The Biggest Pivot In AI History Is Happening Right Now

[00:00:00]When SpaceX happened this week, it became obvious. SpaceX and Bitcoin are basically to me the same thing. I love when people send me things and they're going, "You're wrong. SpaceX is overvalued." I'm like, "When something doesn't have a valuation, it can't be overvalued or undervalued. It has no valuation. It's a complete guess. We're talking about flying to Mars. We're talking about flying to the moon and building space stations." Like, this is a this is a dream. So, Bitcoin has no energy because it is a vehicle meant for two things. One is >> what's going on guys? Today we got a great conversation with Jordi Visser. In this conversation we talk about what's going on with the hyperscalers, why their stocks have been a little weak, what's going on with Fable 5 and many of the open source models, how the competition is heating up, what that means for you and for investors. We talk about Bitcoin trueflation, Kevin Worsh's first meeting, and what the Fed is likely to do going forward. Jordi is thinking a lot differently than he was maybe a couple of weeks ago, and he explains what's changed, what's stayed the same, and how his portfolio is adopting. Hope you enjoy my latest conversation with Jordi Visser. All right, Jordy, there's a big pivot going on in the AI world. It feels like the hyperscalers, there's a lot of weakness there, but there's a lot of technical innovation that's going on. How do you evaluate the current state of AI and why so much of a pivot is occurring?

[00:01:12]>> You know, a lot's happened in the last two weeks. That's probably more important than what um everyone realizes. And I think this is just a world where we sit here, we talk about AI every week. I think the reason we always have a new topic to talk about is because uh the changes happen so fast. I wrote a paper this week and so people know this because the the the number one story from let's say the end of February until now has been the straight of Hormuse >> Iran the US >> during that period where oil prices peaked in the first week literally the first week and then progressively have gone lower despite all of the doom and gloom forecast by um people who get paid to sell subscriptions on oil. Uh there's been over 20 model releases in AI, including Opus 4.7, 4.8, and Fable. So, uh the progress in AI last year, we had to wait a long time for Chat GPT5 to come out.

[00:02:17]Uh it was the most anticipated model release and the most nothing release of any model yet. And now we're releasing them so fast that they don't get any attention. So, in the last two weeks, we hit a point, and I think for everyone, um, they should go back to the the piece by Leopold, who's gotten all this attention now because of his hedge fund going up astronomically, >> situational awareness, >> situational awareness, and they should go back and read it. Um he highlighted in there that an important moment would occur in 2027 2028 when we would reach recursive self-improvement but also when the government would be forced to basically regulate AI and it would no longer be this everyone has this model and that happened in the last two weeks.

[00:03:03]>> Now recursive self-improvement is basically the idea that the model doesn't need feedback from humans. It is learning autonomously essentially and making improvements to itself.

[00:03:12]>> Yeah. Yeah. So we have to hit AI agents first and then the question is how long between AI agents growing in numbers. So think of it as digital employees just sprouting everywhere and the models getting so good that they can create new models on their own and all the algorithmic efficiencies and things that'll come with that. So he wrote that and we've got the government now getting involved and it's specifically involved because a third party researcher in this case it appears to be Amazon figured a way to get around the guardrails. So all that time we heard where mythos was released then it was pulled back during that time period they put up guard rails to make sure that they were preventing bad actors from being able to do bad things. Just so for people who aren't deep in the weeds, uh, Mythos was a new model from Anthropic. It was deemed incredibly powerful. People were using it internally in testing and they were finding a lot of cyber security uh, kind of vulnerabilities. And so the government and a couple of cyber security companies came together, said, "Hey, this may be too powerful to release in its current form." And so, Anthropic essentially took a watered down version. They were able to create these guardrails uh, around it. and they released it under the name Fable, but within I don't know what was it, three days. Yeah.

[00:04:27]>> Somebody at it appears Amazon was able to basically jailbreak it. So same way you could jailbreak a phone, you they jailbroke the model and then of course everyone freaked out cuz they're like, "Oh my god, this mythos thing is actually out in the wild in a jailbroken form."

[00:04:38]>> Yeah. So for those of you looking for an analogy who've played golf, if you take the governor off your golf cart, it goes a lot faster. So that's what they basically were able to do.

[00:04:46]>> No one would ever do that.

[00:04:47]>> No one would ever do that. Not not as a young kid playing golf. Um but what did end up what ends up happening is Leopold talked about the government getting involved which has happened and recursive self-improvement. Now he forecasted that that would happen in 2027 2028. So again I I want to make sure people understand that we've reached a point where the next step is AGI which is something we've all talked about. So you've got the government getting involved shutting it down in a way that makes it very very difficult.

[00:05:16]I'm sure it'll be re-released again after new guardrails are put in and they find some way to go through it. But you just opened up a can of worms and what he wrote about is once you get to this stage, everything changes. Now, at the same time, Z.AI, another one of these Chinese open source models, released GLM 5.2, which ended up basically getting close to Fable 5 Mythos. And so you've got you've lost sovereignty where you don't know if a model can be shut down. So if you built your entire business on Fable 5 now it only been quick. But let's assume you used it and you've already made upgrades and then all of a sudden they say it's shut down. Okay. But you've got an open source model which you can just download onto your hardware, run it, and it's almost as capable as that. Is this the point now where we start to see the drive to more open source? And that's become a story that's bigger and bigger. Now, at the same time with recursive self-improvement, you had OpenAI basically say maybe we're not going to do an IPO and the speculation on this point when they brought up codeex and all these points is are we reaching a point where capital is not going to become as important because these models have improved at this pace without the data centers being completed. So from my side the pivot point is we have a stock market which has just raced higher based on the capex buildup.

[00:06:41]every single part of its capex buildout.

[00:06:43]I think again we're at a point where in when the market shows the next sign of weakness in some of these semiconductor names and stuff, I think people should pay attention. What I just laid out is a narrative that will be a bigger narrative sometime. It might take 3 months, it might take 6 months, it might take 12 months. But when you combine what you said, which is the hyperscalers are weak.

[00:07:05]The hyperscalers are weak because they're spending tons of money. And the question is, are they coming under pressure now to maybe cut their capex, especially a Microsoft and a Meta whose stocks are extremely weak.

[00:07:18]>> Now, as we watch this play out, there's a couple things that I think are happening. And I've talked in the past about, you know, the mandate from heaven 12 months ago was everyone go use AI.

[00:07:26]And every company went and ran crazy with it. We have now since seen uh a number of different companies come out and either say we blew through our budgets, we're spending too much. Hey, we're taking down the token leaderboards and we're saying it's not about consumption, it's about output and efficiency and effectiveness. Um we inside of Sylvia have seen this where we said hey look this user generated that means everyone can just go spend as much as they want of our money for subsidizing. Let's stop doing that.

[00:07:55]I see the per customer per query demand actually shrinking because everyone's becoming smarter about how efficiently do you use the model and the best way that I use this is like you know uh if you're using your regular computer and you type something in and you measured how much computational power is used for that query it is getting more and more efficient over time that's basically what's happening with the models >> but their revenue is skyrocketing still so each individual customer is becoming moreffic efficient which means it's actually less revenue for the company on a per query basis but the demand is not slowing in fact actually it may be accelerating because people are realizing wait I can do this more efficiently I get more productivity out of this and so I actually want to consume more overall it's just that I'm getting more productivity is that kind of how you see this playing out >> yeah so the whole point with Jevans paradox and this whole belief that if token prices start going lower because people get more efficient with going on the models get more efficient all this stuff happens you end up with place that you're just going to get more demand um which I agree with over the long term. I I I think in the Q1 of this year we had an explosion of people diving into anthropic partly to because they felt like they were falling behind. So one of the things that I think with Jeff German's paradox that people assume uh especially the people who say it on the AI side is that it's going to be a linear growth adoption and I don't think that's the case. I think now we're in a place where people are analyzing just like you just said with Sylvia, how much money am I spending and what ways can we get around that? Now it happens at a time when open source models are way ahead. And when I mentioned Leopold's situational awareness, if people go back and read it, he didn't expect open source models to be where they are. He literally in this piece he wrote about how important it is for the US government to take over these models if they get so good to pres to prevent China from the ability to catch up because it's a military dominance thing.

[00:09:47]Well, the Chinese have been able to keep up no more than 6 months behind without having our chips to the degree that is without having all of the things of the model. So, I think we've kind of reached a point in in AI where it's amazing how fast this moves. A year ago is when the GPT5 thing happened. It's it's we're we're moving so fast that I think people are getting caught up particularly people investing and this is a warning to everyone out there. Um this is why I do my weekly video. It's like anything can change during the week. And this narrative that I'm talking about and what you're saying we could see a period where token prices drop because the adoption side pulls back for a variety of reasons even though in the long term German paradox is going to work. So I think the cost of the data centers is becoming the bigger issue.

[00:10:37]>> There's two other aspects to this. um if the Chinese open source models are able to keep pace with the US models, I think the generalized uh view is that they don't have access to the chips, the power, you know, kind of all the the training ingredients, if you will, but they're keeping pace to a degree. Does that actually is that like indicative that the United States is not innovating fast enough? like we should the gap be bigger because of the advantages that we have in terms of chip access power uh and the computational um uh kind of aggregate size the training data all these things.

[00:11:10]>> So again this argument has been brought up now for since deepseek in January of last year which was okay when you take away something the the raw brute force of data centers and colossus and all of this stuff and you just say you're going to have to get smarter without it. The interesting thing about this week, there was another thing that Open Router came out with which was called Fusion.

[00:11:32]Now Fusion is somewhat similar to Z.AI GLM 5.2. GLM 5.2 is a mixture of experts. So with inside the model, it's kind of like having a judge and then a board that's giving things and then one person is, you know, one one part of it making the decision. On Fusion, it's taking all the best models and kind of taking all their opinions and going up.

[00:12:04]Now, when I originally showed people and gave prompts out on on on my payw wall, the thing that got the most attention was, "How did you come up with this concept of deep research?" So when I do deep research on Vera Rubin, which I just did one this week, I actually use all five models to do the deep research.

[00:12:21]So 30 pages each from five different models and then I consolidate them into one that is somewhat similar to what Fusion does, but it also has a similar construct to the way GL GLM 5.2. The reason I bring that up with the Chinese open source models, they're forced to take these other techniques using reasoning, using reinforcement, learning, human feedback, mixture of experts, all these different things and come up. And I just think that that has led to more innovation on them side on the algorithmic and the efficiency side while we've just focused our attention on all the spending on the data center side to getting bigger models and going through it. That's where I think it hasn't been that long. It takes a long time to get these data centers built except for Elon Musk. So I think maybe we're at that pivot point where people should start to pay attention that there will be another narrative at some point this year. There's no doubt in my mind.

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[00:14:19]Go check it out today and see if you should get into the mining game. All right, now let's talk about the capex spending. Um, there has been a lot of debate as to are they spending too much?

[00:14:29]if they're not using free cash flow, they start to take a lot of debt, then there's the kind of leverage question.

[00:14:34]Um, but I think what you're really highlighting is maybe the amount of power and uh compute that we thought we needed, we may not actually end up needing if there's this recursive self-improvement, the software side is becoming so efficient. How do you analyze what the tipping point is when you would say, okay, all of this capex spending, maybe we only need 50% of what we thought we were going to need.

[00:14:58]So the tipping point from memory stocks is honestly going to be if someone says they're cutting capex. Uh the second derivative is a very powerful thing in investing. Um I say it all the time rate of change. And if you look at um semiconductor dollar growth for this year according to Gartner it's going to be close to 100% relative to last year.

[00:15:23]The forecast for 2027 is about 30%. So we went from 100% growth to 30. That's a problem. Um now again it's a good problem to be growing 30%. But if you question whether the capex is necessary, that is the point where I think people start to worry and I think it starts to become a bigger story. Now I I will say this to everyone out there. We have such a shortage of memory that it would be an air pocket. Uh and that's what I expect to happen at some point. I expect capex air pocket where everyone freaks out.

[00:15:53]>> Yeah. What does that mean air pocket?

[00:15:54]That means that if one person pulls back on their capex and again we have no signs of that right now. If anyone would be the likelihood it would be Microsoft is is my guess.

[00:16:05]Sacha Nadell has been very outspoken about things and even said in the last week they're moving to DeepSeek possibly as some for >> like a Microsoft hosted deepseek version or something right.

[00:16:16]>> Uh and again what that is basically saying is he made the decision a while ago to kind of break ties with open AI.

[00:16:23]He has said that the models will eventually be commoditized and getting involved in this. He said this not that long ago either. So when people go that was a long time ago. It was a long time ago in AI time. It was like a decade ago in AI time but it was about a year ago in in human time. Um >> mere mortal time.

[00:16:38]>> Exactly. If they and again they have a problem with pulling back on this not because they're a model company but because they have Azure and they need more and more stuff for to house this because they've got a lot of revenue to come in. But if capback starts to slow down, then all of a sudden you've got all these memory that's sitting there, it will not stop. Because what shutting down Fable 5 said to every country in the world who's way behind the US, you better go build your own thing. You better have open source. You better have whatever because you cannot depend on the United States to just give you models cuz we shut down the rest of the world. Non US people cannot use it. Um, the ironic thing is philanthropic and I think for all of the model companies like 70% of the people that work there are non US people from the moonshots uh episode this week. So I just think that we're going to hit a point where the risk finally and I didn't think this was going to happen is that there'd be an air pocket in capex because one of the companies would say we don't need it.

[00:17:38]You'd have all this memory. The stories would start going they have all this memory they're going to need to dump.

[00:17:43]But Apple said they're raising prices because memoryy's got it more expensive.

[00:17:46]At some point here, the price of all this stuff that's been hoarded could end up in an air pocket, but eventually everyone will build their own AI factories and every country will and there'll be demand for memory for the next 5 years. But I do expect an air pocket at some point.

[00:17:59]>> The open- source uh or open systems seem to win out over the long run. Um you know, AOL versus open uh systems. Um you've seen a lot of open source technology, Linux, etc. that that continue to dominate. is your belief that these closed AI models or the open source models end up winning over the long run?

[00:18:19]>> So I I do, but I think for scientific discoveries and stuff, they'll just continue to be there. I think anything that >> the closed sourced ones.

[00:18:28]>> Yeah. I I So I think um you have to break this down and say we need more Einsteins to solve living forever, to solve energy, to solve space, to solve having data centers on the moon. like Elon Musk is great, but it would be great to be able to do much better simulations and actually have scientists that are uh at 400 500 IQ. So, we're going to need those for scientific breakthroughs. But I think we're coming to the point of what do you actually need for all this other stuff. And I I think housing your own models, training your own models, which is different than what's happening. Um I do think we're getting to that point. I've always envisioned that there'd be more specialized models for particular things that each company that was big enough and was involved in something important would have their own factory just like Eli Liy does with Lily Pod. Uh I think we're going to get to that faster than we were. I never thought you could depend on the cloud for a variety of reasons. But now what's happened is it's not just security, it's not just latency, you're also dealing with the issue that you're at the mercy of a company that just says you can't use it anymore. Mhm. The thing that I kind of come back to is uh Revolute is a business that usually isn't talked about here in the United States. Uh Revolute is um maybe for the the most basic description for people to understand is the Robin Hood of Europe, right? So it's retail brokerage. They have a lot of banking services etc. Um they actually trained a foundation model and it seems like okay they've got their like retail offering and now they've got this model.

[00:19:57]We'll see what they do with it but that seemed like a very big breakthrough moment. Midjourney this week came out with uh hey we've been doing this image uh you know creation. It was this cute creative tool. Oh now we're going into hardware medical services and they seem to have a pretty big breakthrough in terms of the ability to scan your body.

[00:20:17]The way my I understand this works is like you stand on almost like a graded platform and then they submerge you in water and they're shooting light into your body. um and they're able to do some imaging and it's supposed to be, you know, faster, more accurate, etc. Forget whether it actually works or not.

[00:20:35]A retail brokerage creating a foundation model that is a cranking of the ambition dial from like 20 to 100.

[00:20:42]>> Mhm.

[00:20:43]>> Midjourney going from creative image generation to medical device cranking of the ambition dial to 100.

[00:20:51]I h I just don't see anything else other than like AI is now giving them the ability to do this stuff in a way that they couldn't have dreamed of trying to accomplish these way bigger more ambitious projects.

[00:21:03]Is that what we should expect now as the new normal is like people will just say what can I do that's bigger better you know go faster? Yes. Yes. Yes. I mean last week just as like a a jump off point here. So when you brought up Jeff Bezos and Bezos and Prometheus >> Mhm.

[00:21:23]>> crazy.

[00:21:24]>> Yeah. Crazy. And again intelligence is involved in all it crosses sectors. Creativity in my opinion crosses like you can have a person who's an engineer who is the greatest artist painting and cook and writer and all this stuff and you just would never know and you view them as being this math person that's good this what AI allows you to do is take intelligence and combine it with creativity and with that it's very powerful as someone who spends his time trying to think and I had to find a word for this because I've said it a lot on on on this show because I know we we reach a an audience based on the response that I'm getting that might be different than a lot of my my viewers, which is people that have children that care about their children that are not just in the financial world.

[00:22:13]>> And the issue with that is for all kids, they need agency. Um, and that word to me is very powerful and I think it fits into uh a degree what you're saying. If you're a person at home, agency to me fits directly with empowerment. How do you use the tool yourself to create a business, to create a life? And curiosity will lead you down rabbit holes that you never expected, but you've created the idea combined with the interaction with AI. It's the reason why the most powerful people in artificial intelligence that I listen to, and I've run into them at conferences, and they're at all ages, and you probably fit in with this to some degree, although your your your kids are younger.

[00:22:56]I don't have free time anymore.

[00:22:58]>> And the reason is because I can have a conversation with the smartest person I've ever met and any question that enters my mind, I'm in the habit of what do you think about this? And by the time we're done, if it's a great idea, it might be in my video over the weekend.

[00:23:14]I'm spending more time trying to help people with using artificial intelligence to get to your point because they can create ideas that will be better than the job they have. And the world needs people doing that because it speeds up innovation. It speeds up curing health. When I first talked about Eli Liy and I mentioned uh something on Nolan podcast that Gavin Baker talked about about a hedge fund manager that basically spent all of his time to figure out how to help his child that had a disease and he found a medicine that existed that came back and I don't remember I don't think he got into specifics but let's assume it was something that was being used for something else but AI said this will probably work for that and it ended up helping his kids and I mentioned other people that have had mold issues and all kinds of different things that have ended up there. You have to understand that if you're not using artificial intelligence, number one, you're falling behind on everything. And that's the reason why now I've broken my my weekly to there's a signal. How do I avoid the noise? This is a bubble. This is bad. Okay, let's get through it and show you the facts on this. The alpha, okay, if you're going to invest, what should you invest in?

[00:24:19]Why are the hyperscalers not working?

[00:24:21]And why are they an issue on the spending side? And why are all these memory? What's the risk that the memory names fall? And then you've got the agency side. Once you start with AI and you start using it, you get more powerful. And I think you can end up in the same situation as the story you described.

[00:24:34]>> Now, uh Torsten over at Apollo, uh he has uh sometimes charts heard around the world. You know, it's like a canon. He puts the he puts it in, he packs in all the uh uh the powder and then he says 3, two, one, fire. uh today he fired one which is uh if you take out AI and energy stocks from the S&P the S&P 500 is down. Now I jokingly said earlier well if you take all the water out of the ocean then there's no ocean right obviously. Um but I do think that there was even a day this week Ryan Dietrich pointed this out that like 428 of the 500 stocks sold off in the same day. One of the biggest sell-offs where you know majority sold off. And so we've been talking about this for a long time now, how there's weakness in a lot of other industries. Do you get worried that it's only AI and energy or are you like, no, this is what happens. There's sectors that get hot, everything else kind of cools as capital rotates and you know, this is more normal than people would think.

[00:25:34]>> Um, I mean, we watched this the prior 15 years.

[00:25:39]The S&P 500 was driven by the Mag 7. So this is not something new. And this is what happens when innovation reaches the point where it's very concentrated. Um the the the funny thing is the Russell >> indexes work.

[00:25:52]>> So in mentioning the S&P a lot of times what I'll I'll look at is a combination of equal weight or the Russell 2000. I mean these are small cap stocks. The Russell 2000 made an all-time high this week. The S&P 500 did not. So the problem is for people with statistics, you can always find statistics that support your case. You can always find things that show up. Here's the reality.

[00:26:17]AI has exploded higher in a pace that no industry has ever seen. I believe it is incredibly disruptive. I believe it has been a problem for a lot of things, but I also believe that a lot of the S&P 500 are companies that are based on the industrial revolution. And now we've got companies that are based on AI. The industrial revolution companies which make up the majority of the names. I I don't see how they're going to compete.

[00:26:44]It'll really get bad when crypto is working too because then crypto will have the same impact. So I have said before, I will continue to say it at the pace that we are going and the fact that we are closer to we are at RSI now. AGI is behind it. Super intelligence behind that. We will have missed the forecast.

[00:27:00]Everyone's moving their forecasts up on AGI. everyone including Deis Sabis who was the most skeptical I'd say realistic person someone who I actually believed the most he is not hyperbolic in any way so when he goes from I think it's in the early 2030s to I'm now thinking 2029 that's a big deal to move up the timeline that far for it to to shatter Liupold I have said 20 by 2030 all companies that exist all large companies will have an issue with AI they will be disrupted in some way. If we don't need as much capex, well, then there's nothing left in the stock market. I I mean, you're commoditizing AI, which is the model companies are having trouble with that.

[00:27:45]If we don't need the capex, but AI is accelerating without the capex, what's going to happen to all the capex stocks?

[00:27:50]So, my belief has been for all investors that at some point here, it becomes an issue. We're not there yet. Earnings are growing, the stock market's up. I learned a long time ago as my first rule before I ever put a dollar into the market and I ever traded. I studied the Elliot wave theory for a reason. As long as the market is trending a certain direction, everything's fine.

[00:28:13]>> If the market has issues like breath and all this stuff, the S&P 500 will start to go down. But the S&P 500 is like Bitcoin is completely amorphous. It gets rid of the weak and it keeps the money with the strong. right now. AI are the strong at some point. I'm not sure all the AI companies are going to win.

[00:28:32]>> All right. Kevin Wars had his first big day in front of the bright lights. Uh started off hot. Didn't say good afternoon. Said good day. Everyone was freaking out about that. Um I don't know. I thought he did a pretty good job. Uh he didn't say a lot, which maybe was why he did a good job because he didn't have a big attack surface. What was your take on his press conference, some of the decisions they made, uh their focus on, you know, this task force? I think what we learned is he's going to be very different than Jerome Pal and he has said that um he has very different views. Uh I think the reaction by the media was just like the oil doomers and just like every other issue that has popped up. Tariffs are going to take down the country. Oh, he was hawkish. He wasn't hawkish. Um it's ridiculous. Uh tenure rates have been stuck in a range now since 2022. And in this weekend, I'm going to highlight to people the only reason rates went higher over the course of the last since 2021 is because the Fed raised rates.

[00:29:34]Yes. We >> Funny how that works.

[00:29:36]>> Yeah. But that's it. Like everyone is worried about the debt. Everyone is worried they're going to go higher.

[00:29:41]Every time it ticks higher for a week, then everyone comes out and says the world's going to end. Then it ticks right back down. Two things that happened. Uh number one, he's a believer in productivity. He announced task forces. Now my kind of thought on the task force is he believes which I do as well and I think a lot of I think a lot of younger people non-academic and I consider myself non-academic because of much how much I hated school but I've I I I understand macroeconomics extremely well.

[00:30:11]I think the Fed has been in in the habit since 2009 of micromanaging everything >> every word every speech. It's ridiculous. At the end of the day, they do very little unless they have to come in and save something. That's it. Like, they're not moving rates much at all.

[00:30:29]They're going to cut 25. Nope. Now they're going to raise 25. Who cares?

[00:30:32]It's not going to change anything. It's a function where the market gets overly dramatic with it. So, the task force to me is, are we looking at this the right way? And I have said repeatedly GDP by itself is a horrible measure of an AI world. But let's use inflation. He has been very outspoken that he thinks the way we think of inflation and goes through it is wrong. He did not change and he won't change the target inflation rate. And the reason is cuz we're kind of trapped into that. If he came out and said, "I don't actually think the 2% means anything. We're going to go back to something else." But what he did say with inflation and what he said publicly is, I think the trimmed mean is a much better measure. And I completely agree.

[00:31:14]I believe in getting rid of these things that are way on the bottom, way on the top, and just kind of sticking with where the bulk of things are, using the median, and every single part of the median and trimmed mean, it's been it's been getting in a tighter range, meaning most things are kind of in this point of like 3%.

[00:31:33]And the extremes with oil and with all this stuff, it blew out. I think one of the most important things that's happened in the last month is as the news got worse on the straight of Hormuz, oil prices continued to move lower. We've seen no ships go through. Yet the ura price in New Orleans has collapsed back to lower than it was, meaning fertilizer.

[00:31:56]Somehow or another, the world had the most important thing shut down and nothing changed. How is oil ever going to sustain an up move at this point if it didn't just do it now? Now, maybe that'll change over the summer as we hit rock bottom, but I learned with prices, that's a warning sign. And the reason that matters is one-year inflation swaps, which are the only thing that has led the rise up in 2022 from the Fed. It led the entire time said, "Okay, inflation's going higher." It collapsed over the course of the last two weeks.

[00:32:29]So all the crap I gave to true inflation, even though we did get above 4% and they broke away from their CPI kind of guide, it stayed near what the median did and what the mean did. And now we have a Fed chair that's trying to create a task force to agree that okay, we shouldn't be watching this thing. I think that means actually at the end of the day when they focus on inflation that they're going to realize that it's actually lower than what we thought it would be. And if it couldn't go higher with that, how is it actually going to go higher when you strip out memory prices and you strip out all these one-off things?

[00:33:03]>> Are you saying that you think true is more accurate now >> or no?

[00:33:07]>> Well, again, when you say more accurate, >> let me rephrase. Are you using trueflation as a data point in anything you do or not really?

[00:33:16]>> This weekend, I'm going to show it overlaid with >> Oh, that's that's big.

[00:33:20]>> Yes. I don't think I've ever shown it in there. Um, but I'm also going to show how it deviate deviated from CPI. So, if if you were using it to forecast what would happen with inflation, it didn't work.

[00:33:32]>> If you were using it to say what the true level of inflation is that you should be using for where things will settle once you get rid of a disruption, it was far better than the headline CPI.

[00:33:44]>> But core CPI did the same thing. And I didn't think core CPI would go higher.

[00:33:47]The question is on this whole thing is CPI went up to 4.2. too. The next reading, which will come out in early July, >> you think up or down?

[00:33:57]>> It's going to be around zero.

[00:33:58]>> Yeah. Like zero 0% month- over-month >> growth. And that'll make the year-over-year down if that happens down to like four from 4.2. So, you'll have a peak in inflation, which will come back down. And and that was not not only not that, there were there were shows saying we're going to see double digit inflation. Double digit. I remember sitting on >> when listen on the the next CPI report.

[00:34:20]If that happens, everyone should just stay off the internet for the day. I'm going be uh you know what what's the saying? Uh uh trigger fingers turn to Twitter fingers.

[00:34:29]>> I I would be surprised if it doesn't come out close to zero just because gas at the pump has gone from 455 to below four now.

[00:34:38]>> Yeah.

[00:34:39]>> And that's one of the major drivers.

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[00:37:03]Uh I think two things are true.

[00:37:04]Everything you're saying about inflation, I think, is right. There's kind of been this peak. I think the end of the war, I early on was like, hey, I don't think the war is going to be that long. I think that we probably hit a point where I could say I was wrong about that, right? Like it was longer than I thought it was going to be, but it's still not like it's like a three-year thing, but I was like, hey, if we're going to do this, let's do it in like 90 days and be out. So, it's I don't know how long it's been now. Maybe it's 150 days or or whatever, but it's longer than I I thought it was going to be. And so there's been a little bit more persistent uh pressure, but the fact that we're now kind of near the end and it's now rolling back over feels pretty good. And it wasn't that crazy inflation. Very similar to the tariff thing, right? Some areas you saw spikes, whatever.

[00:37:44]>> At the exact same time, what is also true, if you go on the streets of New York and you talk to people about grocery prices, gas prices, all this stuff, >> they are in pain. If you go to any city in America, everything is way too expensive. They still can't afford a home. they still can't, you know, uh, buy all the things they want, all the stuff. And so, I've actually maybe changed my mind a little bit on when I talk to people in the finance world, it's all about the 2, you know, up or down or this or whatever. The numbers don't matter.

[00:38:14]>> Mhm.

[00:38:15]>> People psychologically think everything is too expensive. And it goes back to the Bessant, you know, do you believe the economic data or not? What he said is, no, I believe the people over the data. What I think he really was saying, you know, in hindsight was the data doesn't matter because ultimately people are going to act the way they feel. And so the uh the data point now that I've been using for the last week in conversation, I've got young kids. My wife went on Amazon recently. She bought two boxes of diapers. For those of you young men and women who don't have kids, you could do a lot of diapers with kids.

[00:38:52]>> I don't know. when I should ask her, were they like superized boxes or some whatever, right? But she bought two boxes of diapers. $150.

[00:38:59]>> Yep.

[00:39:01]>> I don't care how many diapers are in the two boxes. If you're going through 8 to 10 diapers a day, right? That's unsustainable.

[00:39:08]>> And so you look and you say, like, by the way, like I don't think he's buying, you know, super organic, non-GMO, whatever crazy diapers. That is one tiny anecdote across an entire economy where people are saying to themselves, "This is nuts." And World Cup ticket prices, Knicks, you know, NBA Finals tickets, all of that stuff, I think, is the extreme end >> where you just have this massive divergence of the K-shaped economy.

[00:39:34]But you know, the crazy data point in 2006, 20 years ago, guess how many Americans were considered under the poverty line? 36.5 million.

[00:39:45]20 years later, guess how many Americans are considered under the poverty line?

[00:39:50]35.9.

[00:39:51]It's basically the exact same number.

[00:39:53]>> Mhm.

[00:39:54]>> 20 years later, now people celebrate because the poverty percentage has dropped because the overall population has grown, but it's only dropped by 2%.

[00:40:03]>> And so, you look at that and you say, there's 35 million Americans who live below the poverty line. the poverty line for those that don't know $15,000 a year in income. A family is $33,000.

[00:40:16]>> 35 million Americans. And so when Kevin Worse gets up and starts talking about inflation and all this stuff, it's like, dude, we Yes. As an investor, you got to pay attention, the average American, Kevin Worsh, Kevin, right? They're just like, "Look, man, groceries are expensive, diapers are expensive." And I think that's ultimately where you get so much uh debate in uh in society now.

[00:40:36]So, I I have a uh >> I hope you disagree.

[00:40:39]>> No, no, no. I I think I have a different um a different take. And >> well, that's called a disagreement, Jordy.

[00:40:46]>> No, no, no, no. Um so, I I think inflation is um is an excuse for for people at this point. Uh it's not that it's not real, but it's always real. So, let's go through it this way. Wages are growing right now at 3.6% and inflation is four.

[00:41:04]>> So, not good. That's not good. That means you can't keep up with what's going on. Uh I think the bigger issue and the biggest issue and I hear this repeatedly from young people. So when I say young, because I live in Williamsburg, so I knew who was going to win the mayor the the election in in New York.

[00:41:20]>> I know you >> as opposed to being in Manhattan. Um uh that group of people.

[00:41:27]>> I'm going to be walking the streets of the Bronx this weekend, Jordy.

[00:41:31]Um, I've never seen young people more dissatisfied with the work environment than now.

[00:41:36]>> And here's what I think it's feeling.

[00:41:38]And this is a word that everyone hate hates. Um, Bruce Springsteen sang about this, trapped. There's no worse feeling for a human being than feeling trapped.

[00:41:49]>> If they're trapped at a job they can't get out of, you used to be able to go interview. And sometimes what would satisfy people enough is knowing they could get a job with a raise.

[00:41:57]>> Yeah. But if nobody is going to hire you for more money or the probability of finding it, you're trapped. If you're trapped in a bad relationship and you're trapped, if you're trapped in a city that you can't get out, if you're a Democrat and you're trapped in a Republican world, if you're a Republican and you're trapped in a Democrat world, I just think these have been amplified because of technology >> and it has coincided with the post period of the great financial crisis. So the great financial crisis took the unemployment rate up to 10. The iPhone comes out. So there's a grace period. We went from 10% all the way down to three and change. It took a decade. I don't think people realize that. If people are listening, we were at 10% unemployment.

[00:42:38]It took us literally a decade to get back down there. Now during that time, you could become a Door Dash driver. You could become an Uber driver. Like none of that stuff existed before the great financial crisis because we didn't have the iPhone. So I think there was a grace period for people. Then COVID happens and the reality sits in. We dump a ton of money on people. They yolo it for a little while. But then 2022 happens. We move rates higher. Insurance goes higher. And all of the money that we gave to people that they spent on cruise lines and traveling through Europe, well, they didn't work. That was meant to offset the inflation that comes.

[00:43:12]There's a direct relationship between this is money because we're shutting down the economy. We know it's going to create inflation. So don't spend it all now because you're going to need it. and then we reset the bar and then the job situation was worse. That is what I think happened and AI happened. When did it happen? 2022, right? When rates went higher. So, I just think there's a chain of events here that have left people um angry and they're blaming inflation. They're blaming politics. They're blaming a bunch of stuff. The reality is uh I believe in empowerment and that gets back to that agency side. You have a chance to make more money. you have a chance to not have to work for someone or make money on your own, just like you did as an Uber driver, but you have to use AI and you have to embrace it. And if you keep saying AI is a bubble and I don't want to use it, >> good luck.

[00:43:55]>> You're just being a victim then.

[00:43:56]>> Yeah. All right. So, we got two things real quick before uh uh we got to go.

[00:44:00]But uh first is Nick's parade happened this uh uh this week. Um my number one takeaway was New York forever. I mean that this is the most New York thing of all time. My second takeaway, do these people not have jobs? There's two million people in lower Manhattan right now. We gave our entire office the day off. And I said, "You want to go to the parade? Knock yourself out. You don't want to go to the parade, that's fine.

[00:44:22]You get the day off." Very unlike me to normally do this. But I said, "Okay, I at least know our people have the opportunity to go because we're giving them the day off."

[00:44:31]>> 50% of the people there, they playing hookie. Like I there's two million people, right? I was like, "What the hell is going on here?" Um, I saw one uh one image was a big picture of a huge crowd and it said uh for those of you watching this from your office on Instagram right now, just know your tax dollars are supporting these people. I don't think that's actually true, but that was the sentiment. That's first.

[00:44:50]Second, Bitcoin uh has actually been somewhat weak in the last two or three uh weeks. What's your take as to what's going on with Bitcoin?

[00:44:58]>> Um, so first of all, it's in a bare market. I'm going to say it every single day until it's not in a bare market. When we break above the 200 day moving average, it will change. Until that happens, it is a bare market. Every single time it runs into any moving average, the most recent one was the 20 moving average, it falls back down. Uh you mentioned the money going into AI when SpaceX happened this week and it became obvious.

[00:45:26]SpaceX and Bitcoin are basically to me the same thing. Like SpaceX is a future.

[00:45:32]>> They're both going to the moon. Well, they're both based on a belief that people have in the future. They're they're not about anything fundamental right now. Like, it's very hard to make an argument as to the fundamentals behind this. I love when people send me things and they're going, "You're wrong.

[00:45:47]Space S is overvalued." I'm like, "No."

[00:45:49]When something doesn't have a valuation, it can't be overvalued or undervalued.

[00:45:53]It has no valuation. It's a complete guess. We're talking about flying to the Mars. We're talking about flying to the moon and building space stations. Like, this is a this is a dream. So, Bitcoin has no energy because it is a vehicle meant for two things. One is for people to hide their money from the government, but that is always going to be a small portion of it because the wealthiest people on the planet, which is where it draws its money from, aren't hiding their money from anyone at this point because they're not taking it. On the other side is the energy that comes from retail and the energy that comes from momentum. It has no momentum last right now. It every week there's more people now. You've got uh strategy has brought people's attention. They're looking at the way STRC is trading and it's down to every everybody has a viewpoint on it.

[00:46:40]I'm going to keep saying the same thing.

[00:46:43]It is very difficult for Bitcoin to be traveling higher if all the money is going into stuff that is based on earnings.

[00:46:50]>> Mhm.

[00:46:50]>> We need and we're running into the second quarter. I believe the second quarter will be more of a disappointment for earnings than the first quarter. Not that it won't grow, but now the expectations are so high.

[00:47:02]>> 22% earnings.

[00:47:03]>> Exactly. So if if the stock market is unchanged from now until September, well, that's a better environment for Bitcoin than one where AI continues to go at 50% a month or 50% a quarter because if it keeps doing that, I do believe like you said six weeks ago, you're talking to people in Korea. It's like they used to be a big player in Bitcoin. Not there. Retail will migrate to what's working. And right now, Bitcoin is in a bare market. We need to see it change. And I'm gonna emphasize this point again and again.

[00:47:32]Never believe you're smarter than the market. Ever. The market knows. I had a day on Friday in my own or Thursday on my own portfolio. I finished up on the day.

[00:47:43]I have 20 stocks that I own including Bitcoin. 18 of the 20 were down. Two were up. Those two, Marll and Entrogress, they made up for everything of the other ones. But I silver was down, Bitcoin was down, Eli Liy was down. All of these things that we've talked about over the time, they were all down. When I'm hoping Bitcoin and these other things are working, it's when there's a pause in all of the AI stuff, but we're not there yet.

[00:48:12]>> I don't think that uh anything you're saying is crazy. I actually agree. I like Bitcoin here. We'll see what happens. um your video this weekend. If you get any value whatsoever out of Jordy, go to Jordy Visser YouTube on your little Google machine, AI machine, whatever. Go hit the subscribe button.

[00:48:28]It's a digital thank you, a little handshake. Dap them up, tell them I appreciate all the information. And uh we'll do this again next week. See you next week.