Bitcoin Will Breakout By Summer If This Happens

[0:00] the silver needs go up dramatically and
[0:02] if you do the numbers we just don't have
[0:03] enough supply. If silver breaks out, if
[0:05] gold breaks out, if Dogecoin breaks out,
[0:07] then Bitcoin will break out. They'll all
[0:09] go together and I expect that to happen
[0:10] before the end of the summertime. Hello
[0:12] everyone. Today we've got a great
[0:14] conversation with Jordi Visser. In this
[0:15] conversation, we specifically talk about
[0:17] the interest rate hikes that could be
[0:19] coming down and we talk about what the
[0:21] impact is to all of the various assets.
[0:23] What's going on with the AI trade, the
[0:25] rest of the stock market, commodities,
[0:27] Bitcoin, crypto, and much more. Jordy
[0:29] has very unique thoughts and he's
[0:31] actively changing his portfolio and his
[0:33] mind as we speak. So this conversation
[0:36] illuminates how he's thinking about this
[0:37] and why he is making certain changes. I
[0:39] hope you enjoy my latest conversation
[0:41] with Jordy Visser. All right, Jordy, a
[0:43] great place to start this is the odds of
[0:45] an interest rate hike have increased
[0:47] significantly over the last couple of
[0:48] weeks. I think a lot of people are
[0:49] trying to figure out why is this
[0:50] happening and what is the impact to
[0:52] their portfolio. Let's first start with
[0:54] what has changed. As an investor, you
[0:55] need to update your worldview when you
[0:57] get new information. And so can you walk
[0:59] us through why interest rate hikes are
[1:01] now much more of a situation for
[1:02] investors?
[1:04] >> Yeah, first of all, you know, so people
[1:07] understand I I really honestly don't
[1:10] remember a time where
[1:13] uh you went in this quickly from a
[1:16] period of expecting
[1:18] three rate cuts to one rate hike over
[1:21] the course of of the year. Um but that's
[1:24] where we are right now. So let's break
[1:26] it down this way. First of all, the
[1:29] economy uh has been strong, but I think
[1:32] this is more about the earnings being
[1:35] strong and the AI trade and kind of the
[1:39] uh the part of it that's there. That's
[1:41] probably 20% of it. The bulk of this is
[1:44] coming from inflation.
[1:46] So, you and I have talked a lot about
[1:48] inflation expectations and inflation
[1:50] going forward. Once uh the situation in
[1:54] Iran became what it is and the straight
[1:57] shut down, the market started building
[2:00] in the likelihood that inflation was not
[2:01] only going higher uh this year, but the
[2:05] longer this has gone on, the
[2:07] expectations are that it's going to stay
[2:08] up here for longer. So, as of now, the
[2:13] uh Cleveland Fed now casting uh
[2:15] inflation number for May is estimated to
[2:19] be again above 04, which would put the
[2:21] year-over-year for CPI at 4.2%. Um so,
[2:25] we're starting to continue moving
[2:27] higher. And if you go through the
[2:29] inflation expectations and you change
[2:31] those, that is pretty much the bulk of
[2:33] what has happened. So, I would put it
[2:35] there. But I also think that the capex
[2:37] trade in AI and this is something that
[2:40] people probably didn't anticipate. So
[2:43] when I say the earnings are 20%. You not
[2:46] only have the oil prices going higher,
[2:47] but the nominal GDP stuff has gone
[2:49] higher, prices paid has gone higher and
[2:51] the PMIs and a lot of this was happening
[2:53] before Iran. So at this point, the
[2:57] market is just building in that we're
[2:59] going to have rate hikes because of
[3:00] inflation and because of much stronger
[3:02] than expected nominal GDP. And if I give
[3:04] you guys one more, Warren Pies put out a
[3:07] uh a great post yesterday or the day
[3:10] before just highlighting that the
[3:13] forward sales growth for the S&P 500 is
[3:17] 18%.
[3:18] Now that's 2 years. So let's just take
[3:21] it as 9% a year type thing. That
[3:25] correlates to very very high nominal
[3:27] GDP. And I think that's where the issue
[3:29] is right now in the market is the AI
[3:32] trade, the AI impact means nominal GDP
[3:37] is going higher. And I think the
[3:38] inflation side connected to it from Iran
[3:40] right now is the major story. And the
[3:43] market has as of now been able to look
[3:45] through it. Now when we go and we see
[3:47] the interest rate hikes kind of on the
[3:49] horizon, one of the interesting parts is
[3:51] that Kevin Worsh is coming in and you
[3:53] know he explicitly wants interest rate
[3:55] cuts. He's been saying that during his
[3:57] confirmation hearings. Everyone believes
[3:59] that Trump is putting him there
[4:00] specifically to cut interest rates, but
[4:02] the economic data or the market is
[4:05] obviously saying something different.
[4:06] And so, is there a world where the
[4:08] market wins out or could we see Worsh
[4:11] and Trump and you know, kind of more the
[4:13] political regime actually went out and
[4:15] say even though the data says one thing,
[4:16] they just start cutting because that's
[4:18] what they want to do.
[4:20] >> I I don't think the administration is
[4:22] going to be uh talking about rate cuts
[4:24] at this point. Um, I think
[4:28] I think they're going to run with the
[4:30] hope that rates stay here and this is a
[4:33] transitory belief. The administration is
[4:37] uh, from what I can see, I mean, they're
[4:40] trying everything to get the straight
[4:41] reopen um, and not have to go do any
[4:45] more bombing campaigns because I think
[4:46] we're at a very very critical point with
[4:49] gas prices where they are. More
[4:51] importantly, and I'm sure we'll get into
[4:52] this, uh the dynamic in the oil market
[4:55] is is a much different stage. I mean,
[4:57] we're now uh this started in February at
[5:00] the end of February. So, we're now
[5:02] almost 3 months into this or two, you
[5:04] know, a full 3 months getting there and
[5:08] inventories are being drawn down. So, I
[5:10] think where the Fed is on this is number
[5:11] one, they don't know when this is going
[5:13] to end. They don't know the disruption.
[5:15] And this is where the uncertainty kicks
[5:17] in, not only for the Fed, but my gut
[5:20] tells me that investors need to start
[5:22] paying attention because we're now
[5:24] focused more on trailing news, meaning
[5:26] the earnings that just happened more
[5:28] than what's likely to happen over the
[5:30] next 3 months. And the problem is the
[5:32] oil situation will not get better over
[5:34] the next 3 months. The straight might
[5:36] might reopen. The question is, will it
[5:37] fully reopen? But only over the next
[5:40] three months, we're really going to see
[5:41] the situation in terms of how much oil
[5:43] has been drawn down, how much the
[5:45] destruction has gone on for some of the
[5:47] production that'll be offline for a
[5:48] period of time. And any rise in oil
[5:50] price where we are right now, guys, as
[5:53] any day oil goes higher, you see bond
[5:55] long-term bond yields go higher. So,
[5:57] forget the Fed, which I think Worsh is
[6:00] going to try his best not to raise
[6:01] rates. Edard Denny did uh say he thought
[6:05] there'd be a rate hike possibly in July.
