#1432 Adam Kobeissi | Bitcoin Is Going To Skyrocket After The Election

Adam Kobeissi is the founder of ‘The Kobeissi Letter.’ In this conversation, we break down the US economy, inflation, national debt, Warren Buffett stacking cash, why homes have become unaffordable, gold bitcoin, stocks, and where the market is going. ======================= The Pomp Podcast is powered by BetOnline.ag, the premier crypto-friendly place to gamble on politics and sports, casino, poker and horse racing. BetOnline.ag gives you the ability to use Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto transaction fees, and processing is instantaneous and secure. Visit ⁠⁠⁠⁠⁠⁠https://promotions.betonline.ag/pomp⁠⁠⁠⁠⁠⁠ and use PROMO CODE: POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline.ag is available in nearly every country around the world, making it the top global gaming destination for crypto users. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on guys? Today I have a very special treat for you. I have Adam Kobase. He is the founder of the Kobase Letter and one of my favorite follows online. In this conversation, we break down everything you need to know about the US economy, different assets, and where the market is going. That's right, Adam is here and we talk about everything

• 0:46Anthony Pompliano?

  from inflation, the national debt, why Warren Buffett is stacking $325 billion on his balance sheet, how come homes have become so unaffordable, what's going on with all the unrealized losses on the bank balance sheet, what he thinks about gold, Bitcoin, stocks, and much, much more. Adam brings tons of data, many, many unique insights, and I promise if you watch this entire episode, you are going to learn so much. So here is my conversation with Adam Kobase.

• 1:10Speaker 01

  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.

• 1:34Anthony Pompliano?

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• 2:20Anthony Pompliano?

  All right. So I thought the best place to start this conversation is with inflation. Inflation feels like the single most important thing for the average family in America. That's the pain point for them. They see everything around them getting more expensive. How do you think about the aggregate inflation that has been created since 2020 in America?

• 2:37Speaker 02

  It's been, it's been wild. If you, if you look at the data, if you had a dollar in your bank account in 2020, it's worth 75 cents today. The purchasing power is worth 75 cents. That's, you know, nearly unprecedented levels of inflation in modern times for the US. And what's crazy is we also have compounding inflation. So right now CPI is back down to 2.4% headline or core is at 3.3, but you're still building 2.4 and 3.3 on 25% from the last four years. So I think inflation is still a major problem. And that's why most people will tell you right now, most Americans will tell you, we are in a recession. Most, they truly believe we're in a recession, over 50% according to recent, recent polls.

• 3:22Speaker 02

  And it's, it's going to be a problem for the Fed going forward. I think that's why I was pretty critical of the 50 basis point rate cut they did. I think now they're trying to back, backtrack, and I'm sure we'll talk about it. But inflation is definitely still a problem that we're, we're dealing with here.

• 3:37Anthony Pompliano?

  So one of the things that I've railed on over and over and over again is this idea that like, once prices go up, they don't come back down, right? So people always look at like the inflation number is coming down, but prices are staying elevated. When you look at inflation, do you have concerns about the methodology, about the calculation, about various kind of, you know, math that is going into this?

• 3:56Speaker 02

  Well, the first thing you said is a key point. There, there's been this common misconception. I mean, not amongst investors, but amongst mainstream, that disinflation is deflation. They're completely different things. We still have rising prices, as you know, they're just rising at a slower pace. And if you look at actually certain categories, going down to the math and all that, certain categories of CPI inflation are actually way higher than 2% or 3% or even 4%. I mean, look at vehicle insurance. You've had like 17% inflation over the last year alone, just in vehicle insurance. That's something that has a material impact every single day on American Families, American people that makes inflation feel a lot higher than it really is. So I think certain categories are definitely starting to impact more food away from home inflations around 4%.

• 4:42Speaker 02

  Eating out is a luxury. It was a luxury. Now it's even more of a luxury. Even fast food is becoming unaffordable for a lot of people. That's something we've been talking about.

• 4:50Anthony Pompliano?

  Explain that. Why is fast food becoming?

• 4:52Speaker 02

  Well, because going to your point, so there's a concept of inflation being entrenched in society. And what does that mean? It's when you have inflation for so long that wages go up. And it makes it very difficult for prices to come back down, right? Because how would you lower prices if your input costs are up? And that's exactly what we've seen.

• 5:12Anthony Pompliano?

  You're saying if you're McDonald's and you're trying to run a business and you say, hey, I've got to pay my people more. And so I was paying them $15. Now I'm paying them $22. You can't bring the price on the menu down.

• 5:23Speaker 02

  Absolutely.

• 5:23Anthony Pompliano?

  Your input cost has gone up too much. And so you're stuck at higher prices on the menu.

• 5:27Speaker 02

  That's exactly right. And even the inputs of the actual food have gone up. And the thing is, you can't go tell your employees that, yeah, okay, the inflation rate's back down to 2%. Yep, we're bringing your wage from 22 to 17. No, that's not how it works. Once wages go up, even in 2008, when we had a period of deflation, you really didn't see wages go down. So it's, it's, it's, and that was something the Fed thought they could avoid for years. And in 2022, they're saying, you know, inflation is transitory. Inflation is transitory. We have, we're going to avoid entrenchment. And then now it's the exact opposite. Wages aren't going to go back down. Input costs are not going to go back down. And I actually think we're going to see above average inflation for a few years. I think the Fed's 2% target that is this golden level is, is going to be very hard to achieve, especially on a core basis for a sustained period of time.

• 6:12Anthony Pompliano?

  Do you think that 2% target means anything? Or do you think that they'll change it? Like, one of the things that we talked about for a while was like, do they just change it from two to three and claim victory and say, hey, now we're below our 3% target? And like, that ends up being good enough?

• 6:24Speaker 02

  I think they, they had the chance to do that for years and they made it clear they're not. I mean, every single Fed meeting, the speculation going into it was, will the Fed raise their target? Will they even raise it to 2.1 or 2.2? They're, they're not changing it. And it's like, it's kind of like the golden rule for economists, 2% inflation. I remember where it started. I think it was like some Australian economists back in the day. It was like, and, and all of a sudden everyone kind of stuck to that rule.

• 6:48Speaker 02

  I don't see them changing that.

• 6:49Anthony Pompliano?

  And so if we stay at elevated levels, I think that you see, you know, Paul Tudor Jones, Stanley Druckenmiller, many others talking about this kind of investment portfolio approach of going to gold, Bitcoin, even I was surprised that Paul Tudor Jones publicly said that he thinks the NASDAQ is being used as an inflation hedge. But just, they seem to be very convinced that inflation will be higher than that 2% target for the foreseeable future. And that's your view as well?

• 7:14Speaker 02

  I a hundred percent agree. I think, and, and just think about it, right? We have rate cuts. It's, it's, it's very strange. Like logically speaking, you have elevated inflation, but we're cutting rates at the fastest pace since 2008, other than the 2020 over zero, 0% rates overnight effectively. It's just weird. It's like you're, and, and we also have an economy that has maximum employment. The Fed said it, Jerome Powell literally said it himself. Even 4.5% unemployment is maximum employment by economic definition of under 5%. So it's like, we're cutting as if we're in a recession or something, but the data doesn't suggest we are. Everyone's saying we're on track for a soft landing.

• 7:54Speaker 02

  And inflation isn't at 2%, right? And it's, it's, you can say there's, they're lagging indicators is, but it's, it's just core inflation has been stubborn, stubborn. And I think we're going to see some more potential upside in inflation next year.

• 8:09Anthony Pompliano?

  And so because we got that 50 basis point rate cut, but inflation is not down to 2%, core is definitely not down there. Actually, core is 50% plus higher than their target and they're cutting.

• 8:22Anthony Pompliano?

  Why do you think they did 50 basis points?

• 8:24Speaker 02

  That's the, that's the mystery. I, I, I really think the Fed looked at what happened. Okay, there's two camps. There's obviously the whole political camp, which I'm not necessarily in that camp that, you know, Biden's telling him to cut rates 50. And I think, I really think Powell has tried to operate as independently as possible. Is there political pressure or 100%? Could they have been a part of this? 100%. But I think the Fed at a deeper level, they looked at everything that happened since 2020 and they've always been late. So when they cut rates in March 2020, they, I mean, I guess you couldn't have been early on that because no one really knew what was happening. But they effectively had to, were playing catch up for a year. And then, once they started raising rates, you know, it went from inflation's transitory to 10% inflation.

• 9:07Speaker 02

  And then they were behind April. So I think now they're saying, look, we, the, the Fed's greatest asset is not interest rates or, or QE or any of that. It's credibility, right? The, the market moves and what the Fed says. And I think they looked at what happened over the last few years and said, we don't want to lose our credibility or whatever credibility we have remaining. And the only thing that will really make us lose our credibility is moving late again. I argue differently. I think what would really make them lose credibility is inflation comes back yet again. And I do think it's going to come back. And I guess we'll see how that goes.

• 9:38Anthony Pompliano?

  Do you think that Jerome Powell will still be around to deal with if inflation comes back? Or is he kind of saying to himself, hey, look, let me just get out of here with as close to a soft landing as possible. My reputation is pristine. People say, hey, he's the guy who, you know, clamped down on the inflation, got us back around 2%. See you later.

• 9:56Speaker 02

  I don't know. It's, it's, it's tough because he's also playing the political game if he's going to be around or not. So I, I, I think, and I wouldn't even say his reputation is pristine necessarily. I think he's in.

• 10:05Anthony Pompliano?

  I was being generous.

• 10:07Speaker 02

  I, I, and look, I completely acknowledge he's had an incredibly difficult job. I, I, it's, it's very hard to say if I was in his shoes, I would have done something vastly different than him in 2020, for example. No one knew what was happening. I mean, people were going out wearing gloves and, and putting, leaving the groceries in the garage for 20 minutes before they came in to let the COVID wear off. So it's like, it was, it was unprecedented time. So I acknowledge that. But I, I think, uh, maybe, maybe that is what he's thinking. He's thinking, you know what? We'll leave on a high note and we'll keep unemployment low. We'll, we'll, stocks keep going up because we're pivoting. Uh, but I don't think that's necessarily his primary driver.

• 10:42Anthony Pompliano?

  So one of the things I've started to pay a lot of attention to, um, which is hilarious because I was not a very good student in like high school. Is the way the Bureau of Labor Statistics calculates a lot of these different metrics and obviously inflation being the big one, but jobs and many others. And so, you know, I've talked about it before. But like this idea that inflation is calculated by sending physical people into physical grocery stores with tablets and saying like, make sure you go find the exact baked beans with low sodium, no salt, whatever. And then physically input the number into the tablet and just do that over and over and over again. That alone seems insane and like, hey, we should just have real time data points. Like, you know, there's online grocery stores that'll just tell

• 11:23Anthony Pompliano?

  what the price is. But, okay, fine, that's how we collect the data. The thing that seems to be maybe the most egregious, in my opinion, is this whole idea of substitution. And so if something goes up too much in the basket of goods, there's like, ah, people stop buying, you know, that baked beans and instead they'll buy corn, or whatever. Like, how do you look at some of these nuances of, again, you know, each one we could kind of laugh about and point to, but it does feel like the overall way that data is collected, the methodology that's used, the calculation of inflation, it just seems like there's a lot left to be desired there.

