Bitcoin Will Breakout By Summer If This Happens

The silver needs to go up dramatically, and if you do the numbers, we just don't have enough supply. If silver breaks out, if gold breaks out, if Dogecoin breaks out, then Bitcoin will break out. They'll all go together, and I expect that to happen before the end of the summertime.

Hello everyone. Today, we've got a great conversation with Jordi Visser. In this conversation, we specifically talk about the interest rate hikes that could be coming down, and we talk about what the impact is to all of the various assets. What's going on with the AI trade, the rest of the stock market, commodities, Bitcoin, crypto, and much more. Jordy has very unique thoughts, and he's actively changing his portfolio and his mind as we speak. So, this conversation illuminates how he's thinking about this and why he is making certain changes. I hope you enjoy my latest conversation with Jordy Visser.

All right, Jordy, a great place to start this is the odds of an interest rate hike have increased significantly over the last couple of weeks. I think a lot of people are trying to figure out why this is happening and what is the impact to their portfolio. Let's first start with what has changed. As an investor, you need to update your worldview when you get new information. And so, can you walk us through why interest rate hikes are now much more of a situation for investors?

Yeah, first of all, you know, so people understand, I, I really honestly don't remember a time where, uh, you went in this quickly from a period of expecting three rate cuts to one rate hike over the course of of the year. Um, but that's where we are right now. So let's break it down this way. First of all, the economy, uh, has been strong, but I think this is more about the earnings being strong and the AI trade and kind of the, uh, the part of it that's there. That's probably 20% of it. The bulk of this is coming from inflation. So, you and I have talked a lot about inflation expectations and inflation going forward. Once, uh, the situation in Iran became what it is and the strait shut down, the market started building in the likelihood that inflation was not only going higher, uh, this year, but the longer this has gone on, the expectations are that it's going to stay up here for longer. So, as of now, the, uh, Cleveland Fed now casting, uh, inflation number for May is estimated to be again above 0.4, which would put the year-over-year for CPI at 4.2%. Um, so, we're starting to continue moving higher. And if you go through the inflation expectations and you change those, that is pretty much the bulk of what has happened. So, I would put it there. But I also think that the capex trade in AI, and this is something that people probably didn't anticipate. So when I say the earnings are 20%, you not only have the oil prices going higher, but the nominal GDP stuff has gone higher, prices paid has gone higher, and the PMIs, and a lot of this was happening before Iran. So, at this point, the market is just building in that we're going to have rate hikes because of inflation and because of much stronger than expected nominal GDP. And if I give you guys one more, Warren Pies put out a, uh, a great post yesterday or the day before, just highlighting that the forward sales growth for the S&P 500 is 18%. Now, that's two years. So let's just take it as 9% a year, type thing. That correlates to very, very high nominal GDP. And I think that's where the issue is right now in the market is the AI trade. The AI impact means nominal GDP is going higher. And I think the inflation side connected to it from Iran right now is the major story. And the market has, as of now, been able to look through it.

Now, when we go and we see the interest rate hikes kind of on the horizon, one of the interesting parts is that Kevin Worsh is coming in, and you know, he explicitly wants interest rate cuts. He's been saying that during his confirmation hearings. Everyone believes that Trump is putting him there specifically to cut interest rates, but the economic data, or the market, is obviously saying something different. And so, is there a world where the market wins out, or could we see Worsh and Trump and, you know, kind of more the political regime actually win out and say, even though the data says one thing, they just start cutting because that's what they want to do?

I, I don't think the administration is going to be, uh, talking about rate cuts at this point. Um, I think, I think they're going to run with the hope that rates stay here, and this is a transitory belief. The administration is, uh, from what I can see, I mean, they're trying everything to get the strait reopen, um, and not have to go do any more bombing campaigns because I think we're at a very, very critical point with gas prices where they are. More importantly, and I'm sure we'll get into this, uh, the dynamic in the oil market is, is a much different stage. I mean, we're now, uh, this started in February, at the end of February. So, we're now almost three months into this, or two, you know, a full three months getting there, and inventories are being drawn down. So, I think where the Fed is on this is number one, they don't know when this is going to end. They don't know the disruption. And this is where the uncertainty kicks in, not only for the Fed, but my gut tells me that investors need to start paying attention because we're now focused more on trailing news, meaning the earnings that just happened, more than what's likely to happen over the next three months. And the problem is the oil situation will not get better over the next three months. The strait might, might reopen. The question is, will it fully reopen? But only over the next three months, we're really going to see the situation in terms of how much oil has been drawn down, how much the destruction has gone on for some of the production that'll be offline for a period of time. And any rise in oil price, where we are right now, guys, is any day oil goes higher, you see bond long-term bond yields go higher. So, forget the Fed, which I think Worsh is going to try his best not to raise rates. Edard Denny did, uh, say he thought there'd be a rate hike possibly in July. Edard Denni is one of the most bullish strategists out there and believes we're in a, you know, a roaring 20s style situation, which I happen to agree with with regards to AI. But I think we're in a very uncertain period here for, uh, investors and the Fed over the course of the next three months.

