AI Juggernaut: The Biggest Bull Run Ever w/ Jordi Visser

AI is going to disrupt all businesses. And I wrote a paper and I did a whole video on the fact that the 2030s to me are going to be a graveyard for public companies because of what's going on. What Mark Zuckerberg said is 100% true. He has no idea who's going to win this race. He doesn't have a choice. So, part of the thing I believe in as to why this continues and why people shouldn't fade it is because for whatever reason, the people that run the Magnificent 7 and are in San Francisco all firmly believe on this concept of AGI. Whether or not there's a godlike figure that comes out of this, nobody knows.

But I do know this. AI is eating the world. Labor data revisions erase nearly 1 million jobs overnight, while the GDP numbers for Q2 have been revised upwards for a second time to 3.8%, 8% shocking most analysts with its strength. The Fed is cutting rates and the AI bubble keeps growing as bulls and bears are getting more and more divided and heated.

Hello and welcome to Milk Road Macro, the podcast that hopes that our new AI powered robot overlords will treat me kindly for doing this episode. I'm your host, John Gillan. Today is Monday, September 29th, and we are joined by the man who many are calling the world's leading AI and macro analyst, Jordi Vista. Jordi is a seasoned investor with over 30 years of Wall Street experience. He previously served as a partner at Morgan Stanley. He now runs a private investment firm and authors the Vist Lab sub substack X and YouTube channel focusing on datadriven insights and macroeconomics on AI and on crypto. Jord is here to tell us everything we need to know about how AI is impacting the market. So if that sounds good to you, make sure that you like and subscribe. Share this episode with someone who's going to enjoy it. Uh and as a reminder, our Milk Road macro research team lives and breathes macro. Every month we drop a report on everything that's going on. I just read an early draft. It's fantastic. You're not going to want to miss this one. Uh so make sure you check out the link in our show notes, get subscribed, get in on the alpha, join our pro community today. And without further ado, welcome to Milk Road Macro. Jordi Viser. How are you, sir?

>> I'm great, John. How you doing?

>> I'm doing great. I'm really excited for this conversation. Uh so usually when I do these podcasts, I like to start with a highle overview from people. I want to go straight into AI with you. Uh a recent guest of this podcast who shared a ton of great alpha. I'm not putting him down at all. Uh but when the subject of AI came up, he told me that it was just a fancy talking parrot. Uh and I didn't push back. I just switched to a new topic. But I thought you might enjoy this and uh have a different perspective. So Jordy, tell us from your perspective, how does AI fit into the macro picture? Is it just a talking parrot or is it more or is there more to it than that?

>> I I don't know how to respond to that. Um I I feel bad for the person who said that. Um here's here's just kind of the reality of the situation. If you're betting against AI, you're betting against innovation in general, which has been accelerating for a long time now. So whenever I talk about these things, I try to avoid really focusing too much on artificial intelligence, even though that's where I spend most of my time talking. And I really talk about the journey there. Um, you know, I think for for one thing, when I get to the endgame and I talk about Bitcoin, I can't get to Bitcoin without taking traditional macro people down the reality that in 1982, the time person of the year was not a person. It was the personal computer and then the early 90s was the disruption from the internet and then we got into obviously mobile and cloud and now we're at artificial intelligence, but really it's been machine learning for some time. So to minimize artificial intelligence as a talking parrot, um the Nobel Prize was just given to artificial intelligence in the in the name of Dennis Hassabis. Like I I don't I don't know how to respond to it, John. It's um it's not a statement that I would want to be associated with.

>> Sure. Well, so tell us so I I think maybe a better way to get into this is to talk about what's going on in terms of the impact it's having on the economy. Um, last week our research team wrote a newsletter called why AI is key for the US economy. Um, and we included charts talking about a lot of things, but one thing we talked about was AI capital expenditures. Um, we're on track now for over $400 billion of capital expenditures 2025. Expectations are over $500 billion in 2026. I'm sure those will be revised upward. Maybe you can just tell us where is all this capital expenditure going? What is it? Just data centers? Is there more to it than that? Who's benefiting from this? How long is this going to go on? tell us about where all this investment is going into this technology.

>> Yeah, first of all, I'm I'm sure it's going to be well over 500 billion this year in the US and and greater when you take it globally, especially now that China's doing the exact same thing. The data centers have a lot of components to them. So when people say data centers, I these are not just buildings. So this involves semi semiconductors, but as I like to say, this is all about compute and power. That's everything. So for anyone who's trying to figure out like how to um look at this through through the lens of what's driving the economy at this point, it's primarily been the data centers which has really been more on the compute side. The power side we've been leveraging off the excess capacity that's been out there, but now we're starting to get into the point where we don't have enough power. Um that'll start showing up next year because we're using up all the excess capacity. So the reality is as of right now um the GDP growth that you're talking about and referring to is going to be re related to everything having to do with data centers. But it's more than just a building. It has cooling systems. It has um semiconductors that go throughout it. You need transformers from the electricity grid. There's a whole bunch of things that are going to not only happen now, but those numbers you're talking about, these are on projects that haven't even in many cases either started or they're dollars that are just going to work now. Uh so the impact that you're seeing in the economy is really the lagging side at this point. We're not seeing everything built up. And we know that just purely based on what Oracle said in their earnings reports, which are for the next five years. I mean, they got $300 billion worth of orders, which may or never ever be fulfilled because they're so far into the future. But the reality is that's gone on. And finally, if you just go through the bottlenecks that you're seeing, which is another way to measure the impact that it's having on the economy, we have bottlenecks on cooling systems, on transformers, gas turbines, DRAMs. There's all kinds of different places where we've got shortages or bottlenecks along the lines. Uh, and I think that's going to intensify in the years to come.

>> What are going to be some of the impacts of this? Because, as you say, the capital expenditures are showing no sign of slowing down. They're they're likely to continue to accelerate, but we're already sort of stressing our capacity. Are we going to like what happens in this scenario? Do we just have a huge influx of demand for for new products here? Can the market supply that or does we get some kind of like air in the pipes where things start to to lock up and the economy starts to seize up on us?