• 11:55Speaker 02

  Hundred percent. And that goes back to what I was saying with certain categories that have much higher inflation than than the headline numbers. And those categories have a much bigger impact. But then, and then you also get the, you know, on top of that, you get the people that say, yeah, you know what, the battle against inflation is over, you know, headline inflation minus housing and auto and this and that. And it's like, what's left? Like,

• 12:18Anthony Pompliano?

  Oh, it's inflation minus everything you need.

• 12:20Speaker 02

  Exactly. It's kind of the same exact thing. It's like, everyone has their own core, super core, whatever you want to call it, inflation. But, um, look, what you're saying is exactly right. And the best indicator of inflation is the sentiment of the general public, I think. I mean, just look at, every time you go to the grocery store, or you turn on the TV and it's on the news, there's something about someone talking about higher prices, or they can't afford to pay their rent, or they can't afford this or that. That's the best indicator. I mean, the data can be golden, but if the people are struggling, I think that's what matters. And the only thing that inflation has done is widen that wealth divide, right? The rich have gotten much richer, the poor have gotten much poorer, and everyone else in the middle kind of had to gravitate

• 13:02Speaker 02

  towards one or the other. Most of them gravitate towards the bottom end, because that's just the way it was. And I really think that all started with that $4 trillion of stimulus that was printed, handed out. I remember going to like, just my local mall, for example, in 2021 or 2020, late, late 2020, and people were just lined up outside the Gucci store, the Louis Vuitton store. I mean, I'm talking like a line, like, Like you're at Joe's Pizza on Broadway, like that long of a line. I'm like, all right, something, something's got us. I mean, someone's got to pay for this here. And look, inflation is, I always say this, the biggest involuntary tax in history. You're effectively handing out money that everyone feels like they got free money, but then they have to pay for it now

• 13:46Speaker 02

  for the next 10, 20 years, however long it takes for wages to catch up to inflation. And guess who's also paying for it? The federal government through net interest expense on federal debt, which is also skyrocketing.

• 13:58Anthony Pompliano?

  I have a story that I've never told publicly, but was my like warning bell that we were in really bad trouble, which is, I can't remember if it was the end of 2020 or beginning of 2021, but my wife and I went to Puerto Rico and there was a friend that was down there. We were going to go, I had a meeting that I was going to, and then we were going to spend a couple of days. And I remember we got on the plane and we arrive and when we got there, there was a ton of people who are very confused. And I remember looking around like, you know, uh, okay. So they're not from Puerto Rico. They've obviously never been here before, right? These are like first time tourists. And so I just didn't think anything of it, whatever. What about my day?

• 14:40Anthony Pompliano?

  Went, go to the hotel. Hotel, I've said it a number of different times there. And the concierge made a comment about like the explosion of tourists. Well, okay, fine. Again, didn't really think anything of it. It was like the first or second night, go out to, to dinner, go to a restaurant and we're walking around and I wanted a pack of gum, right? And I just, whatever, I want a pack of gum. So we go into like, you know, whatever it was a CVS, Duane Rea, whatever the store was. And there was a line of people who were buying, you know, just basically cheap beer, cheap alcohol, uh, getting all kinds of snacks, like whatever they were all getting. And I

• 15:18Anthony Pompliano?

  remember standing there and the guy next to me who had on a ton of fake designer clothes, his chain, like the whole thing. And he asked the cashier, do you take the EBT cards?

• 15:34Speaker 02

  Oh my God.

• 15:35Anthony Pompliano?

  And I remember just like, it was like so like perplexing to me, right? It's like, okay, we're in Puerto Rico. He's buying a bunch of stuff. He's got all the fake, you know, uh, kind of clothes and jewelry, whatever. And then he asked about the EBT card. And so I remember it was like, just so like groundbreaking to me of like, holy shit.

• 15:53Speaker 02

  Yeah.

• 15:55Anthony Pompliano?

  Went out, whatever, go back at night and I started like, you know, I'm on a computer right in my life. What the hell is going on? Right? And, uh, and I joked that like, it was like my own personal, like big short moment. Remember when they're like, you know, like researching, like something's going on. I was like, holy shit. And so, um, then I go downstairs, you know, in the morning and I ask, you know, the hotel people, I'm like, is there like a lot more people coming here? What if like, there's a ton of people. And so like, what eventually ends up happening is the airlines were offering like $70 flights from places like Houston or Atlanta, or like, like these major airports, because just nobody was on the plane at first. So they drop all the prices. So now all of a sudden it's dirt cheap. The hotels had no tourists. So what do they do? They drop all the prices. So now it's like, you can basically go to Puerto

• 16:37Anthony Pompliano?

  Rico for a week and it's like, you know, a thousand bucks. So naturally, a ton of people who otherwise wouldn't go, they're ready to go. Makes complete sense and good for them, right? They should be able to do that. But then how are they at? Like, how are they spending money? What are they doing? Everything? And it was a ton of stimulus checks, like all this stuff. And so, uh, coming back from that trip, I was just like, I actually probably underestimated. I thought that it was gonna be much shorter impact. I was like, this is crazy. But it's gonna be crazy. Like, how much can $1,200? What was that, 30 days?

• 17:06Speaker 02

  The, the world was free back then. Like, for, for, for a couple of months. Like, I remember, I even had to come to New York at one point for, for work. Uh, I was flying in and out of New York and it was like 90 bucks, like you said, for a flight. I'm like, and it was like free upgrade to first class every time. You get the whole row in first class too. Like, like both sides of the plane. Like, it's not even, and then, uh, even I've had to fill gas, it was like 99 cents. I'm like, I mean, this is great right now, but there's no way we're not gonna pay for this in the future. And that's, and that's exactly when I started saying inflation's not transitory. Sometimes to, to make a, an investment or a prediction in the market, it's not that complicated. Just look around you sometimes. And, and that's, that's like you said, that, that you walked in that Duane Reade or whoever it was. And that's what I had to call like the top indicator. Like,

• 17:49Anthony Pompliano?

  Dude, it was, it was one of those moments where I just literally, and I was like, like hitting my wife on the leg. Like, do you see? Like, this is the, this is the end result of like this stupidity that is going on. And of course, she's like, what? I don't, you know, she, she's like completely oblivious. So we go back and, I was just like, wow, but it didn't last for only 30 days or even 90 days. Like, obviously, inflation went to over 9% and we had this huge issue. One of the areas where I think that we've really seen this show up is in home affordability. Where, you know, I think some of the numbers in like 2016, the US median home was like 280,000. In 2024 is like 430,000.

• 18:26Anthony Pompliano?

  How do families keep up?

• 18:28Speaker 02

  It's insane. If you look at, we put out a tweet about this recently. If you look at home price appreciation versus wage growth since 2020. It's been double. Home prices doubled wage growth. So that's one thing itself.

• 18:43Anthony Pompliano?

  And is the way to think about that, it is twice as hard for someone to be able to buy a home?

• 18:48Speaker 02

  Yeah, actually more because all interest rates have almost tripled, right? So you actually have two factors. You have, you know, obviously the income that you have that you make. But also how expensive is it to finance that house? And then it went from a 2.5% rate to 7 to 8% rate and.

• 19:02Anthony Pompliano?

  So basically, the price of the home, the aggregate money that you need went up. And then the cost of the money you need to borrow goes up.

• 19:08Speaker 02

  Exactly.

• 19:08Anthony Pompliano?

  And your wages don't nearly keep up. And so maybe it's three or four times more expensive.

• 19:12Speaker 02

  And guess what went up? Your home insurance went up and your maintenance went up. And you're, you're cutting your grass. Everything went up. So now, I think the average homeowner is for the first time paying almost 3,000. Sorry, home buyers paying almost 3,000 per month to buy a median priced home in the US. Just between mortgage and taxes and insurance. Do the math on that. You're, you know, you're about $36,000 a year. Well, what's the median income? 80,000 for a household? So on a post-tax basis, you're paying over 50% of your income just on a home payment. What about, you know, you have two, three kids, you have cars, you have, you gotta feed your family. You have, I mean, at this point, it's like homeownership is the ultimate luxury. It's no longer even part of the quote unquote, American dream.

• 19:56Speaker 02

  Even renting too, by the way, people are paying over 2,000 a month in rent on average now. So home affordability is, is abysmal right now. And, and really what's causing that is, well, number one, obviously inputs went up. Lumber and everything that it takes to, to build a home. But what about, you know? There's so many inputs that have gone into it, but I think one of the biggest thing is existing home sales are at 2010 levels right now because you have, and it's not even the individuals, because you do have a lot of individuals that have a 2.5% mortgage rate and they don't want to move because you can't transfer your mortgage and you have to get a new mortgage and you have

• 20:36Speaker 02

  to pay 8%. That's one thing, but also you have so much investment activity that happened in the residential sector especially. I mean, investors were buying single-family homes like it was candy back in 2021, 2022, when rates were low because your cap rate was so high. Think about it, your finance, there was a point when mortgage rates were like a third of CPI inflation. I mean, it was like almost arbitrage to take a loan. You're borrowing money at 2%, but it's depreciating at nine. It's like, it's free money, right? So that kind of led to, since the first, for the first time since oh five right now, existing home prices are actually higher than new home prices. Like that's the definition of broken. Think about, think about you go to buy

• 21:19Speaker 02

  a new phone or something and like, yep, the used one is actually more than the new one. It just doesn't make any sense. That's how we are in the housing market right now. And it's hard to see, like it's, we're not in a 2008 situation. It's hard to see like a major crash happen. I mean, the question I get all the time is what's going to, what's it going to take for lower prices and how in the home market? Well, you need some sort of external event that forces supply into the market because it's not a demand. It's, demand is at 1995 levels right now, mortgage demand. I mean, no one's buying. Call your local mortgage banker or your local real estate and I guarantee they'll tell you they don't, they're not even closing a deal. But the problem is, even if they close one deal and there's only, you know, if they close two deals and there's

• 22:03Speaker 02

  one house for sale, then it's still very competitive to get that one house. And we need supply to return for lower prices. That's either going to take a spike in unemployment to cause foreclosures or some sort of external event that rushes supply into the market. I'm not really seeing that happen right now, especially with rate cuts on the way.

• 22:19Anthony Pompliano?

  So I saw a data point that said it's a new all time high. Forty two percent of Americans have no mortgage on their home. And I thought, wow, we're so fiscally responsible. Look at how great we've all been in paying all this off. And then, as the internet is great at doing, somebody said, no idiot, it's because the boomers have been in their homes for more than 30 years. And so they've just been paying it off. And now finally, a huge portion of the population has paid off their mortgages. And so that number going up is really just an aging population more than anything else.