Now, one aspect of this, like inflationary pressure, is obviously energy prices, and there is a belief that if the war ends, then all of a sudden there will be, uh, a return to more normalized energy prices, and inflation expectations and inflation itself will come back down. I get the sense that that is not your belief. Can you talk a little bit as to, uh, a situation where the Iran war is wound down, or there is a ceasefire, or some sort of peace deal? What is your expectation for what happens with inflation, specifically?

I mean, we, we've had a ceasefire now for a while. Um, so I, you know, I, you got to extend this further. I, we have to go back to all of the ships going back to normal from where they were. So, you've got to know me. I mean, I do a video each week. It's all facts. The facts are, when the strait was closed, ships are still not going through. So, uh, we can play "would a," "could a," "should have," "maybe," "this," "that." If they did reopen it and it lasted for a month, I, I think when you get into these situations with the market, um, it's very clear to me that number one, the earnings, uh, blew away expectations in a way that we've never seen before. So, it's justified for the market to go higher. The facts of the matter are that we have a problem where energy prices are significantly higher than they were. So, we don't know if a move back to, let's just say WTI is right around 98 right now. We don't know if a move back to 88, where it stays at 88 over the next three months, honestly, is good or bad. Um, at this point, I would say the market expects it because the market is buying things on trailing earnings and believing that everything is going to be fine going forward. But there's another issue here that comes in, and this is the other fact-based thing that I'm starting to notice in the markets. Correlations are breaking down within the markets. Um, the S&P 500, yes, is right up near all-time highs as we start this. It's slightly below. There's a lot of markets around the world, particularly in Europe and Asia, that are down significantly over the course of the last three months. They have not participated in this rally within markets that have been very correlated to the US, and I would say are very much part of the AI-driven trade, which would be mainly Japan and Korea. Internally, they've got things breaking down, machinery and construction. The construction index for the NE or for the Topix in Japan is about to break the 200-day moving average. So, oil is having an impact on markets. It may not be having an impact on the US, but I think there's two reasons for that. One is we are the world's largest energy producer. Uh, and number two, I think, uh, people have, uh, probably become ultra-fixated on the fact that our AI market, meaning these positions, whether it's the hyperscalers plus the semis, if you just use that, that is pretty much driving the S&P 500. You have a lot of stocks down in the S&P 500 as well, uh, mainly on the consumption side. So, I think within the market, oil has had an impact. It just hasn't had an impact on the types of things driving the market here, but it is starting to break down around the globe.

Now, if we have rate hikes, let's just go back to the last time that we did this in '22. We saw, I think it was November of 2021, the Fed started talking about potentially hiking rates. That was pretty much the top of the market. Then they hiked interest rates at the fastest pace in history, and the market sold off across stocks, commodities, uh, crypto, etc., literally to the point where we had multiple banks that ended up going bankrupt because they didn't, uh, kind of manage their risk correctly. How fast and how aggressive do you think the rate hikes could be? And does that matter for how much of a sell-off there would be in asset prices?