>> Well, if you're talking about revenues, um, we have so many products that'll be coming out in the future that are geared towards AI that it's really hard to measure. So I think one of the things that people have become fixated on in particular in reports recently is all this capital expenditure and when we're actually going to see the revenues come through. You're already seeing revenues come through these companies. It's very hard to measure. The hyperscalers have a problem right now where they actually don't have enough capacity. If they had the ability of having the capacity, which is why the data centers need to be built, then Disney wouldn't be paying people to build movies anymore. They would be doing it themselves. We don't have enough compute for that. Um, we'd be solving cancer right now and having drugs come out, but we don't have enough compute for that. We'd have robo taxis driving around, but we don't have enough compute for that. We'd have humanoids around, but we don't have enough compute for that. So, every time people talk about the revenues that are coming through, I wrote um or in my video this week, I highlighted the fact that this the same thing on with the iPhone. When the iPhone came out, no one could envision the app store. No one could envision all of the revenue that ended up coming that has benefited the exact companies right now that people are doubting again. Uh no one anticipated the Magnificent 7 growing to the size. It was not even a plausible thought. Uh first of all that you could get those kind of revenues from just the ability of the smartphone coming out. So I think the mistake people are making is treating what is today and now when they have no idea with innovation compounding at such a h a fast pace all of the different places along the health care side along the job replacement side that are going to bring revenues into these companies the numbers will be astronomical. This is not something to minimize and it's not something you're going to be able to just put down on a piece of paper. When are they going to get revenues for the products that you and I are going to use? These are far bigger situations that are going to be dealt with.

>> Yeah. So, I think that is something that's caught my attention is that there's been a lot of earnings supporting these overvaluations and these companies reaching these, you know, larger and larger valuations and market caps. Um, I think something else that we highlighted in our our newsletter was that the AI uh or rather the AI bubble, if you want to call it a bubble, the boom, whatever. Um, it technology is now contributing more to US GDP than it was during the dot boom. And a lot of people are pointing to some of these things as evidence that we are in a bubble and that a burst is coming. Do you think that this well see this you have a very different opinion on this right? But a lot of macro analysts are saying that these these valuations are are going to correct at some point. Why is this not concern you? Why do you think this is going to go on? Is this the new normal? And and what what are people missing about this?

>> Well, let's separate your question into two parts. First of all, are we going to have a correction? We've had three 20 plus percent corrections since 2019. So I I don't like this concept of everyone saying we're not going to have a correction. When the internet first got exposed to people um I was trading markets beginning in 1992 for Morgan Stanley from 1992 to 2001. So a decade we had one 20% correction. That's right. One. We had one 15% correction which was the same thing as a 20% correction. I happen to be in Brazil during that time period. It happened very briefly. So what makes a bubble is very simple and I actually am posting a Substack on this today so everyone can go read it and go for themselves. The word bubble is a joke. Um everyone who's go read history books there's tons of books on bubbles and they all have one thing in common. I don't care which one it is. Minsky, you can go read Kindleberger's book. You can go read Galbre's book. You can go read When Genius Failed. It involves everyone in the economy. This is a K-shaped economy. So, the same people are saying there's a bubble, are saying there's a K-shaped economy. The top 1% own onethird of the assets. The bottom 50%, many of which watch your show total combined own two and a half%. So, the reason I think everyone's saying this as a bubble is full of crap is the fact that they're defining it in a way to just scare people. It's clickbait. It doesn't mean anything. What we have is an incredibly concentrated market. We have an incredibly concentrated economy. University of Michigan consumer confidence, which comes out every single month, the highest level ever, John, was January of 2000. It is at the sixth lowest reading in history. right now. How can that be a bubble? How can we have a bubble when no one is involved in it? It doesn't make any sense to me. So, the people who do this are the so so-called proclaimed smart people. And it sounds like the same person who said that AI was a a talking parrot. So, I'll just keep using that person as an example. Whoever it is, I don't care who it was. It doesn't matter to me. The statement means nothing to me whatsoever in terms of calling it a bubble. These are just words like stagflation and all of these things. We have an economy which sucks for 50% of the people. How can that be a bubble?

>> Uh well, he's a nice guy for what it's worth. Um I do want to drill in a little bit.

>> Not saying it could be one of my close personal friends. I'm just saying the statement was meant for clickbait. End of story.

>> Sure. Okay. Uh I do want to go in uh a little bit more on this idea of concentration. Um because I think that a lot of people are seeing some concerns with this as well. Uh Mark Zuckerberg recently said he's willing to squander hundreds of billions of dollars for a chance to be the first person to build super intelligence because he thinks it's economically worth the risk. Um I think that a lot of other you know we've got all these other hyperscalers that are taking a similar gamble. Is there room for multiple like companies to compete in AI or is this going to be a winner take all or winner take most situation? And if if it is winner take all what is the risk to society for these companies that that don't win? if there's there's so many losers, right? Like if this concentration continues to to compound until like you know there's like one big winner and then everybody's left out, how do you see that playing out? What's the risk there? How do you think about that?

>> The size of the Russell 2000 market cap is right now $3 trillion and Nvidia is $4 trillion. We've already seen this play out. um you know for everything that you know people want to say I'm positive on AI AI is going to disrupt all businesses and I wrote a paper and I did a whole video on the fact that the 2030s to me are going to be a graveyard for public companies because of what's going on. What Mark Zuckerberg said is 100% true. He has no idea who's going to win this race. He doesn't have a choice. So part of the thing I believe in as to why this continues and why people shouldn't fade it is because for whatever reason the people that run the Magnificent 7 and are in San Francisco all firmly believe on this concept of AGI. Whether or not there's a godlike figure that comes out of this, nobody knows.

