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Bessent Gets Drucked: Bitcoin, AI, and the New Macro Clock — Transcript

by Jordi Visser · 11,567 words · 1,657 segments · language en · Watch on YouTube

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0:00All right, as far as I'm concerned, uh
0:02I'm back in Brooklyn. So, uh summer for
0:05me is officially over. And for everyone
0:08else, if it's not yet, it will be. Uh
0:11let's go through it. Um
0:15Bessant gets drunk was the big story to
0:17start the week. Then you got Wars at
0:19Jackson Hole. Uh a bunch of podcasts for
0:23the week. I also uh I got so many people
0:25reaching out about Grockbot that I am
0:28uploading a uh a prompt. I highly
0:31recommend
0:33uh everyone who gets the opportunity uh
0:37to use it. They've talked about having
0:39free trials. I would definitely at least
0:41try it to understand the agentic side as
0:43that is going to grow. Um, and if you
0:46have the ability of finding a way to cut
0:48$200 out of your expense for one month
0:50and get it for a month so you can play
0:53with it for a month, I guarantee you it
0:55will be a uh
0:58a special time to learn about what AI
1:00agents actually do and how you create
1:02things. Um, there are so many good
1:04videos out there that you can basically
1:06use to make sure that you're getting the
1:08most out of it. Uh, I will spend time a
1:11lot more on uh the AA crypto macro
1:14collision. There's a lot of information
1:16and as I've talked about, I will be
1:17putting out a video specifically geared
1:19towards uh crypto. Uh in September, late
1:24September into October, um I'm guessing
1:26late September I should have what I want
1:28to get done. You guys have seen little
1:29bits and pieces of it. I'll go through
1:31some more. Uh it's been a big month for
1:34crypto and I will go through and just
1:35highlight some of the things in there
1:37and then um the Agentic AI mud trade
1:41continues. So, we will go through that.
1:44Uh, I highlighted it last week. I'm
1:46going to start showing you guys just
1:48like it appears everyone else uh the
1:51disclosure side of trying to make sure
1:53you guys understand I'm trying to help
1:55you guys educationally andformationally
1:57and I'm really trying to give you the
1:59opportunity to know that I'm outsourcing
2:01uh or you're outsourcing to me the
2:04ability to stay on top of AI and move
2:06things. So hopefully you're getting that
2:08feel. So let's go through this. Um it
2:11the week started off with uh Bessant
2:13basically saying he could tap the1
2:16trillion dollar general TGA.
2:19Uh and that was followed up quickly by
2:22I'd say the biggest story of the week
2:24which was Stanley Ducken Miller
2:27basically writing an op-ed. I think the
2:29reaction to it was in my opinion off
2:32base. uh Bessant
2:36basically the way everyone wrote it is
2:39he was blasting uh Duck Miller was
2:42blasting Bessant. I really if you read
2:44through it and I happen to agree
2:47completely with what Stan is saying on
2:49the surface which is the more
2:52manipulation especially into something
2:53like tenure yields uh it's the only
2:57fiscal disciplinarian the US has left
2:59and that's really the key thing is the
3:01fiscal disciplinarian line and that's
3:04because it's Congress that's the issue
3:06this spending problem has been going on
3:08for a long time the distribution of
3:10wealth problem has gone on for a long
3:12time the kshaped economyy's gone on for
3:14a long time. Um, and this cannot be
3:16resolved with slight interventions into
3:19yields and not allowing yields to go
3:21higher uh is definitely
3:25going to create other issues. But, and
3:28here's the thing that's the most
3:29important, we're at around 240 250%
3:33market cap to GDP. We're going to be at
3:35300% soon. Uh, we're financialized. At
3:39the same time, the debt is enormous. So,
3:41you can disagree with what's going on,
3:44but there really isn't a solution that's
3:47easy, uh, other than allowing everything
3:49to head towards some sort of recession,
3:52which isn't an option. Now, I just want
3:54to make sure that you guys see that
3:56tenure rates are extremely mispriced
3:59relative to what we're doing in nominal
4:01GDP. And this is the issue is Donald
4:04Trump and Scott Besson have said they
4:06want rates lower. They're trying to
4:08handle the K-shaped economy. They have a
4:10belief that rates should be lower.
4:12Apparently, both of them do, or at least
4:13Donald Trump does. Uh here's where rates
4:17used to be. This is tenure rates, the
4:19orange line. And you can see that in the
4:2180s, we were above nominal GDP
4:24throughout the entire time. And then at
4:25this point here in 1997, before the
4:27Asian financial crisis when I was in
4:29Brazil, that's when they really broke
4:32underneath. And they've been underneath
4:33since then, except for periods of
4:35recession, recession, recession. Other
4:38than that, we've basically been at a
4:40point where we've been keeping yields
4:41below nominal GDP. Well, we not only
4:44have nominal GDP right now at six and a
4:45half percent, but it's climbing. And so,
4:49the reality is for everyone involved,
4:51you can make the argument that rates
4:52should be at eight and change. They're
4:55not. So, this is where it gets into
4:57something. And I remember I was at a
4:59dinner
5:00uh not that long ago, I'd say two years,
5:03David Zervos was hosting it. And
5:06actually, I know when it was. It was it
5:08was 23. It was right after SVB. And
5:12every single time people at the table
5:14said this is what the Fed should do.
5:17This is what the fiscal side should do.
5:20And David Zervos would just stop
5:22everyone and say that's a normative
5:23statement. I don't care about it. The
5:24factual statement is what is happening.
5:26And that's really important for this
5:28stuff. As you read it, you can sit there
5:30and have the opinion that Stan Ducken
5:32Miller wrote in the article. And this is
5:33what I was going through. A a lot of
5:36what he's talking about is what should
5:38happen. We don't make money on what
5:40should happen. We make money based on
5:42what the administration is telling us
5:44they believe in. So I want to highlight
5:47there is another endgame and I actually
5:49believe this endgame has a a legitimate
5:51chance or is probably a better option uh
5:55if we actually hit this point than the
5:58other one. And this gets into the debt
6:00and entitlement issue which is based on
6:03human
6:05time. The debt is based on human time.
6:08It is the denominator
6:10uh or the the number on top basically as
6:13you go through this. You're going to
6:16have to find a way, and this is what
6:17they're trying to do, is grow yourself
6:19out of it, which is highly unlikely, but
6:22it's essentially the same debate as the
6:24AI infrastructure debt debate. When the
6:26hyperscalers are taking all this debt
6:28out, they're betting that they're going
6:29to get the revenues in faster than the
6:31debt is going to destroy them. Um, I
6:35think there's less of a chance of this
6:37working out well for them in a growth
6:39perspective and more likely at the
6:42government level because I do think GDP
6:44is growing faster than what's reported.
6:46The question is the tax system is not
6:49set up to benefit from it. So, this is
6:52where the issue comes in is it's great
6:53if you're trying to grow your way out of
6:55it. You still have to find a way to get
6:57the taxes in. And my guess is, if I'm
7:00right about humanoids and what's going
7:02to happen five, 10 years from now, 15
7:05years from now, whatever number you want
7:07to come up with, we're going to keep
7:09kicking the can down the road and see if
7:11at some point if humanoids are in there
7:13that were taxing corporate profits to
7:15pay for this stuff and the debt will
7:17grow at a place. But the one thing they
7:19don't want to do is have interest rates
7:21go higher. So again, it is virtually
7:24impossible, I agree, without exponential
7:26without thinking exponentially for us to
7:28get out of this problem. And that's why
7:30I keep saying every week, if you're
7:32listening to economists, you're
7:34listening to people who only think in
7:35human time by definition. They're
7:38academics. They've done all this work.