• 22:48Speaker 02

  A hundred percent. And not only is that the aging population is paid off, but the younger population is now buying because they can't afford it. So it's happening on both ends of the spectrum. And I mean, like you said, that's, it sounds like, at first, at first sight, that sounds like the best possible thing. You know, everyone owns a home. It's, the grass is greener and we're good to go. But that's really not what it is. I think it's a tough time to be a millennial, right? I mean, millennials are even, even trying to find jobs now is becoming difficult with the labor market weakening. It's, it's, it's a tough time. Affordability is, is bad all around the board right now. And it's not improving.

• 23:22Anthony Pompliano?

  And how much of the affordability is the inflation and the devaluation of the currency, combined with the fact that millennials are all trying to save rather than invest?

• 23:33Speaker 02

  Yeah.

• 23:34Anthony Pompliano?

  Like, one of the things I always say is, and you hinted at it earlier, that, you know, inflation made the rich richer. Not because there's some evil billionaires that, you know, are sitting behind some cloaked, you know, door or something. And they're like, hey, here's the way we're going to get rich. They just have investments and the investments go up in an inflationary environment. People who hold cash go down. And so it does feel like, maybe more so than other generations, they were told, save.

• 23:59Speaker 02

  Right.

• 24:00Anthony Pompliano?

  Save your way to financial security, but actually, they should be investing instead.

• 24:03Speaker 02

  Exactly. Well, what you said is right. Even, and it doesn't mean you don't have to be that rich necessarily to hedge against inflation. Like, if you just own a house, if you owned a home 10 years ago, 20 years ago, that house is hedging against inflation because you can always, if you want to move, you can sell that house and buy another house. And they both theoretically appreciated. When you don't have any hard assets other than cash in your bank account, and even then, that's kind of questionable these days for most, for a lot of people. You're, you're being left behind in an environment like this. And that's exactly what's happening. And also, even look at the market, right? Like, the stock market has seen incredible appreciation. We're talking about an S and P that's nearing 6,000. Like, I was looking at some clips of me on, you know, just like on CNBC or whatever, a couple of years ago. And it was like, S and P 3200. I'm like,

• 24:46Speaker 02

  I thought that was like 2010 or something, but it was like two years ago, three years ago, not even that long ago. So, um, and like you said, it's the rich people that are invested in these assets, not the people that are trying to, you know, build their life and have recently entered the workforce. It's, it's tough. I don't really even know what the solution is because you're entering a situation where you're behind the eight ball. Um, and, and also there's been talk of new home buyer credits and, you know, mortgages are being subsidized by the government. Keep in mind, all that stuff is effectively a form of stimulus, right? There's no such thing as free lunch. You can't hand out free money. You can't hand out 0% loans and expect no one to pay for it. Someone pays for everything and the fight, the way to fight inflation is not necessarily more inflation.

• 25:28Anthony Pompliano?

  Well, it's like the, uh, I see these programs. So like, hey, we want to help first time home buyers. And so we're going to give them $25,000 for the down payment.

• 25:35Speaker 02

  Right.

• 25:35Anthony Pompliano?

  But you're like, okay, so every home price is going to go up $25,000.

• 25:37Speaker 02

  Exactly. That's it. That's how it goes. The cost is always passed down. It's never just someone says, yeah, they go to my heart. I'm giving you this money and it's not going to have an impact.

• 25:45Anthony Pompliano?

  So, um, you and your team have been very bullish on stocks throughout, uh, this year. You have been calling for S and P 6000, um, and you have largely been right. How much of that is just like higher inflation environment stocks go up versus like an, uh, analyzing earnings or specific companies in the S and P like, like kind of walk us through your thesis as to why you've been such a bull in stocks?

• 26:08Speaker 02

  So, um, one of the first things, so, so our, our strat, investment strategy that we try and kind of, you know, provide for our clients and, and our people that read our work is to always kind of get ahead of the trend through two key variables. One is the fundamental side of things and two is the technical side of things. When we, when I first started the cobase ladder, it was around 10 years ago. Technical analysis was viewed as like some witchcraft. Like if you're putting lines on a chart, everyone's like, what are you, what are you doing?

• 26:35Anthony Pompliano?

  Astrology for men.

• 26:37Speaker 02

  Exactly. Uh, but then I realized that market volume became increasingly automated. Actually more than half of all trades in the market today are placed by an algorithm. And a lot of those algorithms, we're trading off these technical levels. So in a way, technical analysis, it's like, it's power in numbers, right? More people that follow a certain level, the more strength that level will have. So one thing that we were noticed going into 2024 was we were in a textbook tech technical uptrend, starting from the October 27th, I believe, of 2023 is when the market bottomed. And everyone was calling for, you know, it's a dead cat bounce and we're going, S and P is going to 2,000 or whatever, you, you name it, it was going to it. But I said, you know what? I, I like this technical setup and I think if you get ahead of a trend right now and, and a, and a market

• 27:20Speaker 02

  that has a lot of money on the sidelines, a lot of people looking for bargains and especially type, the tech sector was down massive. I mean, Nvidia was down like 70% at that time. Just think about that for a second. And Meta was trading like $80 back then. I was like, these stocks are bargains. I mean, at, at some point, there's too much, there's too much fear in the market. So that was one. Two, there was this whole notion that we're going to an election year and it's, I, I've been, I've literally been screaming this on Twitter and on every show I go on. Election years are good for the stock market. People don't realize this. I, so that was something that we did a lot of research going into 2023. If you look at the last 23 election years dating back to the 1920s,

• 28:02Speaker 02

  83% of those election years ended with a positive return to S and P 500. That's incredible. If you think, if you only invested in election years for the last hundred years, you're doing great. I mean, you're not necessarily outperforming that benchmark, but you're, you're doing fantastic. And, and then there was a whole narrative of, well, you know, if Trump wins, then it's going to be great. If, if the Democrats win, whoever it was, Biden and Kamala at the time, then it's going to crash. The market's going to crash. Well, if you look at the data, actually, in both cases, the market ends higher on average. In the case of Republican wins, it's around 15% average annual turn. In the case that the Democrats win, it's around 10. But either way, I was like, that's pretty good. And then the, on the, on the fundamental side of things, I knew that the, this Fed pivot euphoria.

• 28:44Speaker 02

  So I think the point when I realized that this Fed pivot thing was going to just keep driving stocks higher. It was December 2023 and it was the strangest thing. Jerome Powell like completely changed his tone. It was like two weeks before he said, we're not even talking about rate cuts and nothing like it, it was a CNBC article. And then literally two weeks later, he's like, uh, yeah, we're looking at least three rate cuts. Be more sorry, maybe in starting in January. At one point, there was eight rate cuts priced in. It was like wild and I said, yeah, when the market is this euphoric about the Fed cutting interest rates, we're not going to get bearish.

• 29:18Anthony Pompliano?

  Well, because people aren't going to wait for them to cut and then invest and then wait for the cuts.

• 29:23Speaker 02

  That's exactly right. And you're seeing it right now. The same thing is happening right now. So, and then there, at the same time, you had every headline in the world, every headwind in the world, sorry, that could have brought stocks lower from wars to people saying earnings were going to decline to, you know, national, the US debt, every, you name it, it was there, but nothing was, was impacting the market. So we, we saw, we made the thesis that risk appetite right now, I think risk appetite right now is just about as strong as ever been in, in modern US history and for the market. And that's something that's not worth fighting. You have higher highs, higher lows, strong technical uptrend. You have a market that's literally looking for any reason to rally. We were up, we're up 40% over the last 12 months.

• 30:06Speaker 02

  If you look at, and I know I'm just like spewing data here, but that's how I kind of think. If you look at every annual gain from, you know, like annualized on a fiscal year basis. The last time we had a 40% year was in the 1950s, 1954, I think it was. We don't have a 40% year necessarily, we have 40% LTM. That's insane. Like that's, when you have that kind of euphoria, obviously people are going to call it a bubble, but at the same time, you can make a lot of money in bubbles, even if it is a bubble.

• 30:36Anthony Pompliano?

  Well, here's, here's the thing that I

• 30:37Speaker 02

  I'm afraid to miss it. That's what I thought.

• 30:39Anthony Pompliano?

  Yeah. Well, and here's the part that I think people don't realize. There's two things that I think have structurally changed in the stock market, which people who want to sound smart don't like, or at least don't acknowledge. The first is the historical valuations of stocks did not take into account the need for investors to go and buy stocks as an inflation hedge.

• 31:00Speaker 02

  Absolutely.

• 31:01Anthony Pompliano?

  So there is some sort of monetary premium that's assigned to stocks today. I don't know if it's 1% or 10%, but there is some percent of you're going to have higher valuations because you don't just have people buying based on the valuation. You also have people who just say, I need to get out of dollars. And so I got to go into these assets. And so naturally you get that lift. The second thing that just blew my mind was I was pointing the P E ratio. The P E ratio's doubled. Oh my God, it's so high, whatever.

• 31:25Anthony Pompliano?

  The businesses are more profitable.

• 31:26Speaker 02

  Absolutely.

• 31:27Anthony Pompliano?

  The efficiency of the business has doubled as well.

• 31:30Speaker 02

  Look at Nvidia. Nvidia has gotten cheaper as it's gone up. It's like the

• 31:33Anthony Pompliano?

  So explain why Nvidia is cheaper as it's actually

• 31:36Speaker 02

  So the, it's, it's, that's like, it's, it's crazy that people miss this, but it's, it's Nvidia's earnings, their, their EPS and net income, even revenue, every, basically every metric they have has actually outpaced appreciation of their stock price. So the multiples have actually gone down or stayed pretty flat. I think Ford PE is like 35 or in 30s at this point.

• 31:58Anthony Pompliano?

  And it was higher, I think, in 2021.

• 32:00Speaker 02

  It was higher when the stock was like a, you know, pre-split at like $200. So, and then you talk about people saying, oh, it's a Cisco or it's the Intel, the 90s and 2000 bubble. I mean, could it be a bubble? Yeah, absolutely. I'm never going to say there's no chance that a stock that's up 500,000% over whatever amount of time is not, couldn't be a bubble. Yeah. But at the same time, it's not the same situation. It's, it's a different time. And I think it's, the AI trend is also a real thing, whether, whether people want to believe it or not. I mean, that's where investment is going. That's where capex is going. And going back to your point about US stocks too, not only is it an inflation hedge, but it's actually become a safe haven trade globally speaking. So you've seen like, yeah, this is something we've put out a lot on Twitter too,

• 32:43Speaker 02

  is you've seen a lot of global record inflows into US stocks over the last year or so. And it's not even necessarily because everyone's so excited about US stocks, just because they're, they're a lot less excited about everything else. I mean, look at China. China alone is, they have five, six quarters of deflation in a row, first time since the 90s that's happened. Europe's had a lot of volatility, especially with, you know, the war in Ukraine going on has disrupted a lot of supply chains there, has prompted much higher inflation than the US for a period of time. And I think US stocks have become effectively a safe haven trade, along with gold, which I think, which I've said is now the new global safe haven trade, but stocks have become inflation hedge, safe haven trade, risky trade, tech trade, and everything else in between, all in one. It's

• 33:27Speaker 02

  like the complete package. And that's how markets are viewing it. And also, if you look at, think about it from an institutional side of things, if you're a fund manager, or you're, or you're wealth manager, or anything that's really public side related, you can't afford to miss a rally when the market goes up 40% 12 months, right? So those people are saying, I'm just going to keep riding the trend too. I'm going to keep reinvesting money into the market, reinvesting my dividends. And when the trend shifts, then we'll get bearish. And that's exactly what our review has been. And I do think we see 6,000 by year end. And I'm sticking by that call.

