The Pomp Podcast
00:20:02 · Anthony Pompliano
I know that you probably are an expert in understanding these things. So maybe help us understand, like, how do these two things line up in terms of liquidity environment getting much more attractive for Bitcoin, and then what is the Elliott Wave analysis telling us?
00:20:16 · Jordi Visser
[00:20:16] S3: Alright. So the things I mentioned on the liquidity, you have to remember, so real yields went extremely high this year. So so people understand the difference between saying ten year rates went higher and real ten year rates. Ten year rates went higher, inflation expectations did not. So let me repeat that. We saw bond yields go higher, but inflation expectations actually went down since March. So you've had this scenario that when you're using inflation swaps or inflation expectations, you've taken real rates real rates up to big high levels. Now what's happened in the last week, we've seen another significant drop in inflation expectations. Two... One year and two year inflation expectations are lower than where they started this year, and that's because of the oil price that's come down. I don't think enough has been said about what happened this week. The fact that oil fell, I mean Brent crude was down $20 in three days, and that happened right before the election, and I've talked to a bunch of macro people and I'm surprised that people didn't realize that, okay, Iran, basically this week, seemed like they were the ones for the first time that said, hey, we're ready to talk. I'm I'm... Khamenei is giving the okay for them to have conversations. So the price falls. Every time the price has fallen this year, it's been Donald Trump basically saying, yeah, there's gonna be a deal, and then there'd never be a deal. This time, it was the Iranians that basically did this, and the oil price dropped. And I think that's probably because they held out for as long as they possibly could. They got their blue tsunami, and now they get to play from a negotiation in their mind of strength. The vice president is now on a different page than the president, and he's gotta start preparing for the election in 2028. So the oil price has come down, and those types of things, real yields, oil, they've had a big impact. The Fed raising rates, we went from expectations of rate cuts at the beginning of the year to significant rate hikes, not just this year, but into next year. And so I highlighted that that's been correlated. These are all negatives for gold. They're all negative for Bitcoin in terms of the liquidity side.
00:22:26 · Jordi Visser
The only reason that I think people were disappointed is because the AI trade was trading better, the Nasdaq was up, but now you've got the Nasdaq down, you've got rates falling, you've got oil falling. So I know this is hard for people to do. It was easy in people's minds to go invest in the AI trade in May and June because it was working, and now they don't wanna buy anything. The reason I said I haven't made a purchase yet in the last two weeks that's up on money, there's no way to buy the bottom of this. I don't don't think. I also think the AI trade is real and this isn't a bubble, So by not having a bubble unwind and by feeling the liquidity is good. For the Elliott wave, Elliott wave theory is very, it's the technical analysis I chose. I chose it because of Paul Tudor Jones and Stan Druckenmiller when I read a book that they were both quoted in where they said this was the book. At least Paul said he read it every single year. Stan said he, as I got to know both of them, Elliott Wave is just such a beautiful art form for markets. The theory behind it is from, I think his name is RN Elliott. But he was basically an accountant who decided he was gonna study all of the chart patterns of stocks and think of it as coming up with the way that stocks move, because at the end of the day, they are human psychology. And what he's found was that they moved upward in impulsive moves, and then there'd be a correction where it would kinda go sideways, then they'd go up powerfully again, and they'd go sideways, and it would go, and everything moved in kinda fives and threes. So the thing I showed you on the video, Bitcoin's move from the lows back really in June into early July, and then up to where we just peaked, that was five waves, and now we've seen a three wave correction that is almost textbook, getting now down to the two hundred day moving average, which is right around the 73, 74 area. So everything looks good, assuming that the equity market is gonna find a loan. The other thing I showed in there is there are some signals I'm looking for in the equity market, which haven't triggered yet, but we're closer to them today than we were when I did the video this morning.
00:24:33 · Anthony Pompliano
[00:24:33] S1: Alright. So there's two other aspects here that I think are interesting. We have talked a lot about the intersection of AI, Bitcoin, and crypto. I think that if there's one person in the world that could be boiled down to living at that intersection, building a house at that intersection, building a skyrise at that intersection, it is you. You have the foundation. You have the streets. You've got the street sign. It is called Jordi Visser Way. You're talking about AI speed headwind for crypto. The faster the AI thing went, the more that it sucked the air out of the room for crypto. If now it appears both through midterm elections, some of these other components, there is some headwinds for AI or at least some difficulty ahead. Is it as simple as, like, rotate back to crypto, or do you think that both of them keep some sort of correlation that people get worried about, like the Nasdaq and Bitcoin, you know, trading similarly?