7:40The problem is if you're not focused on
7:42AI and crypto and you're not focused on
7:44how quickly things are going to change
7:46from a speed perspective, the question
7:48is can you outrun the debt clock? And
7:52I'm just saying there's no guarantee
7:54that you can't. It's part of the
7:56probability distribution. It is not
7:58zero. And this is what they seem to be
8:00attempting to do both the hyperscalers
8:03and these guys. So it is a huge bet and
8:06I think we just have to follow the
8:08facts. So the facts are yen intervention
8:11by Bessant
8:14late July August 1st. Then the quarterly
8:17refunding language changes.
8:20Then we get the buyback framework in the
8:23refunding statement. Then we increase
8:26the buybacks.
8:28Then he says the buybacks could be
8:30bigger on CNBC.
8:33And then this week possible TGA use
8:35discussed. So I this is a pattern. This
8:40is not what should happen. This is
8:42basically there. I'll get into WSH in a
8:45little bit. But there's a really really
8:47big problem with listening to what
8:48people are saying as opposed to what
8:50they're doing. This is clearly what the
8:52administration is trying to do. They did
8:55this yen intervention. Are they just
8:57letting rates go or is this something
8:59they're trying to manipulate? and can
9:01the markets for the first time beat out
9:05what the Treasury and the Fed wants to
9:07do?
9:08Um, this was a great um piece I thought
9:11by Andrea Stenol Lararsson. I'm not
9:12going to go through the whole thing, but
9:13I think it's important to understand
9:16that he's bringing up the repo markets a
9:18lot in this and heading us towards a
9:20situation where we're trying to
9:23effectively have the debt at the front
9:27end. And this gets back, in my opinion,
9:29into the speed side and growing things
9:31as opposed to allowing long-term rates
9:33where a lot of things are priced around
9:34the globe uh at a level where it doesn't
9:37just hurt us, it hurts everyone around
9:39the globe if 10ear rates go higher
9:40because everything is priced off of it.
9:42So, it's not just a US situation, it's a
9:44global one. But he goes through this and
9:46how important the basis trade is in
9:48here. You guys have probably at some
9:50point, especially when there's an issue,
9:52heard about the basis trade. I'm not
9:53going to go through every part of this,
9:54but if you wanted a visual and you
9:56wanted to learn, effectively, Besson is
9:59trying to find and making sure that
10:01there are buyers for long-term
10:02treasuries. The basis trade is one of
10:05the demand sides for it. You also have
10:07his goal to get stable coins going and
10:09getting trillions of dollars that way.
10:11There's other places that he's trying to
10:13do this in. He did it with bank
10:14reserves. He's going to do it with
10:16everything that he can possibly find,
10:18including trying to hopefully have the
10:21Japanese not have to sell uh their
10:23treasuries. And that's why he wanted to
10:25sit there and get involved with
10:27intervention in Japan. We'll see what
10:29happens in September. I think until we
10:31get to that point, you can expect the
10:32market to have back and forth,
10:34especially now that after the war,
10:36Jackson Hole speech, we're close to 60%
10:38chance of a rate hike and the BOJ is
10:41gonna tighten rates based on
10:43probabilities. What benefit has come if
10:47Besson's doing all this work and now
10:49Worsh is sending a signal to the market
10:51that inflation is his primary focus and
10:54they've built in now a 60% chance while
10:56the BOJ is trying to do something to
10:59stem the yen uh from falling any longer
11:03and the yen is at the weakest level in
11:07so far this month post the intervention.
11:10So if you go through the basis trade you
11:13can see where it is. It gives you what
11:14to watch out. I just say this as a
11:17point. Um, and this is the main thing
11:19for me is that I really do believe as
11:22people sit there and post when I or
11:25respond to me when I post this kind of
11:27stuff in X or if I even show it on this
11:29videos. You don't have to believe in
11:31anything related to AI. I know there's
11:33more skeptics than there are believers
11:35because people don't use it for much
11:37more than chat at this point and they
11:39believe that the doom and gloom side is
11:41going to happen. I'll get into more of
11:42the doom and gloom side, but you have to
11:44understand that if humanoids are
11:46building things in a decade, which seems
11:49legitimate based on what's already
11:51happening in China. Let's assume it's a
11:54decade. You've got a very different
11:56world. And I don't think you can assume
11:58that everything is going to play out in
11:59some linear fashion of human time again.
12:01And that's the reason why I keep going
12:03through these. I think you have to
12:04change your mind and at least open up
12:06the probabilities because it will help
12:08you make money as opposed to believing
12:10that every time that yields go a little
12:11bit higher and as I've highlighted the
12:13fact that 10 years are up whatever it is
12:15this year 40 50 basis points and people
12:18are taking this as being uh the end of
12:20the world it's just not they're way
12:22below where they should be that's not
12:24going to stop growth and it's certainly
12:25not going to change the dollar situation
12:28if they keep trying to get involved in
12:30it. They've sent a message they don't
12:31want yields higher. I think that's the
12:33most important thing that's going on
12:34right now. And I think trying to bet
12:36when this is going to collapse and end
12:38in a dalio style way, I just don't think
12:40that's going to make you money in the
12:41near term. And if for any reason rates
12:43do uh back up and you get Besson
12:46basically saying, "Okay, no moss." We'll
12:49deal with it then and we'll see where it
12:50is. Will you catch the top? No. But
12:52you're not going to catch the top
12:53regardless in terms of the market. The
12:56main thing is to figure out whether
12:57they're really going to let this thing
12:58go and cause a major calamity in in the
13:01United States or are they just doing
13:03what they've done throughout QE and
13:05everything else, which is the economyy's
13:07financialized, they can't have stocks
13:08fall in any major way. And if yields are
13:12the ones causing it, like we saw during
13:14the tariff on wine, as soon as yields
13:16went higher, they stepped in. They've
13:17continued that pattern. So AI is the
13:20main pressure point here because the
13:22capital needs are enormous. So the
13:24government is going to remain under
13:25pressure. This fight is not going away
13:27regardless of what inflation and jobs do
13:30unless we see a significant change in
13:32both of them. And right now I highly
13:34doubt I don't expect to see big job
13:36losses even if we stay on the weaker
13:38side. And I certainly don't expect the
13:40inflation to just fall off a map and go
13:42back down to where it was. Even though
13:44it is certainly more tame than the way
13:46people are talking about it to give you
13:48an idea of the numbers. I mean, this is
13:50just the hypers scalers in terms of as a
13:53percentage of all IG supply, it's
13:57already up to 9%. And we have a doubling
14:00from last year. We're still going to be
14:02growing. So, the numbers are going to
14:03continue to get bigger. Um, and now it's
14:07replacing in terms of bond purchases.
14:09You're getting net foreign purchases
14:11more on the corporate side than you are
14:13the treasury side. So you're getting
14:14this crowding out function in terms of
14:16making it harder and harder to find
14:18buyers around the globe of treasuries.
14:21Uh just to give you an idea, I mean
14:22Broadcom goes out and basically you got
14:26$70 billion deal that they announced and
14:30of course their CDS continues to go out
14:32and and all this CDX thing. Remember in
14:35the same way that we saw concentration
14:38we have about the amount of debt that's
14:41being issued by a few companies is
14:43enormous. It's all of the quote unquote
14:46circular finance companies. Um,
14:49basically the S&P 500, the rally from
14:52the great financial crisis on was
14:54dominated by the MAG7. Profit margins
14:57dominated by the MAG7. We live in a
14:59concentrated world, guys. Uh, so
15:01whenever you see the CDX, these single
15:04name should be going wider while the
15:06index should not be. Just think about
15:08what's been happening in the V of the
15:10equity side. We've seen equity V explode
15:12higher while index V hasn't. I think
15:14people need to understand this when
15:16they're dealing with the credit risk is
15:17not telling you a story. It's just
15:19because it's so concentrated and because
15:20there's a probability this won't work
15:22out and they should be buying hedges
15:23against it. Uh Nvidia $6 billion to
15:27build a open- source model to compete
15:29with China. So then we get Worsh
15:32concerned about inflation says the bank
15:34has has more work to do. Nothing he said
15:37was new. Um, I think people either went
15:40into this uh with the belief that if he
15:42gave anything inflationary, this wiped
15:44out what Besson was doing. I have no
15:46idea, but we did see the market respond
15:48to go from 35% to 60% chance based on
15:52something he said that wasn't new. I'm
15:54guessing based on his own words that he
15:57made some mistakes in the press
15:59conference that the reaction in the
16:02market remember two-year rates back in
16:05July 29th during the Fed meeting uh
16:10where we where they didn't raise rates.
