How Fed Rate Cuts Affect Bitcoin, AI & The Market

What's going on guys? Today we got a great conversation with Jordy Visser. As you can tell, I am not in studio, but Jordy is. He's looking great and he's got great insights for you.

In this conversation, we talk about the Fed decision, the rate cut, the impact on Bitcoin and public equities. Then we go deep down the AI rabbit hole. What's working? What's not working? Where does he see value acrewing? Where does he see opportunity in the market? What should you as an investor be thinking about? And then also, where are the shortages? Where is the risk in the market? And how is Jordy thinking about 2026? All that more in this conversation. Here is my latest episode with Jordy Visser.

All right, Jordy. A great place to start this conversation is obviously Fed decision this week. I don't think people were very surprised. 25 basis point cut. Uh there was plenty of people who wanted a bigger cut, me included. Uh obviously Steven Myron, he wanted 50 basis points. But there was also two dissents that wanted rates to stay unchanged. And I think that there's a lot of people pointing to different data sets that say right now is a very complex time in the US economy. Where should we go? How should the Fed react? What was your takeaway from the Fed's decision and maybe some of Powell's comments after the meeting?

Yeah, the the actual cut was not a surprise. Obviously, we had uh the the committee had worked our way up to 90 plus%. But I think there were a lot of nuances in this that uh that are definitely important for markets and I think for the messaging side. Uh we talked after the last Fed meeting and I mentioned the fact that Powell has gradually since really uh Jackson Hole been working his way towards this position of labor verse inflation but at the same time the progression related to artificial intelligence and I think this is you know this is this is an important time in history where we've reached a point where starting in really September through October and and and now uh with this most recent meeting he has basically talked about artificial intelligence and the impact that it's having. Now at this meeting I think the most important point that he made was really the focus on the labor side. You and I have talked about the reality of the labor market being weak. Uh last week when we spoke I highlighted the fact that six of the last seven months we've had negative job creation for small businesses. uh less than 50 employees and those small businesses. And I think the Fed has a dual mandate, but they also have to deal with the K-shaped economy. And the message that came out was number one, he implied that the non-farm payroll numbers, the one that we pay so much attention to, are likely overstated by about 60,000 jobs. It's a big deal. He also talked about the expectations that inflation was coming down. He talked about the productivity being at the higher li the higher level and the fact that we're really not at the AI adoption point yet. So if you put it all together it was a dovish press conference and it was a dovish me a dovish uh message that came out and Bloomberg Intelligence which kind of goes through it with a fine fine tooth comb and takes the statements that are more hawkish more dovish according to them it was the most dovish press conference we've seen since 2021. So I think on the whole when you just take the press conference part it was dovish. But obviously the other announcement they made which is important for everyone is they acknowledge the fact after saying QT was ending they said they had to start making purchases. Uh bill purchases will be you know starting at 40 billion and likely be around that number until we get through the uh the tax day in April. And so the need again of the Fed to be assisting the market on the funding side and the need with this debt and deficit at these levels has become apparent. And so for anyone who wanted to see gold, Bitcoin, the story of kind of the Fed being there to provide liquidity, uh they got a little bit of everything they wanted on on this. And we don't have another cut built in until April to June. Uh but I think for the time being it was a positive dovish uh meeting for everyone who was hoping so.

>> Now one of the things I took away is that um Jeff Park had this great tweet of like they couldn't even make it to January. They could not make it to the end of the year before they had to start buying uh these treasuries. Do you put any weight on 40 billion uh the fact that they had to do it so quickly within weeks of ending QT or is that actually what we should have expected? They just didn't telegraph it as much.

>> Yeah, I so I think there's two components and we we tend to forget this stuff, but remember the the the government was shut down uh for a long time leading into this. So I think there's two messages out of that. One is they didn't want to do anything or be involved in anything while the shutdown was going on unless they had to. the funding stress had been showing up and even though I think uh they were confident which most people that follow the Fed were that the facilities that are open would always enable this to not be a big problem. But I think once you got through the the shutdown, two things stand out. Number one, they gave the most dovish press conference in 4 years without having any real new data. I think that should be a statement in itself. And I do think the fact that they brought up uh the purchases to now just highlights the fact that this is a uh a scenario that why wait until January when they're in a position that they should get this rolling and the funding stress had been there. So I think there was a legitimate reason to kind of do it now and not have to wait till January.

Now, when we see the Fed's impact, obviously there's plenty of people that go and they talk and there's kind of the soap opera of finance, but uh asset prices had quite a different reaction. There's Bitcoin and there's public equities. What was your take on how each of these assets responded kind of post the interest rate cut and the announcement of QE?

