The Pomp Podcast
00:15:33 · Jordi Visser
[00:15:33] S2: thesis, or are you still a little more cautious? I... I'm... So I had not, except for a small Micron purchase during July or August, whenever, but during the the situational awareness situation. In the last week, week and a half, I've made purchases in AI names three or four times, three or four days, only into panic, which again, luckily we keep getting them, but the reason is because a lot of things happen this week. Last week felt like panic to me on Thursday, which is why I I went in, but this week, first of all, Anthropic released their s one. It was definitely better than what people feared, and you could kind of read through it and get to more than a 100,000,000,000 if you want to in terms of AR, assuming you make the leap that based on what they put in there, they're gonna be telling you that the October numbers since Opus 5.5 went up. But regardless, that is out of the way. So people have been worried about what Anthropic would be. Now we have to get through the IPO, but again, that's coming soon. Oracle had an Investor Day. This might be the most important news point that no one seemed to mention or care about. If you ask me when the mud started, and again, for anyone who's trading, we've been in mud since September of last year, meaning every time you go up, you come back down, every time you go up, you go back down. It's been in a grinding bull market, but a very, very difficult painful one. You just look at the Nvidia chart. September of last year is when the capital raise effectively started. And the reason I say that is because Oracle made their highs on this massive day where they had massive RPOs, which is basically what the hyperscalers have as well. Meaning, we have these orders that we're gonna get in the future. The reason Oracle is so important and is not mentioned, is this week in their investor day, they laid out, hey, We're not gonna have to raise much money between now and 2030. Now that may not mean much to people, but Oracle's raised over $60,000,000,000 since that September last year. People have questioned them. Their debt was the first one to be an issue. Their CDS started widening out, and this is when the mud started. So for everyone who's trying to find, like, when is this gonna end?
00:17:44 · Jordi Visser
I actually think the capital raise has been a huge part, but not the capital raise in general because the AI capital raise is gonna happen. But it's been very concentrated with basically five names, and they've come to the market for a lot of debt. Most of that debt was q four of last year, q one of this year, q two, q three. Q one, q two, q three were actually declining in terms of going to the public markets. You still have some going on. Microsoft did some this week. SpaceX did, but SpaceX did it with... Through the private markets through Apollo and SPV. Very different, and there's a lot of powder there. So we've had this concentrated capital raise where I've calculated the numbers. You've done over a trillion dollars this year between equity and debt. That has been one of the mud issues, and I think that has been the major issue with the rates moving higher. So now you have ten year rates, which have moved down this week as well. Remember how much everyone was worried about ten year rates? Remember how much everyone was worried about breath? Equal weight S and P has ripped higher. In fact, this month, people won't realize this, but as we sit here, the S and P is about flat for the month again. But I think nine of the 11 secondtors are up, and as I looked yesterday, this is before this morning, but I still think it's gonna be good, 350 of the S and P 500 names, 350 of 500, that's 70%. We're up at least 2% for the month. Only 70 were down 2%. That's a five to one ratio. And that means that in a in a period where we're worried about breath, where we're worried about rates, rates started to come down and what happened, the names that were getting hit because rates were going higher came back down. I bring all this up because you know what's rolling off next year? And I'll show all this this weekend. You're gonna get the tariff stuff, which is gonna roll off. So all of the rate hikes that were part of the PCE and part of... In general. Goldman has put this out saying they expect about a 100 basis point drop in PCE core next year purely because of the base effects. DRAM prices have already rolled over, not in a nominal basis, but on a year over year basis, the second derivative, which is what inflation is... Has rolled over. You're gonna have gas at the pump. It's gonna be the exact same thing. Meaning, we had a huge spike in oil.