But I do know this, the majority of people that are spending the money are going to end up losing in this. I I be willing to bet that that's going to happen. So for everything you're saying, you can be on both sides. You can say that it is silly to call this a bubble, but at the same time say that most of the people spending or companies spending money on this are not going to be the winners and they may not even survive in the end. There may only be one winner out of the mag seven. That is what creative destruction is. It's what I believe in. Artificial intelligence is something that people should not fade. They can fade the fact that this is a few companies doing it that a few people are benefiting and I completely agree with it. That's the whole premise of why we have the debt. That's the reason why we have the debt because the government's job is to protect the median person in the country. And if the median person in the country has can't afford to live in New York City, can't afford to live in LA, they haven't done their job and they need to print money. There needs to be socialism in some of the cities. All of these things are the outputs that you would bet on, which Joseph Shumpeter did bet on. So, I don't um disagree with what Mark Zuckerberg said. I actually happen to agree and I think all of them realize that it's a race to obsolescence. But they would rather die trying than die sitting back and waiting to see what would happen if they didn't take the risk because that's what Ford did. That's what GM did. That's what all of the companies that we're familiar with did. They had debt. These companies don't have debt. They're just spending out of free cash flow. And now their free cash flow yield is going negative. And that means that in synthetic terms of today's world, their debt has gone to levels that are very, very risky for them. and they realize it. So, I happen to agree with the fact that there will be plenty of companies that don't survive over the next five years. And I say five years because we're moving that fast and they're making a big enough bet. Uh so, in no way, shape or form am I optimistic on how these guys are doing. A lot of this money will be misallocated.

>> I want to ask some more questions about this and uh but first I'd like you to just define for our audience this concept of creative destruction because you have been very vocal about this. What does that mean for the markets and and h how do investors need to think about that as it relates to AI?

>> Well, th this all goes back to um to Joseph Shumpeter and just talking about how capitalism if if you deal with capitalism where innovation continually happens and always gets better, then the goal is that you're continually looking to be more efficient, more productive. And over time, if innovation accelerates faster and faster, which is where this theory of uh I would say creative destruction merged with John von Newman coming out of the Manhattan project for me at least and then eventually with Moore's law and then Ray Kerszswwell and Singularity. All of these things all lined up the same way, which is that if capitalism is about making sure that the private sector is driving innovation, where corp corporate profits are the goals, you eventually get to the point where capitalism is cannibalizing itself. And that's where I think we're getting to with artificial intelligence. The final line in the sand for breaking the connection to historical GDP and the industrial economy is people. uh we broke a link that got me saying there is no such thing as recessions anymore the way that they were defined before 2009 because two things happened in 2009 uh which changed the world. One is the governments realized and in particular the central banks realized that they could put liquidity facilities together in a matter of minutes to stop any kind of deleveraging cycle in the Ponzi scheme. But at the same point we started accelerating in technology at such a fast pace that we were destroying everything in its path and they didn't need debt to do that. So the reason we had recessions in the past was the linkage between jobs and credit. Jobs and debt. You always had hey I need more debt. I need more people and they would grow together. That's not happening anymore. We didn't have debt grow in the private sector post 2009. And these companies got so big and they have no debt. They're starting to take on debt now because they need to build the data centers, which is why to me they're finally becoming at risk. But now you're replacing the labor side. You don't need to grow a company and have labor. So we've broken all of the connections back to the industrial economy that Joseph Shumper talked Shumpert talked about and it's been this rise of innovation that really started as the birthplace at the same time that he wrote that which was coming out of World War II.

>> So I think this is really helpful for our audience just to understand how you're thinking about this. Um, from a broader framework, I want to ask some more questions about this labor impact and the impact of AI on labor. Um, I open the show talking about how the Bureau of Labor Statistics revised its data showing that nearly 1 million fewer jobs were created last year than was previously thought. The Fed is now openly talking about how they're worried about the labor market. Recently, we saw announcements from Zoom, Fiber, Bosch, several other companies, how they're planning to shrink their workforces. Um, how concerned are you about the impact that this is having on the labor market and how severe is the contraction in the the number of jobs going to be? How does AI factor into this? Does it create some other jobs? Like tell us about what your your thoughts are on the impact on the labor market of all this?

I I think the the best way for me to put what I think is going to happen in the labor market and I think this is a question you could have a hundred people who from the um who focus on artificial intelligence and I think you'd pretty much end up with such a wide range that it would it would shock everyone and I'll just give you um two examples. Jeffrey Hinton is one of the godfathers of AI dating back to the early 80s. And then Yang Lun is a wellrespected artificial intelligence person that most most famously was at um Meta or Facebook at the time. And basically if you look at their on the one side, Jeffrey Hinton thinks all jobs will be gone and Yan Lun thinks there'll be plenty of new jobs created. I'm leaning more towards uh Yan Lun in one part. I think there's a bunch of different solutions uh to the endgame. One is I firmly believe the work week and the amount of hours needed to work to satisfy living a life will go down significantly. I think there's always going to be need needed to be jobs because I think humanto human connection is something that I believe in. Uh the human brain basically was grown the way that it is through fire and sitting around fires and communicating and I think the human connection between people will always be there. I know. I want to watch movies that were made by human beings. I actually get connected to the stories as opposed to thinking that an AI came up with a good story. Uh you can't replace for me what it was like to watch the 1980 US Olympic hockey team. I it's a memory that I have that I I I like watching a movie about and everything else. So, I don't think we're getting rid of the jobs. But that said, I do think for the next five years, um, there's a very very difficult decision for the central banks and for the governments to deal with, which is the inability for people to get jobs is going to be the the the worst part during the transition where AI is accelerating rapidly and where we don't have those new new jobs created yet. So the disruption and the adjustment, human beings do not like change. No human beings do. it's they create um routines to avoid it. This is going to be a drastic shift and the pace of the shift is what's really difficult. So, if you decide to change something in your children's lives or in your parents' lives as they get older and you try to get them to stop doing something and immediately shift their diet or anything, not only will they revolt, but their body will revolt. Uh systems are not made for change. And I think this is going to be a very very difficult four years. I think the you know the polarization we've seen in the government the violence we've seen that have come out of nowhere uh in terms of just all of a sudden everything every day there's something bigger that's happening uh I think all of this is just again a a symptom of the fact that the disruption is coming it's going to be here I just don't think it's going to translate into job losses I think it's going to continue to be a hiring problem a pressure on wages and that's one of the reason when you go through that thing I said about not being a bubble. When consumer surveys um came out, when they were originally put together, whether it was the Conference Board consumer survey, whether anything that went on, this was all coming out of the Great Depression. The government wanted to have people because they didn't understand this concept that people couldn't be happy anymore. Uh we're in one of those situations now. And part of the reason when you dig deeper into this is that people don't feel like they can get out of the hole that they're in. They don't have hope that they're ever going to be able to save enough money for their future. They don't feel like they're going to be able to live a life that's happy and still be able to afford the apartment they're in. Their job isn't safe. This is somewhat worse than than a recession because it's a perma situation where you feel trapped and nothing makes people feel worse than being trapped in a situation.