I, I don't think there's going to be rate hikes. So, let, let me, let me be clear on this. Let's, we may have done this last week, but for people who maybe didn't hear it or they didn't pay attention, this is a very different situation to 2022. Let's, let's put it back to 2021. 2021, the Fed continually said this was transitory. Okay? It ended up being transitory, but it ended up being transitory with rate hikes. But it took a while for the yoloing to get out of play. And the yoloing is the major difference right now. Back then, we had two parts that were moving at the same pace that both contribute heavily to the inflation or the core inflation side. Number one is wages were going higher. Um, wages were going higher at a pace we hadn't seen before. The labor market had complete control. Um, capital was in trouble. They were trying to beg people to come back to the office and at least get them back to work, and it was hard with all the yoloing going on. So, the first thing is wages were going higher. The second thing was we still had people scrambling to get away from cities. Housing market was on fire. You had, uh, all kinds of situations that were spreading into appliances. And when you have a housing market that's booming, that has huge implications for a lot of consumer-related goods, and we still had bottlenecks. We don't have the bottlenecks. Ships are going around the globe right now. They're just not going through the strait of Hormuz. So, this is legitimately a transitory thing. We just don't know how long transitory is again. But because it's commodity-related, to your point on the question, this is not structural. Um, when oil prices come back down, which they eventually will, we just don't know if Iran has a goal in mind. Um, this has been a stalemate. The US has been trying now to get the strait open, and Iran doesn't seem to be budging. And the question is why? Uh, all I can deal with are the facts at this point. And the facts are that we're not opening this quickly. So, I don't expect any rate cuts to happen because the other issue that is here is back in 2022, the deficit was not a big situation, as big a situation as it is now. The debt has obviously gone higher, but right now we have interest expense, which annualized for this year is probably going to be about $1.4 trillion. Back then, it was about $600 billion. So, we're talking about a huge interest expense. If they raise rates, unfortunately, they lose control over this. So, we've talked a lot about the deficit. We've talked a lot about the ability of them to do this. This is a very, very difficult situation. And this is why when people sit here and look at the stock market and like, "Well, this is all great." I've said many times that the Fed's not in a position to hurt the stock market. The government can try to do things. They tried to balance the budget, uh, at the beginning of last year, gave up on that real quickly. I think at this point, people have to deal with the fact that inflation is trending higher. The situation Iran is not there. And if you ask me what's a higher likelihood by the end of this year, 10% inflation year-over-year or two, I'll take 10. We're currently at 3.8. That's the issue right now. Is when you get into those situations where if Iran, if we don't fix the oil problem and they want to hold this out for a long time, oil prices eventually will start to shoot higher because unlike when we went through this situation in 2022 with Russia and Ukraine, we had a problem coming out of COVID where we had an issue with oil inventories because we had shut so many things down. We had a surplus. We're burning through the surplus, and now everyone is starting to talk about the draws globally, but especially in the US, and how much we've released from the SPR. So, at this point, we've kind of run through that two to three-month window that all the oil doomers talked about that this would get really bad. This needs to turn now where oil is going to start to move much higher, much faster. And if it does move much higher, much faster, at that point, you're going to have a problem for the Fed. And I, I still don't think they're going to be in a position to raise rates.

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Okay, so let's say that, um, they don't raise rates, but they don't cut rates. Uh, maybe let's go kind of through asset prices. Is what is the impact on the AI-related stocks versus the rest of software? Have you changed your mind about anything? You, you've been very bullish on the AI, uh, side and not so bullish on software. Is that still the same?

So, this week has been, um, I mentioned the, the breakdown in correlations. We've also had, uh, a pretty dramatic shift earlier in the week. So, between Friday of last week, you know, we, we did our, our normally do our stuff on on Fridays. By the close of Friday, momentum had been hit hard, and that's because software had outperformed semis. That's kind of the, you know, people being short software, being long semis. We saw that unwind that continued into Monday and into Tuesday morning. Over the course of two days and a morning open, it was a dramatic movement in momentum. Now, momentum as a factor for the market just means the winners went down, the losers went up over the course, you know, what had worked and what hadn't worked. I, I, I've mentioned that I've gotten out of Micron. Um, I have no intention of getting back in, uh, at any price, uh, unless it was a significant fall, and I don't expect a significant fall in the AI trade. But the reason I got rid of Micron is because I think we're entering a new regime, and sometimes it takes a little time for the market to deal with that. If I'm right, a lot of the things we've already talked about, rising oil prices, rising, uh, risk of a Fed rate hike, would lead to an unwinding of positions that people are in. You've mentioned the success of the Roundhill DM Memory ETF. I'm highlighting this weekend that I wrote a paper on inference a year ago to this week. That was when Google IO had their event last year, and they showed that tokens had gone up significantly. And I highlighted a bunch of names. Now, most of those names are in the DRAM ETF. The reason I bring it up is we're a year into that trade. Most of those names are up four to eight, eight times. Um, and it's not just Micron, SK Hynix, it's things like Seagate, Western Digital. So, we're long in the tooth in something that has worked. And for me, going forward, the risk-reward has changed. I don't see as much upside as I did a year ago. And normally, that means there's a rotation that should go on. For me, I've rotated, as I've said, into crypto and silver. I've kept some of the semiconductors on, which are still more related to the optical side. Marvell, I actually bought a little bit of Intel in the weakness this week when it got under $110, and I'll continue to look down there. So, I think there's very likely going to be, um, a, a scenario that, best-case scenario, over the next three months, I think the AI trade will be unchanged, type thing. Um, worst-case scenario is we start to see a correction where we probably need to take some air out of the bubble.

