Will a Bond Collapse Crash Equities and Send Bitcoin Soaring?

Holiday weekend. Uh, but got to squeeze one out before uh, we all go uh, celebrate. So, the bond market took over this week as the new uh, fear factor. So, I'll go through the warning signals that are coming out of it. I'll explain to everyone about why you're all of a sudden hearing about Liz Truss and why this is the Liz Truss moment for the US. Uh, and whether that means or when it means the government will start liquidity injections. Uh, capital controls—this is the first time I've talked about capital controls, not in an emerging market—but we'll talk about that today. Uh, tariffs came back, a bad week for private equity and endowments, and particularly Harvard. Uh, but I think there's a bigger story here uh, in this long-duration asset problem and illiquidity problem. Uh, AI continues its ascent, and we have Nvidia this week, which will be important, and then the investment winner has now been determined as we made new all-time highs in Bitcoin. So, let's go through this uh, one by one.

All right, just to start, I want to go back to the end of the year. Uh, America's debt cannot keep stacking up. Jeff Gunlac was interviewed in the Economist and basically, in the coming years, expect dollar debasement, debt restructuring, or both. And we're getting closer to both. In my opinion, we're definitely seeing the the dollar debasement story. America's government is on its way to bankruptcy. So, this sounds like a dramatic thing. Uh, and it is to some degree. Uh, but I just want to go through where we are and how this will be, you know, the major fear factor, as I say, if not now, going forward. There could be a pause; uh, it will be in the second half of the year and going forward until the government can find a way to keep long-term yields from going higher. Uh, Trump's next hurdle: the bond market hates the tax bill. So, again, we came into this year believing there'd be austerity. The bond market warns Trump and Congress of not controlling the deficit. So, remember at the beginning of the year, Trump and Mnuchin's entire tariffs and austerity plan works if only if they end up reducing the deficit. This is from March 13th. If you're going to cause short-term pain, then you need to be willing to stick through it and deliver the goals you set long term. This is Paul Volcker. Trump has to not only stand the public backlash, collapsing approval ratings, and falling markets, but he actually has to deliver on cutting the deficit. That is out the window. We got the Moody's downgrade last week. And here's where we've now gone with Mnuchin uh, yesterday, and this is what he posted: We can both grow the economy and control the debt. What is important is that the economy grows faster than the debt. So, we went from austerity, which would slow uh, things to cut spending, and now we're jumping right into, well, let's grow our way out. Uh, which is the argument pretty much everyone has tried. And so, we're kicking the can down the road. Uh, and that has huge implications for very long-term yields. So, 30-year yields, the US got all the attention this week, but I just want to highlight, um, this is the one-year range. The blue dots are where we are now. So, it's not just a US problem. Every single bond market around the world—uh, the UK, Japan, Australia, New Zealand, all of them except for South Korea and China—are basically in the same boat. Yields are going higher because this is not a localized problem in the US. This is a global problem. So, that's the first thing to take note of.

Here's the chart of 30-year yields. We got up close to what would be the highest level since the Great Financial Crisis. So, when that happens, you'll—it'll take it back to 2007; there'll be a headline saying, "Look what happened the last time we had rates at these levels." Uh, here are JGBs. You basically—now we're back to the highest level um, in over 25 years. Gilts. Um, this is the Liz Truss moment. So, these are 30-year yields in the UK. And this Liz Truss moment, just so you guys have a little history, this occurred in basically the end of September into October, early October in 2022. Uh, total fears—uh, you had—had the rise had basically gone from less than 1% at the beginning all the way up to five, and this became a, you know, a global impact problem.