Well, let's start with uh with equities because um their reaction is what I'm expecting uh as a preview for next year. I you know for the last couple months I've talked about the fact that I think it's going to be a lot harder for tech to continue its uh let's say its dominance specifically the Mag 7 and the well let's let's narrow it down the hyperscalers uh because I do believe that the hardware side of the economy is going to be fine next year and that's Tesla and probably Apple as well. Uh but what did work was clearly the things related to what I call the PMI surge. Uh you've got small caps that went higher. Transport transports ripped higher. Uh you've got a lot of components with inside there related to a weaker dollar. You've got the CRB raw industrials uh metals index breaking out. You've got rates, long-term rates going higher with equities going higher. So you have kind of the perma bears on what bonds are doing. But the reality is we have this whole growth trade going on. So I think the Fed moving rates combined with the expectation that the first quarter is going to see the biggest stimulus part of the one big beautiful bill has people thinking that they should be leaning more towards cyclical pro-inflation related things. Uh and that's the way the market worked out. At the same time growth underperformed value uh that has been kind of a mega trend that's gone on for the better part of this year. But with Nvidia kind of still hanging off the lows, you had Oracle earnings this week. Uh Palunteer is still still off. Sorry. Yeah, Palanteer is off the highs. I was saying Nvidia is off the highs. Uh you have a lot of these uh AI fear trades, OpenAI, all of the component pieces that are still there. So on the equity side, it was as expected for Bitcoin. Um Bitcoin probably didn't go up the way people would have wanted, but I do want to send kind of a a message here. I heard a few podcasts this week with, let me say, macro people that I listen to uh often. There's not a lot of them still, but the ones I do listen to, they usually at least have a view on Bitcoin. All of them turn negative. Um I they one of them I couldn't believe turned negative, but openly said turned negative 3 weeks ago, which I think was the low. Uh if you look at the chart of Bitcoin, it's not a greatlook chart. It fell very very quickly. Uh we've talked about a lot of the reasons why, but it is starting to act better here. And I do believe, and I've said this, that I've got a lot of buy signals on things that I have. Uh I'm looking at a lot of things that say that if we can get above 93,000. Uh I expect there to be kind of a surge back up to 100. If we can have three daily closes above 92, that would be good, too. But Ethereum already has a good-looking chart. You've already broken the downturn trend line. it's kind of outperformed Bitcoin on my stuff in terms of the relative uh chart relative to the beginning of the year. So I think right now uh you've got credit spreads at all time types. You've got the reflation trade going on. I strongly believe PMIs are going higher. And for me that means that Bitcoin is just kind of whether it stays here between 85 and 92 for another couple weeks. When we get into the beginning part of next year, I think we're going to see Bitcoin back above 100. And I think the surprise will be back to all-time highs in the first quarter.

>> Now, one of the areas that um I have been surprised by is small caps hit new highs and we're starting to see uh areas that maybe have lagged. Um you there's plenty of people who still are talking about emerging markets or international um opportunities. Uh you mentioned Ethereum u kind of leading Bitcoin maybe uh here as well. Um how do you start to think about uh the consensus trades? You know, when it's consensus, everything goes up. Everyone's making money. When they start to unwind, there are these previously contrarian or lagging trades that then will be the new consensus trade. And so, you know, you've been doing this for 30 plus years, right? How do you identify not just like diagnosing what's happening today in the market, but people actually want to know, well, what is going to be the next consensus trade? What is going to be the next thing? And so can you talk through whether it's market structure, certain data points, liquidity, uh you know like how do you kind of say okay this is the next thing that will become consensus and therefore if I buy it today I'll capture the return as you know kind of gets bid up when it becomes that consensus trade.

