The Pomp Podcast - Why Bitcoin Will Hit $150,000 Sooner Than You Think | Jordi Visser

Starting point is 00:00:00 When WestJet first took flight in 1996, the vibes were a bit different. People thought denim on denim was peak fashion, inline skates were everywhere, and two out of three women rocked the Rachel. While those things stayed in the 90s, one thing that hasn't is that fuzzy feeling you get when WestJet welcomes you on board. Here's to WestJetting since 96. Travel back in time with us and actually travel with us at westjet.com slash 30 years. What's up, everyone?

Starting point is 00:00:28 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

Starting point is 00:01:05 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. What the MAG7 accomplished from 2007 to today in 15 years people have to go look breathtaking yeah i mean you you went from 1 trillion to 15 trillion when you combine all that this is going to take a lot less time so bitcoin's going to get to 15 trillion it's going to happen and i believe it's going to happen in much less time the reason is because of artificial intelligence so what's going on guys today we got a great episode with geordie visser in this conversation we talk about the bad jobs report

Starting point is 00:01:50 from yesterday. We explained why inflation and the Fed is something you got to keep your eye on. What's going on with Bitcoin, how artificial intelligence, Tesla, and electricity prices are all informing what is happening in financial markets. And then talk about asset prices and why all the all-time highs as cross-stock indexes are going to actually go higher over time rather than lower. The bears are wrong. The market is in charge. Jordy's back here in the studio. And here's my latest conversation with Jordy Visser. All right, Jordy, I thought a great place to start the conversation yesterday we got the jobs data and it was very very bad some would say it was terrible not good uh some would say it was catastrophic whatever terminology you want to use

Starting point is 00:02:28 it seems like the fed is way behind the curve now and the jobs data is screaming and sounding an alarm what's your take on this first of all it's good to be back where's down the business let's go just jumping right into it and go through it uh yeah i mean we i think we went through the whole summer we got the revisions last month um and yes they're catastrophic x health care they're negative so we're continuing that trend and so now you have the situation where everyone's focusing on how many are the fed going to do this year what's going to end up happening And I think everyone needs to take a step back because this should not be a surprise to anyone. We've talked about it.

Starting point is 00:03:13 I think the tariffs have obviously had an impact on some of the manufacturing side jobs in terms of the uncertainty that had gone on. With the reciprocal tariffs only really happening in August and everyone kind of waiting to see how this would play out, what the demand side would be as some of the price pass-throughs were going, we're kind of in a point where on a small-term basis, I want to say to everyone, the market's acting like we're coming out of a recession. not going into one. And I say that because as I read through the X post in the minutes after, all of them were pretty negative going in. Most banks said, well, if this number comes in zero to 25,000, the market's going to be down 50 to 100 basis points. So I think there's a bias still from people to either believe inflation is bad or believe if it's not inflation, we're going to have a recession if jobs are bad. And there's a middle ground here, which I think, again, people just have to accept. The tariffs did put a hold on things and they've kind of freaked people out

Starting point is 00:04:09 a little bit. The AI action plan is in place. The building and the whole situation is going to start to go. We saw PMIs go up in the month of August around the globe, not just in the U.S. The ISM PMI, which came out this week, was only slightly higher than it was and came in a little bit lower than where people forecast. But I think what people have to start realizing, if you look at the market the housing market's doing well why is that how in terms of the stocks the reason the housing stocks are doing well is because they're starting to build in that rates are going to get lower and so if you already have an economy that is stable aggregate payrolls are fine everything is okay PMIs are pointed up we have all of the AI action plan and the stimulus that's going to come

Starting point is 00:04:52 from the capex of the AI situation I think the people that are investing and going through it focused on one thing, which is, I guess the economy is somewhat sluggish from a payroll perspective. Is that related to AI? But one thing is certain, we just came out of a banger of earnings despite all that going on, and it looks better going forward. So my general view, and maybe I can just share this and you critique what you agree with or don't agree with, is the US economy is sprinting, but we're sprinting into a headwind. That headwind is this massive deflationary force. It's like basically smacking us in the face. Tariffs and artificial intelligence. The Fed did not correctly calculate what the impact of tariffs would be. They thought inflation would

Starting point is 00:05:35 be surging. Trueflation shows that right now inflation is at 1.98%. It's down 50% from over 3% to start the year. And artificial intelligence is leading to or contributing at least partially to a lot of this job loss that's going on. And so when you look at this, you say, wait a second, this big deflationary force that's coming to your point the companies are getting more efficient more profitable they're growing faster you're in a way getting an economic boom but you're also getting this dying off of part of the economy it's almost like you're shedding the skin like that's like a snake and one of the data points i saw i think it was um uh i forget who posted it there's this guy joey politano i think he posted that like blue collar manufacturing jobs are

Starting point is 00:06:16 falling very aggressively but somebody responded to him and said no actually what's interesting is white collar US manufacturing jobs are going up. So it's things like lawyers and executives and that in these businesses. And so when you start to look through this, you say, okay, well, hold on a second here. Bad jobs, you mentioned recession, right? Inflation, all these things are supposed to be negative. The Dow's at an all-time high. The S&P 500 is at an all-time high. The NASDAQ's at an all-time high. Gold's up 70% since the start of 2024. Bitcoin's up like 300% since the start of 2024. Maybe markets are just forward looking. And to your point, they simply see they're going to print money. They're going to cut rates. They're going to

Starting point is 00:06:54 run it hot and asset prices are going to do very well and everything else is noise. So let's make sure that like everyone watching this on a week to week basis, I think the thing we do better than any regular program that I see is we kind of stay with inside the fairway with what's happening. Jobless claims have not budged. They're up slightly. That means we're not seeing job losses. We are absolutely not seeing hiring. So this is a reflection, and we talked about it last week with the study, on the realities of AI. And I just want to remind people, when you read people saying a recession is coming, the last cyclical recession, and that means I'm throwing out COVID, but the last time we had jobs, we're weakening, and then we got a recession.

