The Pomp Podcast - Recession Is Cancelled: Why Bitcoin & Stocks Will Explode | Jordi Visser

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Starting point is 00:01:00 What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a

Starting point is 00:01:42 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. When people in the community decide that it's time to buy, they will jump on this in a very quick manner. Between now and the end of the year, the allocations of Bitcoin for next year from the traditional finance world are going to be increased. That is going to happen. And we make a lot of decisions on Wall Street for next year when people make their allocation changes. I think that's going to happen in the final quarter this year. And I think Bitcoin's allocation number will go higher across portfolios. What's going on, guys? Today, I've got a great conversation

Starting point is 00:02:26 with Jordy Visser. In this conversation, we talk about Oracle going up 40%. What's going on in the stock market? What are interest rates going to happen? What about a recession? Is it coming or is it not? The jobs revision, the sentiment index, Besant actually saying stuff about inequality. There's a heck of a lot going on right now. Jordy's here to explain it all and do it through the lens of AI and Bitcoin, just as he always does. I learned a ton from this conversation. I think you will as well. Here's my latest conversation with Jordy Visser. All right, Jordy, I thought a great place to start this conversation is that we have now seen massive moves in public stocks in the last couple of weeks. We saw Opendoor go up 80%

Starting point is 00:03:04 in a single day. We saw Oracle move up like 40, 45% for a stock that is now a trillion dollar stock. We saw Figure go public, 35%. I mean, these are monster numbers. It feels like there is a disconnect between asymmetric moves of these companies versus the guys who are got their binoculars out looking for the 0.1% change in the CPI metric. Like what is going on with the bifurcation in the market right now? Yeah, this is, I, I'm going to just say it out. I've, I, I posted, um, I posted something on X about academic macro being dead. And what you're describing is this fixation that people have on whether tenure rates should be 4.6% or 3.7% when we've basically been 4.25% for the last three years. And you have what happened with

Starting point is 00:04:02 Oracle this week. So the other companies you mentioned, like for Open and for Figure, I think there's a different situation when you're dealing with a company that is one of the largest in the world who in a quarter said what they said, and then to have a stock of that size go up 40% in a day, and for people to still be arguing about whether the Fed should actually be cutting rates because the CPI, and I mean, we're literally talking about a scenario where whether the headline CPI is 2.9% or 3.1% or even 3.2, it's not important. It's not important to the people at home going shopping. Eleven percent, nine percent when food prices have gone up and people can't get them and toilet papers aren't on the shelves. I get it. It leaves people in a really

Starting point is 00:04:55 big mental problem. But whether inflation is 3.1 or 2.9 is nowhere near as important what's happening with AI. And I think this week was the week of Oracle. And I think and I'm sure we'll get more into it. But for me, this was the dividing line where I think this week between oracle happening and the cpi being out of the way now so the fed's going to cut rates i think all of the bearish sentiment that's been sitting out there where people refuse to stop with the tariffs because that's what the cpi is it's i'm worried that tariffs are still going to show up somewhere i think this was the official ending of tariffs this week all right so you say it's the official ending of tariff like fear-mongering i saw a lot of people say oh inflation is now 2.9

Starting point is 00:05:38 year over year the tariffs are here they're infiltrating into the inflation numbers look at and they would go and they would find some data point they'd be like i told you the tariffs are inflationary look at this thing here and by the way these aren't like trolls on the internet these are like well-respected economists and actually people that like we talk to on a weekly or every other week basis i'm shocked at how many people are like hey inflation is here inflation is being driven by the tariffs, and we should all be concerned. So here's the beauty of those economists. Their job, if they're at Goldman Sachs, Morgan Stanley, is to try and help investors make money. None of that is going to help investors make money. If anything, it's helping them lose

Starting point is 00:06:26 money or underachieving. It is the reason why I spend all of the time that I do on AI. It's the reason that, you know, you and I basically got together because I believe AI is the gateway to crypto. Economists don't know anything about AI or crypto, nothing. So what happened in Oracle, I mean, just to put this in economist terms, which no one put out this week, Oracle had an increase in orders of $317 billion. Okay. Is that a lot? That's a lot To put it into context of economist terms, nominal GDP in the U.S. is, let's say, 4.5%. At 4.5% on a $30 trillion economy, you're talking about, let's say, $325 billion a quarter increase. So Oracle, in three months, their backorders grew by $300 billion.