[6:07] Edard Denni is one of the most bullish
[6:09] strategists out there and believes we're
[6:11] in a you know a roaring 20 style
[6:13] situation which I happen to agree with
[6:15] with regards to AI but I think we're in
[6:17] a very uncertain period here for uh
[6:19] investors and the Fed over the course of
[6:21] the next 3 months. Now one aspect of
[6:24] this like inflationary pressure is
[6:25] obviously energy prices and there is a
[6:28] belief that if the war ends then all of
[6:31] a sudden there will be uh a return to
[6:33] more normalized energy prices and
[6:35] inflation expectations and inflation
[6:37] itself will come back down. I get the
[6:39] sense that that is not your belief. Can
[6:41] you talk a little bit as to uh a
[6:43] situation where the Iran war is wound
[6:45] down or there is a ceasefire or some
[6:47] sort of peace deal? What is your
[6:49] expectation for what happens with
[6:51] inflation specifically?
[6:54] >> I mean, we we've had a ceasefire now for
[6:56] a while. Um, so I, you know, I you got
[7:01] to extend this further. I we have to go
[7:03] back to all of the ships going back to
[7:06] normal from where they were. So, you've
[7:09] got to know me. I mean, I do a video
[7:10] each week. It's all facts. The facts are
[7:13] when the straight was closed, ships are
[7:16] still not going through. So, uh, we can
[7:19] play would a, could a, should have,
[7:20] maybe, this, that. If they did reopen it
[7:24] and it lasted for a month. I I think
[7:27] when you get into these situations with
[7:29] the market, um, it's very clear to me
[7:31] that number one, the earnings uh, blew
[7:34] away expectations in a way that we've
[7:36] never seen before. So, it's justified
[7:38] for the market to go higher. The facts
[7:40] of the matter are that we have a problem
[7:42] where energy prices are significantly
[7:45] higher than they were. So, we don't know
[7:46] if a move back to, let's just say WTI,
[7:49] is right around 98 right now. We don't
[7:51] know if a move back to 88, where it
[7:53] stays at 88 over the next three months,
[7:56] honestly, is good or bad. Um, at this
[7:58] point, I would say the market expects it
[8:00] because the market is buying things on
[8:03] trailing earnings and believing that
[8:05] everything is going to be fine going
[8:06] forward. But there's another issue here
[8:08] that comes in, and this is the other
[8:09] fact-based thing that I'm starting to
[8:11] notice in the markets.
[8:13] correlations are breaking down with
[8:15] inside the markets. Um the S&P 500, yes,
[8:18] is right up near all-time highs as we
[8:20] start this. It's slightly below. There's
[8:23] a lot of markets around the world,
[8:24] particularly in Europe and Asia, that
[8:27] are down significantly over the course
[8:28] of the last 3 months. They have not
[8:30] participated in this rally with inside
[8:33] markets that have been very correlated
[8:35] to the US and I would say are very much
[8:37] part of the AIdriven trade, which would
[8:39] be mainly Japan and Korea.
[8:42] internally they're they've got things
[8:44] breaking down machinery and
[8:45] construction. The construction index for
[8:47] the NE or for the topics uh in Japan is
[8:51] about to break the 200 day moving
[8:52] average. So oil is having an impact on
[8:55] markets. It may not be having an impact
[8:57] on the US but I think there's two
[8:58] reasons for that. One is we are the
[9:00] world's largest energy producer. Uh and
[9:03] number two,
[9:05] I think uh people have uh probably
[9:08] become ultra fixated on the fact that
[9:11] our AI market, meaning these positions,
[9:14] whether it's the hyperscalers plus the
[9:16] semis, if you just use that, that is
[9:19] pretty much driving the S&P 500. You
[9:21] have a lot of stocks down in the S&P 500
[9:23] as well. Uh mainly on the consumption
[9:25] side. So I think within the market, oil
[9:28] has had an impact. It just hasn't had an
[9:30] impact on the types of things driving
[9:32] the market here, but it is starting to
[9:33] break down around the globe.
[9:35] >> Now, if we have rate hikes, let's just
[9:38] go back to the last time that we did
[9:40] this in 22. We saw, I think it was
[9:43] November of 2021, the Fed started
[9:45] talking about potentially hiking rates.
[9:47] That was pretty much the top of the
[9:48] market. Then they hiked interest rates
[9:50] at the fastest pace in history and the
[9:52] market sold off across stocks,
[9:54] commodities, uh, crypto, etc. literally
[9:58] to the point where we had multiple banks
[9:59] that ended up going bankrupt because
[10:01] they didn't uh kind of manage their risk
[10:03] correctly. How fast and how aggressive
[10:07] do you think the rate hikes could be?
[10:09] And does that matter for how much of a
[10:11] sell-off there would be in asset prices?
[10:14] I
[10:14] >> I don't think there's going to be rate
[10:16] hikes. So, let let me let me be clear on
[10:18] this. Let's we may have done this last
[10:21] week, but for people who maybe didn't
[10:22] hear it or they didn't pay attention,
[10:24] this is a very different situation to
[10:26] 2022. Let's let's put it back to 2021.
[10:29] 2021,
[10:31] the Fed continually said this was
[10:32] transitory. Okay, it ended up being
[10:35] transitory, but it ended up being
[10:38] transitory with rate hikes. But it took
[10:41] a while for the yoloing to get out of
[10:43] play. And the yoloing is the major
[10:45] difference right now. Back then we had
[10:48] two parts that were moving at the same
[10:50] pace that both contribute heavily to the
[10:54] inflation or the core inflation side.
[10:57] Number one is wages were going higher.
[10:59] Um wages were going higher at a pace we
[11:02] hadn't seen before. The labor market had
[11:04] complete control. Um capital was in
[11:07] trouble. They were trying to beg people
[11:08] to come back to the office and at least
[11:10] get them back to work and it was hard
[11:12] with all the yoloing going on. So the
[11:14] first thing is wages were going higher.
[11:16] The second thing was we still had people
[11:18] scrambling to get away from cities.
[11:20] Housing market was on fire. You had uh
[11:23] all kinds of situations that were
[11:25] spreading into appliances. And when you
[11:28] have a housing market that's booming,
[11:30] that has huge implications for a lot of
[11:32] consumer related goods and we still had
[11:34] bottlenecks. We don't have the
[11:36] bottlenecks. Ships are going around the
[11:38] globe right now. They're just not going
[11:39] through the straight of Hormuz. So this
[11:41] is legitimately a transitory thing. We
[11:45] just don't know how long transitory is
[11:46] again. But because it's commodity
[11:48] related to your point on the question,
[11:51] this is not structural. Um when oil
[11:53] prices come back down, which they
[11:55] eventually will, we just don't know if
[11:58] Iran has a goal in mind. Um this has
[12:01] been a stalemate. The US has been trying
[12:03] now to get the straight open and Iran
[12:05] doesn't seem to be budging. And the
[12:07] question is why? Uh all I can deal with
[12:10] are the facts at this point. And the
[12:13] facts are that we're not opening this
[12:15] quickly. So I don't expect any rate cuts
[12:17] to happen because the other issue that
[12:20] is here is back in 2022
[12:22] the deficit was not a big situation as
[12:25] big a situation it is now. The debt has
[12:27] obviously gone higher but right now we
[12:30] have interest expense which annualized
[12:32] for this year is probably going to be
[12:34] about $1.4 trillion.