• 33:56Anthony Pompliano?

  So the other thing is, are you playing for the short term? Are you playing for the long term? Right? If you said to me, will stocks be higher in 20 years?

• 34:05Speaker 02

  Yeah.

• 34:07Anthony Pompliano?

  There's literally not a single thing you're going to tell me as of right now, based on all the data that I've seen that is going to convince me that there's a 10% chance that they are not higher in 20 years. Right? I mean, it is just structurally, you're going to devalue the dollar. Dog is devalued. The stocks are priced in dollars. We're going high.

• 34:23Speaker 02

  If you're, if you're telling me stocks are lower in 20 years, US stocks, and you're basically saying that the US will have collapsed in 20 years. That's what you're calling for. And in every other situation, stocks should be higher.

• 34:33Anthony Pompliano?

  And I would even argue, even if the US collapsed, stocks are still going to be higher because like Venezuela's stock market or Argentina's stock market is usually the best form of stock market. Right? Because hyperinflation inflates all the stock prices.

• 34:43Speaker 02

  Right.

• 34:43Anthony Pompliano?

  Now, can you get out? There's a bunch of, you know, kind of caveats to it, right? But the reason why I use 20 years is because it's such an egregious amount of time in most people's mind that stocks are going higher. That is the trend. That has been the trend for 100 plus years. It's going to be the trend for the next 100 plus years. What I think a lot of people start to think to themselves is like, well, what about next month or next year? And my position is always, well, if you think long term or you're invested long term, younger especially, who cares?

• 35:12Speaker 02

  Right.

• 35:12Anthony Pompliano?

  Just buy it when it's cheaper, right? Like, don't sell to then hope that there's some drop. Instead, just go find more cash to put into the market.

• 35:19Speaker 02

  What I always say is if you're, if you have time in the market, you want bear markets because you get bargains. Like, imagine you can go buy Nvidia right now for $50 a share and then, oh, that's great. Hold it for five years, it'll be back to 200 or whatever. Long-term investors should warrant pullbacks and they should capitalize on them. Short-term investors should obviously be more cognizant of what's, what's happening. And I think, as you're saying, if you're long-term oriented, don't even be, don't even check your account every, every day, right? Maybe check every month just to see how it's doing. But you don't, it's if long-term oriented, the US is, if you scroll On the chart, S and P 500, we're in an internal bull market. Even if he bought at the top before 2008, the worst recession in U.S.

• 35:59Speaker 02

  history, other than the Great Depression, you're still up hundreds of percents in S and P 500 alone since that time.

• 36:06Anthony Pompliano?

  You mentioned that gold is the global safe haven trade. Explain kind of how you guys think about.

• 36:11Speaker 02

  Yeah, so this is something else. So we got ahead of this gold rally and over the last few months, kind of just started saying, well, this is interesting. You have a market where gold doesn't necessarily perform that well as it's been, but it's been incredibly hot. And not only that, over the last two months or a month and a half, bonds have crashed. The 10 year note yield is at 4.3% and gold is still at now at 2800, pushing even higher. People are calling for 3000. We could, we could definitely see it. It's interesting. You have this massive divergence between gold and bonds. So for, if you ask any person that's been in the market for the last 20 years or 30 years, it was always, yeah, in times of uncertainty, people buy gold, they buy bonds. That's it. Simple and maybe utilities.

• 36:56Speaker 02

  Now, no one wants to buy bonds because they don't know what the, what the Fed's going to do. They, for all we know, we could have rate hikes coming back. I mean, we had 50 basis point rate cuts priced in a month ago. And now there's the, the odds of no cuts are being priced in. It's like no one wants exposure to that kind of volatility. So they're selling bonds and then you have geopolitical tensions everywhere. You have inflation. You have a lot of uncertainty and then you have central banks buying thousands of tons of physical gold while calling for a soft landing. So it's like this, this whole storm, it's like everybody is stocking up on gold, including the banks that themselves say we're not going into recession and it's rising with every reason to fall.

• 37:41Speaker 02

  Even the U.S. dollar, by the way, the U.S. dollar index, the DXY is up like 5% over the last two months or so, and gold is still rising. It's insane. If you put a chart with gold, bonds and, and the dollar, it's like gold is.

• 37:56Speaker 02

  Said, you know what? Have a good day. I'm going on my own path. Like it's crazy. So that it's clear that people are flowing into gold and investment continues to flow into there regardless of what's happening. And it's really is the safe haven trade. And I think there's just so much demand for the for the shiny metal that at this point, it's not, it's Do you think it's a psychological change? Like people have psychologically said, hey, bonds are not safe anymore. I need gold. I really, yeah, it could, it could be. And I also think with rates, you know, now that they even did a 50 basis point rate cut, now you're getting 50 basis points less on treasury bonds and treasury bills and all of all even high yield savings accounts are paying less. So now that gap between gold, that's a zero yielding asset and a bond that's obviously

• 38:37Speaker 02

  not zero yielding is narrowing. So that's even proliferating a little bit more. And I do think it is, people are saying, you know what? Let's stick to the basics right now. Let's get back into the things that are have more certainty and are less correlated with government, less correlated with, you know, you one specific currency, more as a global currency and gold at the top of that list. And what else is at the top of that list? Bitcoin. Gold and Bitcoin are not substitutes. They they can both rise together and we've seen that happen. Do you look at it as they're going to directionally trade together, gold and Bitcoin? I think so. I think they'll, I think Bitcoin different difference from gold a little bit in that it is more correlated to risk appetite, whereas gold is a little bit more

• 39:21Speaker 02

  inversely correlated. And then we've seen Bitcoin actually perform well in a market where where the S and P is rising, where risky assets are rising, a lot of it because Bitcoin is a risky asset. But I also think that you're compensated for that risk. I mean, look at the returns in Bitcoin compared to gold. It's not even, doesn't even, doesn't even make a dent in the chart if you if you put them together. But at the same time, they both have that aspect of being sheltered from government, sheltered from one specific currency, their inflationary hedges, their finite in a way, I guess.

• 39:55Speaker 02

  The interesting is, interesting is, gold has a market cap that's 20 times that of Bitcoins. Like Bitcoin is so big, but so small at the same exact time right now. And

• 40:05Anthony Pompliano?

  Do you think those converge, those two market caps?

• 40:07Speaker 02

  I absolutely think that gap closes. And I think most people don't realize that. It's you always look at something that's up like 50,000% or whatever it is and say, oh yeah, it's huge now. I can't get in. But then you look at when it goes up another 20,000% and you say, oh, it was actually small back then, but now it's huge. And then it goes up again. So it's huge and small is relative. And I think gold on a, when you look at assets that are shielded against inflation and governments and centralization, Bitcoin is actually still pretty small, which is, which is funny. And we've been calling for 100K Bitcoin. We'll probably see a million Bitcoin at one, at some point in my life, especially with inflation. So I, I really do think both assets can rise simultaneously.

• 40:48Anthony Pompliano?

  So when I first started looking at Bitcoin and gold, I think I had two different things. And one of them I changed my mind on. One was gold and Bitcoin would have this flipping, gold's market cap would expand over, or I'm sorry, Bitcoin's market cap would expand over gold. My thought process was gold would be demonetized. And so you'd see that market cap shrink. Bitcoins would continue to expand and you would get some cross. I think at the time, gold was like 10, 11 trillion dollars and Bitcoin was like, you know, 600 billion, 700 billion. I've changed my mind now because the data basically says, hold on, gold's going to keep going up. Just Bitcoin's going to go up faster, right? And so they probably do cross at some point, but it may take longer. It's going to be at a much higher level. And so gold investors are

• 41:30Anthony Pompliano?

  going to do just as well as, I think they've thought that they're going to do. But the second thing that I find very interesting is that there seems to be a demographic difference in terms of, most young people I talk to, they don't own gold and they're buying Bitcoin. Most of the older guys that I talk to, they own a lot of gold and they're starting to kind of dip their toe with the Bitcoin. But the institutions are all run by older guys, right? It feels like that changes over the next, you know, 20, 30 years, obviously, right? And so how do you look at the relationship between these two assets, you know, 10, 15, Twenty years from now, do you think people still try to hold both? Or is there capital that would go into gold historically, but will kind of get siphoned off into Bitcoin?

• 42:11Speaker 02

  You know, what's funny on a side note is every time I go on, I go on Charles Payne's show on Fox. I'm like the only person there that's like, that's young and bullish of gold. And he's always like, yeah, the youngest gold bull of all time. He's always making fun of me. I'm like, but I love Charles. He's great. But I think it's interesting. Definitely institutional investors are probably, retail is a lot less likely to go buy gold. Like some guy buying Bitcoin in his Robin Hood account or whatever is, is going to be more prone to buying a risky asset or something like crypto or Ethereum or you name it than just going to buy a spot gold ETF.

• 42:46Speaker 02

  At the same time, I think that, that, that can change, like you said, especially as the young people start getting into the institutional side of things. And also the only, the other thing that's changing is regulation. I think we've like five years ago, everything was pointing towards the government striking down Bitcoin. Now it's, it's, it's actually become a part of the campaign trail, like, you know, candidates are speaking at Bitcoin conferences and, and, and criticizing, you know, people who are, who are not accepted, accepting the technology and the, the change that it's bringing. So I think attitude and generally speaking is changing. And I even think the older investors are starting to view it. And what, what drives an institutional investor more than anything, it doesn't matter if it's purple, green, gold, you name it, it's returns.

• 43:31Speaker 02

  If it has, if something has good returns as a money manager, you can't ignore it. That's the reality. And I think, like you said, I mean, gold itself is not going to be some crazy performing asset that makes thousands of percents every five years, in my view. It's, it's, it might not even outperform the S and P 500. I think it will keep rising. But I think Bitcoin is going to significantly outperform gold and it has, and it will, and it will continue to do so, especially as we break out higher and more capital flows into it. And then times, and as we go into more economic uncertainty, times with maybe more global inflation, that's even better for Bitcoin.

• 44:06Anthony Pompliano?