Starting point is 00:07:21 So what's more important right now than what's happening with artificial intelligence? what's and that's just the infrastructure side that doesn't include the profit margin side it doesn't include the adoption side it doesn't include any of the other things that are going on this is literally one of the largest companies in the world saying we don't have enough capacity for the orders that are hitting us economists don't talk about that they're still fixated on whether core goods services moved up and i'm not kidding you it It gets rounded to where the big, let's say, scary part today was, well, it came out at 0.346.

Starting point is 00:08:00 If it had come in at 0.351, we would have rounded it up to 0.4. That's the stupidity that gets in for people thinking that is going to help you make money or not. The economic data, I just put it aside at this point. They're saying it's 2.9. I looked at Truflation when the CPI came out. It said 2. So I trust Truflation more than I trust the government's data.

Starting point is 00:08:25 And if you look at that, you say, well, hold on a second, all this like hubbub about inflation data, you're literally looking at data that's wrong. They're telling you it's wrong. The Treasury Secretary is telling you he's wrong. By the way, the Fed chairman, who obviously does not get along with the executive branch, he has slipped up in the past and talked about the alternative inflation or talked about the unofficial inflation well hold on a second here if he's talking about that yeah it's crazy so what about the size of the moves right if you look at oracle um you told me a stat uh about

Starting point is 00:09:04 mexico's gdp no their their market cap the entire sum of their stocks okay is 450 billion dollars so oracle was up in one day all of mexico's stock market well pretty close It wasn't completely, let's assume it was more than half of Mexico's stock in one day. And so when you're talking about companies that are, there was at some point in all of our lives, the laws of diminishing returns that when something gets so big, it can't have these types of moves. Well, Oracle gapped higher 30 plus percent and it finished up 30 plus percent. So these types of moves, they just didn't happen over time.

Starting point is 00:09:43 We obviously saw this type of thing with NVIDIA. But what happened with Oracle is really important for people to just put together because Oracle said in the statement, Larry Ellison literally said on the commentary, I'm getting calls not from the chief technology officer for orders, not some person with inside, you know, the business side who's putting in an order with Oracle. He's getting calls from the heads of companies and the heads of countries. This is something far bigger than anyone can possibly deal with. And that's why I always say with the PPI and the CPI and all this stuff, historically, these things were viewed and we have to make a rate decision based on old data. Because by definition, you're making a decision not on today's data. You're not making it on the future data.

Starting point is 00:10:34 When you're talking about a headline inflation number of 2.9%, that's over the last year. Okay, where's it going to be two years from now? If you think inflation is going to be lower two years from now than it is today, that's the way you should be making your rate decisions. And so when you have a labor market, which is not growing, and you have a scenario where you have AI that's impacting the labor market, AI is going to impact the inflation market as well. And so two years from now, three years from now, the deflationary pressures from AI are

Starting point is 00:11:04 real. And so the Fed should be lowering rates because of the distributional wealth problem, because of the labor issues that are showing up, and also because future inflation is going to be lower. And the swaps market went lower this week, too. So the expectations have gone lower. The sentiment index, people are still bearish. Now, I'm on the internet.

Starting point is 00:11:24 The internet people are not bearish. The internet people are naked long. we're going way higher and they've been that way since april but the like quote real people the smart money the economist world the wall street world not everybody but there's still a lot of people who are bearish and um you've brought up that the atlanta gdp now measurement that like three percent earnings flying what is what's the best argument to be bearish is there an argument that you would say, hey, if I had to be a bear for a day, this is what I would point to? I mean, we talked about why Wall Street can't embrace Bitcoin. We talked about why Wall Street

Starting point is 00:12:09 can't embrace Tesla or Elon Musk. What do you have to accomplish? What does Elon Musk have to do for people to go, yeah, I guess I agree. Tesla's not a car company. I don't know what has to happen. So with the economy, this has a lot to do with how bearish people were with the tariffs. It has to do with a lot of political issues that I think they just have in general. The Fed independence, again, another academic story of if you sit in a dark room and you say to people, do you really think they're independent? It's ridiculous. I heard your interview with Mel Madison, who, you know, I said to you, I think he's great. He's a great historian of the Fed. I think he talks about things in a way that makes it interesting. I don't hear that from

Starting point is 00:12:58 people who are bearish. I hear a lot of anger. I hear a lot of arguments. And I was just at a Robin Hood event where, again, like it is when I say when I go to crypto event, nobody there is bearish. I'm not saying they're uber bullish either. They're looking for trades and they're looking for things that could have that next 30% pop. I think when you get caught in the bearish side and you're missing the fact that earnings are going rapidly, profit margins are going up across the board. We have the most important technology accelerating at a pace that earnings have shown with Oracle. We've had Google, Amazon, Microsoft all say they don't have enough capacity for the people on their side. So the hyperscalers are trying to buy stuff from Oracle. They don't