Starting point is 00:07:41 that was pre iPhone. I like, don't know how to describe to people. Like you're talking about history that seems reasonably, you know, short time ago, the first baby boomer had now retired. These are dramatic shifts in the technology side. We were doing QE back then we were coming out of a housing bubble. Now we have a problem in the housing market. Not that it's collapsing as people want to say, people can't sell their home because they have a mortgage of 3%. And if they sell their home and have to go buy a new one, it costs too much. The housing affordability is a problem because we're not building enough supply. Like this is a very unique situation that you can't go back in history and compare it to. There's a distribution of wealth problem that has been

Starting point is 00:08:25 created by the smartphone, the AI, and all of the printing that's going on. When you increase your transfer payments dramatically to two groups. One is, okay, people are retired. That means they're finally getting social security. Well, they also have a pension, a lot of them. And if they have that, they have money to spend and you move the rates up, which means they're getting money from the government in their bank account. For the people on the poorer end and the lower end of the economy, they're getting more transfer payments. These increased dramatically post-COVID. so we just have you know an economy that i hate to tell people it's kind of boring it's not as dramatic as people want to make we've had nominal gdp above four and a half percent for five years

Starting point is 00:09:07 straight but the amount of recession fears and the amount of times that people get off worried about things we're just in a situation where everyone who's involved in the crypto world so if you separated your audience by people that knew me from the macro world and people that have grown up with you on the crypto world. The basement is the major story. They have to run the economy hot and rates need to be lower than where inflation is going to be. And that's where we're headed. So instead of trying to fight it, I'll use Darius Dale's comment that he said to you, focus on the destination. The Fed's going to be more dovish going forward. They're going to be running the economy hot. Make your investments based on that. So is it a fair conclusion that

Starting point is 00:09:48 the federal reserve and the u.s government have outlawed prolonged bear markets moving forward like it is very hard for me to see an 18 month long recession or longer mainly because it feels like they have perfected the qe playbook and as soon as they start to see weakness we're getting rate cuts we're getting money printing whether it is implicit or explicit and there's just this belief now that like we don't need to live in that world because we have this ability to stimulate I think the first episode we did together was in March, I believe. I think that's when it was, which means it was less than a month from the famous Liberation Day.

Starting point is 00:10:28 If people go back and they go watch those and they looked at what we talked about, one of the things that I said repeatedly is I highlighted the market cap of the stock market relative to GDP and the fact that it was over 200%. and my argument for why you should be looking to buy stocks in the panic is they can't let it sit down here because they've financialized the economy and unfortunately whether people like it or not this gets into the fourth turning that gets into everything that the crypto people all know really well but the macro community is still looking at oh we have to go through the great depression to get out of this when the reality is no we're not going to do that so once the

Starting point is 00:11:07 printing press became a thing after the great financial crisis, prolonged bear markets are not allowed. You can have a fall of 20% and we've had plenty of them over the last three. Had one this year. We had one this year. We had one in 2022. We had one in 2020. They happen all the time. Three in five years is a lot of corrections to cleanse the system. But people still believe, academic people still go back and they look at history and say, this always ends badly. this is not a great time for the median voter in the country, which is why we're seeing protests around the globe. It's why we're seeing protests here. It's why crime is needing. You have a

Starting point is 00:11:42 situation that all of the revolution things that people think have to happen, they are happening, but a prolonged bear market cannot happen because that is an issue that they can't allow to happen. They've allowed the market cap to get bigger, too big relative to GDP. Let's talk about Bitcoin. You wrote a great piece this week. I loved your historical example of this newspaper question around like, is Santa Claus real? Talk a little as to why you think you've been wrong about Bitcoin. Well, first of all, I have been wrong. I've said on here that I thought it would double this year behind closed doors to other people. I said higher levels that I wouldn't say publicly. So this isn't like a minor wrong. But, you know, so people realize I've traded or

Starting point is 00:12:26 I, you know, I've traded, I'm still trading, but I traded regularly from 1984 is the first book that I got, uh, all the way until 2013 in terms of sitting in front of screen every day and trading. Guess what? When you're trading, um, you're wrong all the time, meaning at least 50%, 50% of the time around there, you're wrong. So I've been wrong. I will be wrong in this case, since it's up for the year and and i bought some when it was down during liberation time i'm enjoying the fact that it's up but it hasn't done well and i wrote the paper because i was on a i was having a conversation with sam callahan who i'm sure you've met and he and i had never met before but i've liked his research pieces that he's done with lynn alden and i thought

Starting point is 00:13:12 they were very very good so we were having a conversation and at the very end he just made a statement when we were talking about why it hasn't gone up i gave my thoughts um which i'll I'll give you. And I wrote in the article, but he made the statement that, yeah, I still think people view it as a risk asset. And when he said it, it hit me that why do people think being a risk asset is bad? The only thing you make money on in your lifetime are risk assets. That's the whole point of it. The point of the article was risk assets come and risk assets go. There are plenty of things like emerging markets are a risk asset, but if you've invested them for the last decade. You haven't made any money. China is a risk asset. It's 10-year consolidation.

Starting point is 00:13:55 The only things in the US stock market that have worked have been the MAG-7. So the point of the article is really twofold. One is when you say it's a risk asset, yes, it has the highest correlation based on the work that Lynn and Sam did to global liquidity. Great. But it also is a risk asset in the fact that the way that I think about it and the reason I said when the Mag7 is no longer an easy investment for people, that total $15 trillion market cap is going to start to switch into something that is related to the digital economy, which those names are, and Bitcoin, which is, it's a risk asset that's connected to the digital economy in some way, regardless of what people think. And so the point was, if the Mag7 are no longer

Starting point is 00:14:34 deemed a risk asset, meaning they're not outperforming the market, then that's when i think things like bitcoin will start to find their their thing i will end with one thing here i do believe that i've said this repeatedly and i've talked now to enough people i think you and i have talked about it as well there's a lot of people from 2022 investors or uh entrepreneurs who went through a lot of trouble with the government in terms of regulations and they lost a lot of money in terms of the rise and then the collapse and even though bitcoin has gone higher. The rest of the system, if you strip out Bitcoin and Ethereum, it's not good. So I think every time that there's anything, I think there's a rotation that happens. So anyone that has money

Starting point is 00:15:19 in Bitcoin, I think it's been a funding thing. I saw this with the dot-com bubble. I really do believe there's an overhang of people with inside the industry that are entrepreneurs, that are innovators that need to sell to finance other things. I think we're working through that. I still believe there's going to be a violent short squeeze at some point. I've been wrong on that as well, because obviously we've sat here. But I do believe we're going to go higher because now that the Fed is cutting and now that we're officially in the game of earnings are good, the economy is going to get better because of all the things that are happening with inside the AI action plan. And the Fed is going to be dovish going forward. I can't think of a better situation.

Starting point is 00:15:55 Today's episode is brought to you by Figure. They're the largest non-bank mortgage lender in the United States with over $15 billion unlocked on their lending platform. They've just lowered rates on their Bitcoin and Ethereum-backed loans to 8.91%, improving their already industry-low fixed-rate 50% LTV loans. They keep building as well, being the only major CBL player to launch decentralized MPC custody to protect against single-entry failure, and they just removed interest deferral fees entirely so you can let Bitcoin price appreciation pay for your loan over time. What is MPC decentralized custody? It's a Bitcoin or ETH on-chain wallet with multiple key shards to protect you from single entity custody failure you can always

Starting point is 00:16:38 see your crypto ownership in a segregated wallet and verify your collateral hasn't moved whether you're funding a major purchase like a down payment on a home investing in new opportunities or even buying more bitcoin figure makes it straightforward and transparent visit their app or click my link below to take out a bitcoin backed loan with figure today you know what's funny to me is um you're saying you're wrong but if you go back i think bitcoin was sitting at 35 000 40 000 uh when the etfs got approved in january of 2024. um when we hit november 1st bitcoin's price was 69 000 i know that because it's a ridiculous number to be sitting november 1st right before the election we're sitting at 115 ish thousand 110 000 whatever the number is today

Starting point is 00:17:21 and that is excellent performance compared to almost any asset in the world it's the fact that people's expectations are so high that they say unhappiness is the difference between expectations and reality right and so when go back to end of last year beginning of this year people would talk about hey what price is it going to hit whatever i have consistently thought 150 000 mainly because everyone else was saying 250 300 500 a million you know these huge numbers and i was saying every cycle just seems to be dampening that volatility it's still up i mean remember bottom that 16 000 if it goes to 150 000 that's not bad right but i do wonder if you were to say uh target returns if bitcoin's adoption by public companies and institutional

Starting point is 00:18:18 investors and potentially governments actually is the signal that the target return of bitcoin has transitioned from the hyper-asymmetric thing that retail investors want to something that now is at a level that these public companies, institutions, and governments want. And therefore, that means some version or some percentage of the population

Starting point is 00:18:41 that would be considered a retail investor is actually going to be disappointed moving forward because now the institutions are going to be excited, right? They're excited about a 40%, 50% a year return. yep the retail guys want 100 200 500 and if you start to compound this out it actually means that like bitcoin a million it happens it just doesn't happen in you know the next cycle right and so to me that's where something like the bitcoin hurdle rate becomes really important is because now you essentially are striking this thing and saying hey this thing isn't impossible to beat

Starting point is 00:19:18 because it's not doing 200% a year, but if it's doing 40 or 50, yes, that's much higher than the stock market, but it's still, there's plenty of stocks that do more than that in a given year. There's plenty of other investments. So how do you think about Bitcoin transitioning, you know, from a holder-based standpoint, but also an attractiveness into a group that just like they would actually run away if Bitcoin was going up 300% a year every year? Yeah, so I have a different take than you. And I'm going to be stubborn in one thing. I still believe we are going to shock people in the next in the short time since since for us double from 100 to or 95 to 200 by the end of the year is very unlikely, at least where it is now and where the implied ball is. Um, so probabilistically it's not there. I I've been through, I've been through this cycle before of innovation and what I mean by that for everyone listening. So Bitcoin moves faster and, and, and

Starting point is 00:20:19 technology today moves much faster than it did in the past. What the mag seven accomplished from 2007 to today in 15 years, people have to go look breathtaking. Yeah. I mean, you, you went from $1 trillion to $15 trillion, when you combine all that, this is going to take a lot less time. So Bitcoin's going to get to $15 trillion. It's going to happen. And I believe it's going to happen in much less time. The reason is because of artificial intelligence. So I started doing this because I like to speak a language where AI is in the middle of the traditional finance world and Bitcoin. And I wanted to bridge those two groups together and say, you have to understand that the fuel for moving money from this side to this side is going to take AI. AI will disrupt

Starting point is 00:21:05 all investments on this side, which make them less investable. And gradually people will move into Bitcoin. So AI will disrupt the legacy system. The legacy system. And it's going to bring things into this. More into the digital. It has to be more efficient. It has to be good. I was giving an example to someone. If you're, you know, if you understand poker and you're at a poker table, there's all, you know, if you, I forget the famous line that Doyle Brunson said, but he basically said, if you don't know who the sucker is at the table, you're the sucker, okay? If you're not using AI in your business, if you have a lot of people and you're not using AI, which is the way most incumbents are, they're gradually looking to the CTO. The CTOs at every

Starting point is 00:21:43 company I've ever seen think they can do anything better than any existing technology. The incumbents are going to get screwed. So they're sitting at the table and they're good poker players today, but they're not using AI the same way that the smaller kids are doing. And when they get at the table. And once everyone at the table has AI and you don't, you are the sucker at the table. That will happen slowly because the adoption takes time. AI agents are coming. They're coming quickly. And as they come quickly, more and more decisions will be made by computers and less by humans. That's what Bitcoin needs. Because Bitcoin this year, we're talking about it like it's not doing well. It's outperforming the S&P. The only thing it hasn't outperformed this year is gold.

Starting point is 00:22:18 That's it. And then some of the foreign markets, but it's outperformed them by a lot. So I think as people kind of get used to this, at some point, just like the MAG-7, this will go parabolic. And I think everything today is happening in about one-tenth the time. So if it took 15 years to go from $1 trillion to $15 trillion with the MAG-7, I'm not saying it's going to happen in one-tenth the time, meaning one and a half years. But I do believe that people are going to be shocked in this move higher. And the time where this happens is when vol collapses in my history. So Bitcoin saying it's going to double in a year was a very low probability event with the vol at 40.

Starting point is 00:22:55 I'm a black shoals guy. That's where I spent my life. The probability of what I was saying was less than 2% at the beginning of the year. I still think this stuff is going to happen. One thing that I've been paying attention to that I think is very interesting, you wrote a piece on the Tesla robo taxis. I just saw a chart that shows Waymo, which is definitely growing very quickly in terms of miles covered.

Starting point is 00:23:15 um tesla launching the robo taxis if you look at the chart it's basically all the way to the right because they're they're quote unquote far behind timeline wise it is a vertical lineup and they've now passed waymo in a matter of months it feels like artificial intelligence bitcoin all these things like those vertical charts are going to become much much more common you look at chat gpt adoption you know chat gpt to 100 million dollars of revenue all these different things right? It's just vertical lines compared to the old world. Do you look at something like what Tesla is doing? And you say like, that is the version, that is the blueprint for how we should start thinking about a lot of these businesses where they're very misunderstood. They have these

Starting point is 00:23:57 explosive growth rates and it is really multidisciplinary in terms of combining hardware, software, capital markets, kind of the retail cult audience. All these trends come together in a business that retail has been right and a lot of the institutions haven't been. Yeah. So again, this is hard to comprehend, but we're getting close to three years since ChatGPT was launched. So when you talk about OpenAI and their valuation and the fact that Elon Musk launched XAI post-ChatGPT launch, and that company is already worth $200 billion. Anthropic's now $170 billion. And XAI's models are deemed to be better than the ChatGPT. Absolutely. And it's a short timeframe. So your ability to go fast, to catch up,

Starting point is 00:24:44 to do all this, the biggest risk you have is running into headwinds. If you run into any headwinds and someone leapsfrogging, you keep going. I mean, we didn't even mention perplexity. These were not even companies. You've never seen anything like this. If you go through the S&P 500 and you look at how many companies in the S&P 500 have a market cap of a hundred billion, you're not dealing with that many. So you've had this rapid rise. The Tesla thing is one of the most interesting things because I've written a lot of papers. I've taken a lot of stances on things. I love Tesla cars. I've only driven them for the last 13 years. I haven't owned another car. In Maine, I had to drive a gas car for a couple of weeks. It was a nightmare for me. I can't do it.

Starting point is 00:25:29 And again, this is not like some pro whatever electric car. They're just safer. They're more efficient. They're better. They're faster. They're quicker. It's just a better experience. So I have no I'm not an owner of the stock, although I think I have to be now because I really do believe that what Elon Musk is doing and for the amount of hatred that came my way when I wrote the piece, I had never seen as many people respond to a paper that I wrote.