  And do you think that eventually central banks hold Bitcoin as well? You mentioned that they're really buying gold aggressively right now. Do you think that that's kind of the end game?

• 44:13Speaker 02

  Maybe eventually. I think that we're still far away from that, though. I mean, that would be like the ultimate, the ultimate. That's a good strategic Bitcoin reserve, too. Like, those kind of things are, they would be great to see, but I still think we need, we have some.

• 44:26Anthony Pompliano?

  Is that how we get the million dollar Bitcoin price?

• 44:29Speaker 02

  That, I think that would be a big factor. I think also, just generally speaking, I mean, million dollar Bitcoin, let's just say you're talking about USD, too, right? It's Bitcoin to USD will naturally keep, even if Bitcoin never went up, it will naturally keep rising just because the USD is going to always keep falling. A dollar from 100 years ago is worth like, what, 10, 5 cents or something? So just that alone will keep pushing things higher, but I think it's going to go from both ends of the spectrum. You're going to see higher demand, higher prices, not just because of inflation, but because more people want to own the asset.

• 44:59Anthony Pompliano?

  Now, we mentioned bonds earlier, and one of the things that I keep saying is that people buying bonds is basically a sign of they didn't do the work, they're just on autopilot, or they're dumb. Because it's very clear that if you think higher inflation environment, if you watch the dollar being devalued, bonds are absolutely getting destroyed. And my favorite thing to point people to is just go look at TLT.

• 45:21Speaker 02

  Yeah.

• 45:21Anthony Pompliano?

  I mean, it's down like 30, 40% in the last five years.

• 45:23Speaker 02

  Yeah.

• 45:23Anthony Pompliano?

  Right? And so,

• 45:27Anthony Pompliano?

  is the 60-40 portfolio now completely obliterated? Or how should people think about, you know, some sort of bond allocation? Especially in a bear market where we saw stocks and bonds go down together.

• 45:39Speaker 02

  Yeah.

• 45:39Anthony Pompliano?

  Right? And I think it kind of broke a lot of the models or the brains of people when that happened.

• 45:43Speaker 02

  I think there's been a lot of opportunity to trade bonds, TLT in particular. We've been trading it to both directions because you have seen some pretty large swings, like 10, 20% in both directions, which for bonds is pretty big.

• 45:56Speaker 02

  The sixty forty thing, it's almost like bonds are, you're not even really buying it to make a return. You're just buying it because you want security. Like you want to know that you're going to have your money and you're at least going to hopefully be protected against inflation. And the other thing is too, in the market like we have now, money market funds are paying four point five to five percent. Those have also become a substitute for bonds in a way because they're way more liquid. They're more, it's, it's, it's a lot. It's basically cash in your account. So

• 46:25Anthony Pompliano?

  But I think that's the point, right? Is like, if those exist, why would somebody go buy bonds?

• 46:29Speaker 02

  Yeah. And I think it's a very traditional way of thinking, especially that you talk about the average person that has a 401k, right? You start in an eighty, twenty bonds, stocks to bonds, and then you go more towards fifty fifty as you need retirement, and then seventy thirty and this and that. I don't necessarily think that's dead. I think because a lot of people will prioritize security over returns. Just, you know, if you're, if you're institutional speaking, or you're managing a fund, you think differently than someone that is, has worked for forty years, and then they're going into retirement and they want to preserve capital. So I think that's where the demand for bonds comes. Is it something that I think young people should be investing in? Probably not over the long, long term. I mean, we just talked about how stocks will be higher twenty years from now. Just put your money in an index fund at that point. And if you don't want

• 47:12Speaker 02

  to tend to your investments, and I definitely think you'll perform much better.

• 47:15Anthony Pompliano?

  Hearing you say this, basically, my takeaway is that non-economic actors are buying bonds.

• 47:21Speaker 02

  Exactly.

• 47:22Anthony Pompliano?

  I mean, it's kind of crazy, right? It's like, the entire financial world is built on this concept that you have to be a non-economic actor to buy an asset. But still, there's a lot of non-economic actors because they're optimizing for something else, which, again, fine, no judgment, and is right for them. That, you know, they're a risk appetite, whatever. But like, essentially, the entire asset is being propped up by people who are not actually buying it for the reason that originally was perceived.

• 47:47Speaker 02

  Look, you know what the textbook example of this is, is Dave Ramsey. Like, his audience, and nothing against him. Like, I'm, I'm sure he does, he does great stuff. He's helped a lot of people. But I think I saw a clip of him, like, someone said, if I give you a billion dollars for free right now as a loan, will you take it? He's like, absolutely not. And then they're like, but you can Just put it in like treasury bills and make 5% a year. He's like, nope, no debt, nothing. And like, it's that mindset and that even if you have an arbitrage opportunity in that hypothetical situation, to avoid that for peace of mind and for security is more valuable than making a few extra percentage points for some people. And that's, I think that's where bonds are kind of falling into play here.

• 48:24Anthony Pompliano?

  Yeah, that, um, that makes sense. Uh, if we go and we look at stocks, there's obviously a difference between the S and P, NASDAQ and then kind of we can put a bucket of everything else. Uh, the NASDAQ has been exploding in, uh, in value. I think it was up 50% last year, if I remember correctly. Um, and what I find very interesting is both NASDAQ and then the tech sector of the S and P 500. They have both returned anywhere between, call it 20 to 50% over the last, you know, year or two. That is better than almost all private illiquid venture capital funds. The top, you know, 5% or whatever, they're going to outperform, they're going to do a great job. But if you can get 30, 40, 50% in public markets with liquidity,

• 49:06Anthony Pompliano?

  there's a much harder argument for people to go and invest in alternatives. And so what are you all seeing there in terms of public allocations to tech versus maybe private?

• 49:15Speaker 02

  Yeah. Well, I mean, the NASDAQ has given even private equity firms a run on their money for the 20% IRR golden rule. You know, you make, you double your money in five years in PE and you have your funds doing great. Now you're doubling your money in two years in the NASDAQ and you're not, you don't have to do anything. You just buy an ETF and you don't pay any management fees either. Uh, but I also think that that comes with elevated levels of risk, obviously. The NASDAQ, even the S and P 500 has been, become incredibly concentrated in a few names. The top, you know, 10% of the S and P reflects 30, 40% of the index now. So those stocks are doing great. And I think as long as those stocks keep doing great, the index is going to do great. But there's also the flip side of that in that you're, you're definitely taking on higher risk if those stocks go into a correction.

• 49:57Speaker 02

  Like, look at what happened on August 5th, for example, with the whole Japanese yen carry, whatever you want to call it, carry trade debacle, which we actually bought, by the way, I bought on, and in our research, we posted a, a report for our subs saying we're buying today on August 5th because the yen trade wasn't over and it's still not over. And we can get into that if you want, but, uh, that was a good example of how market concentration right now. Is kind of at dangerous levels and that's definitely an argument that a lot of bears will take because the minute that you start seeing the AI trend fade or you start seeing earnings growth starts to slow and Nvidia and Apple and Microsoft and Meta and you name it, then the market's going to stop returning what it's returning. So that's, that's how you can kind

• 50:42Speaker 02

  of look at that. I just don't think that it's a smart decision to try and time the top on something like that because if you've tried to do that at any point over the last 12 months, not only have you lost, but you missed on a generational run and that run I think will continue, as I said.

• 50:57Anthony Pompliano?

  Now, you say that the yen trade is not over, which is very interesting because I think people said, hey, this carry trade blew up, it hurt my stock portfolio, you know, F the guys who were doing this. Why do you think it's not over?

• 51:11Speaker 02

  So, you know, that day was very interesting because a lot of the selling I think was retail driven and it came, like, we posted a note on Twitter saying, on X, I keep calling Twitter on X, saying, what is the carry trade? It was just a thread and I think that thread got like 10 million, like 5 million views or something crazy because no one even knew what was happening. They were just selling because they saw the headlines. And what happened was, yeah, the Bank of Japan, they raised rates to slightly above 0% out of negative territory for the first time in a long time. And effectively what the carry trade was, for anyone who doesn't know, you could, you know, you could capitalize on the difference between interest rates in

• 51:54Speaker 02

  Japan and everywhere else. So like while Japan was cutting rates or they had negative rates, we had 5.5% Fed funds rate and there was a huge gap. Well, now, yeah, the carry trade has scaled back as we cut rates and they raise rates, but there's still a huge difference between their quarter per, their 25 basis point rate and our. Even if it goes down to 4% Fed funds rate or 3.5% Fed funds rate, the carry trade is still happening. So what my thesis was is this is just pure panic. The carry trade is scaled back, but it's definitely not gone. And I only like a handful of people were kind of took this view. And the S and P 500 rebounded 10% in a matter of days. It was in, it was the most free trade ever.

• 52:39Speaker 02

  I mean, it almost felt like arbitrage, but it wasn't because obviously there's no such thing as arbitrage in a efficient market. But it's not over and I think people realize that quickly. And it's no longer something that I think will, will really catalyze a big drop in stocks unless we have a major shift in interest rate policy.

• 52:56Anthony Pompliano?

  You mentioned efficient market. Do you think the market's efficient?

• 52:59Speaker 02

  I think it is. I think it's, I think it's as, it's more efficient than it's ever been. Is there times when there are inefficiencies on like a microsecond basis when, you know, these quant funds, for example, are trading bid ass spreads? And yeah, maybe a little bit. Um, I think the market is efficient in that whatever data we have, right? As it's released is being priced in as accurately and as quickly as ever before, especially because of the first thing I said in that 60% of market volume is automated. But that doesn't mean that efficient markets also don't mean that there isn't room to make money. And that the way that markets are pricing something in is the way that's going to pan out in the future. Because there's new information every single day and the variables impact that new information are changing every single day.

• 53:43Speaker 02

  So there's a lot of different variables, but I think they're efficient in the sense that when news comes out or when some, a new development happens, it is priced in instantly these days and there's not really arbitrage on that anymore.

• 53:56Anthony Pompliano?

  A place where there is no efficiency whatsoever is the job numbers. Um, we have seen massive revisions. Uh, the famous, you know, 800,000 job revision down. Um, we've got the most recent number of they created 12,000 jobs in October. I'm on the side, we had negative job growth.

• 54:14Speaker 02

  A hundred percent.

• 54:15Anthony Pompliano?

  They're going to revise it down. Why are they so bad at counting? I think a lot of people just want to understand like, okay, you call out this number and there's really actually a lot of people don't know this. Two revisions.

• 54:24Speaker 02

  Yes.

• 54:25Anthony Pompliano?

  So you get kind of the initial number, you get the first revision, you get the final revision. They have wiped at least a million jobs over the last 12 months off. And now it's the point where when they come out the number, anyone who's sophisticated is like, lie, like, not true, right? Uh, it's gonna be lower.

• 54:42Speaker 02

  Yeah.

• 54:43Anthony Pompliano?

  Is that just the new normal?