>> Yeah. And financial nihilism and a lot of other things start to happen from that. Uh Jordy, I'm glad to hear you value human connection. I'm glad you're here, too. Um, I want to ask you some thoughts about, you know, not necessarily speculation, but thoughts about what this future looks like because I think a lot of people are kind of seeing sort of the clouds you're seeing forming on the horizon. Not sure what to do about it or what could be done about it. Um, I want to bring in something here. Anthropic CEO Dario um Amodi said he felt it was necessary to quote warn the world about this, saying that AI is going to cause mass unemployment. We've lost 166,000 tech jobs globally in 2025 so far. 280,000 last year, expectations for more uh next year. Uh so he was saying that the world needs to start thinking about policies, changes we can make now to sort of prepare for this. Some people have said universal basic income. Some people have said a shortened work week. Um how are you thinking about this? What can be done if anything about this? What should be done? Or is this outside of your realm of thinking and you're just leaving this up to the policy makers?

No, I so um Dario Modi has been very very clear on just the disruption that's coming to white collar workers and let's leave um physical labor out of this because that's way down the road for humanoids to to be specialized and to have enough to replace that. I think I have focused as an entrepreneur now um on using artificial intelligence all day long um for whatever I'm I'm working on. So, unless I'm talking to someone, a client, uh, unless I'm doing my videos, I'm using artificial intelligence to shape my views, uh, I use it, you know, again, it it's the the most amazing thing to say that instead of going to a dinner where someone says, "Hey, do you want to come to this dinner? There's going to be a lot of smart people around the table." Uh, you have the smartest person that would ever be at the table in your hand. So, why would you go to the dinner to just listen to smart people? And I really don't care what it is. As someone who find who's always been curious, who always likes asking questions, but really wants to get unbiased answers and doesn't care about quote unquote hallucinations because human beings do that all day long. We started that off with someone saying that this is just a talking parrot. So, again,

>> I'm I'm glad I told you that story because you're going to hang on to that for forever now. I'm glad you know.

>> I may use it in some of my writings and stuff. Um, and again, it's just it's a statement that again gets made like stagflation, which means nothing. And it just confuses people. It doesn't there's there's no truth to something like that. I I I just don't even know what to say when you can do so many things. And I do this for a living where I get on the phone and people go, "Hey, how did you use it to do what you did over the weekend?" And I show them how to do it and they go, "How did you build that?" This is not like a a a joke. This is a real real powerful thing. And the reason it's important to answer your your question that started this um I've gotten to the point where I'm helping people try to make money to get financial security in their life. Uh I've enjoyed working with retail far more than institutions because institutions who all went to better schools think they already know everything. And that's what the bubble thing means. That's what the conversation about calling it a parrot means. It's because it scares the hell out of everyone. It doesn't matter whether you're someone who's about to lose your job or someone who's already lost your job. But the one thing I will tell you is if you use it, you can go become an entrepreneur. Within a matter of hours, you can create an app. You can go post that app connected to Stripe and you can start taking money in. If you're good at creating something and then getting it out on social media, you could never do this before. You can do it for free. So the barriers to entry for people to be entrepreneurs is extremely low now. You don't have to do anything. And so I've said to people and I said it on a recent podcast. If you're in the point right now where you're about to lose your job or you think you're going to or you can re the handwriting is on the wall, you're going to get a severance most likely if you've been there for a while. Spend the time now having an exit plan already where while you're getting paid, you're already setting up a business. Spend the weekends learning about how to use AI. Watch some YouTubes. Don't pretend like it's not going to disrupt the job because it is. And then once you've gone out there and you've had the time to do it, it doesn't take long to get comfortable with it and then you can go build your own business. People who use AI today are going to be useful in the environment because as Jensen Yuang said, which I I believe in, it's why I started this week's video, AI is not going to replace humans. It's going to replace humans who don't use AI. And that is a truth. You cannot use AI to replace all jobs. End-to-end thinking is, as far as I'm concerned, is going to be done by human beings for a long time. And maybe in 75 years, that won't be the case. So, you have a chance to kind of learn this ahead of time. And for those people watching that have kids that are in college like myself, what are you telling your kids? It's hopeless. Don't use AI. That's the whole thing is if you minimize it and you play it down and you describe it as something which is not real, you're only hurting your own children. Get them to use it. Get them to focus on it. It will help them make better decisions and everything and it will help them with jobs in the future.

>> This is one of the reasons I really like your analysis and appreciate the content you put out because you do encourage people to see the opportunity and to to participate in this and and to learn to use this tool, not just to be made obsolete by it. I think that's a really helpful perspective. I want to come back to that at the end just as like a case study on on how you do some of that. Um but for now I want to go back to this thing. So we talked about the MAG7 are competing with each other to build artificial super intelligence. However, the United States is also competing with China on this. Um and both countries seem to view this as a must-win for them. You've said that these economies cannot survive without each other and so they're like a couple who wants to divorce but who are staying together for the kids. Um I want to get your thoughts on this. Who is winning in your mind right now? I know this that's a big question but between America and China and then are they moving faster towards this divorce or how do you see that playing out? What are your thoughts on that?