[12:37] Back then it was about 600 billion. So
[12:40] we're talking about a huge interest
[12:42] expense. If they raise rates,
[12:45] unfortunately, they lose control over
[12:47] this. So we've talked a lot about the
[12:48] deficit. We've talked a lot about the
[12:50] ability of them to do this. This is a
[12:51] very, very difficult situation. And this
[12:53] is why when people sit here and look at
[12:55] the stock market and like, well, this is
[12:57] all great. I've said many times that the
[12:59] Fed's not in a position to hurt the
[13:01] stock market. The government can try to
[13:03] do things. They tried to balance the
[13:04] budget uh at the beginning of last year.
[13:06] Gave up on that real quickly. I think at
[13:09] this point people have to deal with the
[13:10] fact that inflation is trending higher.
[13:14] The situation Iran is not there. And if
[13:16] you ask me what's a higher likelihood by
[13:19] the end of this year, 10% inflation
[13:21] year-over-year or two, I'll take 10.
[13:24] We're currently at 3.8. That's the issue
[13:27] right now is when you get into those
[13:29] situations where if Iran if we don't fix
[13:32] the oil problem and they want to hold
[13:34] this out for a long time, oil prices
[13:38] eventually will start to shoot higher
[13:39] because unlike when we went through this
[13:41] situation in 2022 with Russia and
[13:43] Ukraine, we had a problem coming out of
[13:46] COVID where we had an issue with oil
[13:49] inventories because we had shut so many
[13:51] things down. We had a surplus. We're
[13:54] burning through the surplus and now
[13:55] everyone is starting to talk about the
[13:57] draws globally, but especially in the US
[13:59] and how much we've released from the
[14:01] SPR. So at this point, we've kind of run
[14:03] through that 2 to 3 month window that
[14:05] all the oil doomers talked about that
[14:07] this would get really bad. This needs to
[14:09] turn now where oil is going to start to
[14:11] move much higher much faster. And if it
[14:13] does move much higher much faster, at
[14:15] that point you're going to have a
[14:16] problem for the Fed. And I I still don't
[14:17] think they're going to be in a position
[14:18] to raise rates.
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[15:39] Okay, so let's say that um they don't
[15:42] raise rates, but they don't cut rates. U
[15:44] maybe let's go kind of through asset
[15:45] prices. is what is the impact on the AI
[15:48] related stocks versus the rest of
[15:50] software? Have you changed your mind
[15:52] about anything? You you've been very
[15:53] bullish on the AI uh side and not so
[15:55] bullish on software. Is that still the
[15:57] same?
[15:58] >> So, this week has been um I mentioned
[16:01] the the breakdown in correlations. We've
[16:03] also had uh a a pretty dramatic shift
[16:06] earlier in the week. So, between Friday
[16:09] of last week, you know, we we did our
[16:11] our normally do our stuff on on Fridays.
[16:15] By the close of Friday, momentum had
[16:17] been hit hard and that's because
[16:18] software had outperformed semis. That's
[16:21] kind of the, you know, people being
[16:22] short, software being long semis. We saw
[16:25] that unwind that continued into Monday
[16:28] and into Tuesday morning over the course
[16:30] of two days and a morning open. It was a
[16:33] dramatic movement in momentum. Now,
[16:36] momentum as a factor for the market just
[16:39] means the winners went down, the losers
[16:40] went up over the course, you know, what
[16:42] had worked and what hadn't worked. I I
[16:45] I've mentioned that I've gotten out of
[16:47] Micron. Um I have no intention of
[16:49] getting back in uh at any price uh
[16:52] unless it was a significant fall and I
[16:54] don't expect a significant fall in the
[16:56] AI trade. But the reason I got rid of
[16:59] Micron is because I think we're entering
[17:01] a new regime and sometimes it takes a
[17:04] little time for the market to deal with
[17:05] that. If I'm right, a lot of the things
[17:07] we've already talked about, rising oil
[17:09] prices, rising uh risk of a Fed rate
[17:12] hike would lead to an unwinding
[17:14] positions that people are in. You've
[17:16] mentioned the success of the Roundtill
[17:19] DM memory ETF.
[17:22] I'm highlighting this weekend that I
[17:23] wrote a paper on inference a year ago to
[17:25] this week. That was when Google IO had
[17:28] their event last year and they showed
[17:30] that tokens had gone up significantly.
[17:33] And I highlighted a bunch of names. Now,
[17:35] most of those names are in the DRAM ETF.
[17:38] The reason I bring it up is we're a year
[17:41] into that trade. Most of those names are
[17:43] up four to eight eight times. Um, and
[17:46] it's not just Micron, SKHEX, it's things
[17:48] like Seagate, Western Digital. So, we're
[17:51] long in the tooth in something that has
[17:52] worked. And for me, going forward, the
[17:54] riskreward has changed. I don't see as
[17:56] much upside as I did a year ago. And
[17:58] normally, that means there's a rotation
[18:00] that should go on. For me, I've rotated,
[18:02] as I've said, into crypto and silver.
[18:04] I've kept some of the semiconductors on
[18:06] which are still more related to the
[18:07] optical side. Marll, I actually bought a
[18:09] little bit of Intel in the weakness this
[18:11] week when it got under 110 and I'll
[18:14] continue to look down there. So, I think
[18:15] there's very likely going to be um a a
[18:19] scenario that best case scenario over
[18:21] the next 3 months. I think the AI trade
[18:24] will be unchanged type thing. Um worst
[18:27] case scenario is we start to see a
[18:29] correction where we probably need to
[18:31] take some air out of the bubble. You
[18:33] mentioned Marll and Corning was another
[18:35] one that you had talked about for a few
[18:37] weeks there. What what are your thoughts
[18:38] on those two?
[18:40] >> Yeah, I so I I think if you go through
[18:43] the the cycle of where AI has been, um
[18:46] memory was the first thing that became
[18:48] obvious and that was you know like I
[18:50] said when inference became a higher
[18:51] demand I wrote this paper about the
[18:53] amount of memory that's needed relative
[18:55] to GPUs. So again, when I can write a
[18:58] paper, I'm not a semis specialist and I
[19:00] wrote this paper a year ago to this
[19:02] week. I think that means that a lot of
[19:06] the good news, the acceleration is over
[19:08] and I think the second derivative of
[19:10] price is going to start to uh move down.
[19:14] Marll only broke out about two months
[19:18] ago. Um, so it's not as long in the
[19:20] tooth. And I actually happen to believe
[19:21] Marll has a chance to be like a Micron
[19:25] type name over the course of the next
[19:27] two years. That's how important the
[19:29] optical side is in my opinion. Corning
[19:31] has a massive order. Their earnings are
[19:33] still going to be there. The question
[19:35] is, are they going to get an
[19:36] acceleration in any other part of their
[19:37] business? I still think that they're
[19:39] going to be going higher over the course
[19:41] of the next two years in a very
[19:43] meaningful way, but I also think the the
[19:45] memory names will too. I just think the
[19:47] memory names probably need more of a
[19:49] pause and they actually have more risk
[19:52] because it's easier for competitors
[19:54] theoretically to catch up in memory just
[19:57] because efficiency can do that. But also
[19:59] on the other side, I think uh China has
[20:01] already started to build out their own
[20:03] side. So I'm not saying that's going to
[20:04] happen. I still believe in all of these
[20:06] names over the course of the next 5
[20:07] years. But I just think you got to be um
[20:09] wary of things that have had a big run.
