The Pomp Podcast
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.
00:30:17 · Anthony Pompliano
[00:30:17] S1: Okay. If that is true, you mentioned earlier the commentary that AGI being winner take all or Google saying, we'll spend whatever. I'll bankrupt the company to win this. Do you think it is winner take all? And should every company take that position of it is worth every dollar of spending even if it literally bankrupts the company for them to win?
00:30:38 · Jordi Visser
[00:30:38] S3: I think that is the one thing that's happened that no one has talked about. I... Of all the podcasts I've listened to with with Jensen, I like when I can do everyone's names by their first name, Elon, Brad, Gavin, go through the list. No one has said there's one winner, and the reason has been the physical hardware side. You need to have the physical hardware. So this is where the issue comes in because what are now the government saying? We're not gonna allow there to be one winner. Like, we're gonna be monitoring this whole situation, and if someone gets too big and too powerful, we're gonna get involved. So there's not even allowed to be one. Now I know I've said on on on our weekly talks, but I've said it on my podcast, I've said it with other people that if you don't think the government's gonna get involved as this thing gets more dangerous, you're out of your mind. And we're at that stage now. The government is more involved today than it was a year ago with AI because we've reached levels of cyber that are extreme risk. You hear this repeatedly, we had the Binance thing, which seems like a distant memory, but the Binance thing is a real risk for every single business. I know CZ talked about if you're worried about applications in crypto, you should be extremely worried about bank accounts. I think this is gonna be an issue, and maybe it's not a US issue, maybe it's a foreign one. I think bioterror, I think all of these things are things that people have heard about that are gonna be issues. So, again, I'm gonna say it, I think there were a lot of thoughts going into AI which have been proven extremely wrong, and I think the one thing that is happening is progress is moving faster than humans can handle it, And those humans are government, those humans are the companies that have lots of people. When Microsoft says they're gonna get... Offer buyouts to 27% of their employees, how is that not like a major warning sign that we have reached a level where this has never happened before and they're offering for 27% of the people in the company to go? This is a very kind of dystopian time that's only gonna get worse going forward.
00:32:40 · Anthony Pompliano
[00:32:40] S1: Now as we see headwinds, chaos, uncertainty, we saw Marvell do a big acquisition this week, and that seems to have caught a lot of people's attention. Is that a defensive acquisition? Is that an offensive acquisition? How do you look at consolidation? You know, whenever you get a lot of investment going on and then you start to get these drawdowns, usually, you see some sort of consolidation, but a lot these companies are pretty big. Mean, this was a 100 plus billion dollar acquisition. That's not like, you know, you wake up on Wednesday and decide, hey, let's go do that. There's a lot of work that goes into it. How do you view something like that?