So, in the US, here are the podcasts this week: Trump's Liz Truss moment could be cataclysmic. America's risking a Liz Truss moment. This is a good podcast, by the way. Kevin Muir, very impressed. US bond seen at risk of Liz Truss moment as defoons. Is this America's? So, this is what everyone talked about. We went from tariffs um, and austerity, and we're going to have a recession. Now we're going to have a problem that we're going to have debt. Again, guys, um, this is just what everyone does in the market is they extrapolate a current level because that's all this is. Rates have not changed that much. But now that we're 50 basis points higher than we were, say, 3 months ago, everyone has to say that the world's going to end. When we could go down 50 basis points 3 months from now, we'll be exactly the same level, and then you won't hear about it anymore. Um, these are the reasons why everyone's worried: So, long-dated treasuries have yet to fully recover from their April dislocation. Concerning debt levels, an outlook for greater issuance. Remote odds for serious efforts to tackle the fiscal position. Debt ceiling talks later this year are going to be an issue. Political pressure on the Fed. Shaky demand from Asian buyers. These are all the reasons why there's pressure. So, of course, um, and this is from Mike Kantarovich, uh, who I like. Uh, so he put something out: How higher rates could impact stocks. Uh, two things about the chart: one, we—we're—you can see how tenure yields—we're basically in the exact same range we've been now for the last two years. Um, we go down, we go back up. Uh, now people are going to start going through bond market risk as pressure on equity builds. It always comes back to equities going down. That's where everything always ends up. But at the same time, no one talks about the fact that profit margins just continue to go higher from AI. And do you really think when Palantir, a $300 billion company, is already trading at a 520 PE that that stock's going to be impacted by bond yields going—30-year yields going from 4.75 to 5 and a quarter? Uh, it's crazy talk. There's—there's no zero impact whatsoever to the stocks in the long term from rates going up 50 basis points. Will somebody turn around and go, "Yeah, I'd like to buy bonds?" If you believe the government is continuing to focus on growth and you believe that 10-year rates are already mispriced because they are below nominal GDP, which I'll show again, do not focus on bonds being a a buy. Um, who is going to buy them with inflation and nominal GDP, both up near 4%? Doesn't make any sense to me why you wouldn't own equities instead of bonds unless profit margins were coming down. And as I showed, profit margins are not only at all-time highs, we are just entering AI.

So again, I'm going to keep saying it: Go spend some time on artificial intelligence and start realizing what's coming in front of you. Massive productivity gains are coming for corporations. Uh, not in the technology side. That's what has profit margins at that level. It'll be spreading to other companies. I'll be doing a lot more work on that in the going—in the future. But here's the other thing: Rates are moving higher. Just so you see the facts since I hear that this is going to kill the housing market: Household debt. Here it is. Leverage is a percentage of GDP. Okay. I—I just want to make sure that you look at these recession bars. Traditional recessions. I say they don't exist anymore. Look what happens. Leverage goes into this for both the blue line and the gray line. Then we get a recession. Then we get a recession. That's what a fiat system does. But when the government takes all the debt, guys, now you have the government. That's why we're—we're looking at government debt. Yields are moving higher. I agree. But they have a printing press, and they come in. So, whenever it becomes a risk, it actually is a good thing, not a bad thing. Here's what's happened to household debt as a percentage of GDP. Here's what's happened to non-financial debt as a percentage of GDP. It has not gone up, guys. So, please don't worry about credit card delinquencies and all these things that every macro person just continues to put out there. Are there delinquencies? Yes. Are there people at—at certain parts of the economies that are borrowing too much? Yes. But when you look in an economy, you can't pick the pieces that you want to look at and just look at the bottom end. Overall delinquencies are not an issue. Overall mortgage is not an issue. The housing market, we still have an under-supply of housing. So, yes, certain parts of the country are going to go through this. Every single thing that you can read—just remember commercial real estate. Remember SOM rule. Remember every recession fear that ever pops up. And just remember this is not going to be it because the government has a printing press.

Here's the Liz Truss moment. Now, on the equity market, just to make sure we get it. Here it is right here. This is the FTSE. This is the UK stock market. The lows were made for the last two years at the Liz Truss moment. Remember that when you get a situation where the government is under pressure, they print money. 10-year yields not as big an issue. We're not on the outside. So, so far it's just 30-year yields. The less liquid you are, and I'll start getting into long-duration assets and the problems for private equity, venture capital, real estate, all of them will have trouble in a world where we have no certainty on the future because of the deficits. Be very, very careful with illiquid long-duration assets, and long-duration assets that are liquid will be under pressure too, meaning the MAGA seven. Uh, some things that you can go listen to—this is a very, very, very good balanced podcast this week if you want to go read about the debt spiral and avoid the—the drama and the—"the world's going to end" calls—go—I'm here to give you guys things to listen to that are balanced where they highlight the reality, which is: Hey, remember this on April 9th? We found the Trump put, the best put, a 5% yield on 30-year treasuries. All I heard all year was that there wasn't a put on the equity market. It was on the bond market. I kept saying if the equity market falls down, we're going to have an issue. We'll have a recession, and yields are going to actually have to go up. We had yields up, stocks bottom. Well, now we're having yields up again. Shouldn't this be a buy signal again? Shouldn't this be the time where—Oh, that's right. Mnuchin sees easing capital rule on treasuries this summer. So, he talks about this publicly on Friday. They're prepping you for what needs to go on. The Fed: early signs of pressure in money markets. Remember QT is down to $5 billion. We're already at the point where the repo facility is empty. You're getting closer. China conducting a 500 billion yuan—printing press, guys. Printing press.