• 54:44Speaker 02

  Well, you know, you know, what's interesting is, first of all, I kept saying, we should just look at the jobs data on a one month flag, maybe now two month flag, because they're revising them twice every single time now. Even August was just revised lower, September was revised lower. Eight of the last 11 reports were revised lower. Uh, with many of those revised twice. Um, it's, it's, it's the ultimate credibility lost in terms of the way the market looks at it. And I feel like the market isn't even trading on the headline number anymore. They're almost looking at their revisions more, they're trading on, uh, where, I don't even know what they're trading on the jobs report day anymore now, because basically we go up any, if we're, this is what happens. Um, it's, I don't know, it, I, something, something needs to be investigated or something.

• 55:27Speaker 02

  But when you talk about, I mean, I understand if there's a few thousand jobs here and there that are revised on an occasion, but when you're talking about millions of jobs, that's insanity. And then you also have, I mean, you also had the whole debate of, is the, is the way the numbers are being portrayed even accurate in the sense that you have record numbers of people working part-time jobs, but then you also have maximum employment and low unemployment, because maybe because people aren't looking for jobs, because they're working three part-time jobs. And it's like, I don't know, it's, it's, the labor market is its own beast with so many different things to, to break down. But I think everyone can agree, including the Fed, deep down, I really think they do agree with this, even though they say we have maximum employment.

• 56:11Speaker 02

  The way the headline numbers are portrayed right now is not reality. That, that's a hundred percent fact. People are working multiple jobs, wages have not kept up with inflation. Finding a job is harder than it was since, you know, the pandemic, basically. And, uh, people are just not, generally not optimistic about the economy. And I think that stems a lot from the labor market. So that's probably why they started cutting by 50 basis points, because deep down they know. The labor market isn't as strong as the data suggests.

• 56:38Anthony Pompliano?

  One of the things I think I could be okay with is to your point, you know, hey, we thought there was 400,000 jobs created. Actually, it was 395,000. We'd like to be right the first time, but you know, within some band of kind of margin of error, understandable and also like, you know, 395 and 400,000 are pretty much the same thing. Again, yeah, there's difference, but not really in terms of what people are trying to, you know, use the data point for.

• 57:05Anthony Pompliano?

  We created jobs versus we lost jobs. Like that's a zero to one, right? Like that's a way bigger problem. And it seems like that's the territory we're in now.

• 57:16Speaker 02

  Right. And well, the other thing is too, the 12,000 number, it was impacted a lot by the hurricanes and all that. But it's almost like, I mean, now everyone is saying, oh yeah, it's hurricane month. Don't even look at the data. It doesn't really matter what happened. Even if it goes negative, it's hurricane, hurricane. I mean, it's like, at some point, I get there was a hurricane. I get there's a bunch of variables every single month, but you're just, I don't know.

• 57:39Anthony Pompliano?

  Did the hurricane hit the whole country?

• 57:41Speaker 02

  I don't know what's apparently, apparently it had to be the hardest too.

• 57:46Anthony Pompliano?

  I mean, but it is kind of like this, it's like a black box, right? They come out these data points. Obviously, they don't, they don't make a lot of sense. And your point about the loss of credibility, I think is, is really important. And there's a guy on Twitter who actually is very smart, but he has a habit of whenever I tweet, so I tweeted and I said, you know, if I was a betting man, definitely we're going to get the negative job revision. And this is not going to be positive. And he was like, you know, silly tweet or something, right? And another tweet I had was something about like, basically they've lost credibility. And his point was, look at all of the revisions for decades. They've been doing this for a

• 58:26Anthony Pompliano?

  long time. And my point back to him was not, the revisions are actually not the problem. It's the fact that everyone knows about the revisions now.

• 58:35Speaker 02

  True, true. And they do nothing about it too.

• 58:38Anthony Pompliano?

  Yeah. So it was like for a long period of time before, pretty much before Twitter, right? Maybe there were some really high finance, smart people, whatever. They were looking at the data. For the most part, people just read articles. And so a number came out, bam, that's the number, whatever, move on. Now, there's people like you, like me, like, you know, name the 20,000 other people on Twitter who are all yelling and screaming about this stuff. Who are like, hey, hold on a second here. Did you guys know that they're revising the numbers? And so it's like the, the cat's out of the bag.

• 59:07Speaker 02

  Yeah.

• 59:08Anthony Pompliano?

  And the loss of credibility doesn't come from the fact of what they were doing. It comes from the fact that now everyone knows what they were doing.

• 59:13Speaker 02

  Right.

• 59:14Anthony Pompliano?

  And it feels like along all of these data points in economics, you're just seeing it happen over and over and over again. And so like, you know, there's these, uh, this team that's building a trueflation. And they're building alternative inflation measurement. I spent a lot of time talking to them and trying to understand what they're doing. And they're like, yeah, so we just use like real time data. You know, we just like hook into, uh, oh, you want to know housing? Like, we just hit, you know, Zillow and Redfin and apartments.com and all these things. And we don't look at what they're listed for. We look at like, what was the closed price changes of homes for sale? Or for rents, you know, in, in apartments getting rented.

• 59:48Speaker 02

  What a crazy idea, right? You look at the actual data. Wow.

• 59:50Anthony Pompliano?

  Instead of call people and say, what do you think you could rent your house for?

• 59:54Speaker 02

  It's insane.

• 59:56Anthony Pompliano?

  And so it does feel like we're at this kind of intersection or this, you know, precipice of like a new era in economic data. But it's going to be really hard to rip it out and use the new stuff.

• 1:00:05Speaker 02

  Other thing too, when we were talking about efficient markets, like the, just X alone has changed access to information. I mean, these kinds of things that would be, you'd have to get through equity research or you had to pay Goldman Sachs a million dollars every year to get. It's like, you can just go on Twitter right now and read on your feed, my feed, anyone's feed about what's happening in real time, much faster than anyone can get to it. And with, with most, a lot of people having very stunning accuracy. I will say there is some stuff that's not very accurate, but we have community notes for that reason. But, uh, yeah, I, I think you're right. Awareness is just growing all around the board and with anything market related.

• 1:00:42Anthony Pompliano?

  Let's talk about the banks. Obviously we saw, I think, three of the five largest, uh, banking failures over the last, you know, two years or so. Um, and I think there's a lot of people who are very worried. Bilaji Srinivasan had the famous. You know, because going a million dollars, I bet a million bucks on it. That didn't happen, but I think his point around like the banks unrealized losses that brought a lot of attention to it. If you go and you look at the charts, it looks real bad, right? The unrealized losses sitting on these bank balance sheets, worse than history. And you would think basically the banks are going out of business.

• 1:01:10Speaker 02

  Right.

• 1:01:11Anthony Pompliano?

  Their response is no one's going to hold them to maturity. Everything will be fine. Stop worrying. Where do you come out on kind of the solvency or the structure of the banking system?

• 1:01:20Speaker 02

  Yeah, well, you know, tell it to SVB that no one's going to, no one's going to sell the securities and they're going to hold them to maturity. Cause that's what they thought too, until the run of their bank started and they had to sell these securities overnight for pennies on the dollar. So I think a lot of banks bought a bunch of bonds, treasury bonds, you name it. And these, these securities back when rates were low, thinking that we're going to stay in a low rate environment for a long time. Cause inflation was transitory according to the Fed and that's not what happened. And now we have five, 600 billion, maybe more of unrealized losses on banks' balance sheets. Which by the way, a lot of those are on small banks, regional banks that also hold 70% of commercial real estate debt.

• 1:02:01Speaker 02

  With these commercial real estate, if you look at commercial real estate, I mean, honestly, it gives 2008 a run for its money. That's how bad it's been for office buildings, for example. There's office buildings down the street from us here in Manhattan that are basically given, given away for free just because people want someone to take the bank no off their hands. Because they can't generate any revenue and they can't rent out these properties. There's work from home has grown. So the, you have the small banks that are burdened by these, these key series that they had these unrealized losses on their balance sheet. And then you have this commercial, the, the regional bank crisis that it ended, but it didn't really end. No one really knows what, what's going on with them. Their stock prices really haven't been doing that well. They're still kind of like at regional bank crisis levels.

• 1:02:45Speaker 02

  So I think, yeah, we're golden if nothing happens, but that's a big if. If sadist quo remains, it is the way it is, so all these maturities is secure, these securities mature. Then I think, yeah, you're good. That's a big if. So I'm not here calling for a bank collapse, but I also am not here saying that we're in a perfect world.

• 1:03:04Anthony Pompliano?

  Do you think the banks could do anything to change the situation? You know, obviously, they've got all these different programs they can pull capital from. They tell everyone, hey, it's okay. Everything's good, right? You know, the famous SVB calling all the customers on a call and said, like, don't worry. And everyone was like, I'm worried, right? Like, what do you think the banks could do?

• 1:03:22Speaker 02

  The worst thing your bank can do is like call you in the in the middle of a crisis. Because you're like, wait, why are they calling me now? But I it's tough to say they can do anything because someone has to take on that burden. And you had the bank term funding program, which was the Fed's response to the regional bank crisis. It definitely helped. Was it was it like a bailout kind of disguise in a way? Yeah, I mean, no one wanted to say the word bailout. If you said the word bailout in 2022, I mean, you're unfollowed, hated on, blocked, muted, you name it. Because it's like PTSD from 2008. You can't have a bailout, no way. Where taxpayers are going to pay for it. But yeah, when you're also lending money to banks at free, very free rates, someone's paying for it. Right? So now that that expired, that definitely exposed them to more risks.

• 1:04:06Speaker 02

  But I think the FDIC and the Fed have made it clear that they kind of are the backstop for these banks that take risks that are, you know, they're taking a risk when they're buying these securities that now have unrealized losses. They're effectively hedging against that risk, the Fed and FDIC, which is a dangerous precedent to send. And also, look at their response. This is the other thing. So when when you saw the first bank collapse, it was kind of like, yeah, we're going to bail them out in a way that's not a bailout and everyone's going to be made whole. And then hopefully, you know, they can just continue going on and no, no transformative acquisition really needs to happen. Just you just kind of have to get the fire under control.

• 1:04:47Speaker 02

  And then the next bank collapse happens and then the Fed, the FDIC says, well, this time, we're not going to step in until they really do collapse. But then the next one happened, they said, well, when they do collapse, then we're going to kind of step in. We're just going to let JP Morgan buy them. And now all the big banks say, wait, I'm not going to buy out any failing bank. I'm just going to wait till they fail and get all the assets for pennies on the dollar, like First Republic or whatever, you know, bank.

• 1:05:11Anthony Pompliano?

  Signature.

• 1:05:12Speaker 02

  Signature, whatever's next. And this is like the best, like Jamie Dimon is having a field day with these bank collapses because not only does everyone move their money to the large banks during the crisis, he also buys out these small banks for basically free. Actually, I think they're getting paid for some of them almost because they're getting subsidized. So now you have that precedent that, yep, small banks take all the risk you want. And the case that you fail, yeah, we'll probably just find some sort of way to backstop you and then Jamie Dimon will just come by you guys anyways. And then all the executives, you probably won't even be investigated. You're good to go. That's very dangerous precedent.

