The Pomp Podcast - Will Fed Rate Cuts & AI Send Bitcoin Flying? | Jordi Visser

Starting point is 00:00:00 hear that it's your money calling it wants a promotion elevate your savings with the scotia high interest savings account always earn high regular interest rates that grow the more you save and invest conditions apply visit scotiabank.com hisa to learn more scotia bank you're richer than you think. 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

Starting point is 00:00:52 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 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. the only way to get out of this situation with the debt and the deficit is to reflate your way out and to debase your way out and i think it's good for gold it would be at much higher levels and

Starting point is 00:01:31 send it off and at the same point it would be massively bullish for bitcoin as well last thing i want to talk to you about is uh there's a rumor that the government's going to take a stake in intel um there's a lot here um what's going on guys today we got a great episode with geordie Visser. In this conversation, we talk about the treasury buying more Bitcoin. What's going on with the CPI and the PPI? Are we going to revalue gold? How should we think about earnings growth? AI is accelerating everything. And there is so much happening so quickly. Should we actually be changing anything inside of our portfolio? Jordy's here. He doesn't disappoint. Here's my latest conversation. Enjoy it. All right, Jordy, we got a lot to get into this week. It seems like

Starting point is 00:02:12 things are happening fast and furious. The first one is that the treasury secretary went on Fox business and offhand comments that we are not going to be buying more Bitcoin. World freaked out. A couple hours later, a tweet goes out that says we are going to be buying more Bitcoin in a budget neutral way. What's your take? My take on everything regarding Bitcoin is just how much day trading is involved with the space. I don't think you and I have ever really spent much time on the Bitcoin, the strategic Bitcoin reserve. And if we've mentioned it, it's not the reason why I care about this or got involved. So I think it just shows on the one side for algos and for anything that is quant based, Bitcoin gets bucketed into something which is

Starting point is 00:03:01 about trading an asset that has higher volatility and higher beta. So when something negative comes out on its immediate sell down, you get retail that's involved. And I think based on the fact that we broke out technically. You got Bitcoin up to new all-time highs. People were leaning along. And so any kind of news item that seems to be counter to what people might be hoping on or embedded in there leads to a sharp sell-off. But it's funny, vol is declining rapidly in Bitcoin. We've continued to go lower in terms of the daily trading vol. I think the implied vols, or at least the realized vols, somewhere in the low 30s now, as opposed to we've been going from 40s down to high 30s and now down to low 30s. So when you get these moves now,

Starting point is 00:03:42 they tend to be at a time where a lot of orders come in at the same time. And there's got to be a clearing price and the clearing price was lower. And then we stabilize and we go through it. But I think there was already fears and you had already weakened the thing because of the PPI being higher than expected and people thinking that maybe the Fed wasn't going to cut rates in September because PPI was higher. So when you put it all together, I think it's, again, just another short-term trading overreaction and a great time for people that believe in the long-term story, which we both do. And I absolutely believe that we're at the beginning of a very, very important story that's happening between the Fed, between PMIs, between a lot of different components, which I think is

Starting point is 00:04:22 going to fuel Bitcoin in the latter part of the year. Let's talk about the PPI, the CPI. I think I've been very clear with people. I don't believe the data. I think that it's very antiquated in terms of the data collection. The methodologies of calculation are wrong. And maybe directionally, it can tell you, you know, kind of how they think it is going. But I think that there are alternative real-time metrics that are much more accurate, like trufflation, etc. But my personal opinion doesn't really matter to the market. The market still looks at CPI and PPI. CPI seemed to come in right below expectations. PPI came in scorching hot. How do you read through some of those economic announcements and reports that came out this week? Well, I think the CPI was

Starting point is 00:05:06 important. Let me take them in reverse order because the PPI comes out hotter than expected. A lot of that was from portfolio management fees. So when you strip that out, it wasn't as important. And that's certainly not a tariff situation. When you go through the guts of the PPI for finished goods, there's no doubt that the numbers have shown up on the PPI for tariffs, which had to happen. So PPI got people focused on the fact the Fed won't cut. And I will tell you from my dealings with hedge fund people, because I have a view that we're on the beginning of a reflationary boom, not an inflationary boom in a bad context, but a reflationary boom. We're using the kind of the GAVCOL four quadrant time.