00:20:02 · Jordi Visser
We're at the same price in oil right now that we were, I think, in March. So every day that passes into March, unless we get a spike higher in crude, if crude were to go down at any point, you're gonna have that flow through. The only reason I bring that up is this year has been about real rates going higher because inflation breakevens and swaps have... I mean, they're effectively at two and a half percent. We have ten year rates up close to five, which means there's 250 basis points of real ten year yields. That has been a major drag on crypto. It's been a major drag on gold. It's been a major drag on silver. It's been a major drag, I think, on the entire AI trade. And the irony is it gets back to Oracle because the amount of debt that these guys have needed competes with the treasury. So I'll finish this little monologue off with the quarterly refunding announcement. This is not getting a ton of press, and we'll find out about it on on November 4, so next week. There has been speculation by credible people, and Citibank also talked about this as well, that they could cancel supply. They've already done buybacks. That didn't work. If they cancel supply at the long end and move everything to the front end, it's not yield curve control, but it is certainly an admission that they don't want the long end to go higher. And regardless of whether it's because of affordability issues for housing, because you've seen thirty year mortgage rates go up a 100 basis points since March, or it's competing with AI, and we just saw Kevin Warsh talk about the fact that seems like the AI trade was moving spreads widen or we've seen spreads widen. So I think there may be this effort to really try to bring long term yields down and continue to do it. And if we were to see a reaction for a day, we're already below the 50 moving average for the first time in a while in ten year yields, that could be the catalyst right there, and you'd have all those events going on. So I'm getting more positive because I'm looking through this and thinking the holiday season's about to take over. I'm not worried about a bubble. So I'm believing that over the next six months, even if it's mud, you're getting good entry points right here.
00:22:12 · Anthony Pompliano
[00:22:12] S3: It always strikes me as, when people have, quote, unquote, bubble concerns, when things start to trade down, they think that means that it's going... The bubble's bursting. It's going to zero. You know, it's gonna be a 50% drawdown. But, actually, what you wanna see is you wanna see fundamentals like revenue, profits, EPS, etcetera, all increasing in positive, beating expectations, which we're seeing. At the same time that you wanna see valuations cooling off, which is kind of this, like, cool off during a bull market, that's actually when you should be most excited. Right? Because the fundamentals should provide some sort of floor where that cooled off valuation, to your point, is like an entry price that is more attractive than if you didn't have the cooling off period, but the business themselves... I mean, SpaceX's revenue, they reported a 160% year over year growth in their revenue. That is just mind boggling. Mhmm. We are talking about Microsoft. They have 60,000 people that they have basically said, do you wanna take a buyout of your contract? My guess is that 60,000 number is not a number they just like licked their finger and stuck in the air and came up with 60,000. It probably correlates to some sort of investment they're making around AI infrastructure something, and they're offsetting. If we make these investments, but we have these 60,000 people, AI can make up the gap from a productivity standpoint, and we're going to be closer to kind of a a neutral impact to our financials. And then you look at Anthropics s one, exploding growth. I mean, we could go through... I I have a ton of these that we could go through. And you sit there and you say, what are people worried about? What what... The fundamentals are telling you, this is one of the greatest, you know, kind of economic booms for a capitalist society, probably in human history. Mhmm. And people are literally talking about bubbles. So
00:24:13 · Jordi Visser
[00:24:13] S2: first of all, x has a huge part of this. As someone who looks for news stories to cover, there there is no middle rational line. Like, in my head, I I have no problem being bearish on things. If I see something... I mean, I talked about the AM mid cycle slowdown. If we go back and pull all of the things that I was talking about in in March and April, but also in, I wanna say, a year ago today, I was talking about how tech is going to have issues outside of the AI trade, and we've gone through that. Salesforce.com is still down for the year. Now it was down big. The soft... The true SaaS names have had a bad year. The hyperscalers. I mean, as of yesterday, this is before what'll happen today with Amazon. The four equal weight, or the four hyperscalers, it was flat for the year as a group. One of them was up 9% Microsoft. I do wanna expand on the Microsoft thing, because I think it's important for people to hear this, because this is a a very important story, which I won't get into it, I've talked about this a couple times in interviews recently. The Microsoft news does not get enough press. 60,000 people is 27% of their employees, 27. Now Is that a lot? Well, to put to put it in perspective, I mean, when you have 223,000 people and you're saying, okay, 60,000, you can take a buy up. Now they obviously don't expect all of them to do it. They did this once before, but they did it with 8,000. 60 thousand's a big number. And what do you think those 60,000 people that have been offered the buyout? Are they, like, feel secure in their job going forward?
00:26:01 · Anthony Pompliano
[00:26:01] S3: Mhmm.