[20:12] And that ETF you talked about the record
[20:14] volume. I think it had 6 billion in
[20:16] inflows um in a very short amount of
[20:18] time. Like one of the most successful
[20:19] ETFs in history. The SMH, which has been
[20:22] around a long time, I think it has about
[20:24] 60 billion in AUM. So the memory names,
[20:28] which there's not that many of them,
[20:30] that means there's a lot of retail
[20:31] involvement in there. And I think that's
[20:32] where you'd probably see a correction.
[20:35] The uh DRAM uh ETF has just over 10
[20:39] billion in assets now and I think they
[20:41] launched maybe a month, you know, five
[20:42] weeks ago, something like that. So, it's
[20:44] been pretty uh uh pretty impressive. Um
[20:46] le let's talk about uh what's going on
[20:48] in commodities. Obviously, there's been
[20:50] this commodity bull market. There are
[20:52] these huge shortages. Um you have been
[20:54] all over calling out a number of these.
[20:56] I think other folks like you know the
[20:58] Tom Lees or the Dan Ies, I think they
[21:00] also uh intimately understand some of
[21:02] this. What is your view there in
[21:04] relationship more to the macro
[21:06] environment? Is is it insulated and so
[21:08] you don't really have to pay attention
[21:09] to interest rates, inflation, etc. Uh
[21:12] because this is more of a driver than a
[21:13] reactor or how do you look at it? So the
[21:17] commodity names to me the only
[21:19] difference between them and the stocks
[21:20] is uh until they have momentum going
[21:24] again people don't have any interest
[21:26] because the narrative on silver is well
[21:29] how do I just buy silver pe the
[21:31] questions I get for silver very
[21:33] different than than micron commodities
[21:35] trade a lot more and the thought process
[21:37] is a lot more like bitcoin um where you
[21:40] have to create a narrative around it so
[21:42] think about gold last year I mean every
[21:44] day we talked about gold going higher
[21:46] Well, now Bitcoin is with gold and with
[21:49] silver. They're in this consolidation
[21:50] pattern. The regime shift that I see
[21:54] happening and like I said, historically
[21:57] when you're above 4% in CPI,
[22:01] it is not good for stocks. So the S&P
[22:04] 500 when the CPI is above 4% over the
[22:06] last I think I did this back to 1928. So
[22:09] figure approximately 100 year, it has a
[22:12] negative return when the CPI is above
[22:14] 4%. When it's below 4%, it has a return
[22:18] of about 12%. So negative verse 12.
[22:21] Well, we're just about to cross above
[22:23] 4%. And at the same time, we have
[22:25] three-month bills at 370 right now. So
[22:28] CPI is going to be 50 basis points above
[22:31] 3mon bills unless the Fed raises rates.
[22:33] And even if they do raise rates, the
[22:34] question is how much would they raise? I
[22:38] I I think we're in a negative uh yield
[22:41] regime, but with growth. So the
[22:43] difference is if the Fed's not going to
[22:45] raise rates like it did when inflation
[22:47] was high, but at the same point you have
[22:50] CPI that's higher. I think the real
[22:52] risk, and I wrote a paper about this
[22:53] this week, the AI trade is moving so
[22:57] fast and the hoarding that's going on is
[23:00] so big that the issue that comes in is
[23:03] if we have bottlenecks, you're going to
[23:05] see some of these companies not meet
[23:06] their numbers going forward, especially
[23:08] if the input costs are going higher.
[23:10] you'll see margins get compressed and
[23:13] that's where I think the risk is in
[23:14] stocks. I don't see the same risk in
[23:16] commodities. I think commodities there's
[23:18] an underlying bid by geopolitical uh
[23:20] needs on copper on silver and I think
[23:23] gold is still fitting in there. And I'll
[23:25] just add one thing since I've talked
[23:26] about silver in this group. Um silver is
[23:30] a major part of solar. It's needed in
[23:33] every single part of the AI trade but
[23:35] there's also a growing trade going. Um
[23:39] March was the largest uh import month
[23:41] for China in history on silver
[23:45] solid state batteries which I've said
[23:47] repeatedly to people on the
[23:49] institutional side that if there's one
[23:51] place that you should be spending a lot
[23:52] of time outside of chemicals to make
[23:54] sure you're up to speed, it is
[23:55] batteries. And the reason is if we want
[23:58] to solve our energy and power problem in
[23:59] the US, the easiest way to do it is to
[24:01] have massive batteries uh connected to
[24:03] every part of the grid. Because if we
[24:05] can store the energy then we can use up
[24:08] more of the excess capacity we have
[24:10] because we do have a lot of capacity on
[24:11] days where we don't need it. It's only
[24:13] on those days where we have to keep the
[24:15] excess in there. So batteries are really
[24:17] important and China in particular has
[24:20] made huge advances in solid state
[24:22] batteries. Uh this is critical but the
[24:25] difference is it uses a tremendous
[24:27] amount of silver relative to lithium
[24:29] batteries. And so if solid state
[24:31] replaces lithium over the course of the
[24:34] next five years, the silver needs go up
[24:36] dramatically. And if you do the numbers,
[24:38] we just don't have enough supply. So
[24:40] silver is the one that when it breaks
[24:42] out, uh, and I'll say the same thing I
[24:44] said last week, if silver breaks out, if
[24:46] gold breaks out, if Dogecoin breaks out,
[24:48] then Bitcoin will break out, they'll all
[24:49] go together. And I expect that to happen
[24:51] before the end of the summertime.
[24:53] >> So explain a little bit more as to why
[24:55] before the end of the summertime. Why
[24:57] why that timeline that you're looking at
[24:59] for crypto?
[25:01] >> So in all my experience of trading
[25:04] markets um when I say a regime shift
[25:06] there's there's two types of regime
[25:08] shifts. Uh one is let's say one that
[25:11] lasts for a long period of time and that
[25:13] would be something like coming out of co
[25:16] uh where you go into it it's a
[25:18] deflationary situation and then you
[25:20] print money and it takes a while for
[25:21] people to grasp the inflationary
[25:23] situation. I started talking about
[25:25] inflation postco in May of 2020 and that
[25:28] was because of the enormous amount of
[25:30] money printing. In this case, I think
[25:33] we're in a co type situation from one
[25:35] level that equates this to a regime
[25:37] shift.
[25:39] If you listen to anyone on the oil
[25:42] markets, and I don't know if you've had
[25:44] people on that have traded oil markets
[25:46] for a long time, the one thing they all
[25:49] say as a group is they had all modeled
[25:51] the straight of Hormuz. Straight of
[25:52] Hormuz is really important to the global
[25:54] economy. It's kind of like its own
[25:56] central bank. Um, oil matters to the
[25:59] whole world. There's no way to get off
[26:01] of this. Diesel drives the economy. If
[26:03] all of a sudden we see a downshift in
[26:07] the global economy which I said is
[26:09] showing up in Japan with inside the
[26:11] construction market showing up with
[26:13] inside uh the machinery markets both in
[26:16] Japan and in Korea. This is happening in
[26:18] both countries while the DRM stuff is
[26:20] still going up. You've got long-term
[26:22] rates which are going higher and in
[26:24] particular in the UK and Japan. I mean,
[26:27] we're talking about 25, 30-year highs
[26:30] that we're making in long-term yields in
[26:32] countries that have a ton of debt. These
[26:34] have all been fears at some point. So, I
[26:36] think the regime shift is once the
[26:38] technical market starts to break down,
[26:41] whenever that happens, and it can take
[26:43] weeks. That's why I said by the end of
[26:44] the summertime, I think there's a
[26:47] two-sided thing here. One is I think
[26:49] markets have to have a correction. I
[26:51] don't know to the extent because I don't
[26:53] know what's going to happen to the oil
[26:54] price. If oil, if you tell me oil's 200,
[26:56] I'm telling you at this point, the stock
[26:58] market can't deal with it anymore
[26:59] because we'd be up at that point, which
[27:01] would also mean slowing growth because
[27:02] we've been using excess inventories. The
[27:05] second part of the trade though is if
[27:07] the Fed doesn't move and all of a sudden
[27:10] there is a stimulus thing, meaning okay,
[27:13] the government we the straight starts to
[27:15] open up and oil prices come down not
[27:17] from 100, but they come down from 150 or
[27:20] 200. I think that's going to be
[27:22] extremely positive for commodities and
[27:24] extremely positive for Bitcoin, but I
[27:26] don't think you're going to see the
[27:27] stock market immediately go higher
[27:29] because we'll be significantly higher,
[27:30] but in the commodity markets, we will.