16:12He came across as dovish and you saw
16:14two-year yields come down. He didn't
16:17want that message to come across. So now
16:19you have this. He comes out in Jackson
16:21Hole and basically as far as I can see
16:24that was the no I'm I'm not I want
16:27credibility. I am fighting inflation and
16:29so you get up to 57%.
16:32Again he's saying they want to fight
16:34inflation and until they do there's
16:37going to be more rate hikes. All right
16:39we've one and a half rate hikes. We had
16:40over one before the end of the year. So
16:42none of that is a major surprise. I
16:45think the bigger surprise out of this is
16:48when he said he was dovish, we saw
16:50yields back up on the long end.
16:54So now he's going to be hawkish and
16:55yields backed up on the long end anyway
16:57and we're back up to the level where
16:59starting here yen intervention. Okay,
17:01intervention, intervention,
17:02intervention. We'll see what happens
17:03next week, but basically 10ear yields
17:06despite him being hawkish. If that was
17:08the plan, if you be more hawkish, maybe
17:10this will maybe this will help the back
17:12end and we'll actually get what we want,
17:14which is long-term yields down because
17:16you're actually talking hawkish. Well,
17:17instead it did nothing. So, for everyone
17:20who thought if he just raises rates,
17:21long-term yields will go down. I'm not
17:23so sure that's the case. If this is
17:25being caused by the capital needs of AI
17:28and speculators believing that they're
17:30kind of caught here, which they are. So,
17:32here's what dollar yen did again. and we
17:34weaken to 160.
17:37Uh, important video to watch for
17:40everyone who's doubting AI. And I'll
17:44call this the best macro podcast of the
17:46week. Yes, this is Dylan Patel, the head
17:49of semi analysis. And this is his
17:51roommate, Dark Cash Patel, no
17:53relationship, who interviews all of the
17:56top Silicon Valley people. Uh, the fact
17:59that they're roommates mean they talk
18:01about this stuff all the time. And so
18:02whenever they speak, this is not the
18:04first time they've spoken, it's
18:06important. And they talk about compute,
18:08which I've brought up a bunch of times.
18:10They talk about the insatiable nature of
18:13compute. So let's just go through this.
18:15OpenAI and Anthropic are rapidly
18:17centralizing global compute. Now, I just
18:20want to highlight they don't talk at all
18:22in any way about open source being
18:24competition. So the first thing and I'll
18:27go through this at the end. I just want
18:29you to remember they're talking about
18:31OpenAI and Anthropic like they've
18:33already won. And the reason they've
18:35already won is because they basically
18:38have the highest margins. So when we go
18:40the reverse, oh, we're driving prices
18:43lower on the open source. Well, these
18:45guys are just collecting more and more
18:48money from the people that want to use
18:50the best intelligence and groups that
18:53are actually there. So this is the
18:54enterprises. So all of this stuff about
18:56them not getting money that Anthropic
18:59has reached a peak, these guys are
19:01completely saying the opposite. And I
19:04take them more than I I won't even name
19:07people in terms of what's going through.
19:09There is no way to take two companies
19:11whose ARR is growing the fastest in the
19:14history of the world and start trying to
19:16predict when the top of that is going to
19:18be when these guys are basically saying
19:20it all comes down to who owns the
19:21compute. And these guys have the highest
19:22margins, which means they can buy the
19:24most compute. Makes perfect sense to me.
19:27If they're securing all of the compute
19:29of the world, they will continue to have
19:31the best intelligence and they will
19:33continue to be in a position to make
19:35money. So what they're talking about is
19:37literally concentration of compute by
19:40these two companies. And again, I think
19:43when you go through this and you realize
19:45that why did Jeff Dean leave Google? Why
19:48did Demisabus reportedly try to leave
19:50Google? These companies are trying to
19:53get to AGI.
19:55Google is trying to find a way to make
19:57money. Meta is trying to find a way to
19:58make money. Everyone's trying to find a
20:00way to make money. They're public
20:02companies. They have no choice. Their
20:04free cash flows go negative. These are
20:05private companies that their entire
20:08fundraising and stuff is based not on
20:10them making free cash flow. It's on them
20:13being in a position to own AGI. So
20:16they're basically winning this and they
20:18go through the whole thing. They talk
20:19about regulation and safety pauses or
20:21the main breaks that could hurt the
20:22revenue per megawatt. But that's the
20:24main story is why can Anthropic pay so
20:27much money to XAI for Colossus Compute
20:30because their margins are so enormous.
20:33And so as you go through this they pay
20:36more well that makes it more difficult.
20:38They talk about how how little Kimmy K
20:41in terms of compute. All of these
20:43Chinese models they don't have the
20:45compute. you have to get the compute
20:46from somewhere and if anthropic and open
20:49AI can pay the most for the compute and
20:51we can't make enough compute relative to
20:54the demand then it prices everyone out
20:57of actually doing anything. So this is a
21:00completely different argument and this
21:01was brought up by Darkh on a podcast
21:03recently which Gavin Baker thought was
21:05interesting. This is them talking about
21:07that view. This is why it's so
21:08important. The US has pulled far ahead
21:10of China in a AI compute deployment.
21:14Then they start getting into something
21:16that I actually think is kind of funny.
21:18Um they start talking about interest
21:20rates and how the size of the capex
21:23which will go on from 2024 to 2029 will
21:26total about 11 trillion dollar 5
21:29trillion of which will be credit and how
21:30this is going to create a sovereign debt
21:32and interest rate shock. So, this is one
21:35way to know that when you're stepping
21:36out of your wheelhouse, I like all of
21:38this, but when they start getting into
21:40this and the interest rate shock, I'm
21:43sorry, we are also with AI going to lose
21:47a lot of debt. There's going to be a lot
21:48of defaults. There's going to be a lot
21:50of bankruptcies. There's going to be a
21:51lot of closures of companies. not in a
21:54disruptive synchronized way, but the
21:56reason these companies are winning is
21:58because the debt makes AI, which allows
22:02startup businesses to grow without
22:04taking debt. And we've seen this with
22:06the cursors of the world and a bunch of
22:08places until they get to the point where
22:10they get so big. But for companies that
22:12want to grow, they don't need people and
22:14they don't need debt. So, you got to be
22:17careful when you start stepping into the
22:19macroeconomic side of this. Now AI
22:22creates a higher return clock for
22:24capital. So this is the time disruption.
22:27This is where we're again getting back
22:29into the point where if you can't grow
22:33fast enough, if you're not fast enough,
22:35then your debt is screwed. You need to
22:37have returns coming on this. This is the
22:39reason why I said with the government,
22:41the hardest thing is going to be is if
22:43profit margins are growing rapidly. And
22:44that's what we're seeing right now. So
22:46GDI versus GDP. GDP and the taxes we get
22:52mainly from consumers with a small
22:53amount on the corporate side. It's just
22:55not going to work unless you go in and
22:57what do you end up seeing? Well, let's
22:59tax the wealthy and go through the the
23:01tax on the 182 trillion that's here.
23:03Well, that's not working. People are
23:04moving out of states and moving into
23:06other places. So, you're kind of left
23:09where do we get the money from? And the
23:10only thing I can see it on is a
23:12combination of the entitlement issue
23:14becoming less of an issue on Medicare
23:15and Medicaid due to the advancements of
23:17AI and at the same point finding a way
23:19to increase corporate taxes based on
23:21profit margins and profits continuing to
23:23go out. The old low rate economy gets
23:25crowded out and and again that's the
23:27crowding out that's going to happen is
23:29if you need low rates these guys are
23:32forcing rates to be higher and the
23:34reason is their margins are so enormous
23:36and rates are they're indifferent to the
23:38rates. doesn't change their ability to
23:40make money because they're paying 5%,
23:426%, 7% or 8% and they go through that
23:46the same way that it doesn't matter to
23:47them what the electricity costs are. 50%
23:51plus of a of a data center's cost is
23:54semiconductors.
23:55So, it's just not based on the credit
23:58side is not going to kill it. Um and
24:01again this is somewhat different for the
24:04hyperscalers and things like that where
24:06they do need to get the money in from
24:08the data centers being built. So higher
24:10discount rates crush long duration nonAI
24:12assets. AI compresses economic time. The
24:15old economy borrowed against future
24:17human productivity. AI infrastructure
24:19capital offers a faster claim. This gets
24:21back in in my opinion back to the
24:24drunken miller side. So again, when you
24:26go through this and you look at the
24:27centralization of labor and compute, I'm
24:30not going to read all of this, but
24:32basically one lab could hold more labor
24:34than humanity, you start getting into a
24:36very very
24:38uh AGI into RSI world. And the reason
24:41this becomes important is because we're
24:43really getting closer to that. And they
24:46talk a lot about how
24:48the amount of AI labors is growing by
24:52the week. It's it's an amazing amount of
24:56things that are happening with the
24:57agentic side and it's mainly happening
24:59right now at the places that have the
25:01most sophistication in compute. It's the
25:04reason why I want you guys to play
25:05around with Grockbot so you can start to
25:07understand what it means. Um the key
25:09point Dylan keeps coming back to is that
25:10compute will not be evenly distributed.
25:12It will flow to whoever can monetize it
25:14best. That gets back to the margins.
25:16Better models create more revenue. More
25:18revenue lets them buy more compute. More
25:20compute lets them train better models.
25:21better models let them monetize comput
25:23even higher rate. So again this becomes
25:26very circular not in only the financing
25:28side but the strongest flywheel ends up
25:31lining up here. You don't have to agree
25:33with this. These guys are far far more
25:37uh more uh in tune with what's happening
25:39than anybody at the banks than anybody
25:41you're reading on X. And they're young
25:44enough to basically be spending all
25:45their time. I read all the work that
25:48these guys do whenever I can and I
25:50listen to the podcast. They are very
25:53very on top of things based on
25:55everything that I've heard this year.
25:56I've heard them all multiple times. Um
25:59Dylan's counter. Oh, the open source
26:02thesis says model weights will
26:03commoditize AI. Dylan's counter is that
26:04compute doesn't commoditize when it's
26:06scarce. I've said repeatedly the most
26:08important story in the world is we don't
26:10have enough compute. We'll get into that
26:12later with the thematic agentic
26:15portfolio. So AI is real bottleneck.
26:18Open source can commoditize models.
26:20Scarce compute does not scarce compute
26:23is the key thing. Cheap capital wins the
26:25buildout. Higher dollars per megawatt
26:27can outbid everyone for compute. So the
26:30fact that we are scarce compute is what
26:32drives this factor.
26:36And here's what you get. The demand is
26:39growing exponentially.
26:41Everything over here, the design
26:44permits, all this, the compute side, the
26:46supply is growing slowly and these guys
26:50models are getting better and better and
26:53better and the disruption is taking off.
26:56It's just a reality of where we are. So,
26:58Vera Rubin getting uh getting it out
27:01there and getting Microsoft talking
27:03about using it. This is important. Um
27:05I'm I'm less worried about this from uh
27:08or I think the major story from this so
27:10you guys get it is
27:13open AAI this chip is developed by AI.
27:16This is starting to get into the side of
27:18where AI starts solving problems. So if
27:20you want to take it as a negative on
27:22Nvidia good luck on that uh Nvidia is
27:24just so massive and has so much capital
27:26and has just built so many of these that
27:28to be able to scale this is really the
27:30issue to compete. So um it's really more
27:33to say that there will be future
27:36situations where as AGI does come we
27:39will be solving even the physical side
27:41which is where I start to get into the
27:43terminal value the S&P and the fact that
27:44I think you will continue to see
27:46multiple compression and we will never
27:48get that quote unquote bull market that
27:51feels like a bull market where things
27:53just explode higher and the reality is
27:56that's because competition is coming
27:57three years down the road for
27:59everything. It's that easy to use
28:01Grockbot. I again I'm just highlighting
28:03the fact that this is becoming more and
28:04more of a story. Um more usage for it in
28:08terms of this part of what I'm going to
28:10give you is a prompt that will allow you
28:12right off the bat to analyze your
28:14emails, your calendar, things like that
28:16in a safe manner.
28:19Um
28:21Gavin Baker just talking about how much
28:24compute or the spend that he's doing.
28:26And then note that it is before Grockbot
28:29moves to consumption pricing which will
28:31likely create a step function when it
28:32happens. At least for me. I completely
28:35agree with that. And here's the latest.
28:38I showed you guys this last week uh
28:41multiple times. You can see I have a lot
28:44more agents than I did last week. I have
28:46a lot more routines that are being done
28:48every day. I have these two things
28:51displace and stride. This is a technical
28:54um indicator with three agents. This
28:57here is a probability uh it's a
29:00research-driven probability of based on
29:03earnings how vulnerable they are to AI
29:08disruption in a few years. So on a scale
29:10of one to 100 give me a level on that.
29:12So, I built those and this is what
29:16you're going to get. So, this will be
29:17uploaded to the subscriber site. You
29:19guys can read through it, but this is a
29:21chief of staff starter pack for
29:22Grockbot. The Grock part Grockbot
29:25starter pack. Um,
29:29and then just again, powering the
29:30deficit, AI's massive infrastructure
29:32needs now threatened the US national
29:34debt. This is becoming a bigger story.
29:36This is why again you can't have the
29:40rates go higher because of the K-shaped
29:42economy. My gut tells me that Kevin
29:44Worsh will not raise rates in September
29:48even though he may want to for his
29:51already legacy and for being an
29:53inflation fighter. Um, but I I just
29:56think the timing is not right for him to
29:59sneak one in at this point while tenure
30:01rates are up pressing against while his
30:04Treasury Secretary is trying to stop
30:05them and they just spent all this time
30:07trying to focus on the yen where the be
30:09they're trying to get the BOJ to raise
30:10rates. So, I think September could be a
30:13surprising thing. Is it possible that
30:15maybe Japan not only raises rates but
30:18then builds in that they're going to do
30:19more and they're really going to fight
30:21this? At the same time, Wars doesn't
30:24raise rates now that it's a surprise and
30:27we get a big move. We'll see what
30:29happens, but um I think the pressure is
30:31growing and I think it's worth spending
30:33time on. So again, it's virtually
30:35impossible to grow your way out of a $40
30:38trillion debt crisis. And although I
30:41would happen to agree if there wasn't
30:43this exponential innovation side, uh I
30:45do think it's worth keeping in the back
30:47of your mind as we get to a critical
30:49point leading into the midterms. That is
30:51the other thing that I think is
30:52important for people. Is it really
30:54likely that we're going to take any any
30:58risk with the long end at this point
31:00ahead of the midterms? Are they really
31:02going to let tenure rates break higher
31:04and go into the midterms that are
31:06already in a vulnerable position in the
31:08Senate? Um, I just think at this point
31:11you have to heir on the side of thinking
31:12what do they really want and this
31:14administration does not strive does not
31:16move too far away from trying to make
31:19sure they get what they want. So again,
31:21I wrote this paper. I'm just reminding
31:23you this was on August 10th. This was
31:24the end signal and AI agent macro nexus
31:28point getting back to the point that
31:30that's where this whole thing started.
31:31And the reason I wanted to bring it up
31:33is because Pomp did a video with uh
31:36Roman Yumplowski.