• 1:05:44Anthony Pompliano?

  I think it's very dangerous. I also think that whenever you have fear dominating a market, you get like really wacky ideas. There was a guy who I won't name, who said to me, he goes, I can predict the next bank that's going to fail. And I said, how? He goes, they all start with the letter S. And so he said, you know, Silvergate, SVB, Signature. And then when First Republic went down, he's like, oh, my theory is, you know, like negated. But I do think that like, you know, in these moments, it's kind of like, like, why is this happening? There's very, you know, kind of obvious, subjective things you look at, like the unrealized losses, the bank runs, et cetera. But then there is this kind of overlay of regulatory slash political, you know, Signature Bank, I think is a good example. Barney Frank sits on the board, he comes out and he's like, dude, they basically just took this bank out back, shot it.

• 1:06:28Anthony Pompliano?

  And like, there was no reason, we were solvent when they did that.

• 1:06:31Speaker 02

  Yeah.

• 1:06:32Anthony Pompliano?

  And so I think that again, creates some uncertainty for investors to try to navigate. When you're like, hey, I can't just like, look at the balance sheets. I can't look at, you know, a spreadsheet and determine whether this is good or bad. Because there's this like qualitative thing that is going to play into it, which is nearly impossible to predict.

• 1:06:47Speaker 02

  I agree. And also, we talk about X a lot. The one thing that I will say X has proliferated is the rise of conspiracy theories. Man, I mean, you name it, Signature Bank and all these, there was a theory there for everything. So, yeah, it's no longer just look at the balance sheet. There's a bunch of theories, there's a bunch of different variables, crypto is even playing into that. It's interesting. It's a crazy time to be an investor.

• 1:07:12Anthony Pompliano?

  Another balance sheet that everyone's talking about is Warren Buffett. He's got $325 billion of cash on his balance sheet. He's been selling Apple stock very aggressively. He's been selling Bank of America. And most people, I think, kind of the like elementary explanation is like, he obviously thinks the market downturn is coming. And he's going to just stock cash and he's going to make some big acquisition. The maybe more advanced argument, which I saw people talking about over the weekend is, I think it was last year during the annual meeting, he was asked, on that day, they announced they had sold some Apple shares. He was asked about it by a shareholder and he talked about businesses and kind of what they're going to hold, not hold and all stuff.

• 1:07:54Anthony Pompliano?

  But at the very end, he talked about the fact that the corporate tax rate which Berkshire pays is 21%. Previously it's been higher, maybe it will go higher again. And so why do you think he's trimming these positions? And is it a tax thing? Is it, you know, an investment kind of, you know, decision in terms of what he thinks about the business?

• 1:08:14Speaker 02

  So the first, the tax point is 100% a fact. He stated that. I think it was in May, actually, at his annual meeting or one of his quarterly results. He basically said, we have a 20, 21% long-term capital gains. It's, it's actually correct, but yeah, corporate tax. But that corporate tax is going to go to 28% potentially under Biden or Harris. It was Biden at the time. And people were, he was saying, well, why not realize those gains now and pay less tax? And maybe you won't, you might not even outperform that increase in the tax rate

• 1:08:48Speaker 02

  over the next year or so or whatnot. So that was one part of it. And then I also think he likes the fact that you can get, look at his balance sheet. They have $280 billion of treasury bills. We were just talking about this, but he loves bonds right now because you're getting, you know, a free return. And it's not necessarily that he's even thinks that that return is so great. It's more that it's better than losing if the market goes down or taking uncertainty, taking risk and uncertainty in a time when there is a lot of risk and uncertainty.

• 1:09:18Anthony Pompliano?

  He owns more treasuries than the Fed.

• 1:09:20Speaker 02

  Than the Fed itself, almost 100 billion more, which is insane. But the thing that didn't get as much attention, that if you really read into the report, it said, you know, we're halting buybacks until Warren Buffett himself sees the intrinsic value of our stock, Berkshire Hathaway, is below the share price.

• 1:09:39Speaker 02

  And then you step back and you say, wait, is he sure his own stock? Is he really saying that his stock price is too high? Because that's effectively what that means. So that's when I started thinking, well, maybe he is starting to err to the side that markets are a little bit overvalued here. If, if not even his own stock, they want to buy back anymore. And they only did, I mean, a couple hundred million of buybacks last quarter. Previous quarters is like $2 billion each. So he's been tapering down the buybacks with, I don't know. It's interesting. I think he wants to leave possibilities open, but he also still does have a massively net long position, even in Apple. I think they're at around 70 billion now. So it's not like he's like all out. I think he's just kind of scaling back a little bit and rightfully so after such a hot run.

• 1:10:20Anthony Pompliano?

  I am, I keep coming back to this idea that with $325 billion of cash, like, like, I think he's called it elephant hunting. Right? Like you gotta go make a really big acquisition. And it's unclear what they could buy. You know, there's been a bunch of talk of different, you know, companies, whatever. But

• 1:10:39Anthony Pompliano?

  he's only got, you know, a handful of companies with that much cash. He's not going to blow it all in one acquisition. So maybe he's got two or three that he can, you know, that he can really go into. He's older. I do wonder if he is just saying, look, let me just get all the cash, put it there. And the next, you know, group that comes in, now I've taken the burden of trimming all the positions. So no one can be a shareholder and say like, oh, Buffett would have never sold, you know, ABC, whatever. Instead, he just leaves whoever is going to take over for him with just a pile of cash and says, you know, go do your thing.

• 1:11:13Speaker 02

  Yeah, it could be that. And it could also be that he, maybe he doesn't know what the next thing is. Maybe he thinks that it will appear within the next year or so. And it's good to have money ready to go just so you can. Because if you, if you have to, if the next big investment that he wants to make or acquisition comes up and the tax rate goes up at the same time, then in a way you're better off just taking 4% a year in the treasuries and, and selling now versus waiting for the next, the next year. So I think that's his approach. I don't even think there's necessarily like some big, and obviously this is all speculation. No one knows what they're thinking, but I don't think there's any, some, some big acquisition that's pending right now or imminent. I think it's more so just gradually taper off. And you'll opportunities will arise and he's been, I mean, Warren Buffett's the greatest investor of all time. So you can't doubt what he thinks at this point.

• 1:11:56Anthony Pompliano?

  Do you think that, um, let's say Buffett was 40 or 50 today. Does his worldview around value investing still apply, you know, moving forward for the next 50 years?

• 1:12:07Speaker 02

  You know, I think.

• 1:12:08Anthony Pompliano?

  Could he have the same run?

• 1:12:09Speaker 02

  I think I, that's, that's a great question. I think Buffett's approach to investing would be different if he was younger and one of his main, uh, and Buffett was like, um, when I was growing up, I was like one of my idols. I think everyone that's into markets loves Warren Buffett, but he always talked about how only invest in what you know. Right. And I feel the things that he knows, like, for example, he owns Dairy Queen, right? It's like, that's so Warren Buffett. It's like when he goes to McDonald's every day and gets his, you know, his, more, his breakfast and he eats like a, what does he say? He's like a six year old because they're the healthiest people or something. And like, that's just him. Like he knows these businesses. He knows the ins and outs of these, but I feel like he had, like even apples, like it kind of was a stretch for him, but it was like, he was like, you know what? Apple is the next big thing. It's a big company.

• 1:12:53Speaker 02

  I feel like if he was younger, maybe he would be embracing more of the AI related plays. I mean, he doesn't really talk too much about the AI related stuff for Nvidia and these, these hot stocks. And I, I do think he would have a different approach. I also think it's, it's, I don't know if it's harder to replicate his run now, but the market is way more efficient. Like I've been saying, and it's just a completely different time. I mean, markets are so real time and constant. When I think when he started investing, he probably had to check the newspaper to see where the, where the market closed at the end of the day. Like it was that, it was, so it's just a different time now.

• 1:13:28Anthony Pompliano?

  When you think of, uh, the US dollar, we've talked a lot about, um, kind of everything around the dollar, but, uh, it seemed like you're pretty convinced the dollar is going to be devalued. Do you have a rate in mind? Like, is it just the change in money supply? Is there some other way that you think about this?

• 1:13:43Speaker 02

  Yeah. I mean. I mean, first of all, the US dollars in an eternal bear market, right? Look at the chart. It's insane. If you could just go short the dollar, you could, everyone could retire. I mean, if you could just play a long-term short, I mean, it's, it's been inflation, obviously, has been the biggest driver. I don't necessarily have a rate in mind that I, I just think that it's, it's something that if you're an investor, you should always keep in the back of your mind and not have too much exposure. I don't think that the dollar is going to crash. One of the big things like that was going around for a long time was the US dollar is losing its reserve currency status and no one's going to use a dollar anymore. And there's all this pushback. I, I don't think so. I mean, I may, maybe if you look at a very long timeframe, 50, 100 years, maybe, but over the next decade, that's, that's not going to happen.

• 1:14:28Speaker 02

  I mean, I, we posted something about Swift payments where like decade high levels right now in USD denominated. So I, I don't think the use or the adoption of the dollar is going to go down. I just think that the actual purchasing power will continue to go down.

• 1:14:43Anthony Pompliano?

  What about like BRICS and kind of all the geopolitical stuff you were pointing to?

• 1:14:47Speaker 02

  That kind of played into it and, and it's already kind of started to fade off a little bit. There, I, I don't really think that's going to dethrone the dollar. I, I mean, it's definitely something worth noting and it's something that has been definitely fear mongered a lot, but it's, it's not the first time we've seen something like that. It's not the last. And I, and I think people don't realize how dominant and large the US empire is. Like it's the biggest and most powerful empire of all time. And it's not even close. Like even if you compare it to the Roman Empire back in the day, it's not even close. Like how big and dominant the US is and the US economy. I mean, like you said, you can't, if the US collapsed, everything would collapse.

• 1:15:29Speaker 02

  It's all intertwined. It's a global market. So at this point, if you're betting against that, even if you're right, I mean, that's not even a world you want because it's going to be, it's, it would be brutal. And I, I just don't think we're even near the cusp of that.

• 1:15:43Anthony Pompliano?

  I do say all the time, people will ask about Bitcoin specifically, you know, what happens if the electricity goes out? Right? And I say, you don't want a gun. Like, you know, I get the money thing, whatever, but like, there's a lot of stuff that's gonna be going wrong if no one has electricity in in modern society. What's your process, right? I mean, you're obviously very educated. You've got a lot of data points. You remind me of myself a little bit in that you can recall all the data points, right? Which always seems to befuddle my friends. They're like, how do you remember all this stuff? But like, what is your process to learn and kind of research this?