Starting point is 00:25:54 And it was all negative. There was not one supporter of Tesla. people either hate the institutional crowd from the institutional crowd. They either hate Elon Musk or they just hate Tesla in general because they think it's a scam. They think it's a scam and they think it's overvalued or like when you say scam, can you unpack what you what you think that their view is overvalued that Elon Musk has got away with stuff that other CEOs wouldn't get away with, regardless of whether it's the pay package, whether it's the fact that the company almost went out of business, that he over promises and under delivers. It doesn't really matter.

Starting point is 00:26:25 They all have a kind of an issue that they choose. They have something that they choose to go through. And we're talking about, I mean, the guy is unbelievable with what he's been able to do. And if you go back and read his vision for what he wanted to use Tesla for in 2006, it's unbelievable what he was talking about, which the end game is, I want to have human beings on Mars. So to start with an electric company to do this to everyone, it's unbelievable. So he just got lucky, Jordy.

Starting point is 00:26:53 He just got lucky. He's only started a multi-billion dollar company every five years for 35 years, but it's just luck. It's pure luck. I mean, he gets into politics and he gets attacked on that. I mean, he- Well, he does have a habit

Starting point is 00:27:07 of getting himself in contribution situations. No question. But again, I think Steve Jobs did too in many, many ways. And these geniuses are there. So to finish the point so people realize, the Waymo versus Tesla thing is one of the most important things in stage two for me. Stage one of the LLMs was basically getting

Starting point is 00:27:23 people to use it in the text form. That's it. It's a, it's, it's a replacement of a human being. So now with the most recent chat GPT-5, we get IQ up to 148. It's just replacing a human brain, but what it can't do is it can't take in the physical world. So what he's trying to do is to say, I only want eyes on the car and all of the cars that I have it on the road are mobile data centers, meaning they're collecting data. They're sending it back to me. I'm putting it through my dojo supercomputer. And I'm going through and figuring out how to make this model better and better only using vision as opposed to sensors and cameras. Well, they all have cameras, but LIDAR. And that's the way Waymo's gone. The problem is people doubt that he's going to win

Starting point is 00:28:08 this game. And the thing is, we can't have humanoids that are fully generalist, meaning they're learning everything on their own. You can train a robot to replace what you're doing and do it. Maybe not you, but many other jobs. You can just put them in there and go, okay, you're going to be a perfect person at cooking. I'm going to make you a chef. The humanoid podcast is going to be fire. So to make these guys specialists, okay, that's one thing. But if you're going to make them a generalist where they can do anything, which is really going to be important, especially for war and everything along that, you have to be using eyes. And that's what Elon Musk is embarking on

Starting point is 00:28:42 doing. So I suggest to everyone, he might get paid a trillion dollars based on the news on his on his possible pay package. But to get that, he has to turn the company into something massive and hit hurdle rates, just like a sports player. And I mean, I hate to say it, but I come from the hedge fund industry. A lot of hedge funds, especially the bigger ones, are taking more than 50% of the profits. Well, so here's what I was going to say is, I have two things. One, eyes on the car, eyes on the humanoid, I think is a point here, right? Of like, if you can teach a machine to see, which is at the essence, that is what he is doing. if you can teach a machine to see you control the future it's as simple as that in my mind

Starting point is 00:29:23 and by the way if cars seem to be working humanoids right there's big race going on whatever but if you can teach a machine to see you control the future and it looks like he is well done that path now in terms of the pay package um i think one of the stipulations to receive the full thing right there's a bunch of different milestones one of them is he's got to create an 8.5 trillion dollar company yep okay it's funny that you say hedge funds because forget the top hedge funds i was just going to the guys who charge 2 and 20 right he's underpaid compared to 20 of profits and so uh from that standpoint you look at these pay packages and you say to yourself wait a second he's being critiqued by people who actually get paid

Starting point is 00:30:01 more aggressively than he's getting paid it's just a fact of the matter he deserves i mean again if you go through how much of businesses are owned by you know investment advisors his company is least of the mag 7 because he's the biggest owner he has skin in the game already so he has following from retail what can i say like people love his dream they love his vision they love star trek all the things that i listen to it's funny how you can hear one community that you grew up in all hate elon musk and then you go listen to the podcast that i reference in my videos and we talk about here moonshots and bg2 they all they think he's the smartest guy they've ever met his every vision he's had has come through how amazing it is that he's built multiple companies that he

Starting point is 00:30:47 created starlink it's a major part of the war like i don't think people give him even like one percent of the credit the man deserves as being able to change our lives in such a meaningful way i have starlink up in maine i don't know how people don't understand you can literally go anywhere with a mini setup and you have a computer you have wi-fi where you need it i just don't understand how people don't give him the credit that he deserves so i have a theory as to why a lot of the institutional uh finance community doesn't like him it's not gonna be a popular theory but this is i think a through line there's a lot of envy when you look at what he has done it is the thing that is the furthest away in terms of the path to get to the destination that

Starting point is 00:31:37 they want to receive. Whether you're in hardcore finance or you're in tech, people want to make money. Let's just acknowledge there's a capitalistic system with an economic incentive and people want to make money. Now, there's plenty of people who do a good job of pretending they don't want to make money, whatever, but they want to make money. The finance and institutional crowd they want to make money just like the tech guys want to make but trading investing spreadsheets moving numbers on a screen is about as far away as you can get it from sleeping on the factory floor and building a car building a rocket etc he took the harder path was constantly attacked and is looks like going to be successful and he has beat anyone else in the world