00:25:29 · Jordi Visser
[00:25:29] S3: So here's my thought on on this, and I showed this in the video. Bitcoin is... Has been this year fairly correlated to the Nasdaq over the S and P. Nasdaq over the S and P is another way of saying beta versus quality. So beta meaning faster moving stuff Nasdaq versus quality, the S and P 500. I think that's still gonna hold. So what you have to remember is things can stay correlated, but better returns can happen in this. If if the Nasdaq goes up 10% a year, but Bitcoin goes up 50% a year, If I would have said to you, Nasdaq goes up 10% a year, and I said, hey, based on your brain and where this is, what do you what do you think Bitcoin would do? Most people would say 15 or 20, probably has, you know, one and a half to three times level, it used to be three, maybe it's two now, so 20% a year. I actually think when the true trade happens, people get frustrated by things that are not growing anymore the way that they used to. Or, and this is what's happened this year, Bitcoin volatility stayed around 30 for basically the whole year. I mean, when I came in here, like, I mean, I think Nvidia was down about 10% today. Micron was down more than 10%. The S and P... Like, you're getting moves where the volatility with inside the AI trade is so much higher than Bitcoin, and this was not the case before. So the reason this wasn't the case is because of the hyperscalers. So I just wanna make sure people realize this with the mag seven. The mag seven has had significant... Well, at least the hyper scalers. So Meta, Amazon, Google, Microsoft. They've all in the last twelve months, all of them had 10% falls in a day. Amazon is the only one that didn't do it exactly in a day, but it was pretty close and it definitely did it over two days. But regardless of that, these things have had huge falls in one day. They've also had tremendous volatility and they've been basically around flat going up and down for most of the year. These were the kind of names you just own. What I said about call options before, when you start spending tons of money, you are taking lots of risk. If the democrats slow down the ability for these companies to get their data centers done, well that hurts the revenues because they have a backlog. At the same time, when you read what the new governor of Texas has said, she did not say she hated data centers.
00:27:52 · Jordi Visser
She basically said before data center will go up, I wanna make sure that the people financing this are paying the people, like there's a cost that's gonna go higher. This is not just a tax from memory, this is a tax from you're gonna make sure water's taken care of, you're gonna make sure electricity's taken care of. They're gonna do that anyway, but it does come at the expense of margins. And so when you go through all of this, I just think the headwinds on public tech companies, we've learned about this year. One thing I can say with certainty to everyone watching this, there will never be a time where you will be able to go three months without some risk that makes this question that happened with the midterms rise to the surface again. Bubble risk, someone defaulting, the open source models being able to compete on price. You guys... You you and I have talked about a lot of these issues. This has been a year of a lot of headwinds in AI, which I don't think anyone with certainty can say, no, no, we'll get over all of these. It's a very different world than it was before, and I'll finish with this. All someone needs to do is go look at 2010 to 2019 and look at a chart of the hyperscalers, and really the MAG seven. This was based on SAS. The one thing about SAS is it was a growth thing that was just happening every single quarter. There were very little times to worry. There were very little volatile shocks. It was a fairly boring period. You also had zero interest rate policy. People got used to that. Hedge fund managers got used to that. The people that made the most money from 2010 to 2022, they rode this SAS train. It's gotten much more difficult over the course of the last, you know, two years, three years since the rate hikes. I don't think rates are gonna go falling down. I also don't think that the headwinds are gonna be gone from AI. So if you're investing in this stuff, you're becoming a trader whether you like it or not. You can invest in the S and P five hundred, but like I said, this has been a very bad year for the S and P five hundred relative to earnings. It might be one of the worst in history. With where we stand now, we're no longer up double digits, but earnings are growing close to 30%, so multiples have compressed. And that is the market saying to me, yeah, these headwinds are getting to be a problem for equity growth.