Starting point is 00:06:01 The Fed is 100% or 95% as we get on here to cut rates in September. The PPI comes out. We were actually slightly above 100%. So they had started to build in the possibility of 50. And that was because you got a couple people saying 50. You had Besson talking about the fact that theoretically you could argue the Fed could go 150 to 175 basis points. That got people hopped up. You have a lot of the quote-unquote 11 finalists for the Fed chair, of which a lot of them seem to be Scott Besson's friends from the hedge fund community, who went on TV this week and talked about the fact that the Fed should be cutting rates. I mean, it was a parade of people who've been rumored for the job coming out to say the Fed was going to cut rates. So the way I interpreted this week for me

Starting point is 00:06:49 was that the White House is telling you they're going to put a Fed share in that believes rates should be lower. At the same time, the market is now discounting that because the labor market has weakened enough and you've even had some of the Fed officials, Muslim, the St. Louis Fed governor actually came out one of the more hawkish ones or on that fence and basically said the inflation data, and this is after the CPI over the last six months, has clearly had a sign which shows there isn't persistent inflation. At the same time, the labor market is weakening. So he took his inflation fears down a little, his labor market fears up a little. So the Fed is leaning towards doing 25. The market has built in 25. Powell hasn't given any kind of clue, but

Starting point is 00:07:38 I do believe Powell will follow the committee, which seems split at this point. But to me, there is no doubt that if they were to cut this time, the market would respond knowing that this was the beginning of more cuts coming forward because the White House has said they want to run things hot. And to me, if you put it all together without announcing this, they've basically raised the inflation target from 2 percent to, say, 3 percent. And the reason I say that is, we are about to have a period where if the Fed were to cut rates, they're cutting rates with the core CPI above 3%. Now, that's only happened one time in the last three decades, and that was September of last year. Now, for everyone who gets bearish on bonds, I'm going

Starting point is 00:08:20 to remind you again, the Fed in September of last year did more than what was expected. There wasn't 50 built in. I think it was about 50-50 between 25 and 50. So they did surprise by doing 50 last September. That led to a sell-off in the long end of the bond market. I actually think the surprise is going to be this time. Biden was in place last year. Trump has shown without any question that he does not want rates going higher on the long end. So if we see something happen on the short end, I think they have a plan in place of how to deal with it. I don't think you're going to see a spike in 10-year rates. That's not the trade. I think this is a reflationary boom. I think there's an implied inflation target that's being raised with the next administration.

Starting point is 00:09:05 If that had happened and the Fed had announced it, the markets would go crazy. There'd be massive change. I believe it happened this week. I believe the rolling out of all the next Fed shares basically said, we want to run things hot. And I will remind everyone, if they go back and listen to Scott Besson on the All In podcast, recent one, not the one from the beginning of the year, but the most recent one, he literally said, we want this to be like the 1990s. And we want the Fed to absolutely not be academic and data-driven off things of the past, but have a forward-looking mindset like Alan Greenspan. And that's because they've invested in the most deflationary technology of all time, which is not the internet, which is what the 90s were about.

Starting point is 00:09:48 This one's about AI. And they want to make sure we're making policy decisions based on where AI will be driving things three years from now, not where the most recent PPI number was. So what's interesting to me is as we are getting these economic data points, some of the conversation online is that the decisions the Fed is making actually does have an impact on the market, which I think is kind of a rational way to view this. But it seems like even when the Fed is doing things that the market wants or not doing things that the market wants, We just keep going higher. I mean, yesterday we hit another all-time high in the Dow, in the S&P 500, right? We just keep going higher. And interest rates are already at sustained levels that I think

Starting point is 00:10:30 people are like, hey, it should be cut. The president's calling for that, et cetera. Is it as simple as saying, if we already are at all-time highs, if unemployment is where it is, if GDP growth is where it is, and they start to cut, we should expect asset prices to just explode higher and AI is a tailwind, interest rate cuts are a tailwind? All of this is just one big trade where asset prices and this reflation idea are going to drive everything significantly higher? Everything that you mentioned there was related to the US stock market and the Fed. And let me just make sure everyone realizes globally, this week the DAX made an all-time high. The FTSE made an all-time high. The FTSE MIB for Italy made an all-time high.

Starting point is 00:11:16 You've got the Shanghai Composite about to break out for a five-year high. The Nikkei made all-time highs. The KOSPI, the TAIX, it doesn't matter where you go, global markets are going higher. And this is all with tariffs. Tariffs are a global event. So let's just forget the fact that when people go, I can't believe why the US stock market's going up. It's not just the US stock market that's going higher. It's everything around the globe. The banks, the BKX are about to make new highs. When you have a reflationary boom, banks go higher. When you have a deflationary bust, banks go lower. There is no doubt that the market is implying that there's reflation that's happening. And the central banks around the world are cutting rates. We've had 88 cuts, I think,