>> Yeah, winning is a complex um question when you when you leave it at there and and the reason I say that is not to avoid giving you an answer. I I I traveled to China for one month a year beginning in 2007 until 2013 um when to me the handwriting was on the wall that China had reached a peak in um in growth. They had excess debt and as growth was slowing down the government was going to have to do their version of what the US went through with the housing market. And I I believe that's what they've been doing for the last decade. They have the same tools we do. they didn't have to go through 2009 partly because their banks were not, you know, been exposed to the rest of the globe. Um, I I think China has made very very sound long-term decisions on where we stand right now in artificial intelligence. Um, one of the most optimistic things I tried to get across to people this year was this concept that the US and China were not in a position yet where they could be divorced. And this gets into the question of who's winning. China is winning on the hardware side for sure. Um, we are exposed militarily in a very very large way. And what's alarming to me is that it seems like the US did not realize this until this year and in particular did not realize this until liberation day and the days after. Um, people must remember this, but when when Trump turned around and the markets rallied, uh, where he basically said, "Okay, we're putting a 90-day pause on all tariffs," he didn't do that for China. He actually escalated with China, went up to 10 and something%, the numbers seemed ludicrous. And then three days later, China said, "All right, we're shutting down rare earth." It didn't get the same front press as the 150% did, but it sure made the administration panic and the rest of the globe panicked. And the reason is because China's responsible for 90 plus% of the processing of rare earth. Now, I don't think many people knew that before liberation day. I don't think many people may even know it now, but all things that you own electronically need rare earth and they control it. So if you want to have a military and again this was an this had an impact on the decision-making in Iran uh and the bombing uh Israel was using a lot of weaponry uh advanced weaponry with Iran and that made it a very big issue because the US doesn't have the ability of making a lot more rare uh weaponry without having rare earth. We don't have our own supply. So all of these things are in are linked together. And so on one side China made the decision they're ahead on drones. They're ahead on on humanoids in terms of the uh overall size of them. Uh they're ahead in electric vehicles right now. BYD has taken over and now they're making inroads and semiconductors. Where the US is winning is if you asked every Chinese citizen um and gave them free reign to walk into the United States of America and you did the same thing for the US to walk into China, the US still if it had an open door policy would have floodgates of people trying to come in. So the winning just depends on how you view it and that's why the countries are linked. You cannot just change things overnight. Meaning a country cannot do to its people what China has done in the past and not run into a situation where the people feel like they should come and move overseas because they don't trust their government. If you don't trust your government, whether it's in Argentina, whether it's in Brazil where I live, whether it's in China, the US generally wins in that. And even with what's gone on this year, I would say the US still generally wins because that's what goes on. But I think this linkage between the two countries has to stay in place for a period of time because it is a global world and if people had their um choices, uh it would be a different thing. So I think the US is is losing on one side but winning on the other.

>> Yeah, I've heard uh some of the the people that work with David Sachs compare it to less of a race and more of a scoreboard um because there's you're saying there's more nuance to that. Um yeah, so I would encourage our audience to look into that more. I I want to ask you about something specific that you've been talking about in your research. Um Presidents Trump and Xi are scheduled to meet face toface for the first time, I believe, since 2019 um just over a month from now at the 2025 Apex Summit in South Korea. For those who don't know, Apex stands for Asia-Pacific Economic Cooperation Summit. But the US and China are scheduled to have a direct one-on-one meeting on the sidelines during the summit. Why is this meeting so important to you? what is at stake here? What are you hoping for coming out of this meeting in terms of a deal or just relations between China and the US? What are you focused on with this meeting?

>> Yeah, I'm focused on the fact that like I said um the majority of people still believe that China and the US are um I don't know at war when it comes to AI. And I think a lot of that has to do with chips. It has a lot to do with um the Ivy League education side. It has a lot to do with a whole bunch of different things. China has not yet, let's say, lessened their restrictions on rare earth. They've not really been buying soybeans this year at all in the US, which is historically a a big ticket item for the US. So, I think China and the US are still negotiating and still trying to figure out. I mean, as this morning, there was a story floating around that uh China wants the US to change their views on Taiwan. Um, these are all big negotiation things, which I think uh means we're not finished yet. And I think Donald Trump wants an agreement uh and wants a grand bargain. If he didn't, I think he would be less uh less constrained when it comes to China. uh he doesn't negotiate from a place of weakness yet he goes out of his way to say that he has a great relationship with she there hasn't been any kind of raising of the the the threatening tactics at all uh which was one of the things that China kind of required to get to this point so I think investors have underestimated number one that there is a high likelihood in my opinion of a mediation settlement as someone who went through a divorce once um mediation uh basically ends uh you know the need to go through the divorce sets up the financial constraints and maybe it's a mediation where the divorce is agreed in four years whatever the case is I think that's what we're headed towards now again I think this will be taken positively by the markets because again the uncertainty still remains for businesses if there's some kind of agreement between China and the US for the next four years the One thing I still hear from small businesses throughout the United States that have been impacted by the tariffs is that we still can't replace all of the building that we did of the supply chain through China quickly. So if there's clarity on the US and China in any shape or form, I think you're going to see PMIs pick up. I think you're going to see the manufacturing sector, particularly in the middle part of the country, the soybean stuff, the farmers, everything have a sigh of relief. And I don't think investors have thought about the fact that it would be viewed very positively. I do think it'll have positive um characteristics that will look a little bit like what happened coming out of 2016 with a little bit of a commodity boom. I say 2016 for people don't know. There was the infamous um China US Shanghai accord um which never really happened and if you go look it up it's kind of speculation but it marked the lows in oil back then and I think there'd be a similar thing where commodity prices would catch a bid and there'd be this focal point but to me it would just be the gun going off for the race on AI and the race on spending more money on commodities and hoarding them the way they need them.