Starting point is 00:13:40 have it. And as a user, I agree with what Sam Altman and everyone has said, which is they don't have enough capacity to let this thing run full. They have governors like on a golf cart on all of the models. So you can't use it to its fullest potential, even at the $200 price clip. So I think people are bearish because of, of history of being locked into something. I've seen a lot of the performance numbers and yeah, there's always some funds that are doing well, but for the most part, the reason people are still bearish is they don't think that the way the administration has dealt with things this year with tariffs, with pressuring the Fed, that this won't end badly. And I think they're locked into something. I think the end game ends up being for them. They are dictated

Starting point is 00:14:23 by their investor base. And I think between now and the end of the year, you're cutting rates into a strong economy. You're cutting rates into something where I think the PMIs are coming up and you're cutting rates into a scenario that Oracle just said, demand is outstripping supply. They should be long stocks. I keep hearing people bring up the R word. They keep saying recession.

Starting point is 00:14:45 The dirty word, recession. Do you think that there is a possible recession on the horizon? Not only is there no possibility of a recession, and again, I live in a world of probabilities of some kind of distribution of outcome. The reason there can't be a recession, again, you have to redefine it. Will the government and the Fed allow there to be a

Starting point is 00:15:08 bunch of job losses at some massive level that leads to a credit cycle unwind? It can't happen anymore. There can be a slowdown. We could be in a recession right now. Technically, they could go, well, look what happened. We didn't have a lot of job creation. But GDP is still growing right now at 3%. And after we had that first quarter where everyone kind of flipped out before the tariffs, where we had the trade back and forth and then we got the reversal back, we still have this growing. But the easiest way to do this is to look at nominal GDP seen through revenues. Revenues are growing for the companies. And we have a build out of AI that's going to be explosive now. When Oracle says we have back orders of five years, here's what is going to be a problem for

Starting point is 00:15:55 them and everybody. We don't have the power to generate that. I did the numbers and I went through chat GPT and said, hey, the 300 billion in orders they have, how much power is needed for that? So it goes through its assumptions and it comes back and says, you need the power of what's equivalent to Japan's consumption of electricity. So then I take that answer, I put it into Gemini and go, well, you check that answer for me and come up with an analysis on your end. It says, well, that's a little bit overstated, blah, blah, blah. It comes back. And by the time it's done, it comes back with Germany. I don't care what you're talking about. The amount of buildup that needs to happen on this stuff is there. For the people who do believe there's a recession,

Starting point is 00:16:36 whenever we've had job creation at this low a level, we've either been in a recession or just about to go into a recession. That is the reason why people are bringing up the recession. It has nothing to do with the other things that are positive. I believe the economy is going through a very big change where consumption will continue to just kind of putter along here, driven by the non-cyclical part of what happens, which is health care. And then on the flip side, we are going to see power needs. We're going to see pump needs. We're going to see battery needs. We're going to see solar. We're going to need so many things on the industrial side that that manufacturing thing that the White House wanted to focus on, it's coming and it's coming in a pretty big way.

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Starting point is 00:18:25 crying foul saying, Hey, well, what about us? We're not getting the jobs, which is happening. But to your point, you're getting replaced in many cases by a AI agent that does it better or software that does it better and better. Is it mean that you're not skilled? It just means they do it 24 seven. They don't take time off. They don't complain. They don't, you know, make a mistake they it's just like this very very different thing you are literally competing against a machine now and we have seen uh coinbase they came out and said 40 of all the code being written inside of coinbase is now from ai where they have a goal by october to be at 50 uh eight sleep mateo uh over there said 48 of the code i think from their data team is being written

Starting point is 00:19:10 uh by software these are monster numbers i'll give a very real anecdote uh shane who you've met um on our team i recently was going to a meeting with him and we were in the car and uh he was on his phone i was like you know we're working on and he's like i'm coding and i was like for people who don't know shane shane is an excellent engineer um i said we mean you're coding on your phone he goes oh yeah and he was showing me that basically he's typing in natural language hey i need you to build this tool or this you know whatever and i forget if it was cursor or whatever platform he was using is tied into the code base and so not only is it able to create the code for the thing that he's describing he then just pushes it to github he's doing it all

Starting point is 00:19:56 from his phone i said hold on a second how many hours a day is he doing and i started talking about it he's like well yeah you know if i like go to a restaurant and waiting for the food to cover something and i you know i start coding like he's getting he himself is more productive using these tools so again you can say that's one anecdote but you extrapolate that across the entire economy like of course of course there's a boom yeah it's i it's really hard i think for people above the age of 50 and since i'm in that that cohort we think you look 21 i know it's so nice of you too right matt that's good um i i don't think people above the age of 50 can possibly comprehend what you can do with it to improve your productivity because in a lot

Starting point is 00:20:42 of cases they've they've risen to a level where there's not much to be productive from like i don't i hate to say this but most people that are running businesses have been up there they've got other people to do this stuff, which means there's a disconnect between what it can do and what they understand it can do. And I think that's been one of the issues with the adoption numbers that you've heard from MIT. And these things keep going on and on and on. I do want to make sure that people realize when we talk about the job situation, AI is having an impact and will continue to have an impact. It's happening. It's definitely going to have an impact for the incumbents and for the bigger companies. The startups won't hire as much as

Starting point is 00:21:24 they usually do. So in Shane's case, he doesn't need as many people. So you have a weird dynamic that the jobs market is really being impacted by the AI side, but it's also being impacted by immigration, which is a big component, and it's being impacted by demographics. So we're going to stay around zero, in my opinion. You've got all these moving forces, which are going to make it difficult. The problem with that is that breaks all historical models of what AI is doing is you are getting more productive because you're growing without hiring people. And so if the economy is growing at four and a half percent and we're not hiring any more people, which is what's been happening for the last four months, then by definition,

Starting point is 00:22:04 we're getting more productive. That is why profit margins have been the best gauge of kind of the productivity boom that's happening. And so I think the management people just don't understand what's happening. And that's why I'll say all the time that incumbent companies are going to have a really hard time for a lot of reasons to stay in the game past the next three years. Because eventually the digital employees will be going. We don't have AI agents in a big way, but that's really when the white collar jobs are going to suffer dramatically. And those people, I don't know where their jobs are going to be. So for a lot of the younger people, I've heard Mark Cuban talk about this on the All In podcast, basically saying to them, don't even take a job with a big

Starting point is 00:22:44 business. Like you're going to suffer there. Like they're not going to be able to adopt AI in a way that's going to help your life. You're not going to get smarter at it. Go to a business, a smaller business like Shane's business, where you can do what Shane's doing because that's going to help you. Even if that job doesn't work out, you can go to another one. So there's, I think young people are actually getting a little bit of a break, not getting these big company jobs anymore to the degree that they would. They just have to be using AI because those people are not going to use AI. the job revision minus 911,000 jobs, if I remember correctly, that's big. Now I will say that maybe something I've changed my mind on is the last job revision. I mean, I was going nuts, 800 and

Starting point is 00:23:29 whatever thousand jobs. I now recognize I've been paying attention to it for enough years. Every August there's a jobs revision and I started to really look into the details, right? I went and and read some of the documentation. I've talked to some people who are much more experts on this. And I think their argument, which again, I'll give some credence to, is the system is designed to have these revisions

Starting point is 00:23:51 because it's kind of a survey that turns into hard data, right? So I don't think I understood that before. And now that I do, I don't think I put as much weight on a revision, even though there's a crazy revision, right? Like minus 900,000 jobs is crazy. Yep. What's your read on whether it's important or not, or what's the takeaway from it?

Starting point is 00:24:15 It might be the most useless, backward-looking data point, purely by the revision numbers we're talking as it is. It's funny, ADP has a monthly number as well. Now, when ADP originally launched doing this, they were trying to forecast using their own data what the non-farm payroll number would be. Over time, they realized that was ridiculous and no one was paying attention to numbers. So now they're actually doing the numbers based on actual data related to what they're trying to do. I think their numbers have become more important than the non-farm payrolls. I think they've become more accurate. I think they're a better reflection of what's happening. The only reason I bring it up is for anyone who uses any data, there's multiple forms of data that you can

Starting point is 00:25:02 use for payrolls. But the most important to me that is a weekly number is the jobless claims. and aside from today and the very big distortion that happens around the holidays in terms of people not actually going it'll come back the other direction jobless claims are still sitting at near the lowest levels of all time and when you adjust them by population or the amount of workers they're really at the lowest level the first thing that happens before there's massive job losses is you start seeing people get laid off now this might sound funny to people but there's always these people being hired. And so normally we're creating a hundred, say 200,000 jobs a month. But even with those, you're getting some people that are laid off. The claims gives you the people