Starting point is 00:11:57 this year around the globe. And the Fed's not participating right now. So I think the reason the Fed side matters is because our inflation is not falling like the rest of the world at this point. I mean, you still have deflation in China or they just came out of it on the CPI level. PPI is still in deflation. You've had Europe inflation come down. The US stuff is kind of stabilizing here in this 3% level. And there's no way you can look through the CPI and not see that the sticky side of things has hooked up. So we're going to be above the inflation of the 2010 to 2020 period so for people that want to focus on oh this means that the market should go down the reality is there's something very important happening and we talked about it last week but

Starting point is 00:12:40 i'm going to keep saying it over and over everything is justified based on what happened last quarter in earnings i don't know how people don't realize that we had capex sentiment at levels only associated with a recession in the surveys remember all the soft data was so bearish consumer confidence collapsing. We saw the airlines fall because nobody was booking long-term trips. Uncertainty index was above where it was during COVID. And somehow or another, the S&P 500 posted earnings year-over-year growth of 11%, four times what was expected at the end of June. So somehow or another, every smart person got it completely wrong. Because to get those numbers, this is a lot of analysts taking the revisions, lower strategists, everyone. So no one wants to

Starting point is 00:13:24 admit they were wrong, but earnings don't lie. Here's the thing about earnings. I do not believe that GDP can measure AI and the benefits that come in it. In this week's video, for me, I will be highlighting what ChatGPT says should happen at the different stages of AI. We are leaving the infrastructure stage, but you can't measure the benefits that come from profit margins during the adoption phase. I don't think GDP is going to show the explosive growth that the economists talked about and that we kind of went through last week. Is it a possibility? Yes. But I think the labor versus capital debate is showing up more and more where revenue per employees is driving the S&P 500. And it's driving every place around the world because Siemens Energy is a foreign

Starting point is 00:14:09 company selling into the hyperscalers, which are basically buying infrastructure for the data centers to fuel this AI move. The whole globe is benefiting aside from their need to onshore things and do the same, build the fence, everything else. So there's a justification for stocks to go higher based on earnings. There's a justification based on the fact that I think PMIs are going to go higher because during the adoption phase of AI, I see this as involving three new categories, which kind of get past the infrastructure stage. One we've talked about extensively, which is power. But during the adoption stage, you should be seeing industries, not just tech, not just NVIDIA benefiting as they roll out AI into their own side. The way that you measure that is through

Starting point is 00:14:53 token use, but also through the cloud revenues with inside the hyperscalers. So the hyperscalers get a tax benefit for spending money. They get the cloud revenues from everyone around the globe using AI more and more. And now you're about to enter into the agentic world, which means every company can replace hiring with digital employees. And this is the phase that as ChatGPT wrote. This is really the most explosive phase when stocks should do the best. And that's because people are underestimating the profit margin impact. They're waiting for profit margins to come down. They're watching the labor market, which is weakening. And this is why the Fed is actually at the point now where they're going to be forced, looks like, to cut rates when they're

Starting point is 00:15:36 not fully on board with it, at least the whole committee. And that's why Wall Street is having a hard time grasping it. And this is why I think stock markets around the globe are going higher. It's not just a U.S. thing. Again, AI is driving this. So what's interesting to me is let's go at a couple of these data points, right? So if GDP isn't going to show the explosion of AI productivity, that data may be a little bit harder, you know, in terms of how much severity you can use on it to include in your analysis.

Starting point is 00:16:02 The jobs report shows minimal job growth, but actually the job growth has been explosive if you include the digital employees. So you get into this weird thing of like, no, no, no. Human job growth is not exploding higher, but job growth across corporations is exploding higher. And so when you start to look at this, it goes, okay, hold on a second. Again, economic data point that is inaccurate because it does not fully actually understand what is the growth that's happening.

Starting point is 00:16:32 You can't look at payrolls anymore because guess what? You're not paying the digital employees the way that you pay the human employees. So how do you get at that? So I actually think one of the most important things that can happen, and I've been looking for somebody who's going to do this. If they're not going to do it, I'm considering trying to find someone that I can put task with this funded, etc. We need a new set of economic data that is going to account for not only the human driven economy, but also the digital driven economy. Because as an investor, if you are looking at only the human data that is measuring how many people, what is the GDP, all that kind of stuff, you are missing this story. I think that your point about the smart people got it all wrong, the smart people are using the data that they're used to looking at, but that data is missing this, we can call it a shadow economy, we can call it a digital worker economy, whatever it is, there is a plethora of economic activity and job growth that's happening there, and people are completely

Starting point is 00:17:25 unprepared to use that analysis or that data. I think to your point, earnings may be the single clearing point where people say, well, look, even if you don't have that data, when you look at the earnings, how is it possible that all this other data that you're looking at is saying bad, negative, scary, and earnings is up 11%, well, obviously something's wrong here. And earnings is like the truth teller. I think you said earnings don't lie. I love that. Earnings don't lie. And it is telling you that the economic data that most of the quote unquote smart people are looking at is not accounting for a huge driver of growth right now. Today's episode is brought to you by Figure. They're the largest non-bank

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Starting point is 00:19:19 little chat GPT thing where I went through the stages, it talks about the societal impact. So when you hear people that are negative, they're like, well, if we're hiring digital employees, that's great for companies, but then employees are falling. And so when you see socialism rising in New York City and in the cities, and you see kids not able to afford housing and housing affordability is at all-time worst levels, there is a negative side that comes out of this. What Chachi PT says will eventually happen is that there'll be UBI. So here's what I want to tell everyone right now, there already is UBI. It's just in a different form. So if companies are making more money, then the stock market is going higher. So for people that own stocks,

Starting point is 00:20:02 they're benefiting. They're not getting it through wages, but their net worth is going higher. And we've seen that in the country. Now, again, that's very concentrated, but it does filter down to more than 50% of the people have a pension fund, have something. You have about 30 million people that are no longer employed in the country but are getting social security they're getting medicare medicare the transfer payments continue to grow and i think they're about 20 of income now which means we have a part of the economy between the baby boomers who are no longer working but are getting paid to not work through pension funds and through other things plus people that are at the bottom end that are getting some kind of aid from the government you've created this

Starting point is 00:20:45 weird form of UBI where the wealthy are getting huge returns. The middle group is getting returns through their investments in stocks, through housing prices that are not falling. And then at the bottom end, you're getting a bunch of transfer payments. It's not UBI the way people think, but it's already happening. I think the government has to find a way again to rebalance the economy to some degree. Trump has talked about it. I don't think that game is over in by any stretch of the imagination where he wants to do something for the bottom 50%. And that means house prices have to come down somehow because the affordability is out of whack. He can't force wages higher. He can't run the whole AI thing. I think it's a myth to believe that it's going to

Starting point is 00:21:25 create more jobs that it's going to get rid of, especially in the next three years during his term. But that's where this balance comes in. So I want to make sure everyone realizes when we talk about this from an optimistic basis, it's not that there's no, there's never free lunch. There's always a negative to things. And I do think the labor side is a negative. It is going to lower rates right now. And if the Fed has their way, they'll lower them more. But people are going to start to realize that even if you move short-term rates lower, if long-term rates go higher, that doesn't really help people in terms of their borrowing because most auto loans and housing loans are more dependent on the long end of the curve. And that's where I think the

Starting point is 00:21:58 government, whether it's yield curve control or giving tax breaks to people, there has to be something that's going to have to happen. So I want to push back on one thing that you said, which I always enjoy the very rare times where you and I can debate something because we usually are on the same page. But you said that it will get rid of jobs before it starts to create more jobs. I want to change that to say it will get rid of human jobs, but it is actually creating more total jobs. And I'm going to give you a couple of examples of things that I've recently seen that I think have started to like, in my head, I'm like, oh, I'm seeing the future. There was this video that hopefully we can find and we'll include if we can, but it was a truck driving in China with no cab.

Starting point is 00:22:42 So if you think of most self-driving cars in the United States, it looks like a regular car that a human could sit in. The steering wheel still moves as if a human was sitting there. It's just like there is no human driver. So it is still designed as if a human is in the driver's seat. This truck had nowhere for a human to sit. It was a fully autonomous thing, and it was driving down the road in China. Now, I'm assuming it's some sort of test vehicle that wouldn't be legal here in the United States, blah, blah, blah, whatever.

Starting point is 00:23:09 But what I started to realize was, wait a second, the form factor of the truck outside of the cab looked just like any other kind of 18-wheeler or Mack truck type thing. But the cab had been completely deleted, and it was just like a computer on the front of the cargo area. And I started to think to myself, I said, oh, my God, some of these things are going a change in form factor, which means that now you are actually going to eliminate the job. The human job is no longer like, oh, sometimes the truck drives itself. Sometimes the human's in it. It's just like, there's nowhere for the human to sit, right? So like that is okay.