So, let's go now into where the true risk is because Donald Trump is not done yet trying to figure out how to restructure global trade. And there's one part, as I highlighted last week, that has not been dealt with yet. Uh, and that's the debt—that is the foreign ownership of our assets. So, in this—Luke Roemen was interviewed on this—another good one to listen to. I'll show you the the actual thing in there, but what he talked about: the reason global US capital flows are coming. I talked about capital—uh, flows are equivalent to trade. So, so far we've only been focused on trade. If trade doesn't work, then we move to the next part, which is capital controls. The problem we have is too much investment in the US, which is why we want our currency to weaken, even though publicly we won't say it. And the rest of the world doesn't want to own our currency anymore, and it's becoming an issue. Bitcoin and gold will profit from them. Yes. Why the Treasury has not sold a 10-year in 10 years. Listen: Why the US Treasury has not net sold—they left a net out—a 10-year in 10 years. Oh, on debt despite QT, you have to go listen to this. We're not even actually selling them because we're buying them. Why will we increasingly see crash-ups in financial markets? What happens with the US Treasury 10-year at 5%, which is where we're headed to? So, again, remember when this stuff starts coming up, there are things to talk about, but it's capital control. So, this is the podcast—Less Noise, More Signal. Hadn't heard uh, of this podcast before this week. I listened to two episodes this week. Uh, both were good. I'm going to show you the other one there. I don't know who at America ended up with capital controls on their bingo card. Uh, the One Big Beautiful Act includes a proposed remittance tax that has been adjusted to a 3 and a half percent excise tax on international money transfers made by non-US citizens. We are getting to the point where taxing people taking money back or taxing people for having their money here—not on the currency, but on the asset side, whatever the case is. This is not something new. This was talked about. You can go read about it. So, I'm going to highlight the places where this was brought up: Forget tariffs. Capital controls are a game changer—a risk. This is October 20 or November 22nd of '24 last year. Implement a market access charge. Again, a suggestion on what to do. This is coming from senators. This is the other one from Less Noise, More Signal. Very balanced. Mel Madison. Never heard of him until two months ago. I've listened to three podcasts by him. Again, he talks about the problem we're having. We have a problem. Same thing Jeff Dun-Gunlac talked about. Same thing you read in the papers every day. But what this means is actually that the government has to come in, and that's what the debasement is. And that's why this is more for Bitcoin and gold.