[27:32] One other aspect of the stock market
[27:34] that um I think people are starting to
[27:36] to wrap their head around is there's
[27:37] quite a bit of supply that is coming. Uh
[27:40] obviously the SpaceX IPO, there's
[27:42] Anthropic, potentially uh Open AI, and
[27:45] SpaceX is, you know, probably the
[27:47] largest and the one that is uh most
[27:49] tangible because we we've got the S1
[27:51] now. We we kind of know, you know, when
[27:53] uh when they're going to do this
[27:54] compared to maybe some of the larger
[27:56] private uh businesses, but if there's
[27:59] tons of supply coming and you've got,
[28:01] you know, kind of the macro environment,
[28:03] um there's many people who are quite
[28:05] bullish that are saying, look, for the
[28:07] next couple of months, there could be
[28:08] some headwinds here. Do you agree that
[28:09] that supply could become an issue?
[28:13] >> Supply of this side has to be an issue
[28:15] at least initially. Um, you know, I
[28:17] think if these names weren't going to be
[28:20] allowed to go in the ETFs, the passive
[28:22] markets as quickly as they are, it seems
[28:24] like all the rules are being changed to
[28:25] allow them to go in, it probably has a
[28:28] little bit less of an effect um, in
[28:31] general for what we'd be talking about.
[28:32] Meaning if people have to get out of
[28:35] let's just say the S&P 500 because they
[28:37] have to raise cash to go buy these
[28:39] issuances then it would be negative for
[28:42] the indexes and these stocks would go
[28:43] on. That's what normally has happened in
[28:45] the past. So the size of the numbers is
[28:48] huge. Um I do believe that anytime you
[28:51] have supply of this magnitude it just
[28:53] adds to the question that's in the
[28:55] marketplace. But it's also going to it
[28:57] seems like it's being frontloaded.
[28:59] They're almost in a race to get this
[29:00] out. And I think there's issues with
[29:03] that as well. The question is why are
[29:05] they trying to get it out? If you come
[29:06] to the market with too much issuance, I
[29:09] think it definitely gets people to be a
[29:10] little bit more I can wait a little
[29:12] while before I buy things. So I think
[29:14] the timing of everything for the next 3
[29:16] months just leads to an issue. We we've
[29:18] got expectations very high. We've taken
[29:20] the sentiment back up depending on which
[29:22] risk, you know, which indicator you look
[29:24] at um back up towards the highs where we
[29:27] started the year. The ones that I use
[29:29] were back up there. So, I just think
[29:30] it's a bad setup for the next three
[29:32] months. And like I said, it may resolve
[29:34] itself by just consolidating. But I
[29:36] think the oil part is the bigger risk is
[29:38] that we can ignore oil for a period of
[29:41] time. Inflation's already gone higher.
[29:42] So, we're ignoring inflation. We're
[29:44] ignoring oil. We're ignoring rate hikes
[29:47] and we're ignoring rates in the backend
[29:49] going higher. And the only reason is
[29:51] because we've seen this move in the AI
[29:54] trade. And like I said with inside the
[29:55] AI trade, we're seeing stuff that has
[29:58] been correlated start to break down. And
[30:00] for people who are really want to get
[30:01] into the weeds of this, and I'll go
[30:02] through this over the weekend, there are
[30:05] two sectors that are the bulk of the AI
[30:08] trade. And most people think of it as
[30:10] tech. I I the the AI trade to me from
[30:13] the receivers, the capex trade, it's a
[30:16] combination of semiconductor names and
[30:20] then the industrials. So as much as
[30:23] power is necessary, this is not an
[30:25] energy type thing. This is really
[30:28] transformers, gas turbines, it's all the
[30:31] industrial. So when I talk about the
[30:32] fact that construction names and
[30:34] machinery names are going down in Japan
[30:37] and in Korea, that means part of the AI
[30:40] trade is already starting to break down.
[30:41] And that's what I'm saying. When you
[30:42] start seeing correlation breaks, it's
[30:44] kind of like my turbulence model. It's a
[30:46] warning sign to at least have one eye
[30:48] open, as I like to say, and just be wary
[30:50] that if things start to turn the other
[30:52] direction, you could see a correction
[30:54] that goes pretty far pretty fast. And I
[30:56] don't think people want to be holding
[30:57] stocks during that period. Got it. What
[31:00] are you uh maybe looking for where you
[31:02] would start to change your mind on some
[31:04] of this, right? Like it it seems like
[31:05] you've got a very well-formed view. Is
[31:07] there anything that you're looking at
[31:08] and saying, "Hey, if this changes, you
[31:09] know, I I will uh uh adapt."
[31:13] So I I I'm probably less of a well no
[31:16] not probably I'm less of a trader than
[31:18] probably you know the people that are
[31:21] sitting at home and on the retail
[31:23] trading side. I'm not as slow as an
[31:25] institution and more importantly I can
[31:27] sit in things. Um I started buying
[31:29] Micron last year at 105. It traded down
[31:33] I think to 60 in the first quarter of
[31:35] last year and I bought more on the way
[31:37] down and then I bought more on the
[31:39] breakout. Uh I have a higher tolerance
[31:42] for things that I think are going to
[31:44] play out over the course of the next
[31:45] year. The way that I'm viewing my
[31:47] portfolio.
[31:49] I just had a home run with most, you
[31:51] know, especially with Micron, but with a
[31:53] lot of the semiconductor names. I also
[31:55] lost money last year in the crypto
[31:57] portion of my portfolio. Um, I have
[32:00] upped my crypto portion because I think
[32:02] a year from now when we get to May of
[32:04] next year, instead of us talking about
[32:06] the parabolic needs of memory, I think
[32:08] we're going to be talking about the
[32:09] buildout of the financial
[32:10] infrastructure. I did a um a webinar
[32:13] this week with a group uh from Kraken.
[32:16] And I I I spent a lot of time on my
[32:20] portion about hey, we're building out
[32:22] the AI infrastructure. Only at the
[32:24] beginning of this year did the agentic
[32:26] world start to happen. That's where the
[32:28] inference side kicked in. The other
[32:30] thing that's critical for inference is
[32:32] Ethereum.
[32:34] It's circle. It's go through the list of
[32:38] the financial guardrails that you want.