You mentioned Marvell and Corning was another one that you had talked about for a few weeks there. What, what are your thoughts on those two?

Yeah, I, so I, I think if you go through the, the cycle of where AI has been, um, memory was the first thing that became obvious, and that was, you know, like I said, when inference became a higher demand, I wrote this paper about the amount of memory that's needed relative to GPUs. So, again, when I can write a paper, I'm not a semis specialist, and I wrote this paper a year ago to this week. I think that means that a lot of the good news, the acceleration is over, and I think the second derivative of price is going to start to, uh, move down. Marvell only broke out about two months ago. Um, so it's not as long in the tooth. And I actually happen to believe Marvell has a chance to be like a Micron type name over the course of the next two years. That's how important the optical side is, in my opinion. Corning has a massive order. Their earnings are still going to be there. The question is, are they going to get an acceleration in any other part of their business? I still think that they're going to be going higher over the course of the next two years in a very meaningful way, but I also think the, the memory names will too. I just think the memory names probably need more of a pause, and they actually have more risk because it's easier for competitors theoretically to catch up in memory, just because efficiency can do that. But also on the other side, I think, uh, China has already started to build out their own side. So, I'm not saying that's going to happen. I still believe in all of these names over the course of the next five years. But I just think you got to be, um, wary of things that have had a big run. And that ETF you talked about, the record volume. I think it had $6 billion in inflows, um, in a very short amount of time, like one of the most successful ETFs in history. The SMH, which has been around a long time, I think it has about $60 billion in AUM. So, the memory names, which there's not that many of them, that means there's a lot of retail involvement in there. And I think that's where you'd probably see a correction. The, uh, DRAM, uh, ETF has just over $10 billion in assets now, and I think they launched maybe a month, you know, five weeks ago, something like that. So, it's been pretty, uh, uh, pretty impressive.

Um, let's talk about, uh, what's going on in commodities. Obviously, there's been this commodity bull market. There are these huge shortages. Um, you have been all over calling out a number of these. I think other folks like, you know, the Tom Lees or the Dan Ies, I think they also, uh, intimately understand some of this. What is your view there in relationship more to the macro environment? Is it insulated, and so you don't really have to pay attention to interest rates, inflation, etc., because this is more of a driver than a reactor, or how do you look at it?

So, the commodity names to me, the only difference between them and the stocks is, uh, until they have momentum going again, people don't have any interest because the narrative on silver is, "Well, how do I just buy silver?" The questions I get for silver are very different than than Micron. Commodities trade a lot more, and the thought process is a lot more like Bitcoin, um, where you have to create a narrative around it. So, think about gold last year. I mean, every day we talked about gold going higher. Well, now Bitcoin is with gold and with silver. They're in this consolidation pattern. The regime shift that I see happening, and like I said, historically, when you're above 4% in CPI, it is not good for stocks. So, the S&P 500, when the CPI is above 4% over the last, I think I did this back to 1928. So, figure approximately 100 years, it has a negative return when the CPI is above 4%. When it's below 4%, it has a return of about 12%. So, negative versus 12. Well, we're just about to cross above 4%. And at the same time, we have three-month bills at 3.70 right now. So, CPI is going to be 50 basis points above three-month bills unless the Fed raises rates. And even if they do raise rates, the question is how much would they raise? I, I, I think we're in a negative, uh, yield regime, but with growth. So, the difference is, if the Fed's not going to raise rates like it did when inflation was high, but at the same point, you have CPI that's higher. I think the real risk, and I wrote a paper about this this week, the AI trade is moving so fast, and the hoarding that's going on is so big, that the issue that comes in is if we have bottlenecks, you're going to see some of these companies not meet their numbers going forward, especially if the input costs are going higher. You'll see margins get compressed, and that's where I think the risk is in stocks. I don't see the same risk in commodities. I think commodities, there's an underlying bid by geopolitical, uh, needs on copper, on silver, and I think gold is still fitting in there. And I'll just add one thing since I've talked about silver in this group. Um, silver is a major part of solar. It's needed in every single part of the AI trade, but there's also a growing trade going. Um, March was the largest, uh, import month for China in history on silver. Solid-state batteries, which I've said repeatedly to people on the institutional side, that if there's one place that you should be spending a lot of time outside of chemicals to make sure you're up to speed, it is batteries. And the reason is, if we want to solve our energy and power problem in the US, the easiest way to do it is to have massive batteries, uh, connected to every part of the grid. Because if we can store the energy, then we can use up more of the excess capacity we have, because we do have a lot of capacity on days where we don't need it. It's only on those days where we have to keep the excess in there. So, batteries are really important, and China, in particular, has made huge advances in solid-state batteries. Uh, this is critical, but the difference is, it uses a tremendous amount of silver relative to lithium batteries. And so, if solid-state replaces lithium over the course of the next five years, the silver needs go up dramatically. And if you do the numbers, we just don't have enough supply. So, silver is the one that when it breaks out, uh, and I'll say the same thing I said last week, if silver breaks out, if gold breaks out, if Dogecoin breaks out, then Bitcoin will break out. They'll all go together. And I expect that to happen before the end of the summertime.

So, explain a little bit more as to why before the end of the summertime? Why, why that timeline that you're looking at for crypto?

So, in all my experience of trading markets, um, when I say a regime shift, there's, there's two types of regime shifts. Uh, one is, let's say, one that lasts for a long period of time, and that would be something like coming out of COVID, uh, where you go into it, it's a deflationary situation, and then you print money, and it takes a while for people to grasp the inflationary situation. I started talking about inflation post-COVID in May of 2020, and that was because of the enormous amount of money printing. In this case, I think we're in a COVID-type situation from one level that equates this to a regime shift. If you listen to anyone on the oil markets, and I don't know if you've had people on that have traded oil markets for a long time, the one thing they all say as a group is they had all modeled the strait of Hormuz. Strait of Hormuz is really important to the global economy. It's kind of like its own central bank. Um, oil matters to the whole world. There's no way to get off of this. Diesel drives the economy. If all of a sudden, we see a downshift in the global economy, which I said is showing up in Japan with inside the construction market, showing up with inside the machinery markets, both in Japan and in Korea. This is happening in both countries while the DRAM stuff is still going up. You've got long-term rates which are going higher, and in particular in the UK and Japan. I mean, we're talking about 25, 30-year highs that we're making in long-term yields in countries that have a ton of debt. These have all been fears at some point. So, I think the regime shift is, once the technical market starts to break down, whenever that happens, and it can take weeks. That's why I said by the end of the summertime, I think there's a two-sided thing here. One is, I think markets have to have a correction. I don't know to the extent because I don't know what's going to happen to the oil price. If oil, if you tell me oil's $200, I'm telling you at this point, the stock market can't deal with it anymore because we'd be up at that point, which would also mean slowing growth because we've been using excess inventories. The second part of the trade, though, is if the Fed doesn't move and all of a sudden there is a stimulus thing, meaning, okay, the government, we, the strait starts to open up and oil prices come down, not from 100, but they come down from 150 or 200. I think that's going to be extremely positive for commodities and extremely positive for Bitcoin, but I don't think you're going to see the stock market immediately go higher because we'll be significantly higher, but in the commodity markets, we will.

One other aspect of the stock market that, um, I think people are starting to to wrap their head around is there's quite a bit of supply that is coming. Uh, obviously the SpaceX IPO, there's Anthropic, potentially, uh, OpenAI. And SpaceX is, you know, probably the largest and the one that is, uh, most tangible because we, we've got the S-1 now. We, we kind of know, you know, when, uh, when they're going to do this compared to maybe some of the larger private, uh, businesses. But if there's tons of supply coming, and you've got, you know, kind of the macro environment, um, there's many people who are quite bullish that are saying, look, for the next couple of months, there could be some headwinds here. Do you agree that that supply could become an issue?

Supply of this side has to be an issue, at least initially. Um, you know, I think if these names weren't going to be allowed to go in the ETFs, the passive markets, as quickly as they are, it seems like all the rules are being changed to allow them to go in. It probably has a little bit less of an effect, um, in general for what we'd be talking about. Meaning, if people have to get out of, let's just say the S&P 500 because they have to raise cash to go buy these issuances, then it would be negative for the indexes, and these stocks would go on. That's what normally has happened in the past. So, the size of the numbers is huge. Um, I do believe that anytime you have supply of this magnitude, it just adds to the question that's in the marketplace. But it's also going to, it seems like it's being front-loaded. They're almost in a race to get this out. And I think there's issues with that as well. The question is, why are they trying to get it out? If you come to the market with too much issuance, I think it definitely gets people to be a little bit more, "I can wait a little while before I buy things." So, I think the timing of everything for the next three months just leads to an issue. We, we've got expectations very high. We've taken the sentiment back up, depending on which risk, you know, which indicator you look at, um, back up towards the highs where we started the year. The ones that I use were back up there. So, I just think it's a bad setup for the next three months. And like I said, it may resolve itself by just consolidating. But I think the oil part is the bigger risk. Is that we can ignore oil for a period of time. Inflation's already gone higher. So, we're ignoring inflation. We're ignoring oil. We're ignoring rate hikes, and we're ignoring rates in the backend going higher. And the only reason is because we've seen this move in the AI trade. And like I said, with inside the AI trade, we're seeing stuff that has been correlated start to break down. And for people who are really want to get into the weeds of this, and I'll go through this over the weekend, there are two sectors that are the bulk of the AI trade. And most people think of it as tech. I, I, the AI trade to me, from the receivers, the capex trade, it's a combination of semiconductor names and then the industrials. So, as much as power is necessary, this is not an energy type thing. This is really transformers, gas turbines, it's all the industrial. So, when I talk about the fact that construction names and machinery names are going down in Japan and in Korea, that means part of the AI trade is already starting to break down. And that's what I'm saying. When you start seeing correlation breaks, it's kind of like my turbulence model. It's a warning sign to at least have one eye open, as I like to say, and just be wary that if things start to turn the other direction, you could see a correction that goes pretty far, pretty fast. And I don't think people want to be holding stocks during that period.

Got it. What are you, maybe looking for where you would start to change your mind on some of this, right? Like, it, it seems like you've got a very well-formed view. Is there anything that you're looking at and saying, "Hey, if this changes, you know, I will, uh, uh, adapt."

So, I, I'm probably less of a trader than probably, you know, the people that are sitting at home and on the retail trading side. I'm not as slow as an institution, and more importantly, I can sit in things. Um, I started buying Micron last year at 105. It traded down, I think to 60 in the first quarter of last year, and I bought more on the way down, and then I bought more on the breakout. Uh, I have a higher tolerance for things that I think are going to play out over the course of the next year. The way that I'm viewing my portfolio, I just had a home run with most, you know, especially with Micron, but with a lot of the semiconductor names. I also lost money last year in the crypto portion of my portfolio. Um, I have upped my crypto portion because I think a year from now, when we get to May of next year, instead of us talking about the parabolic needs of memory, I think we're going to be talking about the buildout of the financial infrastructure. I did a, um, a webinar this week with a group, uh, from Kraken. And I, I spent a lot of time on my portion about, hey, we're building out the AI infrastructure. Only at the beginning of this year did the agentic world start to happen. That's where the inference side kicked in. The other thing that's critical for inference is Ethereum. It's Circle. It's, go through the list of the financial guardrails that you want. This is a critical component is connecting the agentic world to the crypto side. And so, when you look at the charts that Coinbase had in their, um, earnings release, and you see them, they look a lot like the charts that Sundar Pai showed in token usage. So, I think when we get here a year from now, and it might take three months, it might take six months, but that's not what I'm looking for. I don't think silver can go down very much, and I think it will double over the next year. I don't think Bitcoin can go down very much from here. And if it acts like Micron did last year, and I have to buy more at $50,000 and $40,000, I will because I believe a year from now, we'll be talking still about the AI trade being happening. There might be delays and bottlenecks. I think the inflation side will still be on the higher side, and we'll still have rates at the lower end. The disruption will be happening to politics. The disruption will be happening to voters. People are going to be angry. And I think that Bitcoin and the crypto world will have a two-prong situation of negative real yields around the globe. The financial guardrails drawing in investors, especially the growth side, and we'll start to get an upward movement in a year from now. We'll be talking about doubles in crypto as opposed to doubles in memory.