I showed this chart. I'm going to keep showing it as time goes on. This is the long-duration asset problem. The orange line here is tenure rates. The white line here is nominal GDP—total revenues of the country—year-over-year growth. We are still right now at 4.7% while 10-year yields are below it. This point, this line here is when the Thai baht broke. It's when Asians started to put money to work. I showed this a few weeks ago. Asian repatriation is happening. And especially when you see JGB yields breaking higher, money is going to be moving back to places outside of the US, partly because of the trade war and what Trump doesn't want with the global reserve. Part is the risk of—of—of uh, restructuring. It doesn't really matter. All of those things that I've shown you, what Jeff Dunlock talked about, we are going to see these converge, and then we're going to go above. Right now, fair value on 10-year yields purely based on nominal GDP in the time before the re—uh, Asian—uh, dollars or Asian—uh, Asians started manufacturing in a big way and recycling those dollars into bonds. We're going to get up to 100 to 150 basis points over nominal GDP unless the government comes in and doesn't allow it to happen. More—more likely it happens slowly. The dollar, which does not get talked about—again, when Trump initially put in the tariff fears, there was a belief that the dollar would go higher—that's what this spike is here, believe it or not—this is when he said the Mexico and Canada side. Since that point, this is what the dollar is doing. I'm seeing many people try to pick the bottom of this. I don't see the reason why you're picking—trying to pick the bottom of the dollar, even if it's a bounce. We just had a bounce; it's a dead-cat bounce, and this is the reason why: when people talk about the dollar, this is—the Asian dollar, it is just coming off all-time lows. This is the beginning of something. So, when people look at the dollar, they're looking at the euro side. The Asia side has broken away from treasuries. This is the overlay with TLTs over the last four years. I showed this last week. The most important chart that I can think of: The dollar is weakening against the Asian currencies at the same time that treasuries are going down. This is the linkage that was the most important in the world for assets, for VC, for private equity, for everything out there. Anyone who is a long-duration person in the asset side is dealing with the reality that rates have been too low, and the government can't fix them. They can find ways to make sure that Main Street doesn't get hurt as much by it. I'm not going to bring that up here, but just watch Fannie and Freddie and what's going on with them right now. We're going to have a different world going forward, and longer-duration asset um, owners—savers—are going to be under pressure.

Uh, I'm just bringing this up because on Friday we got—EU, we're going to do 50% tariffs. Then we got Apple threatening Apple. Um, the market didn't really care too much. And the reason it didn't care too much is we've been through this before. They could be off by the time Monday comes. But more importantly, there is a negotiation going down, and we've already shown that we are going to grow our way out. Remember what Scott Mnuchin just said? We're going to grow our way out. Okay? So, we're going to use tariffs again to—not grow our way out and go through the same thing. Um, this is really because in the press they've been saying that Trump was broken by the Chinese. And regardless of whether you believe that or not, the reality is, um, we're playing hardball again. Uh, the S&P finally had a correction—2.6%—6% after we had four massive weeks; we were due for a pullback. Uh, and we got it. It put the S&P back to the 200-day. This is the SPY. What I want you to see is even on a day like Friday with the tariffs, we're closing above the opening. We had one day that ended up closing near the lows. Uh, but other than that, even on the tariff, uh, the Moody's downgrade Monday closed on the highs. Uh, the market is still showing the same characteristics, which is one where people are left bearish and left underexposed. The bearish sentiment continues to come down, but again, we're nowhere at the point of where people have put their money to work. Hedge funds have added $25 billion of short equity futures in the last three COT reports. Massive, massive, massive uh, increase. Um, Warren Buffett is just some—some stats. The S&P got up to 19.7% off the lows earlier in the week. If this turned out to be a bear market rally, would we rank as the fourth largest on record? So, the bounce that we've had—to go back down and retest the lows and make new lows—uh, would be the fourth—fourth largest in terms of a bounce. Also, the S&P has retraced, as of May 20th, 85% of its peak-to-trough decline to market. Has never retraced this much of a bear market and subsequently revisited the lows. Every time you hear people say we're going to the lows, I highlighted all the people that said that last week. Um, whether or not they believe it or whether or not they're just can't um, unanchor from where they were. Uh, the reality is that people are still responding on the hedge fund side to negative news as a reason to sell, but they don't have chips on the table to play the downside very much anymore. So, every time that they short things, if they run into buybacks and they run into retail continuing to buy, and most importantly, they run into the Magnificent Seven reported first-quarter year-over-year EPS growth of 28%. Why are you shorting the market when the most important stocks have earnings growth of 28%? The rest, the remainder of the S&P had only nine. It exceeded consensus estimates by 16%, and they kept capex going, and we have Nvidia coming up this week. It just doesn't make sense to me when the economy is fine. Here are the realities on the economy. Again, the hard data: jobless claims continue to sit at exactly the same level. So, by now we were supposed to see the job losses because of the tariffs. We haven't seen the job losses, which means consumer spending is fine. Yes, the soft surveys, all the people who hate Trump, all the people that are uncertain about the future, they are still spending money. They can say whatever they want,

But the data shows that right now, no one has changed anything until people start losing their jobs. It doesn't matter. And oh, by the way, junk spreads went down to all-time tights. Again, these two things would not be doing that if there were any problems in the economy. City Surprise Index just went up to the highest level since February. I talked about this last week.