Starting point is 00:32:22 there's a biological response to mostly men who look at and say, there's a guy who did something that was harder. There's a guy who did something that obviously I couldn't have done. And there's a guy who made more money than me. And I think that people drastically underestimate how much the envy, the jealousy, the like biological human nature plays into the fact that they don't like them and i think that tech more so than any other industry in the world there's still plenty of people who are you know succumb to human uh emotions but they have learned over time the pie can grow it's a much more collaborative type environment it's less zero you know some in terms of you get this i get this um and so it just feels like that plays into this in a way that has

Starting point is 00:33:12 completely blinded people it goes back to the old like do you want to be right or you want to make money. Yeah. So here, my theory might be unpopular in this room. It might be unpopular. I'm going to simplify it for people listening. Cause I really do believe this is it. The people that reached out to me for the most part are either my age or older. Okay. Okay. Um, I would say a consistent theme with those people is the phrase, this will end badly. Whether it's the same people don't like Bitcoin, they don't invest in Bitcoin. Elon Musk and Bitcoin are basically the same thing. In my opinion, like it's working, but because they had a stance a long time ago, they won't change. And I've said this to many, many people, and they laugh usually because they know it's

Starting point is 00:34:05 true. You will never admit that you own Bitcoin, but you will own it. You'll never admit it. And they might drive a Tesla. They might sit there and they might buy the stock, but they will always in the back of their mind believe that this went badly because that is the same viewpoint that people have had since the great financial crisis when they bailed everything out. Because there were people back then that were literally like, this is going to be the greatest thing. I've been calling for this. I mean, Stan Druckenmiller has been calling for bonds to collapse for a long time. The guy's the most successful hedge fund manager hasn't had a down year, but that one call hasn't collapsed yet. And yet I'm sure if he was here, he'd say

Starting point is 00:34:45 it's still going to happen, not because he's stubborn, because he believes based on everything that he's learned academically. And he's one of the smartest people I've sat in front of from a balance between understanding markets, but also being just unstubborn and getting out of things. but he still believes it's going to happen, that this went badly because you can't do this. And I happen to agree. I just think from my time at Singularity University that bad things are happening. They're just not happening in the bond market. They're happening in distribution of wealth. They're happening in other places, even though I believe in abundance down the road, which is the other part. But to get to abundance, you actually have to have Elon Musk in the world.

Starting point is 00:35:26 You need Elon Musk to get us to abundance. And the irony is he's the one saying the end game is good for everyone. He's the one not wanting to make the money. The reason he wants the trillion dollars is to get everyone on Mars. That's the thing people don't get. This episode is brought to you by BitLayer. BitLayer is taking Bitcoin beyond just a store of value. For the first time, you can put your Bitcoin to work, earning yield while staying true

Starting point is 00:35:51 to its core principles of security and decentralization. BitLayer is making Bitcoin DeFi a reality. Learn more at x.com slash BitLayer Labs. Again, that's x.com slash BitLayer Labs. 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.

Starting point is 00:36:20 Why is Bitcoin up or down? 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 he's the one not wanting to make the money the reason he wants the trillion dollars is to get everyone on mars that's the thing people don't get it is uh it is pretty incredible um his net worth is going up the other thing that's going up is electricity prices

Starting point is 00:36:56 aggressively it's just like a vertical line as well uh what's going on with electricity prices and should we be worried uh this story is not going to die soon so i i'm sure if not everyone no everyone has seen over the course of the last three months usually around june uh this is when I heard most people, particularly in Texas, they looked at their electricity bill and were, what just happened? For those looking at home, in case we don't pull it up, that's the electricity prices. It's up. So this is all related to AI.

Starting point is 00:37:31 This is only going to get worse. And let's say at the wholesale level, that may be subsidized by the hyperscalers. I'm sure Trump will declare a national emergency. Yeah, if everyone hasn't figured out yet. That's the go-to move now? National emergency worked on trade. I mean, I think this is the 10th one coming up now with housing. And people are still fighting these.

Starting point is 00:37:53 Like, this is not a national emergency. Housing is a national emergency. Electricity is going to be a national emergency, which means we'll find ways to make sure that your electricity bill doesn't go up or it's paid for by the hyperscalers, someone. It won't be the states because they don't have the money necessarily to do it. I don't want to scare people, but that is a representation of something that people have to pay attention to because the demand side of power, as I've talked about repeatedly on this power, power, power, we are entering a stage of power needs that is unprecedented. We are seeing

Starting point is 00:38:23 it in the earnings of companies at all levels, batteries, storage, boilers, gas turbines, transformers. It doesn't matter what it is. The back orders are just going up dramatically. It's obviously driving GDP. It's keeping us from going into a recession at this point, but it is not going to stop. Now, the one thing I do want to say, and I'll do this on my video this week, because everyone says, well, there has to be an end game. Here's the end game. I wrote a paper this week about efficiency. I'm sick of hearing about efficiency. There will be efficiency. But for all of you people, as I wrote in the article, we went from 2G to LTE. We needed more bandwidth. It didn't stop the software that kept growing. We needed the

Starting point is 00:39:03 bandwidth to support the increase in software. We have so many things happening that are going to continue to drive more demand that we don't have the power for. But eventually, sometime 2030, 2029, these recursive learning situations will get there, which means the actual algorithm, the AI, will figure out how to better be more efficient. The AI is the one that has to solve this, not humans. And so it's going to take some time. We're going to need AI agents. We need to go through this whole process. There's a lot of demand side that's coming, but I think people should just be come. The news headlines are going to come because they like to put out all the big doom and gloom things. And this thing is already out there. Electricity prices are going to be