Starting point is 00:23:42 There's one part there. The second thing that I have seen now is I have started to see more and more of what I'm going to consider white collar displacement AI products. So there is one that does Excel, you can, in natural language, explain what you want. It will go and pull data and it will build entire Excel models. And the joke on mine is like, oh, the investment bankers are going to be in trouble. Oh, the white collar workers, the entry level. Well, there's a new report out in the New York Times that says that actual job growth in New York City, flat. And everyone's like, oh, that's a sign of a bad economy. I think it's an AI story. Like it's much more AI than it is bad economy. And so you start to look at this and you're saying to yourself, wait a second,

Starting point is 00:24:29 how many quote unquote digital employees have been hired inside of companies? That's where all the job growth is going. And so it comes back to this idea of if that is true, how do we start to think about the productivity of them? Right? Because human labor, we know how to measure that productivity. What I don't know, and I even think about it for our own companies, how do i measure the productivity it's not like they give me a weekly report of what they got done right and maybe we could code that in but it changes the way you think about management it changes the way you think about how the company is going to grow it changes the way you think even about the organizational structure like these are very big changes underway here that

Starting point is 00:25:07 all come off of one piece of technology that now is going to be widely applied across every industry right all right so everything that you mentioned i don't think we disagree on this but i'll ask your question. When you and your lovely wife and kids go out to dinner for pizza and you look across the restaurant, how many digital employees do you see sitting in the restaurant eating? How many of them do you see on the plane? This economy is not built on what you talked about. The society, government, going back to the whole Noah Yuval Harari book on sapiens, the societal impact from this is the issue. Profit margins are growing. The question is to keep a government in a good position, to not have a revolution,

Starting point is 00:25:50 the cost of things have to head towards free, which is where I think they will eventually get to. And that's the thing we're talking about. But the path to that point takes a lot of time. I want to add on something. I always try to send you podcasts that I think are important. And I sent you one earlier in the week because I just thought the moonshots one was great. Crypto and AI. It was amazing on AI, but also the collision with crypto. But one of the things they talked about, which fits in with what you're saying, I mean, transportation jobs, I think, are the largest job in the country when you aggregate them all together. And they talked about the fact that there would be FSD has reached a point where robo taxis next year, there will be millions of them on the road by the end of 2026.

Starting point is 00:26:36 And the reason is because we have finally everyone's heard about full self-driving. they've heard about autonomous vehicles, but those were based on data. Those were based on sensors. Those were based on not really learning on the job. We've reached a point in AI, and in particular FSD, where they're talking about we are at the inflection point where everything related to machines and intelligence in machines starts to accelerate. And transportation is the first place that this will start to go. Humanoids and everything we talked about will come down the road because that's a safety issue that is going to take more time, having things working in your house, being elderly care, stuff like that.

Starting point is 00:27:14 But we are at the point on the transportation side where robo-taxis are going to start to have an impact. You remember what happened when Uber went into cities and the societal impact we saw around the globe, strikes from taxi drivers. This is a much bigger thing. So I'm just trying, I think where we may disagree a little bit, I don't think this is going to be an easy transition.

Starting point is 00:27:33 And I think we're moving at such an exponential pace that next year will be when the societal impact will go because the digital employees don't get to vote for the next president the people spending money in the pizza place do i don't disagree with that i think that there is um there's two tale of uh two stories right uh you've got kind of the the productivity conversation and then you've got the consumption conversation the consumption in that pizza parlor 100 there's no digital employees eating anything right um i think that actually the wider that gap becomes in terms of, you know, think of it as like penetration of number of digital employees. If you're 90% of your company is digital employees,

Starting point is 00:28:15 that's a big displacement. And so now you have a very big penetration of people who are not having a job or fully employed. And then what happens to the consumption side? And so what I actually think is, you know, there's a lot of hedge funds. They do this thing. they're long the disruptor, short the disrupted. It's like a very common phrase that people will talk about. When you start to think about what is happening in the S&P 500, that's kind of what has naturally bifurcated. The top 10 companies are the greatest companies that have ever been built in human history. They use this technology. They're accelerating. Everything's amazing. The 490 other companies are kind of like, you know, watching from the sidelines like,

Starting point is 00:28:56 what the hell happened to our stock? And so I do think that maybe that's not a perfect analogy, but it is a sign of the disruptors, in this case, are actually the large companies. They are accelerating and they're using this technology. And people, I think, are very excited about that. Where there is potential investment opportunity is finding the other 490 companies who are going to embrace this stuff and say, well, hey, listen, I'm going to get the same benefit that they are because I'm going to take this seriously. And I think that there are a lot of companies that are going to be pressured from the outside. We were talking before we started recording about Opendoor. They got a lot of data. And one of the biggest things