[32:40] This is a critical component is
[32:42] connecting the agentic world to the
[32:43] crypto side. And so when you look at the
[32:46] charts that Coinbase had in their um
[32:48] earnings release and you see them, they
[32:50] look a lot like the charts that Sundar
[32:54] Pai showed in token usage. So I think
[32:58] when we get here a year from now, and it
[33:00] might take 3 months, it might take 6
[33:01] months, but that's not what I'm looking
[33:03] for. I don't think silver can go down
[33:05] very much, and I think it will double
[33:07] over the next year. I don't think
[33:08] Bitcoin can go down very much from here.
[33:10] And if it acts like Micron did last year
[33:13] and I have to buy more at 50,000 and
[33:15] 40,000, I will because I believe a year
[33:17] from now, we'll be talking still about
[33:19] the AI trade being happening. There
[33:21] might be delays and bottlenecks. I think
[33:24] the inflation side will still be on the
[33:26] higher side and we'll still have rates
[33:28] at the lower end. The disruption will be
[33:30] happening to politics. The disruption
[33:32] will be happening to voters. People are
[33:34] going to be angry. And I think that
[33:36] Bitcoin and the crypto world will have a
[33:37] two-prong situation of negative real
[33:40] yields around the globe. The financial
[33:41] guard rails drawing in investors,
[33:43] especially the growth side, and we'll
[33:45] start to get an upward movement in a
[33:47] year from now. We'll be talking about
[33:48] doubles in crypto as opposed to doubles
[33:50] in memory.
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[35:59] check them out today. Now, I'm sitting
[36:01] here looking at a bunch of uh uh public
[36:04] equities, commodities, and uh some of
[36:06] the inflation data. And it looks like uh
[36:09] the economic data can be twisted to tell
[36:12] very different stories. And one of the
[36:14] things that I find uh maybe most
[36:16] fascinating in financial markets right
[36:18] now is the economic data if you want to
[36:21] tell a positive story can be
[36:22] overwhelming. But maybe the most
[36:24] important thing to tell a negative story
[36:26] is you go and you look at some of these
[36:28] polls. So CBS just came out with a brand
[36:29] new poll and asked people, you know, how
[36:31] do you feel about your personal
[36:32] finances? Over 70% of people said
[36:34] they're concerned or they're worried,
[36:36] right? If you go and you look at uh
[36:38] people saying, hey, is your wages or
[36:41] your income keeping up with inflation?
[36:43] something like 75 80% of people saying
[36:45] no. And so there's this idea of like
[36:47] almost regardless of what the economic
[36:49] data is, the perception, the feeling
[36:52] that people have is very negative. And
[36:54] you see this in some of the u approval
[36:57] numbers for Trump or the economy etc.
[37:01] And so are we now in a world where the
[37:03] economic data is important to be
[37:04] informed by but actually that sentiment
[37:06] that those kind of survey type results
[37:09] have more and more weight because you're
[37:10] getting this you know kind of split or
[37:12] or this uh kind of paradox in the market
[37:14] where wealthy asset owners are actually
[37:16] making money and the rest of the country
[37:18] feels like they're being left behind.
[37:22] >> I mean Donald Trump was elected on the
[37:24] distribution of wealth problem in the
[37:26] country. Um, there's no doubt that it's
[37:28] a K-shaped economy. So, everyone can sit
[37:32] there and try to pretend they can pick
[37:33] whatever side they want. I I listened to
[37:35] someone this morning that I shut off
[37:37] after 5 minutes. Because if you start
[37:40] with highlighting the delinquencies
[37:42] happening on credit cards, the
[37:43] delinquencies, and say something like
[37:45] the consumer is feeling it worse
[37:49] than any time since the great financial
[37:50] crisis. There is truth in that statement
[37:53] because we do have credit card
[37:54] delinquencies, auto delinquencies,
[37:57] mortgage payment delinquencies
[37:59] at those levels. There's no doubt about
[38:01] it. The problem is they're
[38:04] inconsequential to GDP
[38:07] because you're dealing with small parts
[38:09] of the economy. On the higher end, the
[38:12] wealth side is just insanely getting
[38:15] created by the day the more that the
[38:17] stock market goes higher. If you have I
[38:19] mean I think as we get on here we're up
[38:22] about 9% in total return for the S&P
[38:24] this year. I mean I hate to tell people
[38:26] but whatever you want to think about the
[38:29] global economy it's the US stock market
[38:32] is so big. I've talked about it. We're
[38:34] now above 225% of GDP. So, if you have a
[38:38] 10% rise in the stock market, you guys
[38:42] have to go through the math and just
[38:43] realize that is literally you're talking
[38:46] about, I don't know, $7 trillion,
[38:49] which is equivalent to about 25% of GDP.
[38:54] So, when you have an upward movement, it
[38:56] creates a lot of wealth for people that
[38:58] are already wealthy. For people that are
[39:00] not, we have transfer payments. And this
[39:01] is the K-shaped economy. And this is why
[39:03] voters are not happy. I absolutely know
[39:06] from having, you know, four kids what
[39:10] the truth is because for me to subsidize
[39:14] my kids in some way and help them be
[39:16] able to get started on their life in
[39:17] cities, you know, if there's an
[39:19] emergency at the house and they have a
[39:22] flood and the insurance doesn't cover
[39:24] it, they don't have the extra money in
[39:26] the bank account without dipping too far
[39:28] in and so I end up helping them out. So
[39:31] parents know that people are living
[39:32] paycheck to paycheck across the country.
[39:34] And I think that's the reality. And I
[39:36] don't see a situation because of AI that
[39:38] that's going to change anytime soon. You
[39:40] don't just accumulate assets and have
[39:42] them go higher. Now for people that are
[39:44] trading, as we talked about last week, I
[39:46] do think traders have an advantage over
[39:48] wealthy people in the fact that what I
[39:50] described, they can get long these
[39:52] things and ride them up. Most
[39:53] institutions can't put a big position on
[39:56] in the DRAM names. Um, and that's one of
[39:58] the reasons why retail's been having
[40:00] such a fun time. Institutions aren't
[40:02] overly long them. So, if this falls,
[40:04] it's going to be a margin fall, meaning
[40:06] it's going to be because retail gets
[40:08] stopped out of these trades and then
[40:10] they'll move on to something else. Just
[40:11] like last year, they were involved in
[40:12] Palunteer, gold, and silver, and they're
[40:14] not involved in Palunteer, gold, and
[40:15] silver anymore. Retail's good. They'll
[40:17] go find the next trade, and the next
[40:19] trade to me will be in different areas.
[40:21] Now, one other aspect of the stock
[40:22] market that I find very fascinating is
[40:24] uh there's this chart that shows the S&P
[40:26] 500's net profit margin has risen to
[40:29] almost 15% in the first quarter. And so
[40:32] there's this idea that the underlying
[40:34] fundamentals of many of these businesses
[40:36] are improving in some cases the you know
[40:38] pees etc actually getting cheaper. And
[40:40] so how do you look at this you know
[40:43] bubble talk and and all the excitement
[40:45] but um also at the same time the
[40:47] underlying businesses themselves seem to
[40:49] be improving and actually driving you
[40:50] know real financial performance.
[40:53] So the problem and and again this fits
[40:56] into the distribution of wealth problem.
[40:58] Um
[41:00] the profit margins at the aggregate S&P
[41:03] level are up at 15%. But most of this is
[41:05] being driven by,
[41:08] you know, seven to 10 names in the S&P
[41:10] 500. Um, Micron's margins are exploding.
[41:14] Nvidia's margins are up at 70%. The
[41:17] hyperscalers. So, it's it's a it's a
[41:20] world of halves and halves, not have
[41:22] nots. And the reality is the S&P 500 is
[41:25] the S&P 500. It there's no way to go
[41:27] through it. If those names are, you
[41:29] know, the highest ones, that's great.
[41:31] The issue is right now and where I see
[41:34] the issue popping up
[41:36] if margins were to start heading down
[41:39] because this is an inflated number
[41:40] driven by seven companies and all of a
[41:42] sudden their margins start to drop off
[41:44] for some reason it's going to look like
[41:47] the S&P margins are dropping off and
[41:49] that will scare people and that's what I
[41:51] think is going to happen and even if it
[41:52] doesn't scare people the one thing I
[41:54] will tell you if you want a signal in
[41:56] the marketplace if profit margins start
[41:58] dropping it's not really good and if
[42:00] you're a quant
[42:02] meaning a computer and you're trading
[42:04] off signals and you get a signal that
[42:06] says profit margins are declining or
[42:08] they've peaked you start extrapolating
[42:10] that out and even if it doesn't continue
[42:12] for the time being it's kind of a risk
[42:14] signal to reduce risk that's the problem
[42:16] I see is these charts look so good and
[42:18] so explosive and one of the things I'm
[42:20] highlighting um this week the capex
[42:24] trade so remember you and I last year
[42:27] spent the time defending the AI bubble
[42:30] meaning going against people saying it
[42:32] was an AI bubble. When we look at these
[42:34] capex numbers, you've seen the numbers
[42:36] for this year. We're now expecting about
[42:38] 800 billion for this year. Last year was
[42:40] I think about 400 billion. The year
[42:42] before was say 200 and change. At the
[42:45] same time, so we've got combined now for
[42:48] the last two years plus the first
[42:49] quarter of this year. Let's assume it's
[42:51] a trillion dollar so far. Well, that's a
[42:54] trillion out of what's now expected to
[42:55] be an $8 trillion
[42:58] capex build. We're basically about 12%
[43:02] through the build
[43:04] and we have an enormous amount of
[43:07] shortages already now. So the one thing
[43:09] I will tell people about the buildout, I
[43:12] think for the next year because of how
[43:14] quickly the shortages and the buildout
[43:15] have shown up, people are
[43:16] underestimating that the capbacks may
[43:19] run into issues not on the ability to
[43:23] spend more money on it, but the ability
[43:25] of actually building as much as we think
[43:27] to use the chips that we're hoarding
[43:29] right now to compete with other people.
[43:31] I think that is a real risk that is
[43:33] going to show up. I also think the
[43:35] adoption numbers I've now spoken to a
[43:37] variety of people uh at senior levels at
[43:40] big institutions as much as AI is being
[43:43] adopted and people are getting um
[43:45] anthropic in there they still don't
[43:48] they're not seeing the productivity
[43:49] numbers um they're not seeing the actual
[43:52] change they haven't fired people at most
[43:54] institutions so I think one of the
[43:56] things that it could become an issue too
[43:58] is the token costs are are are spiking
[44:01] because we've had a lot of people
[44:02] ordering anthropic The question is if
[44:05] that starts to flatten out a little bit.
[44:06] We've been in this game of extrapolating
[44:08] the present. So sometimes when you get
[44:10] in the thing of extrapolating
[44:12] exponential numbers, the supply
[44:14] bottleneck starts to become an issue or
[44:17] the adoption process becomes an issue or
[44:19] cost becomes an issue. And this is what
[44:21] I wrote about this week. I think the
[44:22] bottleneck or the neg the next negative
[44:24] trade for AI is not that it's a bubble
[44:27] in terms of the spend. it's that we just
[44:29] can't we're not prepared for the amount
[44:31] of volume that we need and the
[44:34] bottlenecks that are showing up
[44:35] throughout it are real. But then you
[44:37] have the other bottleneck that was just
[44:38] added 3 months ago which is the straight
[44:40] of hor moves. When you combine all those
[44:42] together and inflation going higher and
[44:43] the Fed raising rates possibly, we might
[44:46] see a a a immediate shift in profit
[44:50] margin expectations.
[44:53] When we go and we take a look now at uh
[44:56] Jeff Bezos, uh Jamie Diamond, many of
[44:59] these people, they keep talking about
[45:00] taxes and I find it very interesting
[45:03] because uh there now seems to be a
[45:06] coming of, you know, the uh uh butdding
[45:08] of heads. It used to be that wealthy
[45:10] people really didn't talk that much
[45:12] about taxes, but they seem to become
[45:13] more outspoken. We had an idea that was
[45:16] proposed by Jeff Bezos this week, which
[45:18] was that the bottom 50% of Americans
[45:22] should not have to pay tax. And so they
[45:24] contributed about 3% of the federal
[45:26] budget. His point was if you make
[45:28] $70,000, if you're sending 10 or $12,000
[45:31] to Washington, one, that's an incredible
[45:33] amount of your of the money that you
[45:36] need to live. Uh it'd be very impactful
[45:38] if you didn't have to send it. But also,
[45:40] Washington's not exactly the best, most
[45:42] capital efficient, you know, kind of uh
[45:44] uh allocators. What I find interesting
[45:47] is I don't know what's going to happen
[45:49] on the tax front, but all of a sudden,
[45:52] again, it's getting back to this idea of
[45:54] like the federal budget, the federal
[45:57] spending is really the thing that I
[45:59] think these wealthy people are
[46:00] attacking.
[46:02] Will we get a change there or are you
[46:04] convinced that look, this thing is going
[46:05] to, you know, kind of explode higher?
[46:07] The national debt will continue to go
[46:08] up. government spending is only going to
[46:10] get worse and Doge, you know, didn't
[46:12] work to the degree that people wanted it
[46:14] to. And so, we just need to be all
[46:16] prepared for um you know, kind of more
[46:18] pain from uh from the government
[46:20] spending.
[46:23] >> So, let let's let's
[46:25] do it this way. Um, we haven't talked
[46:27] about this, but
[46:30] I remember um I listened to a podcast
[46:32] today with uh with Yan with John Vanek,
[46:36] who you've interviewed before and who
[46:38] you interviewed at one of the events
[46:40] that that I was on stage with you at,
[46:42] and it was the first time I I had seen
[46:44] him speak. Number one, he's very smart.
[46:46] Number two, he's very thoughtful. But
[46:48] you guys had a debate, and I hate to
[46:50] bring up something that that that you
[46:51] were wrong on, but I I'm I'm bringing it
[46:53] up more for a point. Um and this was on
[46:56] can we actually balance the budget and
[46:58] can we actually get and and he he
[47:01] basically was as direct as he said there
[47:03] is no chance that we can do that. Now
[47:07] his point as someone who I find very
[47:09] thoughtful on this is the clock is
[47:11] ticking every day. So whenever we see
[47:13] the debt clock that's one thing but the
[47:17] real issue is of the receipts that we
[47:20] get. So let's assume the stock market's
[47:22] booming, the economy is booming, and
[47:24] right now the receipts that the
[47:26] government gets are effectively
[47:27] equivalent to the entitlements plus the
[47:31] interest expense.
[47:33] So the entitlements, we're running into
[47:36] a shortfall soon, meaning we don't want
[47:38] to have the money to pay for it. We're
[47:39] going to have to refund things to
[47:41] actually go or go borrow the money. How
[47:43] are we going to go borrow more money
[47:44] when our rates are up? So, at some
[47:46] point, if someone has bad credit and
[47:48] they need to come to the market to
[47:50] borrow more money on their house, it's
[47:52] not the original mortgage rate. It's
[47:54] when you run out of income, it's really
[47:56] hard. The the government is in a very,
[47:58] very difficult situation. Everything is
[48:00] firing on cylinders. We're trying to
[48:02] basically inflate our way out of this
[48:05] problem from everything that I can see,
[48:06] which is why the Fed can't raise rates.
[48:09] But the issue that comes in as much as
[48:11] the tax like figuring out all these
[48:13] games, the entitlement thing just stares
[48:16] me in the face every single day. That is
[48:18] the pressure point that is growing. The
[48:20] entitlements grow every year because of
[48:22] demographics, because of the health of
[48:24] people of the country. And that reality
[48:26] is just coming and coming and coming.
[48:28] And so this is the point of when you
[48:30] look around Japan and you look around
[48:32] the UK, the similarity between Japan and
[48:35] the UK are these two little countries
[48:37] that are very important to the global
[48:38] environment and their 30-year bond
[48:40] yields are just going higher. And
[48:43] they've had issues inside both
[48:45] countries. And I think to pretend like
[48:47] that their issues are not going to be
[48:49] something that puts a spotlight on this
[48:51] situation, we can play whatever games we
[48:53] want with the tax thing. It's not going
[48:55] to fix the problem because the problem
[48:57] gets worse every year and now we have
[48:59] inflation. And if there's one thing that
[49:01] doesn't get talked about, and I heard
[49:04] Luke Groman talk about this, and I'm
[49:05] going to I'm going to show it in the
[49:06] video this week. What the Iran situation
[49:10] ended up doing was front-loading the
[49:13] inflation. And the problem is it's
[49:15] putting pressure on the bond yields.
[49:16] Pressure on the bond yields is leading
[49:18] to the dollar rallying. Like all of
[49:19] these things are happening. And now we
[49:20] have rate hikes. So Iran is a far far
[49:23] bigger situation for the long term when
[49:26] it gets back to the debt and deficit
[49:27] than I think people realize. And I don't
[49:29] want this to be some like doom and gloom
[49:31] thing because we just continue to print
[49:33] our way out and vote our way out. But I
[49:35] think you have to remember that the
[49:37] government is going to have to do
[49:38] something to keep yields in check and
[49:41] that means buying some that's very
[49:43] positive for the whole crypto thing and
[49:45] I think that's the endgame for all of
[49:46] this honestly for people that are
[49:48] watching since most of them are crypto.
[49:50] We go through this routine all the time.
[49:52] You need a crisis for Bitcoin to come
[49:54] out of it soaring and usually comes out
[49:56] of soaring whether it's COVID, whether
[49:58] it's 2022 when they stopped raising
[50:00] rates. I think we're getting closer to
[50:02] the government having to do something on
[50:03] the long end of the curve because all
[50:04] these pressures are growing and this
[50:06] debate over taxes. It means the
[50:08] municipalities are going to have an
[50:09] issue because people are going to keep
[50:10] moving to Florida or moving to Texas and
[50:12] that's what's happening for wealthy
[50:13] people.
[50:15] >> What um what else are you going to show
[50:16] in your video this week?
[50:18] I I'm going to talk I'm going to give a
[50:19] lot of again we we talk on this I don't
[50:22] show any slides we don't go through
[50:24] anything. So when people try to you know
[50:26] think about well what's different
[50:28] between what I talk about on the weekend
[50:31] you and I don't go through what I'm
[50:32] going to talk about and I've spent the
[50:34] week kind of going through with the
[50:36] facts behind what I talk about here. So
[50:38] if people wonder how does he have all
[50:40] this information in my head? Well, I'm
[50:42] doing a lot of work during the week just
[50:44] like you Anthony is to go through and
[50:46] and be able to talk about these things.
[50:48] We don't prep. We don't go through this,
[50:50] but the shaping of what we talk about is
[50:52] things that intersect. And I think the
[50:53] intersection for this week, guys, is as
[50:56] well as everything is doing. My thematic
[50:58] portfolio has had a huge run. Um, I will
[51:01] say for people who are interested,
[51:02] particularly on the RAIA and FA side,
[51:05] you should tune in because I am getting
[51:07] things listed uh not in an ETF for a
[51:10] variety of reasons, but Morgan Stanley
[51:12] and I are working on things to basically
[51:14] have an index that is trackable in at
[51:16] least Bloomberg, but it's very good for
[51:18] institutions who are looking to be more
[51:20] involved. And again, these are a hundred
[51:22] names that I think are going to survive
[51:23] whatever we're talking about here
[51:25] because the AI buildout is going to
[51:26] happen. the path between here and there
[51:29] I will talk about I think we're entering
[51:30] a different regime and as a trader as my
[51:34] father taught me when I would go when
[51:35] he'd teach me okay if you're going to
[51:37] the racetrack and you've got a certain
[51:39] amount of money uh you may only find
[51:41] three races where there's edge in it for
[51:43] you and those are the three you should
[51:45] bet don't be this person who bets on
[51:47] every race and believes that you have an
[51:49] edge in every race you want to find
[51:51] things where you've done your homework
[51:52] where you've done your analysis and then
[51:53] go through I think in the case of the
[51:55] memory market the DRAM market. If you're
[51:57] trading momentum right now, it is not
[52:00] completely collapsed, but I would have
[52:02] one eye open and be ready to kind of
[52:04] reduce your risk and already be taking
[52:06] cash. What I'm doing is rotating into
[52:08] stuff that might be a little early, but
[52:10] I think the downside is limited and the
[52:12] riskreward is shifted where I think I'm
[52:14] getting back into these good scenarios.
[52:16] So, I'm going to kind of teach people
[52:17] that I'll show them a little bit more on
[52:19] the thematic portfolio and I will get
[52:21] into a couple more names that maybe they
[52:22] haven't thought about. uh and this is in
[52:24] the IP side which have been left for
[52:26] dead names that are probably more
[52:28] important in the power situation but
[52:29] they're more defensive and so if we get
[52:31] in a situation that's less momentum
[52:33] you're probably going to see the
[52:34] defensive names start to outperform and
[52:36] that's the place that I would kind of
[52:37] hide my money for the near term
[52:39] >> makes uh makes complete sense to me I
[52:41] appreciate you doing this every single
[52:43] person here should go Jordy Visser on
[52:44] YouTube go hit subscribe go check out
[52:46] your substack I I think I'm like Jordy
[52:48] Visser president of your fan club that's
[52:50] what I've determined so uh everyone
[52:54] my man.
[52:54] >> Yeah, it's my job to go get uh you know,
[52:56] get more people to join the fan club. Uh
[52:58] but I appreciate you doing this and uh
[53:00] and next week we're going to be back in
[53:02] person, I think. Right.
[53:02] >> Back in person next week.
[53:05] >> All right, sounds good. We'll uh we'll
[53:06] talk soon. Okay.
[53:07] >> All right, bud. See you. Have a good
[53:09] one.