Starting point is 00:39:46 higher. I just think there'll be a national emergency declared at some point. To put a number on it in 2020, 2021, we were hovering around 13 and a half cents a kilowatt hour. It is now 19 cents, right? Which is, you know, pretty material 50 ish percent in a short amount of time and that's across the country so there's areas where it's higher or lower um speaking these national emergencies um every time i hear national emergency now what i actually think is is no different than somebody running a business saying this is our number one priority at the moment let's mobilize a team to go and solve the problem elon is famous for this right like let's solve it now is you know number one problem and so trade immigration we haven't even talked about the fact

Starting point is 00:40:33 that uh the united states military now known as the war department um decided they were gonna missile strike a uh caribbean drug lord as he rode in his little boat right um which you know again goes back to this whole thing of a no-nonsense approach and again you can debate whether it's a good idea bad idea whatever but just like they're telling you what they're going to do and they're gonna do it right yep um the housing national crisis what i wonder is what can they do right and you know you go to this weird dynamic of okay we know that supply is a problem why supply a problem well actually a big reason for it is local zoning local law local city councils federal and local it's like uh oil and water does he nationalize zoning does he you know i mean like

Starting point is 00:41:23 Like, what could the potential solution be if one of the major problems is actually not a federal oversight thing? And the second thing comes down to we know that not only a supplier problem, but obviously mortgage rates. And in a way, historically, people have not, from the executive branch, had oversight over the Fed in the way that he wants to have. But it almost is like they feel like they can have a bigger impact on interest rates in a quicker feedback loop than they can on zoning. and that's why they've like been attacking that point before they go and try to figure out how to get more supply online i think this is a an important point um before i kind of go through the housing thing what you just brought up and you left one national emergency out that's been more recent which is the the fight on crime in the cities um these are these are things that

Starting point is 00:42:16 voters actually agree with so oh they want to be safe yeah they want to be safe i mean nobody wants crime especially in the major cities real quick on this have you seen the pictures that people are posting in washington dc and like you know it's like the trump haters and they're and they're like uh i went to you know union uh uh center or whatever and uh there's just military guys with guns standing around doing nothing and then people respond to be like yeah it's called deterrence that's why you also don't see any criminals or homeless people that you saw three weeks ago i saw someone i mean i was on the subway this morning coming from my workout and i saw someone pulled off the the the subway that i was in but everyone was happy by the police yeah and

Starting point is 00:42:59 everyone was happy and all that happened was the subway stopped and the police i don't know if they just saw the person or whether someone called him i don't know but they came in and they escorted him off. He was clearly on drugs. And these national emergencies, in my opinion, actually are national emergencies. You can disagree. And like you said, this is the playbook. So for investors, for the next whatever amount of years, this is what's going to happen. They've done this consistently. Housing affordability is a major midterm thing. It's been brought up. I've highlighted on my videos. I always believe, based on how vocal Bill Pulte was being, at the same time as how many times they've referenced the housing affordability.

Starting point is 00:43:42 But when Scott Besant comes on, on whatever, Labor Day, and I see this ex-post going, oh yeah, we might declare a national emergency very soon. Oh, you mean they were testing the waters with their messaging to see what their reaction? It's called a probe, people. Doing it every single time. It's like, okay, now you know what's going to happen. So don't fade those stocks in terms of the home bills, because I don't know what's going to happen. I just know that their goal is to bring house prices down. And the only way to do that is like you said, they've got to figure out some way to deal on the building side

Starting point is 00:44:10 and they have to increase transactions. So the market's frozen. And when the market is frozen, they need to find a way to unleash all this stuff. And so rather than sit there and fight it, rather than sit there and say, this isn't good. Anyone who has a child in the age like I do of say, 22 to 35, they need to find housing. It's just expensive in every city across the country. If you're paying lots of money for an apartment to rent in New York or in LA or in Chicago or DC, and at the same time, there's a lot of crime. So your kids are in a place where they can get the jobs, but they're also exposed to the crime. You're not rooting for that to be dealt with on both sides because i know i am well you're you're paying more for a worse product right and that's

Starting point is 00:44:59 the point yeah uh real quick on the on the probe playbook i do think this is important for people to understand we have seen them probe narratives yep and when it's a positive reaction they follow through but we've also seen them probe narratives and the market goes down or something happens and they within hours are out saying just kidding essentially fire drone pal right we're gonna fire him market goes down literally i think they were on on tv within two hours saying we are not going to fire him right uh so i do think that what we are starting to learn here more so than even the first term is this administration their communication style they talk they listen then they decide what they're going to do and as soon as you start to see that pattern

Starting point is 00:45:43 why would they ever say leak housing national emergency may come in a few months yeah obviously they're testing and then pretty positive reaction quickly yep besant with a tweet right it's like they start to walk it in it goes from a leak to uh not the president but somebody close to the president to eventually then the president and then eventually action and so i think once you start to see that you you can start to really understand what is going to happen in the stock market based on just look for the leaks, look for the early probes. And you can tell, I mean, X is perfect for this. You can tell very quickly whether the sentiment is positive or negative. It follows through in the asset prices within a couple of days.