Starting point is 00:25:45 that declare for insurance and the continuing claims show you the people that are not able to get a job and are still on this. What has happened without any doubt is the hiring market has slowed down and everything that you look at is in there. People are worried about their jobs. There is definitely a job situation which is on the weaker side but this is the argument why the fed should be cutting rates and i think they have been slow to doing it i think they're going to pick up the pace and i think if anything with the data we saw this week more and more people are open to the conversation of them doing 50 i still don't think it's going to happen but we are you know we are getting higher and higher on the possibility i'm sticking with 50. there you go i think they

Starting point is 00:26:28 they should do 100 but they're i told you remember we talked about two three weeks ago right i said this is crazy just get to where you need to be now i understand the market won't like it etc but yeah 50 to me 50 is your serious 25 means you're getting pulled kicking and screaming i don't think the market will care as much as it would have two weeks ago if they did 100 it no no 100 would Yeah, okay, yeah, that's awesome. 50, I think the market actually, a part of the market wants 50. You shove a bunch of academics in a room,

Starting point is 00:27:00 they're not gonna come out and say we were wrong. When they do 50, I do believe there's a political side to this. I do think there's gonna be enough discussion. There might even be dissents of people that think 50 are in there because if you're leaning towards the labor market, there's no way to look at the labor market

Starting point is 00:27:14 and think that it is good. There's no way to say the labor market is good. You got the revisions, but more importantly, you've now had, you know, June, July, August, you just don't have good data sitting there. And so wages are still coming down slowly. I believe everything is fine in the economy, but if I'm, if I'm sitting in there and I want to impress the administration to see if I can be the fed chair, I think there'll be some 52 cents. The 30 year fixed rate mortgage sitting near two-year lows going into a 50 basis point cut or 25 basis point cut what do you read into

Starting point is 00:27:53 the mortgage market and our plight to make the market more affordable for americans it's happening and you're going to see a pickup in housing i mean uh the housing stocks have been doing great home depot is near a four-year high and it's been in this um range i i know i've talked about pmis a lot. And I know we went through and described what it was. But just so everyone hears this, I'm going to keep pounding the table that the market is going to start to go through a bit of a change where the leadership is going to change. And a lot of these long term charts and long term, meaning most of these stocks peaked before the Fed started hiking rates. And once they started hiking rates, the parts of the economy that were the most sensitive to rates,

Starting point is 00:28:37 the stocks. This means housing. This means small cap stocks. They had trouble. Manufacturing, anything related to autos, all had trouble. Now we're moving rates down. And you're seeing 10-year rates are just above 4%. This is the lowest level they've been in, as you said, for mortgages in almost 30 months now. So I do think the housing market is going to see a pickup up from that. But as I've said, I really do believe the administration is going to declare a housing emergency. And that just means they're going to look for other ways to bring this down more, which means mortgage spreads will probably tighten up. And that means that mortgage rates will come down even if 10-year rates don't come down much more, 30-year rates don't come down

Starting point is 00:29:23 much more. So I think people have to get used to the fact that I do believe there's going to be a little bit of a housing change and those stocks are going to do well. That should mean transportation patient stocks do well. And all of this comes, like I said, Oracle's got a lot of orders. Think of those orders as being software orders, AI. But this is where software meets hardware. To actually fulfill those orders, they need more data centers. They need more electricity. And so you're going to have this next phase where they're saying, we don't have the capacity anymore, guys. We got to build out this stuff. it's a lot of semiconductors it's a lot of physical things that are going to start to

Starting point is 00:30:02 be needed over the course of the next year how do we accelerate that one of the um i was talking to somebody recently and he's starting a new company so i want to be careful about uh describing what he's doing it's not public yet but um there's somebody who is creating a business the government is creating a very large fund to go and specifically advance something that government believes is a critical national security issue but they are doing it through a business lens so they're making investments in a certain thing that is outside the united states that will help accelerate kind of american strength globally domestically it doesn't seem that crazy so i'll give you a an example i was talking to one of the humanoid

Starting point is 00:30:49 robot ceos and one of the things that he said to me that was very fascinating is he said listen china is actually subsidizing the adoption of humanoids so what they're essentially doing is everyone is always focused on the manufacturing right the building of but what they're doing as part of their strategy is they're actually going to companies that can buy them and say hey well what if we give you money or we subsidize the cost of this thing to make it more likely that you are going to be the demand side of the humanoid robot which if the demand is there somebody's going to figure out how to build it right and his point was well in the united states we don't have those types of programs right we are very supply cyclist but actually if the government was to