31:39It's worth listening to. Um my son had,
31:43ironically enough, reached out and said
31:45to me, "Have you listened to him speak?"
31:47Uh and he sent me a diary of a CEO, one
31:51that was old. And it was really about as
31:54much about how AGI is going to have a
31:58negative impact on the world. And I
31:59think he has publicly said 99.99%
32:02chance that humanity is destroyed by uh
32:05AI. Now he's a very respected person who
32:09is been writing about AI and talking
32:12about AI from like 2011 to 2013 from a
32:16safety perspective. So it's not
32:18surprising that uh I'm sure his public
32:21speaking things he's makes more money
32:23and does better if he talks about the
32:25negative side. What I thought was
32:26interesting was he's the only person
32:29I've seen connect as I did in the yen
32:31signal one. The AI
32:34needs, the AI growth, the capital needs
32:37to keep this intelligence going is
32:39putting pressure on yields. It's putting
32:42pressure on the old system and the old
32:43system is cracking. So now we've got not
32:47printing QE style but we definitely have
32:49twisting and we have using the repo
32:52facility and we have them clearly trying
32:54to find a way to not let yields go
32:56higher and that was the reason why in
32:58there I said I think this is the
33:00beginning of Bitcoin gold and everything
33:02else right after the yen side happened.
33:04Now when you go through what he said
33:07he's not mentioning any of the macro
33:09side. This is an AI researcher. If you
33:12listen to him, he speaks a language we
33:14don't speak. But he eventually gets into
33:16the exact same points that I make
33:19repeatedly in these videos that
33:21eventually because of AI abundance
33:24because of the lack of scarcity meaning
33:28things that can't be replicated very
33:30quickly that as we continue to
33:33accelerate in AI and the frontier models
33:36are much further ahead than what the
33:37public sees, it will fundamentally
33:40change labor in the economy. all
33:42cognitive jobs become automatable,
33:44including new jobs invented afterward.
33:47And he goes through the reasons why. And
33:49then he talks about
33:51the only things that'll be left for
33:53Bitcoin, waterfront property, and
33:54potentially human attention, meaning
33:56what has value.
33:58So, I didn't realize that he was that um
34:01as I was listening to it was a Bitcoin
34:04person. And he gets into the reason that
34:08it is. He goes through the importance of
34:09cryptography. And again, this is a
34:11safety person. The ability to copy
34:14things, how we need it verified. AI
34:17acceleration is fundamentally about
34:19compressing scientific and technological
34:21time. So, he's getting into the time
34:23thing the same way I did. So, I picked
34:25out the point that I wanted him to spend
34:27more time on, which was the AGI part,
34:29which is right here. And he talked about
34:32it where the implication is
34:33technological progress starts operating
34:35on a different clock from human society.
34:37This is the pressure we're seeing. It's
34:39not just the debt side again. It's this
34:41point that on the one side things are
34:43growing insanely fast like anthropic
34:45like open AI fact like the AI models in
34:48terms of the intelligence side facts
34:50like the capex side not just from open
34:52AI and them Nvidia spending money Oracle
34:55spending money uh Google spending money
34:59Amazon spending money Microsoft is you
35:01guys get it these are the winners of the
35:03technology world they see this coming
35:05they see the models that are already
35:07here and so we're getting to the point
35:10where accelerating drug discovery,
35:13improving our understanding of genomics
35:14and pro all of the things that I've
35:16written about and talked about and where
35:18we are. This creates a widening divide
35:20on digital time and physical time. We're
35:22in there. So AI acceleration is
35:25ultimately the compression of the
35:26discovery cycle. The defining threshold
35:27is reached when machines no longer
35:29merely help humans innovate but
35:31autonomously decide what to discover.
35:34He even gets into the difficult that
35:37that will be for
35:39companies in general and that you can't
35:42compete. Um, and then he gets into the
35:45physical uh bottlenecks such as chip.
35:47They're unlikely to permanently stop
35:49this process because he's saying as it
35:52gets smarter and smarter, we will keep
35:54getting more advancements.
35:56So
35:57the entire loop becomes automated. Now,
36:00what I did was that interview that my
36:02son sent me to watch had 21 million
36:06views. So, I'd never heard of this guy
36:07three weeks ago. And then Pomp does an
36:10interview. My son had already sent me
36:12something. So, what I do is I go compare
36:16what he said with Pomp with what he said
36:21a year ago and see if anything changed.
36:23Now, Bitcoin becomes a major theme. It
36:26was not even mentioned in his his
36:28podcast a year ago. Everything else is
36:31kind of in the same, but um it's like
36:35shifts. Nothing major. Humanoid robots.
36:38There's a little time in the in the in
36:40the time, but all of these things here
36:43are basically major things that he
36:45talked about a year ago. So, it's not
36:46like he's just saying this now based on
36:48what's happening. Now
36:51as you go through it and you look at the
36:54uh other parts in here, it's all the
36:57same. The shift is the government role
36:59has become more aggressive and the open
37:02source thing even surprised him in terms
37:04of how quickly it it it came. Now what I
37:06wanted to do was I released this this
37:09week for those of you who didn't see it.
37:11I've been saying that Bitcoin's been
37:12going through an IPO uh process that in
37:15my opinion started right after Donald
37:18Trump took over. even though that was
37:19not the peak and that's when I believe
37:21that the ideologues gave up. Um the ETF
37:24was not a good sign for people who
37:26wanted decentralization and not having
37:28the two systems merge but especially
37:30when the president endorsed it and then
37:32created a memecoin. I think that was a
37:34signal that this is no longer what
37:36people had gotten involved in and you
37:38saw a lot of people come out. So what I
37:40was saying is that Bitcoin AI and the
37:42collision of time and going through what
37:44I believe is now happening and why this
37:46is the critical moment for crypto and I
37:49said compare what I wrote to what he's
37:52[snorts] saying what he just said with
37:54Anthony Pompiano. These are all the
37:56different points. It's a time disruption
37:58human time. These are all things that I
38:00wrote about in the paper. Never seeing
38:02or hearing this guy. We're in agreement.
38:04The only reason I bring it up, you can
38:06disagree with me. You can disagree with
38:08Yman. uh with Roman Yampolski, but
38:12we're from two different worlds. I am
38:14not an AI person. I am not someone who
38:17just uh got involved with it uh 15 years
38:21ago from a safety perspective, but we
38:23are in heavy agreement on almost
38:25everything except for the way it ends
38:27the world. That's about the only thing
38:29that's not there. Now, for Bitcoin, just
38:32I'm going to do some more Bitcoin later
38:34on, but I I put this out because the 200
38:36day moving average slope
38:39turned up. So, these are the four times
38:42in history that we had the 200 day
38:45moving average pointed downward for at
38:47least 100 days. Uh, ironically enough,
38:50look at these declining observations.
38:52Last one took was the exact same amount
38:54of time. This one was only off by 13
38:56days. This one was off by 60. Here are
38:58the performances for Bitcoin over the
39:00next three months, six month, one year
39:02and two year.
39:04Uh in all cases, we never took out the
39:06lows uh from before that going down. So
39:09that would mean around 58,000
39:11would if this holds over history would
39:13hold. We got South Korea back in. Um
39:16I've mentioned before that AI had been
39:18taking everything in South Korea. Well,
39:20we had a volume spike in the crypto
39:22world over there. Um, I'm going to
39:24remind people the amount of people that
39:26basically were bearish at the lows. Uh,
39:29the most famous one being Jeremy
39:31Grantham saying it was less worth less
39:33than a bucket full of piss. That was at
39:36the lows. That was two days from the
39:39lows. Uh, and and really at the lows. It
39:42was basically 59,000ish when it was 58.
39:44Jim Kramer sold all his BTC two weeks
39:48ago. Uh Mark Cuban went on, I sold most
39:53of my Bitcoin. It's lost the plot. Uh
39:55more technical things in terms of a
39:58different way of looking at it. Uh this
40:00is a breakout signal that takes uh
40:03basically the rate of change and puts a
40:05zcore on it. And again, you had a big
40:08move,
40:10not shocking. Japan to start stocks and
40:12bonds tokenization development plans
40:14this year. They're racing towards
40:15moderniz. In Japan, if you go back and
40:18just ask what has cha changed in Japan
40:20with their views towards Bitcoin
40:22tokenization and do the same for South
40:25Korea, there is no way you can ignore
40:29that this is starting to become a bigger
40:31race just like the administration has
40:34said. Why AI forces tokenization?
40:38So why does AI force tokenization? Well,
40:40it needs programmable money to be able
40:42to go. It it compresses decision time.
40:45The tokenized assets become better
40:47collateral for AI. The fastest rails
40:49attract the capital. This becomes
40:51important as I get through with Japan.
40:53AI makes settlement speed a national
40:55competition uh competitive issue. So
40:59tokenization democratizes capital
41:01formation for the AI rebuild. This
41:02becomes critical if you want to raise
41:04the capital that's needed for AI.
41:06Tokenization helps that because if you
41:08guys haven't seen it, if the only people
41:10that can buy private credit are people
41:12that are
41:14wealthy, but you want everyone to be
41:17able to buy 8% yield bonds on things
41:19that are there or have the
41:20diversification to go through.
41:22Tokenization will democratize the
41:23ability to raise money from anyone. Why
41:26does Japan need to have a stake in the
41:29tokenization race? Capital moves towards
41:31the best operating system. Japan cannot
41:34afford to be slow. Global investors want
41:37speed, liquidity, yields are blah. If
41:39tokenized US assets trade and settle
41:41faster than Japanese assets, capital
41:42does not need to panic leave Japan, it
41:45can quietly migrate to the market with
41:46the better rails. Basically, if you're
41:48in a market where your stuff settles in
41:51a day while everything else settles in
41:53seconds, AI agents will continue to
41:56treat you differently. The same way we
41:58treat emerging markets differently in
42:01terms of wondering if their government
42:02is going to confiscate things or go
42:04through it if you haven't invested in
42:05the best technology. So, this is causing
42:07a race. Human time rails while or I'm
42:11sorry, tokenization compresses financial
42:12time. If Japan assets stay on human time
42:14rails, while global capital moves to
42:16software time rails, Japan does not just
42:19risk missing a technology channel. It
42:21risks lossing the marginal capital that
42:23sets the price of money. I really do
42:25think of Blackberry in this case as an
42:27example of something that just could not
42:29compete with the iPhone. Forget the
42:31iPhone and uh Android in terms of open
42:35source and closed source. Think of just
42:37what happened uh in terms of BlackBerry
42:40and not having the apps. tokenization to
42:42me and the ability to move things
42:44quickly, make decisions, having better
42:46liquidity, having democratization of
42:48capital. Okay, Ashe BD, I really liked
42:53this post in terms of u last week on the
42:56tokenization super cycle. Uh I think his
43:01analogy here in terms of what YouTube
43:03brought again is a democratization side.
43:06Distribution is valuation. the more
43:09distribution, the more people are
43:11involved and theoretically the more
43:13you're going to be able to trade things
43:14at least that day and know where the
43:16price is. Um, distribution was always
43:18one of the great moes of US capital
43:20markets and that monopoly has now met
43:22its final boss internet scale
43:23distribution. So the US has dominated
43:26capital markets not just because people
43:28are wealthy but because it work the
43:30deepest capital markets. If all of a
43:32sudden we have a competitor for capital
43:34markets which is tokenization
43:36creates an issue. Um again I'm showing
43:40you guys this because as I go through
43:43the next four things remember every week
43:47on the sub on the website I put up the
43:49video podcast info. All the podcasts
43:51that I reference in here those are not
43:53all the ones I listen to for the week. I
43:55go through I don't know 10 maybe 15
43:58different podcasts. I go through more
44:00than that in terms of transcripts to
44:02determine whether I should go look for
44:03it. Sometimes I find a transcript where
44:05I like the timestamps. I go listen to
44:06that 15 minute period. I use those in
44:09here. I will go listen to it. If there's
44:11more nuggets, this one is big because I
44:13have a lot of things in here that I
44:15spent a lot of time on. And this is
44:16starting to get into the crypto side.
44:18For those of you who want to learn more
44:20about tokenization, which I'm telling
44:21you is the most important thing to be
44:23spending time on at this point along
44:24with the payment rails in general. this
44:26token 49 Singapore event which was a
44:30year ago. This is 2025.
44:33Ash K ash um BD spoke and I watched it
44:37and I thought it was great. Um
44:40capital markets no longer work for
44:42ordinary people. Labor has been left
44:43behind while capital owners won. He goes
44:45through this whole thing on why
44:48tokenization is important based on
44:50what's happened to the world. He talks
44:52about Salana specifically, but the
44:55internet internet capital markets and
44:57what it's going to look like. For those
44:59of you trying to I I guess get to the
45:02point of number one, why AI agents are
45:06necessary for this to be the point. You
45:09cannot do this stuff without AI. And so
45:12in 2022 where these where you know we
45:16were talking about these types of
45:17things, it was still a dream. there was
45:19no ability to do this and we didn't have
45:22Salana and Ethereum to the degree that
45:24they are today. So all of this stuff in
45:27terms of what the end state is, a lot
45:29more assets, wallet based ownership of
45:32those assets, not just assets, but
45:34things like IP and everything. Um,
45:37productive assets. So again, anything of
45:40value that you can think of that right
45:42now you can't trade. Broader ownership
45:44could reduce inequality and social
45:46strain.
45:48Think about this and go back to the
45:50Bessant thing. If you're going to make a
45:52bet at this point, the new technologies
45:54are the place to make a bet. Not
45:56thinking about the world from a economic
45:59handbook that goes through the history
46:01of the world like Ray Dalio does and no
46:03offense to Dra who I love, but the same
46:05type of thought process. It's a you have
46:09to at least incorporate this in the
46:11possibility. I'm not saying it's going
46:13to work out. Governments could stop it,
46:15but this is not a US clarity act
46:18decision. This is a global decision.
46:20Salana is not a US thing. Ethereum is
46:23not a US thing. So when you go through
46:26all these things, I just want to make
46:27sure you understand that you have to
46:28watch these things to start thinking
46:30this way. The same way that a year ago
46:33when I was talking to people about
46:35micron and memory and why we need all
46:37this and I was writing about humanoids
46:38and embodied AI and then I wrote a paper
46:40on inference in May. Crickets
46:43tokenization crickets right now. Nobody
46:46wants to spend the time on it. And in a
46:48week where crypto is exploding, where
46:50Salana's up 40% this month, the only
46:53thing people ask me about this week is
46:56gold. I kid you not. Of the macro people
46:59that are reaching out to me, the only
47:01thing I heard this week was gold. Nobody
47:04is talking about this stuff. So, if gold
47:07is the big trade and people are saying,
47:09"Well, I think it's going to go up." I
47:10do, too. Gold's not going to be the
47:13fastest horse in the race. I don't even
47:14think it's going to finish in in in the
47:16top hundred of the fastest things. And
47:19that's because this thing is a part of
47:21the economy going forward and gold will
47:23not be a part of that. Gold will not be
47:26a part of that. So let's just remember
47:29that a store of value is good but the
47:32store of value and the tokenization and
47:34the stable coin and again
47:37if I compare what ash said and then I go
47:41through where stripe is
47:44again you guys can read this on your own
47:47what he was talking about a year ago and
47:49what Stripe is doing right now in terms
47:51of the companies they're buying and what
47:53they're trying to do what they said in
47:56their sessions and in their public
47:58reports. All of this stuff is based on
48:01what Stripe has said. Now, this is what
48:04he was talking about a year ago. And
48:06again, the reason this is important, AI
48:09agents were a dream a year ago. They
48:12were not supposed to happen the way they
48:13did. So, this has been the year of AI
48:15agents. If you guys go back and read
48:17what I wrote about or go watch what I
48:19wrote about last year on all the videos
48:20which are on YouTube, I repeatedly said
48:23AI agents will be the story for 2026.
48:26consumer agents and AI agents will now
48:28be the story for 2027. The reason that's
48:31important is because we're now getting
48:33into the application side, which is the
48:35agents actually consuming and doing more
48:37traffic on the internet, doing more
48:39things, which is why I want you to use
48:40Grockbot. That is the reason why I do
48:42these videos so you can learn. Tom Lee,
48:46I don't know if because Tom Lee has this
48:48kind of look to him that people don't
48:50pay attention once he started to get
48:52more involved in crypto. Um, I've done
48:55John Gillan
48:56interviews before. I think I have
48:58another one coming up in September. This
49:01one is a good listen. Uh, I think it's
49:03important. You should go understand
49:06Tom Lee says a lot of, uh, smart things.
49:10Uh, he says he has a lot of experience
49:12on Wall Street obviously, but he
49:14understands Tradfi, but he says a lot of
49:17very key lines. And I say that because
49:18when I'm listening to someone and during
49:21an interview I pause and stop the button
49:25seven to 10 times and I go into AI and I
49:28have a conversation. It took me about
49:30double the time this morning before I
49:32went to go uh work out listening to this
49:35for a second time where I had to go
49:37remember all the things. So when you go
49:40through this and you realize what he's
49:42talking about and how AI agents change
49:45everything, how AI agents demand this,
49:48they cannot work without the smart
49:50contracts. They cannot work without all
49:53of this. AI forces finance to move from
49:56human precision to programmable
49:58constraint. And again, it's the same
50:00thing as AI agents force memory. It's
50:03the same exact thing, guys. the
50:05inference needs, the memory needs would
50:07not be as high if it wasn't for the
50:09advancements we made with Opus 4.5. It
50:11wouldn't have led Nvidia to then very
50:14quickly go out and purchase Grock.
50:17All of this stuff happened in the final
50:19quarter of last year. We are now seeing
50:21the Agentic side and the consumer side
50:23go and we have an administration that is
50:25trying to figure out a way to get out of
50:27the debt problem in the old system and
50:30they're betting on this stuff working
50:32again. Maybe it doesn't work, but it's
50:34part of the distribution. The Ethereum
50:36network, he goes through that. Um,
50:38Ethereum is not just a blockchain. It's
50:40more like the root settlement layer for
50:41a new financial operating system. Um,
50:45there's a lot of things in here that are
50:48important. And again, financial systems
50:51are rarely won by technology alone. They
50:53are one by liquidity, trust, standards,
50:56developer activity, institutional
50:58comfort, and path dependence. This is a
51:01critical part because people on the
51:02crypto side that are negative on
51:03Ethereum, they see other places building
51:07and going through their own approach. I
51:11completely agree with this having worked
51:12at Wall Street. You have to remember the
51:14old system is not going away. We need to
51:16find a way for AI agents to work, but we
51:18also need a way for humans to feel and
51:22this is institutions too. At least for
51:24the near term, liquidity is there, trust
51:26is there. Maybe eventually it won't be
51:28there but for the beginning start I
51:30absolutely believe that Ethereum will be
51:32the big benefit from here. So Ethereum's
51:35edge may be less about speed and more
51:36about trust at scale.
51:40Salana may represent 247 speed of
51:42markets. Bit may represent protection
51:43against time debasement. Ethereum in
51:46Lee's argument represents the
51:47institutional settlement layer where
51:48tokenized assets and activity become
51:50legally financially and socially usable.
51:52He obviously has a vested interest in
51:54this because he has a DAT uh on
51:57Ethereum. So, Bit Miners is something
52:00that I own and I own it because I
52:03believe in Ethereum and I believe this.
52:05Uh I've listened to Tom a bunch of times
52:07and I actually think Ethereum should
52:09outperform Bitcoin. I like the way the
52:11chart has looked all year when Bitcoin
52:13was down. So, I just bring this up as
52:14something to go through it and I get
52:16back to tokenization as the super cycle.
52:19Lee's point is that tokenization turns
52:21assets into software. Once an asset
52:23becomes software, it can move faster,
52:25settle faster, be divided into smaller
52:26pieces, be embedded into apps, be used
52:28as collateral, be traded globally, and
52:29interact with smart contracts. This
52:30changes an asset from a static financial
52:32claim to a programmable object. Again,
52:35there's so much richness in this in
52:38terms of things to understand and to go
52:40through. But a stock becomes software, a
52:42dollar becomes software, a bond becomes
52:44software, a royalty stream becomes
52:46software, a membership becomes software,
52:47reput you get it. It's when AIs enter
52:50the picture. So assets become
52:53programmable. That's the tokenization
52:56side. Then we go into 247. I gave a
53:00presentation at the New York Stock
53:02Exchange uh to
53:05uh I think all of the Korean major
53:08Korean brokers. Um, just to give you an
53:11idea of again where Asia is leading on
53:13this. AI agents become the users of
53:15those markets. So, you need them to
53:17become programmable. That's what we've
53:19been working on and getting towards. You
53:22need this, but then you need AI agents.
53:23This is the catalyst point. Okay? That's
53:26why I'm talking about this now. That's
53:28why as much as I love the infrastructure
53:30names to outperform the S&P, I don't
53:33think you're getting 10 and 20 baggers
53:35from those in a year anymore like the
53:37firework show is over. But I do think
53:39you can find those things in crypto. We
53:41have the tape speaking to us. We have
53:43the action point of AI agents. We have
53:45the administration saying we're not
53:46going to let yields go higher. Maybe
53:49they'll change their mind. Maybe Wars
53:50will raise 50 base points in September
53:51and crypto will go back to the lows. I
53:54just don't think that's the place, but
53:55it's obviously part of the distribution.
53:57Now, connecting this to Grockbot, Elon
54:00Musk, Grockbot promised, we will make
54:02you whole if AI loses your money. I
54:04think this is an super important story.
54:06Number one, I'm using Grockbot. Elon
54:09Musk backed a bold Grockbot promise on
54:12Wednesday. If the AI agent loses money
54:15while running an investor's bank
54:16account, XAI will make the user whole.
54:19He's trying to get people to use it with
54:23agents. This is the way it starts, guys.
54:26And this is why he wants to own this
54:28framework, which is why I want you guys
54:30to use it.
54:32[sighs and gasps] Tom talked about why
54:33this crypto winter is different. Okay.
54:36Why this one is different. Price was
54:39acting like crypto was dead while
54:40fundamentals were acting like crypto was
54:42getting ready for an institutional
54:44adoption. So this is his big change
54:47right now is that other times when
54:49crypto winters were occurring.
54:52There was no fundamental side. It was
54:54all a way down a future dream. The
54:57fundamental side is happening. The value
54:59acrruel is happening. We have public
55:01companies that are showing what their
55:04earnings are. All of this stuff has
55:06changed over the last two years, but the
55:07fundamentals have been improving all
55:09year while the prices have been have
55:11not. Part of that was because AI was a
55:13better place to put your money. Whatever
55:15the case is right now, remember software
55:19was getting destroyed in the first
55:20quarter of this year. Then it reached a
55:23point where
55:25no one was in it and everyone was in AI.
55:28Then we got the momentum unwind in July
55:30which got people to cover their shorts
55:32in software at the same time reduced
55:35their longs and semis. We're still
55:37seeing that play out. And guess what
55:38guys? Software's gone back up towards
55:40the highs. Now Bitcoin miners led it.
55:43Palunteer is part of that. Palanteer is
55:45part of the thematic uh portfolio. It's
55:47what I've written about. It's what I
55:49own. All of these things in here as far
55:52as I'm concerned are part of the
55:53rotation of looking for the next thing.
55:55This is part of the software trade. So
55:58past crypto winners ended because
56:00speculation returned. This one may be
56:02ending because the use case matured.