Starting point is 00:46:27 Yeah. One of the places that people have to look for as well now, and this is starting to become something that whether you like it or not, again, if they could declare a national emergency on the Fed, as opposed to the manner they're going in, but that's what they're doing. They view the Fed as a national emergency they just can't publicly come out and say it because there's this thing of fed independence so they go yeah we're they're doing all this we believe in fed independence so they're still kind of going through it polty showed his hand did you watch the interview yes it was a great interview i thought actually your interview with darius dale is what triggered me to go watch it all right so i thought it was very fair on both sides i thought uh people give joe

Starting point is 00:47:03 kernan becky quick and andrew ross sorkin shit sometimes i think that uh more so than any show that i watch i think that they do a very good job of towing the line between their journalists they ask hard questions and then they also will uh not be nefarious in terms of pressing too far and trying to like play super gotcha questions and they're and they're a broad balance of views so they cover the entire spectrum for sure when they were talking to polti i thought he did a great job pushing back as well at certain times and so like that like that to me is actually the conversation people want to hear is like we don't want to see just like the softball questions and people all agree and stuff it's like like let's you know kind of let him go at it a little bit

Starting point is 00:47:43 but he said that uh the longer this goes on powell is introducing the risk of his job being up for termination based on cause and i thought that that was that was the oh we put our card let's pull them back real quick but that to me was wait a second if that is the angle that that they tried to take. I don't know if it's possible, but it did feel like that was a point that they may try to exploit. One thing we've learned is when you say, is it possible? They must have every lawyer in the world sitting behind this trying to figure out what they can do. What I was going to say about the Fed for everyone who's looking for insights. So in the Fed minutes from the most recent meeting, what was brought into the equation for the first time was housing

Starting point is 00:48:29 is a problem. So we already heard labor was a problem. And the more hawkish part was worried about the inflation side. So Waller and team were not only focused on labor as an issue, they brought housing into it. Housing has now subsequently become an issue. Labor, Waller did this, then Jackson Hole comes out. People are surprised that what's happening behind the scenes is what Waller said. And you asked me and you had the same view for a long time. But when you asked me, should they be cutting rates? The answer is yes, because labor to me is a problem. Inflation is not a problem. Could it be a problem? I guess. But 3% versus 2% is not a problem. No job creation is a problem, especially when you have such a

Starting point is 00:49:17 inequality situation in the country. You have to focus. But when you throw in the housing side, and the fact that we need to help the bottom end of the economy be able to do stuff. We need to help the 22 to 35-year-olds. You may disagree with it, but if you're an academic sitting in the Fed going, we have to keep rates high because of inflation, you go, wait a second. Back in 2022, it made sense, but here's the thing that people don't realize. We're in a totally different situation in the economy because of the deficit. The debt and the deficit have not improved since 2022. 2022, we were still fighting the COVID situation. We're not in that anymore. We were still creating 4 million jobs in 2022 coming out of a situation. They have to cut rates and they

Starting point is 00:50:01 have to cut them more than just 25. Even if inflation does start to uptick over the next two months in a meaningful way, meaning 0.3, 0.4 for a couple months, they have to focus on the labor market because it's worsened significantly. Well, I have a minute and I got to go pretend to be a busy person um but uh do you think in september it's more than 25 basis points no can i lay my argument out as to why i think it should be 50 or more they're behind the curve they can do 25 which is somewhat of a step it's not going to be enough and because it's being priced in the fact that it's being priced in means they won't have as big of an impact as they otherwise would if it was unexpected and an upside surprise in the size of the rate cut

Starting point is 00:50:50 i think actually could be pretty profound i tweeted and said if you forget first second market reaction if you forget everything they should be 100 basis points lower right that's all that so should they cut 100 basis points well that would get them to where they should be now now the market would freak out if they did that i do think there's a acceptable middle ground of 50 would send the signal. We know we're behind. We're now catching up. We're serious. Everyone calm down. Do you think it's possible at all? Or do you think 25 is like pretty much baked in and not going to surprise? So there's two things to come out before the Fed meeting, which could make it at least a 50-50 chance. The first is the revisions for the prior labor numbers. So we're

Starting point is 00:51:39 going to get revised down. I think estimates are somewhere around 600,000. So if that number actually came at higher and the economy was weaker, that's one place. The second thing is we have another CPI number. And if for any reason the number comes out and reverses kind of the fears that were there and we get anything that's on the lower end, I think the market's going to take it a 50 50 shot um we got over to i think when i when when when i saw i think we got to like 10 to 20 chance um to start i think we could get to 50 50 but i think it's going to take those two things should is what i avoid doing um what i think they'll do because you are going to have a side again of academics that would have to admit that they're wrong but out of 80 economists

Starting point is 00:52:30 forecasting the jobs number, 79 were above it. So this gets back into, we had inflation surprising five months in a row way below the lowest estimate. So now we get a payroll number and 79 of the 80 were above the actual number. I think there's a chance.

Starting point is 00:52:50 And the one just guessed right. All right, that's it for today. Where can we send people to find you on the internet? You can find me in the usual spots on x on linkedin on youtube especially on sundays uh my youtube video and then for the institutional people around the world particularly people that want to focus on this transition between traditional finance into crypto and just how ai is doing uh i spend my time on the macro side for air for 22v you can find them at 22v.com and 22v research 22v security is wherever you'll

Starting point is 00:53:22 find me there it's great to have you back it's good to be back do it again next week

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