• 1:16:16Speaker 02

  Yeah, that's a great question. So my, I'm always looking at data, like, ever since I was a very young, I I'd always looked at charts and I I could just notice trends, notice outliers, like be very observant about things from a young age. And I feel like that's still kind of the way I am now. And I'm always looking at just raw data. I don't even want anyone to break down the data for me. I want to see the data and then I want to synthesize it and come up with my own takeaways. And that's kind of where I start with things. And that's also why I got into technical analysis, because it's a very mathematical way, objective way of looking at things. And all the work I do is objective. If you're investing with emotion,

• 1:16:58Speaker 02

  that's, you know, you're never going to be profitable in the long, investing with emotion. You should look at markets objectively from a fundamental and technical viewpoint. That's what I do. And then always look to evolve. I think what a big mistake that investors make is they get comfortable. Comfort as a business owner, as an investor, as really anything involving money, comfort is the enemy of a profitable and well performing fund manager investor. Because with the mark, when the market evolves, you need to evolve. You can't have the same approach all the time. If you were investing the same way you invested back in 2008 now, well, then you missed out on a lot of stuff. So I think my, a lot of my, my methodology stems from the fact that don't get comfortable, always evolve,

• 1:17:43Speaker 02

  come up with new ways of viewing things and be open minded. I think if you get hard headed with an investment thesis, that's a very dangerous way to to think. And from there, that's kind of where my my trades fall into play. I do focus on macro with, you know, some of those very similar assets throughout time, like gold, stocks, bonds, various commodities, and I think it is good to stick to the things that you're an expert at. But also, you know, look for other opportunities and be open minded, because the market will continue to change.

• 1:18:12Anthony Pompliano?

  When you wake up in the morning, what do you check first? Do you check certain data points, certain websites, read certain things?

• 1:18:19Speaker 02

  So the first thing I do is I just open my, my investing.com app out of all things and just check at the futures and like I have a whole watch list, check the commodity markets, what's happening because that will tell you a lot. And even right now with the election, I've been looking at the prediction markets a lot with, you know, Kelsey's markets, for example, there they tell you basically minute to minute who's leading, who's not. And then you can see that translate directly into the markets. So I'll check that and then I'll do the normal morning news runs, see what happened overnight. And then from there, I actually get on Twitter and see what people are talking about because that's what Twitter has been honestly, the biggest driver of market sentiment amongst retail investors out of any platform that I've seen in most

• 1:19:03Speaker 02

  real time. And then from there, you know, just look at wait for the next big usually there's an economic data release around eight 30, everything's been data oriented recently. So wait for that and then take the day as it goes. I mean, every day, that's the beauty of investor. Every single day is different.

• 1:19:18Anthony Pompliano?

  And are you trading every day? Or are you saying, hey, look, I've got kind of a core positions, I let those run. Maybe some days, depending on data, maybe I do, maybe I don't.

• 1:19:26Speaker 02

  Yeah. So we're, we're not, I mean, I'm not a day trader by any means. We're more swing oriented. There are days when I will have multiple trades that happen if we have extreme volatility. That kind of goes back to what I was saying. I mold my, my strategy to where the market is moving that day. So if you are on a March 2020 market, when we're seeing the S and P swing 10% a day, then yeah, I'm trading multiple times a day, but in more constant and less, less volatile times, more swing oriented, maybe a few weeks time horizon to longer, but constantly updating analysis and posting updated research for our, for our subscribers.

• 1:20:01Anthony Pompliano?

  And then talk about your business because I think it's very interesting. You started a decade ago, which is pretty early, kind of in this trend. And so like, what gave you the idea to start? And then, you know, kind of walk us through how you built the business?

• 1:20:12Speaker 02

  So I know you were talking about off camera, but Dennis Gartman was my motivator. I went back when I was in high school, actually, I would read the Gartman letter and I Loved it. I thought he had a great approach. It was all macro based and he would go on TV, talk about his predictions. And focus on the same assets every week and everyone would basically stop and listen to what he said. And I thought that that sounds like a dream job, like invest and talk about what I'm investing in. And that's when I started the Cobase Letter.

• 1:20:40Speaker 02

  And then over time, it's kind of evolved. I think the, the thing that, that Garmin, he was very fundamental based. I kind of started embracing technology and investing more. Which allowed me to differentiate myself a little bit. And another big thing, and I think we've talked about a lot is Twitter. Back in the days there, if you went on finance Twitter 10 years ago, it was like a few thousand people. It was, it was honestly a great time because it was super, super technical. It was like, I mean, if you post, if I, if you posted a chart or a tweet that I, if you go to my tweets in like 2015, you'd be like, yeah, no one would even understand what you're saying right now, man. Like it was like very technical. A lot of institutional investors that just talked about markets and that was it. And it was a small group of people.

• 1:21:22Speaker 02

  Once it started growing and me being one of the first people on that platform, well, obviously my following grew and that, that kind of changed my content a little bit, made it a little more broad, but still kept that technical approach in my premium service where I'm investing. And now I kind of had the best of both worlds where, where we trade with, with anyone who's really serious about trading. We publish our, our trades, we publish our research and they follow that. But then on our public feed, we also keep it more broad. We talk about macro stuff. We talk about the data. We talk about all the things we've been talking about. And I think we're, both sides of the, the spectrum are really enjoying this stuff to be published.

• 1:21:57Anthony Pompliano?

  I think you guys do a fantastic job and

• 1:21:59Speaker 02

  Thank you.

• 1:21:59Anthony Pompliano?

  Part of what I think has been a contributor to your success is not only do you publish data points, but you explain it, right? And I think there's a lot of folks who they can look at a data point and it's kind of like a, almost a siloed thing. They're like, hey, this happened. Great. But really what ends up bringing value to people is saying this happened and here are the three contributing factors. And then here's where I think the world is going because this thing happened.

• 1:22:22Speaker 02

  And that's kind of the basis. It's, I appreciate you saying that because my.

• 1:22:28Speaker 02

  Where I come from, like the way I think is when ever since a young age, I was always that kid in the classroom that was like, you know what? How do I think about this more simply? I'm not really getting this concept. Explain it to me more simply, or let me think about more simply. And that allowed me to just break down complex topics and data and charts in a way that's a lot simpler to understand, even for people that don't have a lot of experience in investing. So, and that also made me a better teacher. So I thought, why don't I employ the same thought process in markets? Because I remember I would turn on CNBC or all these different channels when I was in high school or even younger, because I was always interested in investing. And I'd be like, all right, I understood three of the last 10 words that they said.

• 1:23:12Speaker 02

  Can someone just say this simply? I said, I want to be that person that says it simply for other people. So I like to take the complex stuff and break it down and make it understandable. And I mean, we're doing close to 100 million views a month between all platforms now. And I think that's why I think it's it's more so that people just understand what we're saying and they find it valuable.

• 1:23:30Anthony Pompliano?

  And then who are the type of people who subscribe and kind of pay attention off of the social media platforms?

• 1:23:36Speaker 02

  So there's honestly a wide range. So we have a ton of people that are just managing their own account. Retail traders, just just like myself, managing my own account too.

• 1:23:48Speaker 02

  And that's probably honestly a vast majority of our subscribers. But we also have institutional side of things. We have a lot of funds, banks, wealth managers that just find research in our value in our research, not even if they're trading on every day, but just seeing what we're thinking. We're even in the natural gas market, for example, natural gas is like a very technical, but highly, highly profitable market that we've been trading for years. We have funds that follow us just for our natural gas trades. So it's all over, but that's the beauty of the Kowesi Letter. We and we're expanding too. We were trying to bring on more analysts who cover different topics. And we kind of want to be this one stop shop for whether you're very sophisticated or you're brand new to markets. You can get something of value, whether it's free or paid.

• 1:24:32Speaker 02

  As long as we can add value to an investor's day, that's what we try and do.

• 1:24:37Anthony Pompliano?

  And then.

• 1:24:39Anthony Pompliano?

  Does geography matter anymore in investing? You know, you're very unique in that you kind of go back and forth between different cities, but also it seems like on Twitter specifically, I talk to people all around the world now. And they have very different perspectives. There's a lot I can learn from them, but they all are trying to trade US markets.

• 1:24:59Speaker 02

  Yeah.

• 1:24:59Anthony Pompliano?

  And so like, talk a little bit about geography and the importance of that, you know, in terms of either subscribers or people you don't actually.

• 1:25:05Speaker 02

  We have subscribers in probably every country in the world at this point that is legal for the US to do business with. And people are always, I mean, when I go, when I go to sleep, someone's waking up and reading what I wrote or trading on what I wrote. And that's the beauty of it. And also, I think the pandemic, the one good thing about the pandemic is that kind of proliferated this global market and economy and way of doing business where, I mean, I'm sure you remember, if you were going on a news, news show before the pandemic, everybody was coming to studio. Now I go to studio, I'm probably the only person there in person because everyone wants to join virtually. It's a lot easier. So that the globalization of markets and just technology has led to rapid growth in our subscriber base and our business.

• 1:25:48Speaker 02

  I think that will continue to be the case because everybody can invest in the market in the US or globally. And everybody can read what we write because it's not, I'm mailing you a daily edition. It's no, you just log on, you write to your email or you log into the website and you're there within seconds.

• 1:26:02Anthony Pompliano?

  I think it makes a, makes a ton of sense.

• 1:26:03Speaker 02

  Yeah.

• 1:26:04Anthony Pompliano?

  Where can we send people to find more about the letter?

• 1:26:05Speaker 02

  So yeah, you can check us out, the cobase letter.com is our website and then at cobase letter on all platforms, we publish everything.

• 1:26:15Anthony Pompliano?

  Highly suggest people follow, check out the, the letter.

• 1:26:17Speaker 02

  Yeah.

• 1:26:17Anthony Pompliano?

  And you're doing a great job. So thanks so much for coming to do this.

• 1:26:20Speaker 02

  Thank you.

• 1:26:20Anthony Pompliano?

  We'll definitely get you in the future.

• 1:26:21Speaker 02

  Absolutely.

• 1:26:22Anthony Pompliano?

  What's up, guys? I hope you're enjoying this episode, but I got a quick message for you. I just released my very first book. It's called How to Live an Extraordinary Life. In this book, there are 65 life lessons that I've picked up over the years. These lessons will teach you about money, investing, relationships, work, health, happiness, and much more. In this book, I wrote letters to each one of my children and I tried to share those life lessons with them. If you pick up this book, there's three things that I can promise you. The first is that it is very concise. The audiobook is only three hours. You can listen to it on a long drive or on a rainy afternoon. The second thing is that you're going to learn something. It's worth the price of admission just for the lessons themselves.

• 1:27:02Anthony Pompliano?

  And then the third thing is it will make you think more deeply about your life and how you try to live it. So go pick up How to Live an Extraordinary Life today. It's a quick read. It's very impactful. It's very concise and it would mean the world to me for the support. Go check it out today on Amazon, Barnes & Noble, or wherever you buy your books. Hardcover, audiobook, it all works. Thank you so much for the support and I'd love to hear what you think about the new book.