You don't want to be fading the market when we just came out of a bare negative sentiment point and people are still bearish and we have outperformance of data relative to lowered expectations, which is what happens when economists get to a 50% recession. The last one we had was right here. This is what the city surprise index did. This was on that silliness of the sam rule and the yen carry trade. Amazon CEO, he probably matters a lot. Um, tariffs have indented consumer spending. We have not seen any any change in demand.

Ken Henry McVey, good friend, uh, former Morgan Stanley partner with me and he does excellent work. He put out something, the art of learning, which is coincidence considering I just wrote a paper myself, uh, using the art of learning the book. Um, but he goes through things and he covers a lot of ground. One of the things he brings up, which again is why I like Henry, he's adjusting to the fact that the weaker dollar is actually a good thing. And what he highlights here is service exports are actually more valuable than goods imports on a gross profit. And he's focusing on the profit side, which again matters more than anything because if the profits remain high in the S&P 500, then the stock market remains higher. The number one driving force for the economy is the S&P 500, particularly for household net worth. Henry knows how to cover it. He's covering it well. He travels the world. Services account for fully 84% of US private sector employment. I've highlighted the same thing. This whole thing with tariffs is an 1800s bunch of crap that people are paying attention to as the big thing, especially when China is the only real thing that matters from the supply chain disruptions that we were going to have.

We have not solved the tariff thing. Nothing is completely done, but we do know the way that we're playing poker on this. So unless until we get people that are optimistic again and actually have positioning on in that I I just think that there's going to be a bid underneath and we'll grind our way to all-time highs and it'll take an earnings report like Nvidia to be kind of the deciding factor on for the time being whether we're going to hit new all-time highs before we get far into June or whether we're going to pull back again because they beat earnings but people are worried again and then we consolidate more around the 200-day moving average. Um, I don't want to minimize the impact of the rates, but I do want to show you what's important about it. So, this is the Ponzi scheme. Higher or lower highs, lower lows continuously from 1980 all the way on. This is every time we have a recession, we print money to get out of it. Every single time we get a rise in rates after that, then we go down to the next one. Then we reset, reset, reset, reset. The private sector, households, and non-financial businesses. Like I showed you, the reason that their leverage has come down is because everyone locked in either long-term yields on the non-financial corporate side by terming out their debt or they locked in very low mortgage rates. So, you go all the way down here, but then we've started to go higher. So, there are issues that show up, and I don't want to minimize them. This is the first time. This is a broken trend. If you look back, this is from 5 years ago now. There's no time in this entire period where you can find five years later where you're higher than you were at that point. It's just not possible. We've been making lower lows. So for any businesses that have been dependent on it, which are not many anymore, uh because we just don't have leverage in the system, you do have leverage in this illiquid private equity just goes bidless.

I'm bringing this up because this problem is becoming a bigger issue. And to me, it lines up with my beliefs in both the change in rates and the change in AI. AI makes the future less certain for all businesses. Businesses will be disrupted and will go out of business faster than they ever have. What Amazon did to the mall retailers will look like nothing compared to artificial intelligence and its destruction of businesses. If you're a private equity firm and you have companies that you've been sitting on, that disruption increases because it's happening faster. We are not going to bail out the system. So if you think about what has happened and you looked at that chart, anytime that there was a problem in private equity, it always got bailed out by rates moving lower. Now rates are moving higher. So what's happened is presidents squeezing Hartford will lead Harvard will lead to selloff in private equity. Once the great thing about illiquid assets is they're not marked. The bad thing about them is if they start selling there's no liquidity and once they start getting marked and people start worrying about them it's an issue. So these are all news stories that are coming across there when Bessant Harvard is a giant hedge fund.

We're going to look back on this in six months. These are the waitings of the endowments for asset allocation and this is going through eight Ivy League schools in Stanford and MIT. Uh I don't understand why they don't have um uh venture in here. I don't know why it doesn't show up, but they're showing the private equity side and how big it is. The numbers are staggering for VC real estate and private equity according to Bill Aman. And if you haven't seen this um interview that he did at Austin, Texas, uh at the University of Austin, it's worth going. One thing I believe is that the private equity VC and real estate portfolios are mismarked. For everyone who's going to argue there isn't a mismarking, they're full of crap. Uh there absolutely is. Um the FT had an article on Friday. IRR is private equity's favorite measure of returns, but it is tragically flawed and often used to bamboozle investors. Love Robin Wigglesworth. Um again, this is not to try and like go in. This is just a reality of what's going on. Private equity is troubled $1 trillion Kuwait fund boss warns and as you just go through it the industry is struggling to monetize assets due to valuation gap between buyers and sellers leading to the use of continuation vehicles to generate returns this is not just a problem there I've said the mag 7 is going to go through a similar thing the only difference is they're liquid now I like to use charts and assets I created an index of private equity these are all the listed private equity firms so I have the six big ones in here. They've lagged on the bounce and here's them relative to the S&P. Uh this is not a canary in the coal mine because I don't view this as a big problem. But I think these businesses just have issues as long as rates are going to stay high and we're not having a recession. This why I always say that everyone in this industry, hedge funds, VC, they want a recession. They want rates lower and rates aren't moving lower. And we just found out that there's almost zero chance of them moving lower. So everyone's rooting for recession. That's the logic that goes in. But the government's not doing that. They're focused on Main Street and they're focused on the median voter. They're not focused on the high-end. So the wealth that was created in tech in long duration assets, there's a repricing. This is not a default. This is a repricing. They are mispriced.

AI again very important to this whole conversation. Listen to Sergey Brin talk for I I reached in last week's video. I begged people above the age of uh of 50. I had four of them reach out to talk about AI and talk about crypto. People that I can have a conversation with and I had some good ones this week and I thank you guys for reaching out. I have a couple more that I think are on the same topic. If you don't use AI and you aren't spending all of your time listening to it and you're still reading about tariffs and the history of of uh debt default and Liz trust moments and all this stuff, if you're making money with that this year, go for it. I I'm I'm surprised you are. But if you've been able to time the markets and go through it, that's great. AI is the most important force and the one that's going to make you the most money because it'll eventually lead you to Bitcoin, which is the best performing asset in the world. Again, whether we have a down market, whether we have an up market, and I'll go through the reason why. Eric Schmidt TED talk released again. Amazing to listen to Sergey and listen to Eric Schmidt to the original people uh or the early people with Google. Um Stripe, I brought this up. This is the disruption side. I just want to I show this and I repeatedly talk about this with Pomp on our weekly podcast. This is why all businesses are screwed that exist. The time to grow a business with no people. That's the one thing he doesn't include in here is how few people it took to get to here versus the SAS company of 37 months. Look at that decline. 28-month difference. So, you're talking about almost a 75% change in how fast things move right now. Seriously, go through that in your head and realize what's happening. This is why small businesses that have debt have no chance, in my opinion, of outperforming the big guys. The big guys will eventually lose to that side, which is the startup businesses. It'll take some time. In the meantime, you're going to have multiples expand, multiples contract, but overall, we're going to see private business, private sector, true private sector, not the public markets, but the private markets growing rapidly. Uh, Satcha Nadella at their build event, um, the amount of things coming out at Microsoft, you can go read them. I'm not going to take you through this, but the age of agents begins, again, I talk about this for two important things. One is the adoption side. This speeds it up because you don't depend on the humans to do it. It's actually through the computers. They go through the agentic cases. Talk about MCP which I brought up many times which Anthropic put out. This was out in November. I played around this a lot. This is really critical to the agentic side and then the science breakthroughs he went through as well. And then you had Jensen Huang speak at Computex talking about how it's we're basically at the hardware side. So you really need to go listen to it to go through transformation from a GPU maker to an AI infrastructure company akin to electricity and the internet. Uh it's now the third grade infrastructure after power and information. I I'm not going to go read all these things. You guys just have to go spend time on it and go watch them and listen to them. I wrote uh a Substack and released it at 22V as well uh due to how well it had done on Substack. It all talks about the book, The Art of Learning, but it really gets into my beliefs that if people want to adapt to AI, this is my journey back really from 2013 when I decided to first go to Silicon Valley and listen to Singularity and listen to what was coming. So, I've been in this for 12 years. It's what eventually led me to Bitcoin. It's the whole key thing. So for those of you that are having a frustrating time this year, remember none of the things that are happening, rates moving higher, restructuring of global trade, capital controls, AI, none of these are going away and not in your life, not in your business lifetime. So you got to make some adjustment and the adjustment would be to learn more about what's happening in AI. Uh this is something that I'm sure I'll be talking more about, but you got to go read about nanobots. Again, this is the embodiment of AI. Nanorobots in your body to make us immortal by 2030. Ray Kurzweil, who's probably had a 70% hit rate on most of his predictions going back to the 1980s in terms of where we would be. Uh we're getting to crisper on the body. So, all of these are all of these are coming in the next year to three years in terms of them being utilized. We've done the same thing on Neuralink. And then AI drug design uh will save millions of lives. We're just at the point where you have to pay more attention to what's happening on longevity. It'll also have a macro impact uh a big one too and it should lead to theoretically uh at some point if AI goes through it some demand for treasuries. Uh but at this point I rather than focus on any of that AI is just an important thing for this year. Okay. An executive order. Trump spent a lot of time on nuclear and speeding up. Remember what he did with the vaccine in terms of eliminating the regulations. Uh there's going to be a tremendous amount of investments in nuclear. Want to see this grow. This is going to be again another phase of expansion on the growth side. And for those of you who haven't paid attention, go read about bonus depreciation and what they put in the tax bill. It's going to help the buildout of the data centers and the energy that's needed for it. Don't fade the economy on the back of AI. Bernstein says US gas super cycle is coming.

All right. So now over to AI and Bitcoin. But before we do that, CZ who was the founder of Binance gave an interview with Raoul Pal. Uh I listened to it and I just wanted to highlight the currency for AI is crypto. This is again the linkage between AI. Humans generate 300 trillion tokens a day. Again AI. Soon AI will generate 10 times that. As AI begins trading with AI, AI begins trading with AI. Again, this is the crypto side of blockchain secures data and payments. Productivity decouples from humans. CZ predicts GDP may no longer be tied to people. This is what I talk about as GD as no recessions possible and anyone paying attention to interest rates and credit and recessions and the way they went through it and the jobs. It's just not possible the way it was in the past. So bad week for Wall Street's old guard. This is my uh 50 and above people I want to talk to who know the macro side but also know AI and crypto as crypto burns the haters. This was out uh Friday late after the market closed. I had just put out my own thing minutes before and then the reporter reached out to me and and asked uh if I'd be involved in the next time. Bitcoin is back at all-time highs last up here. I did this thread. It's about 182 Y of why this week in particular and what went on with the tax bill with all the things that I showed is the most important thing for Bitcoin and why Bitcoin is sitting at all-time highs. We talked about this Pomp and I did uh 13 days ago and I didn't pick the title getting squeezed to all-time highs. We're there now. We talked this week uh probably the most important interview that we've done together in terms of conversation. Uh I will say if you haven't watched any of them, watch the one that probably um will be released early Saturday morning. I go through a lot of the situation that I put out in the thread. This was a big week and I think we're very likely to realize something in Bitcoin very soon which is an upside crash is more likely in this with this going on than any kind of a down downside move and I think it will make all of this look ridiculous. So on my wave count we are in a third wave right now. I expect something breathtaking to happen this year on squeezes on the upside. I think there's a lot of people that are going to get caught in this. It'll propel this to where I predicted at the beginning of the year and we'll keep saying this will be the second biggest asset in the world by the end of the year. It continues to move higher. It started the year behind silver. We're now up to number five as of 109,000. We will because I still believe we will more than double this year. We're up about 20% so far this year. That'll put us above that level. It's still coming soon. And remember right now it's Bitcoin alone. This is not the other side. So Ethereum is down sizably for the year. Uh and we haven't broken above the 200-day moving average. We failed there a few times. Solana failed at the 200-day moving average down for the year. So so far the crypto market cap has not broken through the pre-Trump Trump highs. Uh remember this is right as the meme Trump memecoin came out and everything broke down. This is the altcoins or I'm sorry this is market cap without bitcoin. So you can see that it looks a lot like the ethereum and solana chart except worse because they're probably up here. And then you've got the altcoins down here. So we haven't this is not a a euphoric move at this point. This is being led by an asset that's being accumulated by corporations, countries, endowments, pension funds around the globe. There's more and more countries. And at some point, I'm sure we will get some kind of announcement from a government around the world who's either bought it or is saying they're going to buy it that matters. And at that point, I think you're going to have, you know, wild speculation start and people really be scared of missing out. I've said all year that the MAG 7 being around flat for the year, which is where I expect it overall for the year on multiple compression, not on earnings coming down, but on multiple compression because they are a long duration asset and where Bitcoin is going higher and the benefit it has is it has no valuation. So again, I'll keep saying it. Everyone who said I don't know how to value it, how do you value private equity? How do you value VC? How do you value real estate? This has always been to me. Every asset is difficult to value. How do you value a company in the S&P 500? You're taking a discounted cash flow of the future. It has nothing to do with today. And in a linear world where competition does not happen fast, that makes sense. It does not make sense in a world where competition is going at the pace that Stripe is showing you. Readjust your mindset. Ticking time bomb. $40 trillion big Fed print. We are going to, as I said, get something. If we get capital controls, Bitcoin's outside the system. It goes straight up if we get QE because we have to do it at some point. Whether it's allowing the banks to do it or us to do it to keep tenure rates in. You want to buy more. If Asia's repatriating their dollars, they need to put that money to work. They're continually looking for different assets. Bitcoin's outside of the system. It's outside of the dollar. It's outside of the yen. It's outside of everything. You don't want to own fiat currencies. They're all weakening. And this is related to gold and Bitcoin outperforms gold. So let's just keep going through the whole thing and remember Arthur Hayes predicts Bitcoin could soar to 1 million by 2028 not from ATS but capital controls. This is not about anything more than what people are ignoring. We're at a different stage of the fiat system. This is the end of it. This is a new system that is being created on the back of technology in the digital economy that is a reality. Cup and handle technical formations say positive for this Bitcoin option traders I 300,000 with record high insight. I believe there will be a short squeeze and part of it will be the massive covering of call options that there are massive sellers in that I've shown on this exchange Deribit which was just purchased by Coinbase. Um, I've been told these are people that are selling to enhance yield. They are also uh companies that are selling for future production. All kinds of reasons that people are collecting money on businesses because there's no income related to Bitcoin. That will eventually lead to problems. I'm a derivative person. I've seen it before. And it reminds me of the nickel squeeze that happened in 2022 for commodity producers. You try to increase the amount of cash flow or yields and eventually it comes to bite you. Uh the genius act. Okay, so stable coins again I talked about it. Eventually the Democrats would have to cave major US banks mold jointly launching stable coins. Stable coins are the network effect for the ecosystem and that money ends.

Up in Bitcoin, or at least a portion of it, eventually. And Jaime Diamond, after years of saying any employee who traded Bitcoin was stupid, called it a fraud. Last year, he called the cryptocurrency a pet rock. But this week, Diamond announced that JP Morgan Chase allows clients to buy Bitcoin.

Again, here's the reality: Michael Sailor says it. You don't find Bitcoin; Bitcoin finds you. Eventually, when you need to do this, as Jaime Diamond did, he needed to say this. And why did he need to say it? Because every other bank's getting involved in it. So, at some point, if you're that person who's Jaime Diamond that says, "I don't want to be involved in it," and you manage money for someone else and an asset that's going up 100% the last two years—it is on pace right now for 50% this year—how do you avoid it? Other than just being the thing of stupid, or just being inflexible, or living in a past system where it's going past you, everything in there. If you're the person that had trouble transitioning away to streaming on your TV and you still have a cable wire so that your TV doesn't look as good as having Wi-Fi, sorry, you're going to be the one who misses it.

This is going higher. This is part of it. And the reason it's going higher is because the current system is breaking down, and this is the new system. The guardrails are being put up. Circle launches stable coin powered cross-border payments network. JD Vance is speaking this week at Bitcoin. Whenever Trump, JD Vance speak at a Bitcoin event, I would say at this point it's must-watch TV. They are telling you all the time that they believe that we need to be the digital asset leader in the world. So if they're going to speak at events, there's always a chance that they could say something that's positive for the event. I can't imagine it's negative, other than a sell-the-news type scenario, but that's going on this week.

All right, guys. That's it for me. Have a great weekend. Uh, I'll check in with you next.