>> Okay. So I appreciate the the answer on that. I think that this is still a developing situation. I just wanted to kind of ask the question to get your thoughts around this and to kind of get our audience to pay attention to what does come out of that. I agree with you. They're going to try to reach some sort of grand bargain because that's what Trump does. Um, but I I really don't know exactly whether or not we can expect that to be like like you said a mediated solution or or or what that's going to look like. So, I'm interested to see what comes out of that meeting as well. I want to ask another thing about something you touched on ear earlier which is energy policy and energy needs of AI and some of the differences between China and US on this. China has invested over a trillion dollars in clean energy. They've also leveraged fossil fuels fuels. They're way ahead of us on nuclear energy as well. Meanwhile, AI is rapidly pushing towards the limits of the United States's energy capacity right now. How dire is the energy situation in the United States right now? What are we doing to address this? Do you think it's going to be effective at meeting those needs or or are we just going to have our energy capacity completely tapped out by the growth of AI?

>> It's a good question. The one thing I know is that the demands from AI are going far faster than what was anticipated. Um, and so the gigawatts that will be needed are are are going faster even though the efficiency gains are happening at at a fast pace. And it's one of the interesting things about this is that people try to come up with with simple solutions to this meaning oh if we just get efficiency gains in the architecture of the semiconductor chips um or in the architecture of some of the designs like what happened with Deepseek at the beginning of the year um we'll be able to satisfy the power needs. Uh the reality is that is all complete speculation and all we know is that the model releases continue to be hogs in terms of energy usage. I'm sure many people watching have at least heard the term tokens but the token needs have gone up exponentially both in US and the China. Um, in the case of the US, you know, famously, and I wrote about this, Google talked about their token needs being up I just I mean 90 times in the span of one year. And in China, Bite Dance just talked about similar type numbers that were happening. So, this is not just a US situation. This is China and the US. And yes, China has spent more money. The US has spent a lot of money on the energy side as well. I mean, we did create a lot of gigawatts over the course of the next few last few years. But the problem is the demand side for AI is the place that I write about. The demand side is exponential. And so every time I get into

A conversation with people about, well, the supply side is going to catch up. There is no indication of it at all. And in this week's video, I just went through Micron's recent earnings report, which Jensen Huang said on the BG2 podcast, and entered all that information, the transcript, and the Microsoft information, and the Broadcom information, and the Oracle information, and all of the hyperscalers from their most recent earnings reports where they talked about capacity needs on the cloud. And the end result was that we have no signs anywhere in the supply chain that we're going to be able to meet the demand that has gone through with AI.

So I think for people listening, I'll just continue to say concentration is both a negative but a positive. If you have concentration, you don't have to go look very far to find the areas to invest in. I think for the next few years, it's all about compute and power. I don't think consumption is going to get better all of a sudden. Most of the consumption, most of the economy in the US is consumption. So consumption is fine. You brought up UBI. We already have UBI. It's called the 1% owning 30-something percent of the assets. The bottom 50% are guaranteed to have a job they hate, but they have a job and it's just we're on UBI. It's a horrible form of it.

The transfer payments continue to grow. That's why Bitcoin ends up being the end result for me that I go through this long, this long road to end up in the same place. But the power needs are going to be running into a lot more problems next year based on the fact that so far all we've used is excess capacity and now we're trying to build more. I think you can spend your time looking throughout the power side. You're going to be able to make money on it. One place in particular that I would highlight, gas turbines. Just go look up and ask how big the backlog is. Ask how long it takes to make them. Ask how few are the issue that pops up on that is you'll see is that you end up in a situation where we're not going to be able to deal with natural gas for all of the problems, which means the PMIs are going to go higher because the tide lifts all boats. We're going to have to find every potential solution and there's going to be a lot of private sector dollar that's flowing into this because the administration has allowed you to deal with the capex side in a better accounting framework and I think you're going to continue to see a lot of dollars put into this. At some point we will overbuild that as well because I'm sure the efficiency gains will catch up, but we're not there yet.

I want to ask a lot more questions about investments, how you're thinking about your portfolio in this environment. I want to ask one more question on this before we move on though. You've talked about the the energy demands of AI, the compute demands of AI. Do you see a scenario in the future at some point? I want to ask kind of like a dystopian question on this, but I'm actually curious here. Do you see a point in the future where we're going to have to make decisions between giving more energy to AI so it can do things like cure all diseases versus having ordinary American citizens be able to have electricity to light their homes? Is that a decision point that might come or is that like a dystopian fantasy nightmare scenario that will never actually happen?

It's a Sam Altman line recently. Um, I [Music]. You know what, I could sit here and give you an answer to this, but somewhere behind the scenes, it's already happening, to be honest with you. So I'm sure most people saw V3 when it came out. This is obviously not curing cancer, but V3 and making videos. The fact that the only way you could do it is if you pay $200 a month, and even then you only get a certain amount of times a month that you can do it for eight seconds, that just says that we don't have enough compute for any of this. So, we're kind of in that situation that you're describing already, meaning it's not cancer, it's not this, but they don't have enough capacity to allow you to do what you'd want to do.

And so, you know, I'm a lateral thinker when it comes to connecting dots back and forth. That's why I keep saying for people who are fading AI at this point and thinking it's just going to run dead. The reality is video is such a hog in memory usage and to actually get to the point of cancer, we need more compute, we're going to need more power for it. I just think we're already kind of in that situation and we're making choices that necessarily they don't want to make. OpenAI could be offering a lot more things right now. Google Gemini could be offering a lot more things right now. They're just not capable of it at this point. And I think that's going to be a factor that slows down the progression of it. The demand will be there. The ability of getting all that done is going to take more time. And that's gets us back to the concentration problem.