56:04There was no FTX. There was no the
56:07system is showing a much better place.
56:09And meme coins are not leading this one
56:11out. This is being led as I created my
56:13thematic portfolio for crypto by quality
56:17fundamentally driven ones. You got this.
56:21This week, Coinbase and Better Mortgage
56:22announced general availability of
56:24Bitcoin backed mortgages.
56:26I could show you guys time after time
56:29how many countries are embracing crypto.
56:32It's happening.
56:34Uh figure more good news. The tokenized
56:39portfolio again broke out. Here we go.
56:43Bitcoin again. I'm showing you this.
56:44This is since October one. So, the
56:47tokenized index which is outperforming
56:48so far this year. It's up on the air
56:50while Bitcoin is still down. This is
56:52meant to represent that Bitcoin is the
56:54store of value for this and they're
56:55exactly the same trade. Okay. So, when
56:57you're trying to figure out the
56:58fundamental story for Bitcoin, even for
57:00crypto people who don't think this way,
57:03at the end of the day, it should be
57:05incredibly correlated to the ecosystem.
57:07So, when the ecosystem is getting the
57:09money from the Tradfi world, Bitcoin is
57:11going to be going higher as well. If you
57:13just want to buy the proxy, you go buy
57:15Bitcoin. I don't see them separating.
57:16Here are the verticals. Not going to
57:18take you through all of them, uh, but
57:20you can see how they're broken down
57:22sector-wise. This is what they are
57:24monthtodate.
57:26This is the verticals monthto date. So
57:29big moves
57:32all where everyone's complaining about
57:34AI movements. Here are the individual
57:36names that have moved so far. What you
57:38can see Salana up 46%.
57:43Figure public company. hype. one drug
57:47mentioned uh in his uh quarter remember
57:50pure or purr purr which is owns hype is
57:56on there another big performer and then
57:58you've got circle
58:01nvidia reported
58:04blowout numbers uh next year the
58:06expectations were for 44% growth they
58:09said it's going to be 70
58:12um here's the pe now uh continuing to
58:16just move lower. Here's the earnings
58:19estimates post the announcement. This is
58:21for 2029. I just want you to see how
58:24much it's up. That's how much of a
58:26surprise it was to analysts.
58:29But as I've said, we're in the Nvidia
58:32mudstorm. So the stock trades up 9% one
58:35day and then the next day it goes right
58:37back down four to 5%. This is what's
58:40been happening in it. this line here
58:42with the chart.
58:45It's almost exactly where we closed
58:46today. I think it's up $3 from that.
58:48That was October.
58:50The earnings have gone up dramatically.
58:52So, just get used to the fact that this
58:54multiple compression story has been
58:55happening to Nvidia. It's going to
58:58happen to a lot of the AI semiconductor
59:00names. They are overowned in the hedge
59:02fund world. People have already made a
59:04lot of money. They're just not having a
59:06fun time buying things that aren't
59:08working on a momentum basis. That's the
59:09way momentum ends up unwinding and
59:11selling off. I'll show more about that
59:13in a little bit. S&P for the week, as
59:15much as it was seemed like a crazy week,
59:1740 basis point change. Same thing for
59:20the Q's. Russell was down 1.4%.
59:24The thematic portfolio was down 1.4%.
59:29Um, this is the breath analysis that
59:31I've shown you guys. This is what I'm
59:33waiting for for us to be out of the mud.
59:35I don't think we're going to be out of
59:36the mud till maybe the midterms. That
59:39would be my guess. I think we're gonna
59:40be in the mud. That doesn't mean you
59:42can't find a name that won't go up a
59:43decent amount. Pure Storage went up a
59:45decent amount. Marll went up from 180 to
59:50240 and then pull back after good
59:52earnings report and after saying that
59:54things are going to be much better than
59:55what people expect going forward. But
59:56that's that's all different. Here's what
59:58we need. It's the 50-day moving average,
1:00:00not the 20-day moving average.
1:00:02Structurally 50-day moving average. We
1:00:04are still only have 29% above the
1:00:0750-day. This need name this needs to
1:00:09start expanding. The slope of the 50-day
1:00:11is turning down. We only have 36 there.
1:00:13The 200 day still massively positive.
1:00:16We're 25% off the highs. That's the
1:00:18biggest amount we've been off the highs
1:00:20except for the situational awareness
1:00:22lows. So, we are getting some
1:00:26improvement in terms of the range, the
1:00:29volatility range. This is a good first
1:00:32step because the V is coming down. So
1:00:35this is the average volatility range
1:00:39for all of the names. So we are making
1:00:42some progress. Again, this is mud. So we
1:00:44bounced out of here. Ken Griffin buys a
1:00:47bunch. We go up and now we're basically
1:00:49no different in price than we were after
1:00:51the first gap day. We're sitting here. I
1:00:53expect a more of this. And let's assume
1:00:56this goes in the midterms. That's out
1:00:57here. It will be frustrating, guys.
1:01:00It'll be frustrating.
1:01:03Um, momentum, this is tech momentum. Has
1:01:05not stopped going down yet. Made new
1:01:07lows. Industrial momentum went back
1:01:09down. This part of the reason you're
1:01:10going through it. Remember, momentum
1:01:12does not mean that the AI trade is not
1:01:13working. It means that
1:01:16the long side is not moving. It's in
1:01:18mud. But the short side continues to go
1:01:20higher. That is what's driving this.
1:01:21Now, so software is going higher.
1:01:24The longs are not moving. So, what you
1:01:27get is the V's coming down. I mean,
1:01:29here's the 15-day V on tech momentum.
1:01:33The 60-day peak, but it's not going fast
1:01:35enough yet. Uh, factor neutral V still
1:01:39not moving. It's not coming down fast
1:01:41enough. It's going to take a little
1:01:42while. I think that's going to stay
1:01:44there. Bitcoin, you had this massive
1:01:47week. All those Sigma numbers, great
1:01:50consolidation week. Fantastic. Ethereum,
1:01:53a bigger week, over 30% consolidation.
1:01:56Salana even better up over 30 finished a
1:02:02week up eight. Salana seems to have some
1:02:04tokenization love going on right now. If
1:02:07you want to see something amazing in
1:02:09February semiconductors before they had
1:02:12had their big rally just to show you how
1:02:13quickly
1:02:16crypto can win.
1:02:18Salana relative to SMH
1:02:21is now back where it was in the early
1:02:24parts of February, guys. After that
1:02:26entire bare market, it takes one month
1:02:29for it to make up everything. That's how
1:02:32you can find five to 10 baggers with
1:02:34inside crypto. Here is the software
1:02:36thing I talked about. This is the UBS
1:02:39software index. This is not a cap
1:02:41weighted one. This is equate. This was
1:02:42the highest correlation with Bitcoin.
1:02:45again looks pretty good to me. Uh
1:02:49credit, we've got triple C's widening
1:02:51out. This is what I talked about before.
1:02:52I think the crowding out and the
1:02:54movement on all this stuff in yields and
1:02:55the CDS going out, you're going to see
1:02:57crappy companies that are not going to
1:02:59be able to survive. The junk spreads,
1:03:02they're hanging in there, not doing
1:03:03much, but the triple C's are widening.
1:03:06Just something to watch. Uh high yield
1:03:09CDS, nothing. Oh no, no. These are the
1:03:13disclosures that I mentioned at the
1:03:15beginning. I'll start including these at
1:03:16the end. You guys can watch them and
1:03:18read them on your own. Uh that's it for
1:03:20this week. It's good to be back.
1:03:22Although the humidity is horrible. Uh
1:03:24I'll be seeing you guys at events that
1:03:27I'll be speaking at. I'm sure in
1:03:28September and October, some in DC. I'll
1:03:31be at an event in New York in September.
1:03:34And then I think Pomp's event is uh in
1:03:37October. I look forward to seeing
1:03:38everyone there. Uh reach out and uh I'll
1:03:41see you guys soon. Bye.

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