>> Yeah. So as a macro person this is an important point. So I am positive on small caps for next year. I am positive on commodities for next year. I am negative on the hyperscalers for next year. Well, that's the opposite of what's worked for clearly the last three years, but honestly, for the last 15 years, this has been a long software, short hardware trade. Uh, I can't say this loud enough to people. Uh, I can I can scream it from my window. I can do this in my YouTube video every week. We've reached the physical limits of software. So we've reached the point where we need to build out a lot of things to actually get the intelligence that we need from the data centers and we have a bottleneck. So semiconductors are thought of as technology that's hardware. These are chips and they might be something that you can build but they're not software. You don't snap your finger. You actually have to produce them. You have to go through this whole thing. We had companies uh that were able to grow without hiring people and by having margins up at 60 70% for 16 years that dominated not only the US market but the global market. Uh I like US uh foreign stocks over US stocks. I like emerging markets over US stocks. But that is not a a call on US exceptionalism. It's not a bad thing. I think they're all going to go up together. But the problem is the US market cap which is a momentum decision-making who has won the last 17 years is heavily geared towards things built on code. Oracle had their earnings this week. Uh the earnings were good. I mean I you know there's there's nothing bad within there but we reached a bottleneck point. You can only say for so long oh we're going to get the revenue down the line. So, this is one point that I'm going to make uh very clear in in my weekend video for this week, which is Gavin Baker did an interview with Patrick Oshanosy um on Invest Like the Best. I've referenced one he did a year a little over a year ago, which I thought was fantastic. This one was also fantastic. There were so many nuggets in this uh when I do my weekly video and I'm thinking about all the points to go. I think there were about 15 pages or 15 slides that I have solely from this interview. So, I highly recommend people listen to it. But one of the points that he made was that over the last 18 months, the progress we've had in the models, so going from GPT4 to GPT5 was not based on Blackwell. It was not based on getting these chips, which are super important to having bigger intelligence. It was based on the advancements we made in reasoning, the advancements we made in reinforcement learning, the advancements we made in testime compute. These were all, let's say, efficiency gains that came that allowed us to get to this point. The reason that's important, those are basically software things. Those are not the hardware buildout that we actually need for power and to get to the point where, as I've talked about before, VLMs, visual language models, can start to enter our world. That's where things like robotics, humanoids or uh robo taxis, upgrade cycles to uh phones to computers, all of that stuff is coming soon, but you can't get there without the Blackwell deployment. And even though Blackwell started being sold this year, the data centers have to be built. So in the first quarter of next year, it's expected that the next phase of Colossus will be done, which means we're going to start to see the benefits of Blackwell in a bigger level. you're going to see the robo taxi roll out. Elon Musk hinted that he still believes that before the end of this year, which means within the next two weeks, he will have no safety driver in a car in Austin. I still believe that's a massive event for Tesla. I love the chart of it. I believe we're entering the hardware side, and the hardware side means we need LiDAR. Go look at LiDAR stocks. They are beating down like small caps. We already talked about Corning last week, which isn't a small cap company now, but before the rise came for optical fiber from their point, they were a midcap company. They were below 30 billion before this rise. So, I think you're going to see a lot of the Cornings of the world, a lot of the EOS of the world, the things we've talked about that so far this year have benefited. I think next year, it's a tide that lifts all boats. And this is why PMIs are important. If you don't know what a PMI is, we've talked about it. Go into your favorite LLM and just type in why are the PMIs important to the stock market.

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So, one of the things that's interesting to me is you and I have been talking about and sharing these anecdotes of people who use AI on a day-to-day basis, right? Um, I saw this week that Michael Sailor took a picture and he said, "Where am I?" And somebody immediately responded, "You're at the JP Morgan headquarters." Because they asked AI. And it was able to, you know, figure out where he was uh from the the background of the photo. Um, we were talking about there's an individual who put online something and said, "Hey, these are all the people related to this thing I'm doing. Who can guess it?" And obviously, somebody went put it into AI, immediately got the answer. Um I recently was talking to a friend of mine with no technical knowledge. He's built an entire product in about three or four weeks and he was able to do that uh by simply just prompting right you know hundreds of thousands of lines of code etc. It feels like some of these challenges that the economy is facing whether they are hardware manufacturing, whether they are electrical infrastructure, etc. There are people who are feeding this stuff to the AI models as well, right? They're just asking the like how do we solve this? How do we build something better? Is it like at what point do we hit kind of escape velocity, right? Right. I always go back to like I think from a technologist standpoint, we're all excited about, oh, we're going to hit this like utopian economic boom that has escape velocity and the AI is going to be able to solve everything. And then you go and you talk to like a chip manufacturer or somebody in the hardware world like well it's still atoms like you know we still got to be able to make the hardware do something. And so that balance feels like the optimism of AI also meets maybe the reality of hardware you know power regulation etc. And so how how do you kind of see that especially in light of now the White House signing this uh executive order that essentially creates national AI regulation versus the state level stuff?

>> All right. So this is a good question and the first way I'm going to go back to the Gavin Baker point because he he he did kind of address this in one element for everyone. So I've openly talked about the fact that I consume a lot of podcasts. So far today I've listened to three podcasts um and it's still early in the morning. So I go through many hours of podcasts. I am now up to 1.75 or two times speed. So I can consume a lot more than I could say 6 weeks ago just by listening constantly at a faster speed. Gavin Baker said that in this day and age it is unbelievable that you can listen to Dario Amodi, Elon Musk, Sam Alman, Jensen Yuang, Satcha Nadella. Go through the list. I don't want to leave Sundar Pchai out, but you you can go through this. They speak almost every week and they're in a podcast. And the reason that's important is when you combine what they're saying with what I hear regularly on the Moonshots podcast, we are already at the point of recursive self-improvement. This is the breakaway point. And this is when you're getting closer to whatever you want to call it, AGI, ASI, but recursive self-improvement gets to the point where the computers are are learning on their own, where they're asking the questions and they're figuring things out. And this is where you start to get the advancements that you're talking about in energy, in biology, where the computers can run all day long and actually solving the problems. Elon Musk on his interview uh last week that we highlighted, he talked about we're going to get to the point where the humanoids are making the humanoids. That type of thing where the computers are doing the work and the thinking, that's hyperproductivity. That point is coming sooner than than you believe. Now, Eric Schmidt did an interview at the um Harvard Kennedy School and it came out this week and I listened to that this week and he specifically talked about the fact that the San Francisco consensus, which is the people I just mentioned, believes we're going to hit recursive self-improvement in the next two years. He believes it's going to be more like 3 to four. Who cares whether it's one to two or 3 to four? It won't be a button switch. It will happen. And so to your point and getting back to the Gavin Baker point, the improvements we have seen using these models, you and I use them every single day, I literally cannot go when I was waiting uh to to do this. I was with one of your colleagues out there and I was showing things that I built in Nano Banana. I was showing how I think about raising my HRV. I was going through the visuals, how I do all this stuff. It was all on my phone and it was all built from AI. So the ability of doing things today relative to a year ago without having Blackwell to power that is unbelievable to me. So we're already at the point um and everyone should just recognize that the compounding of progress of productivity that you've seen over the last 3 years was actually slowed down by Blackwell. And if you haven't spent the time understanding why Blackwell matters so much to the gateway to all of the next phases which are far more dramatic because you're going from a textual world to taking AI and allowing it to make decisions in the physical world beginning with robo taxis at the end of this year.

Another thing that um as I have spent more time, you know, kind of at the intersection of AI and Bitcoin, if you will, um what I've always appreciated about Bitcoin is this decentralized kind of open-source nature of the actual software itself. And then you layer in this group of uh millions of volunteers that are relatively uncoordinated. Uh they actually in some cases just shoot each other in the foot all the time. But it is the like cyber hornets of Bitcoin that have helped to make it successful and they're all working together whether they they like it or not, realize it or not, and they're on quote unquote team Bitcoin, >> right? And so that's always been to me a very valuable part of the Bitcoin story is that you have people who have this economic interest to go and make this thing successful.

>> Now the reason I I explain it that way is because what we're seeing in AI is there are a number of models whether it's open AI, anthropic, etc. uh but now they are coming under quite a bit of pressure in my day-to-day conversations with executives uh from DeepSeek or Gwen these open-source models some of them coming out of China there's some here in the US and people are saying wait a second I can take this open source model and I can simply run it on my own infrastructure but it's faster it's cheaper I'm able to use this in a unique way that I might not otherwise be able to do with the anthropics and the open AIS and so part of what I'm trying to think through here is the age-old question of like closed source versus open source and how the US economy gets impacted differently if open source ends up being the winning model and all these companies are using this stuff versus maybe the XAIS and the open AIs and the anthropics those are the winning models and it's more kind of a closed source thing it seems to be a little bit more expensive there's a little bit more capital flowing to those businesses u than the open source but how do you think about you know open versus closed and maybe the impact on the economy or financial markets

>> well let let's take two parts of this First of all, on the open plus close, I or open verse close, I think people have to be careful with the difference between I'm going to run this on my own computer. It's going to be safer and I all I want to do is have intelligence on my machine. Uh, think of this as a difference between a free tier and the most expensive $200 a month. The reason I say it that way is when you get into the second part, which is the China versus the US thing, Gavin Baker also addressed this point. He said the Blackwell is so far above any other chips in the world at this point. You're dealing with a massive performance jump with Blackwell. So we're going to see significant performance jumps in the models here. Now the reason that gets important, let's go back to the way everyone felt with the realistic thing. Um, the jump from 3G to LTE was necessary for you to be able to watch YouTube on your phone. Before that, it was it was a hog. You couldn't do that. That wasn't that long ago. So, with Blackwell, you're going to be able to do things far far faster and bigger than what you could do before. Now, some places can't use the open source if they I mean, if they want the best computer, open source and the Chinese models are not going to be powered by Blackwell chips. They're not going to have the exact same thing that you're going to have here. So, I think people have to be careful um in kind of dividing these lines. There are some places that open source will do the job that they want to do. And I think any business that is competing with businesses that are not using AI have a huge advantage and open source is a cheaper way for them to go through it. So this is in the early adoption phase. I think when we get out 3 to 5 years in this and this is again I'm I am never going to pro uh proclaim to be a computer scientist but what I am going to do is be a macro person who spends his time listening to everyone speak. When you get to the point of edge devices and you're talking about having a chip where they're making decisions in there, what we're talking about still with open- source, this is a competitive thing with inside the world of capitalism. Uh you brought up the Bitcoin side and and I I wrote a paper on this this week, but this is the way that I just want to make sure I see entrepreneurs happening with inside crypto and they're focused on Ethereum and Salana and Sooie and Tenzor, all all of these different components. Great. I see the same thing in the traditional finance world where we have all these companies that are competing with each other uh right now. I mean, think about all the coding companies you and I have talked about cursor, we've talked about Replet, there's Devon, there's Lovable, there Windsurf, go on and on and on. There's Claude Code. Think about how many competitors there are in this space. The problem with innovation and the way that I lean towards Bitcoin is what I wrote about in a Substack this week, which was I believe at the end when we get through all of this, let's say hyper productivity growth of AI that is turning one year into a decade of progress that at some point all of the AI models are competing with the other AI models and all the other digital employees. And it's not a human being game. It's a it's a completely AI and humanoid game. That's not that far down the road. And at that point, I don't believe there's any moes that can sustain themselves. I think any idea, the ability to go from I have an idea to monetization shrinks so much that being an entrepreneur is not about coming up with an idea faster than everyone. It's about coming up with an idea, monetizing it, and then moving on to the next idea. It's more about adaptability, resilience, the ability to get off the ground. And that's not a skill set if you're building a big business. So I do believe that where Bitcoin starts to gather steam is the faster we go on this this journey of AI. So I'm not as worried about the open source closed source side of someone. I'm looking more that 5 years from now I can't imagine a world with humanoids walking on the street. It's just something that to me is mindboggling and yet we're going to be there and I think people have to prepare for that kind of uh matrix-l like world that's coming soon.

What are like the hedge fund friends that you have? what are they doing internally with AI? Are they creating agents? Are they just running the traditional models? You know, I I think a lot of people who listen or watch us on a weekly basis, they're investors and they're trying to figure out how they can use some of these tools and, you know, obviously we've built the Sylvia product. You've talked quite a bit about kind of some of the searches that you'll do to, you know, maybe do some screening or some, you know, identification of trends, but the quoteunquote smart money, the most sophisticated people, what are they doing with AI inside of their shops?

It depends on their sophistication level with um with tech. I think one of the downsides, so when we've described, so Sylvia, I know the you know, I run into the person in your offices, he's committing all of his time to doing that. If you're working at a hedge fund, unless you're a quant person who's coded and you can do things with inside the constraints of a hedge fund which has a lot of proprietary data, even then you're going to still be restricted on what you can do. So, do I know people that are building agents? Absolutely. The one consistent theme amongst all of them are they have a general or a good knowledge of coding. I'm not hearing anyone my age coming up and going, "George, I built this really cool AI agent. You want to see what it does?" I haven't reached that point yet. I haven't even heard anyone I would say I'll define it by kids who has more than two kids that has come up to me and said they're building things with AI agents. It's a very time consuming thing to spend the time and go through. Even though the productivity comes uh from AI from doing stuff, you and I both know and I'm guessing because of how busy you are, I spend more time on artificial intelligence than you do. I'm constantly at this point learning new things by the day. There is not a day that passes where I'm not blown away by something that I can do. I've used Nano Banana so much. I have my own uh image context window. If I showed you all of the things that I've created in it and then the way that I had to redo some of the gems uh the the GPTs, the custom GPTs in the gems to be able to replicate this in the same format. I I couldn't have done any of this two weeks ago because I hadn't used it before. So unless you're doing things every day, I think it's unfair to think that people, even in the hedge fund world where you're dealing with people all coming out of great schools, they're highly educated, they're highly motivated, I think the younger they are, the more likely they are, the more that they have coding skills, the more likely they are. But then when you go the other direction, it's just not happening to the degree that I'm seeing.

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Hi everyone, Matt Hogan here, the chief investment officer for Bitwise Asset Management. Each week, I write a short 5-minute memo on the biggest topic in crypto. And this week, I examine the single investment that I'm most confident in across the entire crypto landscape. To find out what that is, check out my memo at bitwiseinvestments.com/cio memo. That's bitwiseinvestments.com/cio memo.

Now, one of the other big aspects I think of uh of the economy, um we've talked a lot about like the weakening job market. Um it does feel like uh there are more and more tech companies. Now I'll say tech companies because it could be one person startups. Uh but I saw data recently that showed um the number of US small businesses that filed for bankruptcy just hit a new record. And so one of the things that I keep kind of struggling with here is on one hand in my tech circle friends and and people who you know are like on the internet it's not ever been easier to create something that can make money. I know people who are doing it on Substack. I know people who are doing it on YouTube. I know people who are doing podcasts. I know people who are creating little, you know, uh software products and they're shipping it. I know people who are creating courses or, you know, all kinds of things that I think people generally would label as like a side hustle.

>> Mhm.

>> On the other hand, small business uh, bankruptcies is at an all-time high. Um, it just feels like the economy is going through a transition. And an area where I see this is um I recently tweeted seven years ago I wrote a piece uh talking about assets. And what I said was up until the 1980s 1990s we lived in the analog age of securities. So this whole idea was it was physical assets, physical stocks, physical bonds, physical um, you know, deeds to your home etc. At some point in maybe the '9s into the early 2000s we transitioned to an electronic age. Everything became an electronic QIP. Now when you buy a stock they don't send you the stock certificate. you hold the electronic cusp. We're now transitioning into the digital age and I wrote it 7 years ago and I thought it was, you know, we were it was about to happen, but it seems like now DTC uh just got this no action letter from the SEC like that there's some things that are starting to happen where uh you're seeing it occur. So financial markets are going through a transition from like an electronic and analog into this digital world. But it also feels like on a on a macro basis the US economy is transitioning. We are going from something that is not digital, something that is not got software at the heart of it. And so in that transition, it just feels like there is immense disruption and you're almost like shedding skin, you know, like a snake that's going to regrow their skin. It sucks. People lose their jobs, companies go out of business, all stuff. But like it does feel like if you unemotionally look at it, that's kind of what's happening in the economy. Is that a fair assessment in your mind?

Uh >> 100%. But let's say what you're describing is what a recession is supposed to be. Um, so the shedding of the skin, you're supposed to have the weak go out of business and the strong companies survive. If you have bailouts, you allow everyone to survive and this got most people angry at the government because they're using the balance sheet to bail things out. That occurred during COVID, obviously, that occurred during the great financial crisis. It occurred during SVB. um all of these times where the government or the Fed comes in and basically decides to save things, it's a problem. What what you said at the beginning and I I just want to make sure people hear this. Every single unless I missed one, every single business of entrepreneurial thing that you mentioned could be done at home. So one of the things people have to remember is we have advanced because of the cloud. So, if you go through the iterations of the smartphone, and the reason I brought up going from 3G to LTE, 3G to LTE, people should think about as Blackwell being like 4G, like you're going to open up so many new businesses. There is no Uber working without LTE. And the reason is, people probably forget this, but do you remember when we first started using Uber before LTE and the car would be stuck and it's not moving or the app would just kind of freeze? That was because there wasn't enough bandwidth for everything that was going on. All of the apps that have now become mega companies, they depended on this next stage. What you're describing coming out of COVID is the remote work from home. That was not a thing before 2019 in a major way. Uh now it's normal. My LLC, you know what the business address is? It's my apartment. I I mean I everything can now be done at home. I spend most of my time if I'm not in meetings working from home because it's the most it's the easiest way because I the way I've set it up for me to do the time there and I save the commute time. I save everything. So I think the economy is changing rapidly. Um, one thing I do want to bring up to people since I've mentioned this a bunch of times and whenever there's kind of negative things that are out there in terms of views, I think whenever people talk negatively about technology, most traders get, you know, they get kind of pissed and the reason is because they want to belong palunteer and belong these things. Next year, I think people have to start to understand that it's going to be a historic 12 to 18 months for IPOs. We're going to have Anthropic come out. We're going to have uh XAI come to the market. We're going to have OpenAI come. And we're going to have SpaceX come. If you take their market caps now, I mean, you're talking a trillion and a half, a trillion, two two to$2.5 trillion dollars of companies that would go public. Why are they going public while Stripe's not going public? So, let's get back to your point. These companies are going public because they need the capital to build out this physical framework to support the intelligence for their businesses. Why did cursor just raise $3 billion at a $30 billion valuation on the fastest company ever to 500 million ARR? Why did they have to do that? It's a code company. These are new things. And the reason that these are important and the reason that I'm really more negative on tech, you're going to be bringing a lot of supply to the market next year in terms of IPOs that just has not occurred. And these tech hyperscaler companies, they're doing something they never needed to do, which was borrow money. So, back to your original question, the economy is changing rapidly. And I think the age of software dominating is now getting into a reality that at some point the physical world still exists and you still need power to fuel all this technology. You want to be focused on energy. You want to be focused on transportation. You want to be focused on small cap companies that make lidar make sensors and a whole bunch of things along those lines. They've been left for dead. And that's why I keep coming back to the fact that if you want to find one index that represents everything that you're saying, it's the PMIs. If the PMIs break above 50 after 3 years sitting below 50, that is your trigger point that something different is going on in the economy.

Now, what are the areas that um are hidden risk? And and the reason I say this is everyone looks at the Fed. We're cutting rates. We know that now QE is back. Asset prices historically have done very well under this. You know, there's nothing more uh permanent than a temporary government program. Uh balance sheet is going to expand. AI, sure, there's people who are concerned, but it looks like uh everyone even um I saw uh I forget the gentleman's name from Wharton, the professor, uh Jeremy Jeremy Jeremy Seagull, right? He was on uh CNBC earlier uh in the week and he was talking about everyone knows AI is going to be a thing. It's just is this the right cost for us to be spending to make it a thing, right? So, I think everyone is convinced that that it'll be here. Where do you see the potential black swan type things, large risks or maybe the areas where capital is uh concentrating and as that concentration occurs that leads to contagion areas or areas that maybe people uh could take a hit in 2026. Right now, I want to kind of present the opposite view. I think you and I are very optimistic, but where if you had to point to things that are pessimistic, would you point?

>> So le let's go through this. If I if I had everyone write down what that meant and let's separate it into um into two categories. Jordy, I think there's going to be a recession and millions of people are going to lose a job. Okay, that I put as a low very low probability event for the reason same reasons that we talked about during the tariff situation. If someone says, "I believe the market's overvalued and we're going to see a 30% correction." Okay, so let's go through 2020, we had a huge correction. That was for a pandemic. 2022, we had a huge correction. That was because the Fed had to turn around after the pandemic and raise rates shockingly fast. Okay, let's go to 2023. We didn't have a huge fall-off, but we had Silicon Valley Bank basically a digital uh bank run that had not been seen before and we got a correction. It didn't last very long, but the sentiment dropped off a cliff. And then we had a 20 plus% correction, 30% correction, the MAG 7 this year on the back of the tariffs. That's three big corrections with a run on a bank. Four events in the last 5 years. I will say this unequivocally. we will have more 20 and 30% corrections in the next 5 years. There is no doubt in my mind. So it really depends on what you're doing. What I think has happened is each one of those had the same ending. Once the events kind of stopped, the market went right back to all-time highs. And the reason it went right back to alltime highs is because of profit margins, productivity, and the ability of AI and whatever else to impact the companies. That to me is the overwhelming trend that will happen. So I do believe we will see corrections. If you ask me what's the most likely risk to pop up, uh I believe the capex hole is another bearish story for next year. Meaning the hyperscalers are spending lots of money. Gavin Baker talked about this air gap in ROIC. Meaning until you actually get the black wells, you're not going to get your revenues in the door because you can't deploy the amount of product that you need to people until you have the compute. You need the speed because right now I had never had a problem with Google Gemini. You know what's happened now when I'm using it? Hey, come back later. We're busy right now. And this has happened now a few times. This never happened. This this was happening with chat GPT all the time. Now all of a sudden it's happening at Google. What that says to me is we just don't have enough compute still relative to the demand and how

fast. It's increasing, particularly when you start, start rolling out video. So I do believe the, um, the CDS rise that we're seeing in Oracle is a warning sign that if OpenAI doesn't get their revenue in the door, do I think they'll go bust? No. Do I think this stock could, you know, the private company valuation could go down a lot? Yeah.

Uh, I just don't think there's a recession that can happen because the reality is we're not having an overinvestment boom in people. Every time we've had kind of a bubble thing, whether it was in '99, we had hired an enormous amount of people without anything going on. We've been in rolling recessions now in this economy since 2020, late 2021, into 2022. Housing, commercial real estate, there's all kinds of things. Autos, everything's been there. We see the credit card delinquencies. I'm not worried about a big event, but I do think there'll be many, many 20, 30% corrections, just because I think that's the negative that comes with AI.

>> Is there anything on the, um, embodied AI that you're paying attention to, especially as, um, SpaceX starts to talk about going public, building data centers in space? Um, Elon and some of his recent podcasts, I mean, it seems pretty obvious he's thinking about Tesla, SpaceX, and XAI as one company in the future. You know, just talk to like, how you see this stuff coming together and, and, um, I don't know, are data centers in space a real thing?

>> Well, I'll, I'll say this. I've, I've done a lot of conversations with people in the last week. I did one yesterday with someone who said that data centers in space was not a possibility. And very smart person, runs a hedge fund. And I just, when he was done, I said, "No offense, you could be the smartest person in the world. I'll take Google plus Elon Musk over your decision." And he smiled and he said, "Okay, well, let's put it this way. Not in the next five years," which is what they're talking about. And I said, "Okay, fair enough. That may, maybe they're off by five years and go through it."