Longevity is going to explode higher and people are going to live longer. On my morning walk today at 6:00 AM, which I do most days if I'm not working out somewhere else, I was having a conversation with ChatGPT about solving Elon Musk's problem of not having enough people, meaning not the birth rate not growing. And I just asked the simple question, if people are going to live, beginning in 25 years, another 80 years longer, do we actually need any more people? And these are the types of questions that you can have a conversation with ChatGPT again, and it will blow your mind on how even Elon Musk has not thought about putting that through and going what it means because it does have huge implications when you get into it. So I think there's no way for us to know this stuff, but I just want to emphasize to people, we have a demand situation right now that is so much bigger than what people realize, and it's already been constrained by power and it's already been constrained by compute.

Good. Well, I am sufficiently scared. So, I think we'll move on to a new topic. But I just want to emphasize to people, the podcast is called Milk Road Macroeconomics. Economics is the allocation of scarce resources, and AI is one of the biggest ways we as a society are thinking about how to allocate our scarce resources right now. So, you know, just I think it's a good thing for everybody to think about, even if they're not doing anything about it. It's something to pay attention to. I want to pivot now to investments because I can't end this without asking you about how you're allocated, how you're thinking about the opportunity of the market right now. You might not remember this, but I met you at one of Anthony Pompliano's investor events in New York. I grilled you for about a half an hour on Bitcoin. So I want to ask you about this specifically to start with. You said that Bitcoin, in your view, is the quote purest AI investment play on the market. Clarify for our audience the link in your mind between AI and Bitcoin investment and why it's such a pure play on AI in your mind. What is that thesis for you?

Well, the good thing is I already gave answers to it throughout this interview, which means I don't have to go through the whole long-form answer. But it gets back to the starting point where I said John von Neumann, Moore's Law, the personal computer winning Time Person of the Year, Time Machine of the Year 1982, the internet, the smartphone. Basically, this isn't about necessarily AI. People need to think about innovation as when is the endgame. So at first, you get so efficient that you don't need debt, and that's what the Mag Seven were. They didn't need debt to get to the size they are. I just want to reemphasize again, these companies did not need debt to grow to the size they are. It's an amazing thing to think about. But you broke the historical correlation between debt and growing your business. Now you're breaking the historical correlation between the concept of GDP, which is a statistic created during the Industrial Revolution, and human intelligence or people working. Theoretically, you could have an economy that has nobody working theoretically in, I don't know, 50 years, 35 years, and we might be there along the path between now and let's say 35 years. If that were to occur, a new system needs to be born because the current system, whether it's the fiat system or the industrial economy, is no longer relevant. You can see that with the concentration of wealth that's been created.

So, the reason I bring up Bitcoin as the endgame is that it's part of the future system. So, the reason that we have 1% controlling 33% of the net worth in the United States is because those people don't own any fiat cash. They own assets. Those assets are all valued where if everyone tried to sell them, they have no value. It's about a Ponzi scheme, meaning you want to sell that, someone else needs to buy it. Bitcoin is the opposite side of it. It is a system that is not based on leverage. It is a system where it is being driven right now by the minority. So, I saw a recent thing that I put in my video where I forget, Bank of America did a survey in one of their fund manager surveys, and it was like 0% of the people had any weighting to Bitcoin still. These are wealthy people. So the people who own Bitcoin, again, for the majority of them in terms of those people numbers, they're at the lower end. And I meet those people. I met you, John, at one of those events. I meet them at Robinhood. I'm fascinated by how many people, plumbers, electricians, cops, watch Anthony Pompliano. They speak about Bitcoin. They speak about all of these things. That does not come up on Wall Street.

So AI to me is the perfect side of the disruption of fiat assets. And so I always say this, let's just pick real estate and not pick something that is financial because I think most people could say, "Well, I think stocks are worthless and bonds are worthless." Okay, but real estate's worth something. Okay, so if real estate's worth something, what is the value of a house on the Hamptons? If it cost X amount of dollars to build, you go, you get insurance. They have a part that's the land and they have a part that is the house itself. Well, if humanoids can go build the house for zero, how much is the house next to it worth? Well, then it's just the land. How much is the land of an overall house? You're going to get to the point over time that people are going to realize that fiat assets are not worth what they're supposed to be in a time of replication. And that's what AI does. It's deep fakes, which means it can replicate anything. So the only thing in my opinion that has a moat around it is gold on one side, religion for people, and then Bitcoin. Those are the only three moats I'm aware of where people actually just believe. Everything else is an idea, and I think all ideas are about to be disrupted by AI.

I have a lot more questions I'd like to ask you on this, but I really appreciate you explaining that. I'm always amazed by how different a diverse set of views you can get on Bitcoin when you ask people about how they think about it, and I've always found yours pretty interesting and novel. So, thank you for that. What is your portfolio composition going into Q4? I think a lot of people want to get allocated to artificial intelligence, but beyond just buying Nvidia or Tesla, they're kind of struggling with that. How are you allocating? What opportunities are you seeing that are maybe overlooked, underappreciated that investors should be paying attention to right now?

Compute power and Bitcoin. I mean, for right now, that's where it is. So on the compute side, you know, I'm in a lot of public areas. My favorite stock for this year was Micron and high bandwidth memory. I am long Nvidia. Recently Pterodactyl, recently ASML. There's a bunch of semiconductor stocks that to me are about to go higher because of the upgrade cycle that's coming for PCs and phones. Tesla is something that I've talked about relentlessly since the middle of August. And this is an interesting one for people to just pay attention to rather than listen to me for advice. I would just say that Tesla is a perfect example of a company that people should be paying more attention to. It is hated in the same way Bitcoin is hated. Elon Musk, obviously, is thought negatively by most people outside of retail and his little cult following. But the reality is, we're at the cusp of where Tesla has had a vision of robo taxis and humanoids. We're at the cusp of that now, and we're starting robo taxis. We're in Austin, and now he's releasing version 14 of his FSD, which he says is going to be the game-changer. The main thing people should realize is when they hear Waymo and they hear Tesla, they should understand the difference between the two. And I'll just leave it with this. When Elon Musk says if you take a Waymo vehicle and you put it on Mars, it won't go anywhere. It doesn't know what to do because it doesn't have its directional system. It's like if you went up there without Google Maps. If you go up there as a human being and you want to move around, you're not going to look at your phone. You're going to use your eyes. He's built the cars to make decisions based on its eyes and the cameras. And so if he's successful at that, it changes everything, and it is the step that's necessary for generalist humanoids, which means when you go through the valuation of what the humanoid market would be, the robo taxi market would be, Tesla's valuation goes up. The second that happens, if it coincides with an upgrade cycle for iPhones and an upgrade cycle for computers, if all that happens next year, expect to see more of a bubble next year.