Starting point is 00:31:31 start to subsidize demand you may have the same impact that you have in china which has been this acceleration on robotics you know in his case could we see that type of stuff start to play out here whether it's ai whether it's robotics whether it's you know some of these other kind of physical world technologies well let's get rid of the word subsidize and let's so spoken like a true capitalist well here's the thing i think the administration is using a lot of china tactics so part of what you said i i've i've highlighted in recent writings in the video last week i spent a lot of time on how the administration realizes that for national security so let's go back to the the worst part of of the tariffs the market's collapsing you

Starting point is 00:32:19 and i are sitting here and we just keep taking out our little three iron and we're hitting the ball down the middle of the fairway and going okay everyone's gonna panic everyone goes through this they're worried about doom and gloom but it'll work itself out and the reason it'll work itself out is at the end of the day number one the stock market's not allowed to fall because it's been financialized so it can't fall or there's a recession we can't have a recession because we we have 6% to 7% deficit, debt to GDP 100. You can't do that. Okay, so what's the other problem?

Starting point is 00:32:48 The other problem is we have a national security issue. What's the national security issue? Well, if someone gets AI before us, we're at a huge disadvantage, so we need to focus on AI. What else do we depend on? Well, to actually get the AI, we have a national security issue. What's that? Most of the stuff we need for the AI is made in China.

Starting point is 00:33:05 So we're racing with China. They have a lot of our supply chain. Okay, so we have to change this whole thing, and we need to declare emergencies around national security. And so Taiwan Semi, you're going to build a fab here because your chips are sitting a boat's ride away from China. So exactly what you're saying is what's happening. And this is why they are going to continue to focus on,

Starting point is 00:33:30 we got to go get our own rare earth. We have to build our own semiconductors here. We have to, and just keep going down the line. So the way that they're going to speed the things up here the best of the ability is through the permitting side. It's through the tax incentives. So for CapEx, by allowing them to change the accounting rules on how they deal with the CapEx so that they can grow their way into it, that's kind of like a subsidy. It's kind of like, okay, you guys spend today. You're going to hopefully grow into it with your return on invested capital. The problem is,

Starting point is 00:34:03 do I believe that like in China, that means there's going to be a misallocation of resources? You're damn right I do. But that's five years down the road. And our job as investors is to think about what the way the market's going to work over the next year. There are going to be PMIs that are going up because the government is reducing the friction and setting a path. And as I've heard all of them say, and especially Chris Wright for the Department of Energy, if you have a situation where you can produce power and you're having restrictions, you call us up. That's a different mentality than it was before where you couldn't get through to the administration on certain items. So they have made this a critical situation.

Starting point is 00:34:42 Everyone can argue about whether it's the right thing to do, just like with the Fed. The reality is, as investors, they're allowing this to happen. There's going to be a misallocation of resources, but that's way down the road. And right now, this is a national security issue, which means we're going to grow the economy hot and we're going to move rates lower. That's the playing field you're involved in. So I think all of that's going to happen. I think there is a lot of China thing, because I think if your competitor is doing these things, you can't do exactly what they're doing, but you can do a form to kind of speed up

Starting point is 00:35:11 and make sure that we can move at the same pace. Hi, I'm Matt Hogan, CIO of crypto asset manager, Bitwise. Look, crypto can be confusing. There's so much noise and the space changes so quickly. That's why every week I write a five minute memo on the biggest stories impacting crypto in plain English. Why is Bitcoin up or down?

Starting point is 00:35:30 What are people missing? Where should investors look next? get the lowdown every week sign up to get the weekly cio memo delivered straight to your inbox go to bitwiseinvestments.com slash cio memo that's bitwiseinvestments.com slash cio memo carefully consider the extreme risks associated with crypto before investing mel madison when i talked with him talked about this idea of higher rates being actually stimulus. Besson, now I started to talk about some inequality stuff. Help us sift through this. What's happening here?

Starting point is 00:36:06 Yeah. I mean, this is something that people just haven't understood, particularly on the macro side. And I think it was a confusing situation because when rates went higher, everyone assumed, this will be a big problem. The issue is the government has a massive deficit. So they're printing money to give to the private sector in interest payments. So who benefits from that? People that have lots of cash. So especially the hyperscalers, they're loaded with cash. They have cash sitting in a bank. So they were actually making a lot of money. And that's why the net corporate interest payments actually declined when they moved rates higher. And that was a chart that not enough people looked at and saw it collapsed all the way back to the early

Starting point is 00:36:52 1980s which means that the companies that have debt small cap businesses most of them had termed out their their borrowing at least the companies that could particularly the bigger companies uh out a long time when during covid when the fed basically moved rates to lower levels they all termed it out as far as they could so they didn't have to deal with their issue and then the bigger companies got the money same thing goes for the baby boomers the people that suffer are the people that need to buy homes, people that need to buy autos, because those interest rates create an issue. And so mortgages, housing affordability is directly impacted by where rates are. So I think the reality is that what Mel said is something that gradually over

Starting point is 00:37:35 the last few years has become something that more and more people realize, that when you have a big deficit and you have interest payments that's beginning, the government's losing, but someone's winning and the people that are winning are the wealthy people that already have cash and again i think this is why besant put out a tweet to focus on the fed needs to lower rates and the reason they need to lower rates is to help the people that actually need access to the borrowing to be able to i mean young people should they have time they're going to have a job they're going to have income for a while they're not retiring for a long time they want to build a family you need to be able to buy a house move into a bigger space you need to borrow money

Starting point is 00:38:13 Yeah. It's very, it's very interesting to me how no one, until he said it, I hadn't thought about it in that way where like the government is paying interest to someone, which is the same thing as if they're sending checks to stimulus checks, right. You know, or the Trump bucks or whatever they were calling them. They're just giving it to you in a more acceptable form and companies, wealthy people, they're the ones who are receiving that money. Yeah. So again, it's a distribution, which is not fair because it's based on how much money you've already received. And so by keeping rates at higher levels, there is a form of that going. That's why over time, if you go back and look at money supply growth, there is a relationship between what the interest rates are. So in the 1970s, when people were like, well, money supply was going through the roof. If you have money in a bank and the rates are 13% and you have any kind of income and you don't touch it because you're, you're bearish and you just don't want to spend any money, your money grows to some degree. Now, if inflation is also 13%, then you're spending

Starting point is 00:39:20 more out of that. And that's where this whole relationship comes between the money supply and also the wages at this point with where we have rates, money supply is growing fairly rapidly around the globe right now. Part of that is the government handing out this money through again, having interest rates and having a deficit yeah last thing i want to talk to you about is you went to the robin hood event you mentioned um what was that like like you know people i think i've seen some live streams or clips from these things um it looks really high quality it looks like uh it's kind of community based from what i can tell and the other thing that seems is like it's cool right which is like you know maybe uh uh nobody wants to point to but but it's true like what

Starting point is 00:40:05 was your experience going to this event it's this has been the best part about not attending any wall street conferences now and only attempt attending crypto and i mean we were at a crypto event together it was in miami it was not a wall street event no and i it's funny because for that one i'm like what do i wear you know and by the way he didn't have a suit on in miami guys he was not dressed this way at a crypto event um i i didn't know what to wear and so i mean i saw people dressed any way they wanted at robin hood a very similar thing this was in vegas um the event was was very enjoyable i i wish i could say i was there for very long but no red eye back so it was just there for meeting people. But I met a lot of people. And again, there's a different way that

Starting point is 00:41:02 people who are trying to learn how to invest their money. And part of the investing side is the trading side. And what I learned in Miami was this three-bucket portfolio approach that crypto people had that is somewhat similar to what the Robinhood community has. And so people understand this and i think everyone should do this you have a a bucket of of money that as you're making money or from your job and also investing that that's really the long-term stuff that's in things that you're not moving around a lot think of that as bitcoin the bitcoin bucket or think of it as the mag 7 bucket then you've got your next one which is kind of the fundamental stories of things that you think are going to play out well that haven't played out yet let's put that

Starting point is 00:41:46 is the tesla or the ethereum one the ones that you kind of believe there's a fundamental story you want to grow into it and as that makes money you take some of those off you move it into the safety one and then you have your your party bucket your game time bucket the entertainment side the meme coins the the open no come on come on things that can go up 80 percent a day fit somewhat in in the party eric jackson would say it's a colt stock not a meme what is it a 500 now in the last whatever the case is he's up i think he's up 20x okay so basically where people are dreaming a little bit that the thing is going to work out and it's going to play big and so when you think about the way they're approaching it it's different than the baby boomers investing

Starting point is 00:42:34 it's different where people focused on how much am i going to have in bonds and how much am i going to have in stocks the long-term side they've adjusted to this debasement story far better than the baby boomers. And the debasement story is this. The government has to have inflation to offset the debt. That means stock inflation. That means debasement of the currency. That means some form of assets have to do well. And I don't care which administration it is. I mean, we had a Democratic administration that got chastised for printing lots of money. We now have a new Republican administration, which says they want to run the economy hot. They're all debasement stories, and they get elected by the baby boomers who don't want a

Starting point is 00:43:25 recession. So I made the comment that we haven't had a recession since before the iPhone. Before the iPhone, we had $9 trillion of debt, and now we have $37 trillion. People just have to understand that at the government level, we have locked ourselves into a world where the only way out of having this much debt is you can't have another recession. You can't have something big or you end up in the Great Depression. And since we already know that, well, let's go with the unknown where it goes in. And that's why when people see the polarization of the government, the anger that people have, the violence that's happening around the globe, the inequality has left the world in a place that, again, is part of the debasement story. That is why I migrated to understand crypto more

Starting point is 00:44:13 it's why i think ai is going to take us faster to a world where those two merge and it happens at a time when very few people that i've met on wall street that were trained in the same way i did training mark trading markets understanding macroeconomics understanding the history where i can talk all day long from 1920 all the way up about what's happened to markets and interest rates and all of a sudden it's like throw it all out the window ai and crypto are the only thing that matters at this point and that's the way i believe it and that's what's dominating the markets and that's why people are having a hard time adjust to it I actually have one more question. We made people wait all the way till now. Any updated thoughts on Bitcoin?

Starting point is 00:44:49 I like the way the charts are starting to play out. I think this was an important month because I wanted to see if it finally responded to good news. But it's the ecosystem, the broader things. I'm seeing a lot of mini breakouts technically right now. And these are just small things for me. But we talked about Ethereum when it got through 4,000. What I really wanted to see was Ethereum got through 4000. Now it's been consolidating between four and five. Great. All time highs are up around five. Once it actually breaks through and goes, we need the entire ecosystem to be going, and that means Dogecoin needs to be going and Sui needs to be going in other parts that are showing up.

Starting point is 00:45:32 And each of them has a they're all sync moving in a synchronized manner right now. So I think there's going to be a chase in these things that is going to start. I'm still, like I said, I'm not worried about Bitcoin a year from now. I'm not worried. I was already wrong on how far I thought it would be this year. But I still think before now in the end of the year with what's happening on stocks and they kind of have a little melt up look to them, we still don't have sentiment at high enough levels. So I think between now and the end of the year, if I'm right about the PMIs, I think Bitcoin will still get up. I'm not going to put any more levels on because it's not going to where I thought three months

Starting point is 00:46:07 ago, but everything's starting to look like it's starting to move higher. Are you telling people that they're not uh bullish enough is that what i just heard like bitcoin can't go up until people are more bullish no no no the market you know what the best thing having been in this thing for a while now and again i've said this repeatedly micro strategy when people start sending me something like are these companies gonna blow up now i'm like what are you talking about well micro strategy the premiums coming in how do you think about it so everyone hears this I don't know why. MicroStrategy's premium to me is a sentiment gauge of Bitcoin, okay? So when the community is really enthusiastic, the premium heads up towards three. When Bitcoin's stuck for

Starting point is 00:46:52 a while and people get bored with it, it starts to migrate towards one and a half. And that's kind of the way I view it is. It is a sentiment gauge, just like for stocks, you have all these sentiment gauges. When people in the community decide that it's time to buy, they will jump on this in a very quick manner. Between now and the end of the year, the allocations of Bitcoin for next year from the traditional finance world are going to be increased. That is going to happen. And we make a lot of decisions on Wall Street for next year when people make their allocation changes. I think that's going to happen in the final quarter of this year. And I think Bitcoin's allocation number will go higher across portfolios. I tend to agree with you. I think Bitcoin's going

Starting point is 00:47:34 higher. I think stocks are going higher. I think all the bears are wrong. They're going to cry. and uh i don't think a recession is coming people are gonna cry anthony pompliana uh to quote the great philosopher chamath palpatia who put in his spack filing there's no crying in the casino a lot of people crying right now stop crying in the casino all right thank you very much uh where can we send people to find your weekly video and all your tweets youtube linkedin x i post them all there so you can find me there on youtube and then for the institutional side you guys have been great with 22v in terms of reaching out we're doing a lot more stuff for everyone who's listening it is primarily institutional but if you do have

Starting point is 00:48:16 interest in getting not only the research but getting a little more access to things give them a call go to their website they'll help you out amazing talk again next week see you next week

The Pomp Podcast - Recession Is Cancelled: Why Bitcoin & Stocks Will Explode | Jordi Visser

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