So on the embodied AI question, I'm going to say it again. The robo taxi without a safety driver is a major event for Tesla. It's a major event for the world. It is the pixelization of AI. It begins embodied AI. So that is the, the trigger point. I believe next year is the embodied AI, which means it's a hardware year. It is not a software year. So all the reasons that I mentioned, the IPO focus, the fact that you're going to see ROIC gap where you're not going to get the revenues in and people are going to start looking at the balance sheets and every time there's a balance sheet issue like Oracle, they're going to start freaking out. OpenAI is going to have a balance sheet issue. They're going to have to go public. So that linkage between those is a negative.

On the flip side, Apple, if they can get this whole plugging intelligence in. And just so people know, embodied AI, don't think of it as a humanoid. Think of it as sticking intelligence in any machine. Your phone is a machine. Right now, Siri's stupid. If we give Siri a brain in the second half of this year, everyone's going to go out and buy one. That had huge implications for PMIs back in the early 2010 to 2015 period. You can go read IMF blogs on this. That is that is embodied AI. You're going to see this for computers. Then if we're getting it for phones, everyone's going to want a computer that has artificial intelligence on it that allows you to do things, have your own AI agents, all that stuff is going to happen next year. And so this embodied AI focus, which think of it as the transition finally from software to hardware, is going to happen next year. It has huge implications for all the component names.

So when we, we talk about Corning, and I got a lot of people reaching out. It was up again big this week and they're like, "Give me other names like Corning." I'm like, there's a bunch of small and mid-cap names that I've talked about on this show. Pterodine, go look at what Pterodine's done the last three things. If you go read what they do, yes, they're a semiconductor, but they also have robotics companies. Like there's a whole bunch of places where you can find companies, coherent. They're all related to the embodied AI trade. This is a big deal. You want to focus on batteries. If you want to focus on commodities, copper is breaking out to new all-time highs right now. We've got the CRB raw industrials, uh, metals, which are rallying dramatically. The commodities trade related to building out the framework that's necessary not only to power but to actually have these machines is following what DRAM prices have done. So I think people just need to accept the fact that embodied AI is happening. Robo taxis. The last week of December in Austin, Texas is the beginning point in my mind of getting vision in. And next year, in the first part of the year, we're going to have the rollout of Colossus 2, which is going to power Grok. And the next Grok is going to be amazing because the current Grok is amazing. It's insane how quickly Elon Musk has caught up to the other LLMs. As someone who used them all the time, I use it all day long. Now.

>> Jordy, I'm going to leave you with this. Uh, Corning being up. Maybe it's because Corning was going to go up. Maybe Corning is up because you told everyone about Corning. I don't know. But sometimes markets, they tend to be reactive.

>> Well, it was up a lot, a lot before I even spoke about it on this show or on my weekly. So I'll take credit for the last, uh, 10% and maybe 10% of that 10%. So I'll take, I'll take credit for 1%. And that's being very generous and probably building up my, uh, my ego a little bit here.

>> Amazing. All right. Um, give us a little preview for the video this week that you're going to put out. Anyone who has not yet checked out Jord's YouTube, please go check it out. Uh, just search his name on YouTube and you'll find it. Make sure you subscribe. But Jordy, what, what are you going to cover?

>> I spe a lot of different things. I'll go through in detail on the Fed, but I am absolutely positively going to go through the Gavin Baker side and this whole thing with Blackwell for everyone who trades out there who wants to figure out the next move in stocks for next year. Everything we talked about, small caps, midcaps, a lot of this has to do with a visual I posted on X this week, which is just this Blackwell gateway to all of the new world that is coming. So when you mention embodied AI, I think for everyone out there, they want to invest in it. I don't think this is the year of Palunteer. It's not that I think any of these stocks are going to go down. I don't think the Mag 7 and the hyperscalers necessarily are going to go down. I just think if they underperform, the better investments are going to be in the places that benefit from those guys being less investable.

One thing people need to remind each other, and I'm going to, I'm going to highlight this in the video, the size of the Russell 2000, the IWM, as people look at it, is less than $3.5 trillion of market cap. That means it's less than Nvidia. The Mag 7 back 15 years ago were smaller than the Russell 2000. We have seen a market cap change that has happened and I believe right now is the reversion of that. And this goes for everyone in Bitcoin. I will highlight the fact again, as I did in my Substack. I believe Bitcoin, when it comes out of this little down cycle for next year, this is the year once the stuff starts going that the rotation begins because we need the hyperscalers and specifically the Mag 7 to not be an easy investment for traditional finance people. They have put a lot of money. They are benchmarked to MSCI World and to the S&P that is heavily concentrated in those names. If those names just go flat the next five years, everyone's going to be looking for large-cap growth. Large-cap growth is Bitcoin. It's the next biggest company. So I think that's where the migration is going to happen. I'll cover all that this weekend.

>> I love it. All right. Thank you very much. We'll be back in person next week.

>> Enjoy Miami.