Yeah. Well, I really appreciate that. I really wish we could go for another hour, but I promise you I'd keep this reasonable. So, I want to kind of bring this together for the audience with a couple of things here. So, we talked about how AI is eating the world. There's a lot of economic concentration. AI is the US economy. We talked about how that's impacting the labor market, how that's impacting geopolitics, things for people to think about there. And then some opportunities for investment. You know, you've been early to a lot of these things and pounding the table and been proven right in many cases. I want to end with just like giving us a case study, maybe like your recent, you know, the Teradyne example, but you've been educating your audience about how to use AI, how to think about how to use AI. And I think just having you share with our audience that case study of how you've used this to help evaluate new investments will help them think about these tools as well. So could you just walk us through that example of how you're using the tools and how other people can use it to help them as well?

Yeah. And I'll just give an example from this morning. I was on a call with a very smart hedge fund, and we were talking about the video that I had done for the week. But they also wanted to go through how I'm using it. And so I took them through some examples of custom GPTs that I had built where all I have to do is post in the name of a stock, and it will go through and do an analysis on their earnings report and basically go through and highlight immediately all of the places I should be paying attention to, all the supply chain companies that could benefit from their situation, and also the competitors that would benefit. So this is a way very quickly to take any company and just take its earnings report and extrapolate it into other places, which becomes very important for people as they're, you know, focused on kind of earnings come out, it's new information. I don't want to just focus on this company. I want to focus on all of supply chain immediately. The stocks react extremely fast in most cases. But that's just an example. And in one case, I just highlighted what they said about the phone and PC upgrade cycle and what they were already seeing because a lot of those semiconductor stocks that benefit the most from that, they're the same price they were four years ago. So they haven't benefited. But I'll just give you a specific example. When I was done with the call, Morgan Stanley, or I noticed that Western Digital was up 89% and it was leading kind of the semiconductor move this early this morning. And so I went to go see what had happened, and Morgan Stanley had just raised a price target on the stock almost like 100%. So I clicked, I clipped out a piece of what they wrote, and then I put it into ChatGPT and said, "Will you take this, please, and do the exact same thing that I said with an earnings report, which is go through and find all of the other companies that should benefit? Is there anything new in this report?" blah, blah, blah. Doing that on news that you see and just saying, "Hey, will you explain to me what other companies or what other things that can go in?" And it doesn't have to just be that. It could be anything that's happening in the world, any new piece of information. If you haven't learned up what Bayesian is, when new information comes out, the odds of anything in life change. And we all make decisions every day. Annie Duke wrote a great book called Thinking in Bets. Every decision we make in life, John, is hiding from the cops. That's why the cops are riding around and sirens are going off, and he puts it on mute. He needs to figure out and make a solid decision on how to not get caught. You have to put that into ChatGPT to make sure you don't get caught. You just can't let the cops see the thread that you've put in there. So you have to be careful with it and maybe use other ones. But every single decision you use in life, if there's new information, I would put it in there and just say, "Hey, take this on a lateral direction. Give me some thoughts that I haven't thought about." That's the beauty of this, and what very few people can do. That's why we have polymaths. You have the ability of taking one story and translating it into other verticals. That's the way you use it.

I didn't think Bayesian updating and a police shootout or chase down would come into this conversation, but I'm glad that we got there in the end. Yeah, that's right, man. Oh, so look, where I want to leave the audience with this is just that, you know, there's a lot of fear of nihilism about AI, about the future, but I want to empower people to say that this is like Jordy said, like having the smartest person in any room willing to talk to you, willing to work on problems with you. Avail yourself of that. Don't give in to despair, but rather lean into the opportunity here. So that's why I wanted to end with that for our audience. And Jordy, I'll end with one question for you. Where can we send people to find more of you and your great work online?

First of all, if they start with LinkedIn, they'll see everything eventually, but they can find me on YouTube, they can find me on X. All of the work that I do, maybe outside of Substack, I post on X and LinkedIn at this point. And then I do write on Substack, usually once a week. These are all thought-provoking pieces. They're meant to get you to think outside the box. I spend a lot more of my time, like I did at the beginning, going against this clickbait stuff, which is not going to help you. Just take one thing from me. If you want to actually educate yourself, don't read things that start with clickbait. Clickbait is meant to distract you. It has biases associated with it. The same thing goes with the news you choose. They're showing you what you want to see. And I'm telling you as a fact that clickbait is meant to distract you. And if you want to do your own work, just go on the place that has no clickbait. It's called ChatGPT. You'll get everything you need. And by the way, use Perplexity for your searches instead of Google at this point.

Well, I can't wait to come up with a good clickbait title for this episode. Jordy, I really appreciate you coming on. I had a great time. I hope you did too. I really appreciate you sharing this with the audience, the weekly videos you do with Pomp on his channel. If you know, for our audience, if you're not watching those, make sure you're checking those out because those have been a great resource for me. So, just thank you so much for being here. Thanks for being on Milk Road Macro. I hope we can have you back again soon.

Uh, thanks, John. Thanks for dealing with me. I'll be back. Yeah, my pleasure, sir. And thank you all for joining us. I'm really looking forward to see where all this goes. Stay with us, stay educated, stay bullish, and we'll see you all on the next episode of Milk Road Macro. Thanks, everyone. Want insights on what's really moving markets and how we're trading each event? Subscribe to our channel, then join the Milk Road Macro and Macro Pro newsletters. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky.