, believe it or not we're in october of 08 after lehman brothers during the melee and again markets rallied from those points both times now in terms of 08 that was not the ultimate bottom we continued

Starting point is 00:13:07 to eventually fail and and go lower but back then the economy was going into a recession and i think that's what i'm going to say is what that represents to me is yes that was a bad sign and you're a trader uh the way that i start doing things in fact i texted you this week saying i think the bottom's in for bitcoin um it fell another nine percent since i've texted you that so that was wrong um and again i think we're in that mode where they're searching for where the pain will be and where we'll get for selling when you get into scenarios like that including 08 i will tell everyone until we actually see kind of a let's say a four hour big white candlestick where we're down and we go straight back up then you look for the retest and on the

Starting point is 00:13:55 retest you want to see if the rsi divergences are there and uh and we don't have any signals in that yet but i think every day now i'm watching for trading signs where i can let's say triple the amount of money i'm putting into bitcoin uh and some of the other names although the semiconductor names and things I still like for next year, they haven't fallen as much. So really, when you're trying to go bargain hunting right now, you know, aside from Bitcoin, I really don't I really can't find anything that I personally want to buy. And that says to me that this has been more of a healthy move lower, not something more panicky. Today's episode is brought to you by figure looking for the best way to unlock your cryptos liquidity. My friends at figure are exactly what

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Starting point is 00:15:12 loan with Figure today. So what's interesting to me is Bitcoin is down about 35% off the all-time high. And we've gotten two other, call it 30 to 35% drawdowns in this bull market. Historically, we have seen, and the numbers I remember 2017 was like five different 30% drawdowns or more on the way up. I think that there is a lot of talk of, you know, October. There's a number of people who kind of predicted that was going to be the top of this four-year cycle. We then sell off 30%. It does feel like if we go down 40% off the all-time high, you're going to see everyone, okay, fine. It's bear market. You know, here we go. But there is kind of this clinging to hope at that 30, 35% drawdown level that actually this is just the third drawdown in this cycle.

Starting point is 00:16:01 and it's going to be an extended kind of prolonged bull market. The four-year cycle thing is not legitimate, et cetera. I don't know what's going to happen, right? I fully don't know what's going to happen, but it does feel like a 30% drawdown, which are painful. But again, to have this extreme fear, it's like Bitcoiners have been here. I don't know if you go all the way back and you look at,

Starting point is 00:16:22 let's say from 2017 to today, less than a decade, the number has to be something like 25 30 30 drawdowns right i mean like the the generation holding bitcoin i always tell people like people oh you didn't live through 2008 you didn't live through 2001 like hey my brother these people live through that like three times a year every year for a decade right um i mean just think if the stock market went down 35 percent you would have people freaking out the bitcoiners in the last two years having three times so i just think that there is this element of when you get the risk takers when you get the people who are used to volatility and they're at extreme fear that's like a sign of oh you've spooked even the people

Starting point is 00:17:08 who are you know kind of used to this level of volatility that to me is a data point that a lot of people don't talk about yeah i so i have a lot of thoughts on this and i'm going to include them in my YouTube video this week where we've already had four 80% falls in Bitcoin. So let's not stop at 30. It is an asset that historically has been able to lose 80% of its value and then go to all time highs again, all during its lifespan. So to have four of those, that doesn't happen in the S&P 500. And again, there's an element of this of two things that I think are important. And this is why I still don't believe that we're going to extend this much further. And I'd like to hear your, I'm going to ask you a question at the end of this, because I think you'll be able to add

Starting point is 00:17:54 some value to me as someone who's looking at data statistics. And I'm only investing in Bitcoin for one reason. I believe that exponential innovation runs coinciding with it. And that 25 years from now where AI agents are accelerating what the world will look like in the future, Bitcoin will be a major beneficiary of what's going to happen. So in those 80% drawdowns to get to that level, it was an immature asset. It wasn't very large. It has finally reached a status this year in the crypto entire thing to get up to $4 trillion overall. I mean, it's a real asset class. Here's the problem. The altcoins, most of them did not get above the highs that were made in 2021. to 2022. And the reason that's important, and I've mentioned this multiple times and I still

Starting point is 00:18:47 believe this to be true, the dot-com bubble left a lot of entrepreneurs with losses. And whenever things would sell off, the hope would immediately turn into despair and a belief that we were going to go through another one. And the pain of that one was so recent that it scared the hell out of people. The VC world is not coming back to crypto because it also has a lot of assets in there. I've talked about the importance of the private market, and we've talked about that OGs are selling. And now everyone that's been moving money for portfolio diversification reasons inside iBit and some of the ETFs, they're starting to get a little shaky and wonder why they've done this, and they're starting to sell. So the problem is you run into this situation where despite all of the good

Starting point is 00:19:32 structural news, all of the innovation news, all of the entrepreneurial hopes, and the administration getting to the Clarity Act, I still believe this stuff is gonna be good, but it needs to start holding somewhere in here and it doesn't have to be a particular level. We could fall 50% off the highs. I remember saying two weeks ago, we might get to 80,000. Well, we did, we got to 80,000.

Starting point is 00:19:54 I still think there'll be a day when it reverses back higher. And this is where I wanted to ask you a question that I think for the people that have known me a long time that watch us and probably the people that have known you a long time that watch you, You must have some feeling or insight that there is some kind of for-selling that was triggered by some event. I'd love to hear it, and I'm sure other people would too.

Starting point is 00:20:15 I think the short answer is I don't know, and I don't think anyone really knows. The maybe two most credible rumors, if you will, the first is on October 10th when there was the big liquidation. If people remember, it went from like $120,000, $122,000 to like $106,000, $108,000, something like that in the span of a couple of hours. That was the bigger liquidation than during FTX or any of these moments. I think it ended up being something like $19 or $20 billion of leverage. Somebody blew up. Who is it? How much?

Starting point is 00:20:48 What is the contagion from that type of event? What are all the – something happened on October 10th, which is right about when we went from the top and we've just been down only since then. So you've got some sort of selling. Now, there are people who will look and say, on binance people are selling at 9 30 every single day uh it must be some sort of you know programmatic suppression but i think that there's a lot of folks who are smart who say well actually

Starting point is 00:21:14 they're probably just selling to an otc provider the otc provider is you know essentially uh collecting all the orders and then they're executing the other day so i think that there's um a blessing and a curse the people in the bitcoin and crypto world they actually understand the technology and the assets really well they don't have tons of experience in the traditional financial system compared to traditional folks. And so you get a lot of like rumors and speculation and like assumptions. And frankly, just like they don't understand how the systems work, which is an overgeneralization. There's some people who do, but for the most part, traditional finance understands it better. So that's one is there's been a blow up.

Starting point is 00:21:49 The second thing is I don't want to say who said this. I do not think that this is probably the thing, but it was so outlandish that I had to hear more. There's a person in the Bitcoin community who is very well respected, who said, well, it could be government organizations who are being told that they need to take any Bitcoin that they have seized or have access to and put it into the strategic Bitcoin reserve. But that means that they would be giving up the value. So if you have $50 million worth of Bitcoin and they're saying, give it to you, you would lose the $50 million in your department budget. And so instead they're choosing to sell it so they don't have to hand it over because they get to keep the $50 million. Again, this person does not work in the government

Starting point is 00:22:34 or whatever, but like they're in the know, right? And so I don't know where they got that information from, but it was a interesting theory maybe that, you know, maybe there's some credence to it, but I hadn't heard that one. My guess is the October 10th, that's like the most credible, realistic thing is somebody blew up, there's contagion and we'll go down. Now, the question that I think I have is we've seen this before, but usually the liquidation has not been over a month and a half. It's been pretty violent. It's kind of like a market sell order almost, right? And so if you look at the capitulation point of FTX, we were kind of in a bear market, bear market, bear market, and then you got that final capitulation.

Starting point is 00:23:15 This doesn't feel like that. This feels almost like controlled to a degree. And so it's left me thinking there's some piece of information we don't have that in hindsight we'll be able to explain what's going on right now, but we don't know at the moment. Yeah, only other thing I'll add, and again, I'll show this over the weekend. So I've highlighted that on the retail side in the US, the correlation between Bitcoin and these speculative names has been one for one after, and I would say it started more late October. So if you take in that we saw OG selling that forced the consolidation where we were going sideways and underperforming as AI names were going higher, which to me would have been, again, there was a lot of supply coming to the market that Mike Novogratz talked about in September. Then you get the event on October 10th. You get the fall off and maybe it was whatever.

Starting point is 00:24:10 Let's assume it was $20 billion. That's not enough. The OGs were selling more than that. But then now let's add in a retail pullback that fueled a lot of selling in the U.S. But one thing that people haven't really thought about, and that's because, again, we have a U.S. show and we focus on the U.S., but the Asia growth factor has completely collapsed also since September. And then you add in, oh, the Fed's not going to cut in December and all these things. And I think we probably got the sentiment low. the one thing about sell-offs, the sentiment was not super high when we were on October 10th

Starting point is 00:24:46 anyway, because people were already frustrated with the fact that it wasn't going up. And then it immediately went down dramatically afterwards. So I do believe that we are in just a liquidation that in an asset that moves a lot, if it rallies from here and let's say it went back to 100,000 by the end of the year, it still would finish up for the year. So I think, again, we're caught in this position where something is now down 6%, 7% year to date. And we're all frustrated because this has been an ongoing hood on the market. But if you get through this, I think next year, again, this is about tokenization. It's about the Clarity Act. It's about AI agents. There's a ton of things that are going on. And again, I wrote this and published it in the Substack. And I

Starting point is 00:25:30 really do believe that if you look six months from now, this sell-off will be looked at something that, hey, I should have just got involved because next year is going to be a great year for risk assets. I want to talk about Fed rate cut in December, jobs data, and midterms. And those three things are very connected in my mind. So jobs data, we're not really getting it. They're kind of telling us like, hey, we're not going to give you the official stuff. We've got some private data sets, which now the Fed, which they're used to driving down the road, looking in the rear view mirror. Not a great way to drive, but that's what they do. Now they're basically putting on a blindfold and they're saying, hey, now we're going to drive and we're not even going

Starting point is 00:26:05 to look at the road. There seems to be a jump ball, 50-50, whether they're going to cut rates or not cut rates in December. But you hear Besant, you hear Hasek, they're all out on television talking about Q1, Q2, Q3 next year. What they're not saying is midterms are coming. And I think that there's a general belief in the market that these guys are going to run this thing incredibly hot. The Atlanta Fed Now number, I think it's like 4.2%. How do you think about the jobs data and the December rate cut with the backdrop of midterms being a year away. This still gets back into the fact, I don't expect the jobs market to get significantly worse. I also don't expect it to get better. And I do expect inflation to come down. So this is where we keep

Starting point is 00:26:56 talking about the labor market. But what Powell said in Jackson Hole was that although they believe inflation will continue to err on the upside they realize how dangerous it is to fall behind on the labor market and that's really to me the critical part anyone who's hawkish on the fed to drive back down the probability of a rate cut in december has been focused on the inflation side of the teeter-totter and the people that are more dovish have are focusing on the k-shaped economy in the the labor side. I eventually think the labor side will win because AI will be deflationary. And at the same time, it will be not good for jobs. And I can say this time and time again, but if you have gas at the pump not moving higher, and we've been sitting below three and a quarter

Starting point is 00:27:44 in gas at the pump pretty much all year since we got down here, and we're still around $3 right now. When you have wages that are coming down, but most importantly, and I highlighted this last week, the wages at the lower end continue to fall more. And in an election year, like you said, midterms, this is going to be critical. But I also think for the Fed, they can't ignore it. So when you have wages going down and you have oil not spiking and gas at the pump not up, the only other thing left for me where inflation could surprise us on the upside is if we had a strong housing market. We don't have a strong housing market and we have owner's equivalent rent, which is coming down. So what else do people need to see on the inflation

Starting point is 00:28:24 side to not realize that what AI is doing to inflation is not just the, hey, it's deflationary, we're going to lower drug prices, we're going to lower education prices, we're going to lower all that, all well and good. The main thing that it's hurting is it's hurting the ability for people to have a job, the ability for people to think that they're going to be able to actually grow their wealth over time because they're capped kind of on the upside at these jobs. Because if AI doesn't get them today, it'll get them in the future. That's why confidence is so low. I can't remember a time in history where people were talking about inflation. And I just don't see it happening. And we're the only country in the world that still is even really focused on this at this point,

Starting point is 00:29:07 except for Japan. And Japan has a very different story. And for people that are talking about their bond market and stuff, Japan actually has their short-term rates way below inflation. We actually still have our rates above where I think inflation is, and we should be lowering. So I'm going to continue to believe that we'll err on the side of them cutting. And even for the December meeting, we did get payroll data yesterday, and it was slightly better than expected. We revised down the prior month stuff, so we're starting to trickle through. But New York Fed Williams came out this morning and basically said he's erring on the side of the labor side. I think the labor is the most important concept.

Starting point is 00:29:46 And I think whether it takes another month or two, I think the deflationary pressures will start to show up and inflation will not be an issue. visa with Bitcoin exposure. Here's the best part. The visa gets approved first and you invest only after authorization. The company runs a Bitcoin aligned treasury, non-custodial L2 staking and offers 24 month redemption windows. Go to bitizenship.com slash pomp and book a free strategy call today. That's bitizenship.com slash pomp. Today's episode is brought to you by Arch Public. As markets shift, headlines break and interest rates swing, one thing stays true.

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Starting point is 00:31:25 When we think about optimism, when will this be over? What are the catalysts for the reversal? Jobs data being a little bit better, that feels like that could be one of them. Inflation being lower that feels like that could be one of them potentially a rate cut could be another data point like what are the things that you're looking for where you can have confidence of okay we could be reversing so that i think next year is going to be a much much better year for confidence than this year and again this gets back into my argument and i've said it now for five months PMIs are going higher. We're going to have a broadening out in the winners. I'll be highlighting a lot of stuff in this weekend's video that just shows that like Goldman Sachs estimates for

Starting point is 00:32:13 Russell 2000 earnings for next year. I mean, people have to start paying attention to the fact that between the rate cuts and the fact that you can make the argument, we're still coming out of a recession. If PMIs go higher, a lot of companies will be coming out of a three-year recession. and part of coming out of a recession, and I think this gets back to coming out of the great financial crisis, it's not about things getting better. It's the second derivative. It's actually about things getting less worse. One thing starts ticking up, you start getting revisions going higher, and earnings revisions are still moving higher. It doesn't get talked about that often, but really over the last 15 years, there's very, very little time where we actually see

Starting point is 00:32:56 earnings revisions going higher with the consistency that they are now. It's been about 20 weeks where they've consistently been moving higher. And that's across the stock market. That is not just technology. That is not just AI, which means more and more companies are starting to say their earnings the following year are going to be better. And sometimes that can just happen through cost cutting. That can just happen from running your businesses more efficient. after uh nvidia came out i mean i hate to tell people we're we have all-time highs for profit margins now so michael burry put out another comment this week along with jeff gunlack and and they're both calling ai overblown and a bubble and they're giving all their examples

Starting point is 00:33:37 they're just wrong i mean i don't know how to say it they're wrong this is not a bubble this is not 1999 i said it last week on your show i've said it online i'm going to say it again the five years leading into 2000, when we actually had a dot-com bubble, the NDX was up 800%. The last five years to today, we're up 100% in NDX. So it was eight times as big a move. And Cisco is trading at over 100 PE. We still have NVIDIA growing earnings and revenues are up 60 plus percent from where they were a year ago. And just so people hear the numbers, their most recent quarter and their estimates going forward are over $60 billion in a quarter. I mean, there's just not a lot of companies inside the S&P 500 that are bigger than the revenues that they make on an annualized

Starting point is 00:34:32 basis at over $200 billion. So this is not a bubble. AI is the most powerful thing I've ever been involved in. And for people that say it's overblown, I'll say it again. Eli Lilly's been up again this week. I talked about it last week. We are on the cusp of curing all diseases. It was all over the podcast I listened to this week. Pay attention to the things that really matter. If you're at a point where curing cancer, I want you to go into your chat, GBT, after this interview is over, and I want you to type in, what would the stock market do if we cured cancer and see what result you get? When I think about a narrative my smartest friends are talking about, but has not yet hit the mainstream kind of retail investor community.

Starting point is 00:35:13 It is the introduction of leverage and debt by these companies. We've seen the hyperscalers go from using free cash flow to now starting to add debt. We have seen some of the AI infrastructure companies start to add quite a bit of debt. We have seen things playing out in the private credit market, both in terms of some of these companies trying to do certain types of deals, but also just like an explosion there. can you talk about the introduction of you know uh credit leverage debt etc but also what's going on in private credit yeah this is an important point and so when you hear me drone on and i'll

Starting point is 00:35:52 use the word drone on because i'll just keep saying ai ai ai um you always have to remember this message that i have i'm more bullish on international stocks than i am on u.s stocks only because of the weighting that there is towards companies built on code. So I just want to remind people on this because it's really important. The S&P is up 11% this year. The Brazil market used EWZ, the ETF on it. It's up over 30% this year. It was up over 40%.

Starting point is 00:36:24 Europe is still, for the most part, depending on which market you look at, outperforming. The Hang Seng is up over 25% this year. global markets are going to outperform because they're seeing a re-rating happen because they will benefit more from artificial intelligence than the mag seven will and if the mag seven to me everyone thinks they're going to benefit i really am in the camp that i don't think they're going to be able to get the revenues to justify what's happening but as i've said these guys are in a race in a lot of cases of history. Think of them more as presidents in their final term. We have four years left before they believe we're going to hit AGI. So they want to be the ones to

Starting point is 00:37:10 get there first. That's what they want. That's their legacy. Curing cancer, Demis Hassabis, all of them talk about this, or at least the majority of them do. Zuckerberg did an interview about curing all diseases where he took his 2100 forecast down to 2030. When you get through this, they want to cure this. They want to be the ones to go through it. And even Sam Altman, who's trying to win the consumer game, he talks about curing diseases. So I think these guys are going to spend themselves into problems, but not the kind of problems that people are saying. There's a difference between their multiples not being justified at the levels they are, where they never get the revenues, and that the beneficiaries, they benefit through democratization

Starting point is 00:37:52 of intelligence. And that's why I think small cap stocks, people are underestimating, not the fact that they're going to solve their problems, but if you can grow in any way your earnings over the course of next year, and there's a multiple re-rating on cheap stocks, which is what has happened in Europe this year and happened in Asia. In Brazil, you still have single digit PEs versus the mag seven. So I do believe that the debt they're taking, it is justified to be worried about it, but not for the market to go down, not for the economy to go down, not for junk spreads to go down. This is not big enough for that. But I don't think they're going to get the revenues, which means they're going to see their multiple compress. And remember, they didn't have to take

Starting point is 00:38:31 any debt to cannibalize the world's revenues. The unwind is going to be that their re-rating of their multiples, to me, will come down over the course of the next five years and that the beneficiaries will be the companies that are able to use AI and grow their businesses. Now, in terms of the private markets, one thing, I just think this market was completely mispriced. I had heard for years when I would go out and market my own fund and talk to them. When I started hearing things like, well, we really like private credit and private equity and VC because there's no mark to market.

Starting point is 00:39:05 That was the reason that people wanted those over hedge funds and over kind of the equity market. It's also the negative that people would have for Bitcoin. Like, I can't have anything that's that volatile. So I want something that basically goes up 10% a year, and I don't have any mark-to-market risk. So now that stuff's all being marked down, and I think that's going to remain an overhang until tokenization comes where you can clear the market. Otherwise, it's kind of price discovery with seven buyers. You need to have price discovery with 8 billion buyers, and I think we'll have that once tokenization starts.

Starting point is 00:39:34 On the private credit side, so I understand the LP argument. what about from a uh a borrower standpoint like this is more capital that was available it created competition in the market right there's like these benefits as to why somebody would want this um do you have any thoughts in terms of you know from a borrower perspective private credit and like will this hurt will this you know slow down some of the development or or maybe R&D in some of these companies? The loans are still going to be made. I think the private credit market really grew

Starting point is 00:40:13 because the banks weren't allowed to lend. So now the banks are going to start lending. You're still going to have the ability to borrow money if you have good business. I mean, that's just a fact. You're going to have an ability to do that. What I do think is that AI is going to have to be a part of those new businesses.

Starting point is 00:40:28 And this gets back into the point of, I think the game of extending people for long periods of time, kicking the can down the roan in lending, I don't think that's going to be doable anymore because I don't think these problems are going to go away quickly. I think the reason we're having these credit problems is very simple. We have a K-shaped economy, and the K-shape has bigger numbers than the top end. So there's no other way around it. This is healthy.

Starting point is 00:40:53 I mean, I hate to say this to people, but everyone in the macro level complained for years that we weren't allowing recessions to happen. And they were saying that because you're allowing the zombies to survive. I don't think the zombies are going to survive anymore. And there's two ways to let that implode. One is the historical credit contagion where lending is shut off because no one trusts anyone. And then there's the, well, let's let them go out of business over the course of five years, 100 a month, as opposed to 12,000 trying to go out out of business in one month through pulling the lending. So I think what's going to happen is it's going to be a slow period of kind of getting through the bad situation, the bad credits. And guess what, guys?

Starting point is 00:41:39 In 2023, we had another private market issue. It was commercial real estate. And everyone thought commercial real estate was going to take down the world. And guess what's happening? A lot of you just going to X. Hey, this building in New Orleans sold down 90%. Hey, this building in Chicago was down 90%. It didn't take the economy down. It didn't do anything. And the size of the commercial real estate market is much bigger than the private credit market. I think the numbers in the private credit market that Jeff Gundlach referenced were 1.7 trillion. I mean, we got a $30 trillion economy now, guys. That's not a big number to be focused on. The subprime situation was probably an equatable number, but the overall mortgage number was much bigger. And so when people extrapolate

Starting point is 00:42:23 private credits into subprime, I think there's a valid situation there relative to the economy size, but then the contagion needs to spread. And I will remind you, junk spreads have not moved out at all. So there's a big difference between private credit markets where there's no transparency and kind of the corporate junk bond market, which still has not moved. I recently was talking with one of the larger real estate, commercial real estate or office real estate owners in Manhattan, and they told me that all of the Class A real estate on Park Avenue, completely filled. They're like, there's like nothing, right? You can push out, you know, east or west and maybe find more stuff there. Because I was asking them, you know, did people come back?

Starting point is 00:43:08 Are they going back into the office? Are they taking space? They were like, Class A, full. And so, again, there's obviously, you know, certain pockets of cities or kind of inventory that is still, you know, in a bad spot. But I think to your point about commercial real estate, like it has come back pretty strong. Now, private credit, you know, we'll see what happens, but it does not feel like that is actually the thing that people are publicly talking about. Like it doesn't feel like that's driving fear. The AI bubble and, you know, kind of the retail names and those are the things that people are paying attention to more.

Starting point is 00:43:42 mainly because those are the things that have marked the market as well, right? The exact reason why the LPs were buying it or the reason why people aren't worried about it because it's kind of, they don't see it. It's behind the curtain to a degree what those issues are, so I don't know. Yeah, you know what's funny is they talked about this,

Starting point is 00:43:58 Jason Kalkanis talked about this on the All In podcast last weekend about how important it is for the good stuff to come online and that if you have more supply of class A stuff, the one thing that's happening is then people are leaving the garbage stuff and they're going into the class A stuff. Well, what happens is that lowers the price of the garbage stuff. And it forces the people that buy those things then to get more amenities and increase the value and the appearance and actually invest money into it. So again, part of what has to go

Starting point is 00:44:31 on in a recession is you're out with the old and the garbage and the zombies that were there. Someone else buys them who has the money and they fix them up and they turn them into at least class be or something a little bit lower. And that's the way that a recession actually ends up being something good. It's the one thing that people just don't realize. And I think because, again, I've thought about this for a long time. Our lives get better with innovation no matter what. Meaning to go from rabbit ears growing up, having to look at TV that I couldn't see, and now being at this unbelievable time where you can see the sweat on the actors as they're talking or the people on stage. We continue to have innovation that's going. And the scary thing is curing cancer,

Starting point is 00:45:16 flying cars from Manhattan to JFK, humanoids. All of this stuff is coming in the next five years. The amount of breathtaking things that will happen in the next five years and the S&P 500 at the end of the day, it's just a representation of the innovation that happens. And so this is what's going to drive things. And I think for Bitcoin and for people that are focused on altcoins, Yes, from a trading perspective, it's been bad. I've lost money. This has not been fun. I wake up every day and I go,

Starting point is 00:45:45 okay, here, we're in for another battle. But I've been through enough of these battles to realize that when it feels this bad and there literally is no hope and I'm getting signs of really intelligent people calling me scared to death, I just increase the amount of things that I believe in in the long-term to put money into.

Starting point is 00:46:01 I was doing that with NVIDIA and Micron during Liberation Day. They're not falling that much right now. The only thing in my mind as an innovation that's falling that I believe in that five years from now, Tesla's come back down to levels that I think are fantastic. And I also believe Bitcoin's come down to levels that are fantastic. Jordy, we should tell people next week we got bad news for everybody. We are not going to do this next week. We're going to take a week off.

Starting point is 00:46:25 Jordy doesn't really take time off. I don't take time off. But Thanksgiving, Jordy and I have both agreed that we're not going to do this on Friday and Saturday of Thanksgiving or spend time with our families. So, uh, you guys are going to miss us. Hopefully nothing happens between now and two weeks from now. Uh, but let's see, we're going to see what happens. Um, but I appreciate you taking the time to do this. Uh, where can we send people to, uh, find the video every single week that you put out on Sunday mornings, YouTube on a JVS or labs. Uh, and I do want to say I'm a big holiday person in terms of like reflection thinking about the year uh action thinking about the year uh i really do

Starting point is 00:47:08 i i'm very family oriented in that aspect of i like the holiday season i kind of like the feel i did run the main for thanksgiving but i'll be back for for for the holidays but thank you to you i mean i've had a great time doing this we're going to be doing this for hopefully a long long time and enjoying the ride and going through the ups and downs and thank you to everyone who tunes in every week you guys have been great so well um i i appreciate that i think people appreciate that one thing i will say i'm locked in a eternal battle with my wife she tries to put the christmas tree up after halloween and i tell her you like listen there's another holiday you you can't like ignore another holiday it should be illegal to put your christmas tree up so anyone out there

Starting point is 00:47:49 if uh if your husband or wife is putting the christmas tree up before thanksgiving you should And, you know, you let me know. We'll, in solidarity, kind of fight the – it's a holiday crime. You can't do that. You got to wait. You got to have Thanksgiving, and then you can do it the day after Thanksgiving. All right. We'll talk again in two weeks, Jordy.

Starting point is 00:48:08 All right. Have a great Thanksgiving, guys, and you too, Matt. Thank you.

The Pomp Podcast - Bitcoin Fear Hits All-Time High - What Happens Now? | Jordi Visser

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