Starting point is 00:29:35 as I've been paying attention there and participating is the retail crowd is saying to them, if you are an iBuyer, if you are essentially a artificial intelligence market maker for residential real estate. How do you not have a very strong AI strategy? How do you not have the AI, right? Like they're getting the shareholder pressure. And so I've referenced online this idea of a digital upgrade. Put Bitcoin on your balance sheet and embrace AI. The companies that do that will have a significant advantage in the future of the companies that don't. It's just that we are in, I mean, we're not even in inning one. We're in the warmup for watching this play out. And I think that you see the companies who are starting to embrace this stuff. You have the Bitcoin

Starting point is 00:30:20 treasury companies, you have the AI companies, right? But the rest of the businesses that are in the public market, if they can start to understand and do the same things, they will follow suit. And I think it's more of a trend than it is kind of these single stories that are the outliers. 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? 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

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Starting point is 00:32:34 a trend than it is, you know, kind of these, uh, single stories that are the outliers. Yeah. So this is a really important point. And for people that, um, don't understand why Michael Saylor did what he did back then, I want to bring in three components of what you said. Um, I want to start with the Bitcoin component because it's, it's the dead companies, the zombie companies. Michael Saylor talks about the zombie company. So a zombie company is actually one that will just be gone like they can't win they don't have the let's say the intangible assets that you're describing from like open where they could be monetized into something real and i'm going to get into that with the way ai can do that and what happened with china globalization but what

Starting point is 00:33:15 michael saylor said and what you're seeing around the globe is if you're a company that's already lost where you can't possibly get out of this your only choice is really to come up with a bitcoin situation like that's the only way it's a hail mary that always hail mary and i think you're going to continue to see more and more places that have the cash on the balance sheet that realize that if I can't grow my earnings at 6% a year and Bitcoin is going up at 50% of the year, how can I turn that into at least the type of thing that helps Michael Saylor? Will it end badly? Yeah, I'm sure a lot of the treasury companies, it'll end badly if they can't handle it, but let's leave that alone. From the AI side, people remember what happened with private equity

Starting point is 00:33:54 buying companies, public companies, and then just redoing their supply chain using China and how much that would bring to the bottom line. You're basically describing a scenario that I'm already hearing about from smaller consultants on the AI side that are focused on it, where private equity firms are like, hey, I have this healthcare business

Starting point is 00:34:12 that is filled with paperwork. They don't have any ability to make money, but if we can get the AI in there, we can drive revenue per employee. So it becomes an infusion of technology, of artificial intelligence into these businesses to extract value. This is really important.

Starting point is 00:34:29 Again, I'm going to go to the Moonshots podcast because I don't know how much you listen to it, but they talked about this Doge AI thing. Everyone heard about Doge. I think the Doge AI part might be the most important. And they talked about on the podcast about it's about deregulation and about getting rid of as many regulations as possible, believing that that will unleash trillions of dollars in the economy. And we all know that's the case.

Starting point is 00:34:55 If you can get rid of inefficiencies and friction, that is the easiest way to get the bottom line better. It may not get the top line going any better, but it'll definitely get the bottom line going. And theoretically, if the bottom line is better, you should get more spending to get the top line going. The efficiency side of things like that at the business level is going to happen. So you will have the adopters that are going to do it themselves, the Disney's, the places that are building agents in. I think the financial companies are already doing it. They've got a lot of bloat in terms of the expenses on technology and coding. Anything where coding has been a big expense will be dramatically dropped down.

Starting point is 00:35:32 Entrepreneurs will compete with those companies, so it's a race to the bottom in terms of the deflationary pressure. But I think there's this other angle where people that may not have the inside technology, they might be purchased from private equity companies and then infused with the AI, which will get the efficiency down because they have a good brand, they have a good business. So your comment about the extraction of value in companies, I think, is a really critical component and the Bitcoin part. This deregulation and the efficiency side from AI is another reason why the shareholder

Starting point is 00:36:00 value, which is the focus side that you brought up, which has been a major story in Japan for the last, really, seven, eight years now, but I think it's a prime story now. Extracting value out of the intangible assets or in people's business is going to be a major theme going forward because of AI. Let's switch topics and talk about gold revaluation. This seems to be popping up more and more. And now this week, we got a Fed paper. We've got a lot more chatter online.

Starting point is 00:36:27 It's unclear whether we're going to do that or not. I think the Treasury Secretary said that we're probably not going to do it. But how do you look at revaluing gold and whether we should or should not do it and whether we are going to do it? Let's go back to why this is even a story. Stock markets are going higher. Excellent. We still have a fiscal deficit and we still have debt to GDP of 120% in the US and around the globe. It's a massive problem. And there's a tremendous amount of short-term debt maturing over the course of the next three years. And this is not just in the US. This is an enormous amount. They have to do something. And the one big beautiful bill is not reducing the deficit. And we can hope that AI is going

Starting point is 00:37:14 to do this, but I don't think you can have hope. And the US is clearly focused on if they're going to be inflation targeting, moving it higher without saying it. Okay, that means that the dollar is going to weaken. If they're going to find some way to make the housing market more affordable, they're going to have to get involved in that business as well. Yield curve control comes into something that's in there. If they're cutting rates in the short end, they have to do yield curve control. Well, then that's another weakening dollar trade. That's another situation where they're basically saying we're going to take reflation. So gold is another way. And gold fits in with kind of the Stephen Mirren piece. He wrote a paper. And one of the things in there

Starting point is 00:37:56 was the Mar-a-Lago Accord to kind of be a topic with the Plaza Accord, to go back to what happened in 1971, getting off of gold. We're not getting back on gold. So the gold standard is not coming back. But there's also not another currency that can replace the dollar as a global reserve currency. And so we have these imbalances, which the White House clearly does not want. They do not believe having the baggage that comes with the global reserve currency, which leads in their mind to a greater distribution of wealth problem. And they want to redistribute the money in a more equal manner without socialism in some way through capitalism. So how do they do that? So a gold revaluation that would be agreed upon with China is a story that has been percolating

Starting point is 00:38:41 out there this entire year. If you just type in gold revaluation, I think Luke Grauman has done the best work on this. And I think he's laid out why China would want this, why the US would, And why all of these weird things that happened in terms of all the gold buying and all the onshoring of gold and all this stuff was happening. Luke Grauman even gets to the point in one of the podcasts I listened to that, do you really think it's a coincidence that J.D. Vance was at with the Pope the day before he died when the Vatican has the U.S. gold there and like all these things going on?

Starting point is 00:39:16 I bring this up not because it's necessarily going to happen, but that Fed paper is not the only thing that happened. As of this morning, Michael Hartnett came out with a report talking about gold revaluation. I think there's more of a story here than people realize, because when your debt to GDP is at such a bad level, you got to figure out what some way to kind of rebalance things and almost reset the global framework. Stablecoins is not the issue at this point, and no one's going to agree with it. But moving gold and kind of choosing this avenue is something that I think people shouldn't

Starting point is 00:39:48 minimize. I think they should think about. And yes, they've said they're not likely to do it. But here's the thing, and I think this is a story that should be getting more attention. In the courts right now is the next stage of the tariffs. I think people forget that the courts said the tariffs were not legal, and it's been forgotten. But it's in the next stage of the courts before it would go to the Supreme Court, and all

Starting point is 00:40:14 news publications are basically saying they're clearly losing at this level. And a lot of people, including people at 22V, are basically saying in Washington that if they lose this, it's very unlikely the Supreme Court would reverse it. The White House has come out and used one of the tactics that governments use when they think they're going to lose something, which is say, if this happens, the Great Depression will set in. Well, the fact that that is kind of an issue at this point, if the tariffs were taken off, I think all options are back on the table and they have to find some way to do an agreement

Starting point is 00:40:47 in with the rest of the world. And I think a gold revaluation is something that people should put in the distribution of possibilities. And again, it leads to the same thing, which is the only way to get out of this situation with the debt and the deficit is to reflate your way out and to debase your way out. And I think it's good for gold. It would be at much higher levels and send it off. And at the same point, it would be massively bullish for Bitcoin as well. Last thing I want to talk to you about is there's a rumor that the government's going to take a stake in Intel. There's a lot here. I mean, Intel is a whole thing. The government taking stakes in private sector companies. The government taking a stake in Intel. We have negotiators

Starting point is 00:41:34 in the White House. If you ask a negotiator whether they want to negotiate, they say yes. um how do you sift through you know revaluing gold is like a macro conversation now we're in like a uh government governance and public equity market uh sovereign wealth fund i mean there's a lot here what's your take all right i'm gonna turn it back into macro regardless of where this is going with intel so uh let's go through two weeks ago three weeks ago elon musk buys all of Samsung's chips for the next whatever years. Okay. The U.S. government is basically taxing NVIDIA on anything, an AMD that it sells to China. That comes out. Another theoretically government involvement in kind of what these companies are doing. We all know that Taiwan

Starting point is 00:42:31 Semi is responsible for about 60% of the global chips in terms of the most important ones that we need and china is just offshore with taiwan and believes it's there so that's a political risk basically no matter how you go through this intel needs to basically make chips for the country so that we can get off of the need of depending on the global supply chain so this all fits in with the ai arms race and i have to remind people whatever you thought when deep seek was announced never listen to people again that basically fade the AI trade. Like, here we are now, the government's talking about taking a stake in Intel. And I remind you guys, it's only days after the Intel CEO came into the White House for a spanking

Starting point is 00:43:16 and the rumors were he owned Chinese companies and could be a spy. And the government is involved, and I only bring it up to this. If you don't think that this can happen to the AI companies, to the hyperscalers, I want to take it to another level. This is a much bigger story than just the profit margins. You have the companies of the world, and you mentioned this, the S&P 500 earnings, I said it was a great quarter, great year over year. The hyperscalers, the MAG-7, earnings grew 26%.

Starting point is 00:43:51 The rest of the S&P 500, up 4%. percent so when you're looking for a distribution of wealth problem when you're looking for a problem of employees when you're looking for those digital employees spending money in the pizza parlor there's one way to do that which is to tax the digital employees and give the money back to people so they can go to the pizza parlor that don't have jobs and even though that's not going to happen under the white house everything is about trying to make sure that the us wins the ai arms race and it is the single most important thing and on that same podcast they basically said if you're not paying attention this is now officially the manhattan project and the race

Starting point is 00:44:29 for space like the ai arms race is in full boat we are racing against china there is nothing that's going to stop and crypto is the exact same thing so they talked about the importance of crypto the financial guard rails they want that to be us dollar dominated again even if they don't want want the U.S. dollar, the fiat dollar to be the strongest currency. They absolutely want the stable coins to be dollar back. And so all of these things all line up the same way. I would take the Intel thing as just a recognition that chips, chips, chips, power, power, power. And remember, in a year, in two years, when you really start realizing how bad the electricity problem really is and how often we talked about investing in power, it is now is the time to start focusing

Starting point is 00:45:12 on this, particularly if I'm right that PMIs are about to go higher. Are you changing anything in your portfolio this week or recently due to all this news? The only thing that I'm caring about is adding to positions with inside the energy space. And the reason is because I'm getting more and more convinced once the inflation targeting thing, once they got to 100% built into the market of the Fed rate cut, I think people are underestimating what that is from a gateway and a doorway. If they were to cut, to do it at a time when core CPI is above 3%, to do it at a time when PMIs to me are about to go higher. We got an Empire Fed number today. The regional PMIs last month suggested the PMI should have

Starting point is 00:46:01 been above 50. I think with all the uncertainty over the tariffs in July and wondering what was going to go on. I can see where some of the survey stuff would take a little bit longer to get through. But the reality is that I think we're at the point where you want to be invested in these types of things. I think banks is another great place to be involved in at this point. Like I said, we're close to the all-time highs in banks. This is a reflationary situation. I'll just add one other thing. I do believe China and emerging markets will benefit tremendously in a reflation theme, but also one where the dollar has another leg lower, which I think with all the things we mention, especially if the courts rule against the tariffs, don't underestimate that as another

Starting point is 00:46:42 trigger point combined with Fed's cutting rates and everything else, that this becomes a situation where people really start to go from a period of only investing in AI companies and high multiple stocks, where it reverses and we start to see people looking at a rising tide that lifts all boats. It'll be good for smaller businesses, industrials, and you'll start to get takeovers of the things she talked about and things like open. So I'm looking more for opportunities that are not involved in the infrastructure build out of AI, but more on the adoption phase.

Starting point is 00:47:10 That makes sense to me. Where can we send people to find you on the internet and watch your great videos on Sunday? YouTube, they can see me every Sunday at 8.30 AM. I haven't missed one yet. So they've all been going in there and I've done them every week. And my Substack, X, they can always find me on LinkedIn.

Starting point is 00:47:28 And then for the institutional people, i'm doing a lot of conversations on the pmis and power right now for 22v and ways to participate on that i will say if i'm right on this i view this as a major inflection point we're in the adoption phase once we get through the adoption phase which will take about a year where profit margins grow across industries next year is about the embodiment phase kicking off because of the robo taxi side and i think people have to start realizing the world of software is under attack from ai the The world of hardware has been underinvested. And as we see this hardware side accelerate,

Starting point is 00:48:01 there's just not enough capacity. And if you don't believe me, look up gas turbine back orders, look up transformers and look up cooling systems. There's just nothing out there for the next five years. Crazy. All right. Well, we will talk to everyone again next Saturday.

Starting point is 00:48:14 Thanks so much for doing this, Jordy. See you soon, bud.

The Pomp Podcast - Will Fed Rate Cuts & AI Send Bitcoin Flying? | Jordi Visser

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