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Now, I'm sitting here looking at a bunch of, uh, uh, public equities, commodities, and, uh, some of the inflation data. And it looks like, uh, the economic data can be twisted to tell very different stories. And one of the things that I find, uh, maybe most fascinating in financial markets right now is the economic data. If you want to tell a positive story, it can be overwhelming. But maybe the most important thing to tell a negative story is you go and you look at some of these polls. So, CBS just came out with a brand new poll and asked people, you know, how do you feel about your personal finances? Over 70% of people said they're concerned or they're worried, right? If you go and you look at, uh, people saying, "Hey, is your wages or your income keeping up with inflation?" Something like 75, 80% of people saying no. And so, there's this idea of like, almost regardless of what the economic data is, the perception, the feeling that people have is very negative. And you see this in some of the, uh, approval numbers for Trump or the economy, etc. And so, are we now in a world where the economic data is important to be informed by, but actually that sentiment, those kind of survey type results have more and more weight because you're getting this, you know, kind of split or, or this, uh, kind of paradox in the market where wealthy asset owners are actually making money, and the rest of the country feels like they're being left behind?

I mean, Donald Trump was elected on the distribution of wealth problem in the country. Um, there's no doubt that it's a K-shaped economy. So, everyone can sit there and try to pretend they can pick whatever side they want. I, I listened to someone this morning that I shut off after five minutes. Because if you start with highlighting the delinquencies happening on credit cards, the delinquencies, and say something like, "The consumer is feeling it worse than any time since the Great Financial Crisis." There is truth in that statement because we do have credit card delinquencies, auto delinquencies, mortgage payment delinquencies at those levels. There's no doubt about it. The problem is they're inconsequential to GDP because you're dealing with small parts of the economy. On the higher end, the wealth side is just insanely getting created by the day, the more that the stock market goes higher. If you have, I mean, I think as we get on here, we're up about 9% in total return for the S&P this year. I mean, I hate to tell people, but whatever you want to think about the global economy, it's the US stock market is so big. I've talked about it. We're now above 225% of GDP. So, if you have a 10% rise in the stock market, you guys have to go through the math and just realize that is literally, you're talking about, I don't know, $7 trillion, which is equivalent to about 25% of GDP. So, when you have an upward movement, it creates a lot of wealth for people that are already wealthy. For people that are not, we have transfer payments. And this is the K-shaped economy. And this is why voters are not happy. I absolutely know from having, you know, four kids, what the truth is because for me to subsidize my kids in some way and help them be able to get started on their life in cities, you know, if there's an emergency at the house and they have a flood and the insurance doesn't cover it, they don't have the extra money in the bank account without dipping too far in, and so I end up helping them out. So, parents know that people are living paycheck to paycheck across the country. And I think that's the reality. And I don't see a situation because of AI that that's going to change anytime soon. You don't just accumulate assets and have them go higher. Now, for people that are trading, as we talked about last week, I do think traders have an advantage over wealthy people in the fact that what I described, they can get long these things and ride them up. Most institutions can't put a big position on in the DRAM names. Um, and that's one of the reasons why retail's been having such a fun time. Institutions aren't overly long them. So, if this falls, it's going to be a margin fall, meaning it's going to be because retail gets stopped out of these trades, and then they'll move on to something else. Just like last year, they were involved in Palantir, gold, and silver, and they're not involved in Palantir, gold, and silver anymore. Retail's good. They'll go find the next trade, and the next trade to me will be in different areas.

Now, one other aspect of the stock market that I find very fascinating is, uh, there's this chart that shows the S&P 500's net profit margin has risen to almost 15% in the first quarter. And so, there's this idea that the underlying fundamentals of many of these businesses are improving, in some cases, the, you know, P/Es, etc., actually getting cheaper. And so, how do you look at this, you know, bubble talk and, and all the excitement, but, um, also at the same time, the underlying businesses themselves seem to be improving and actually driving, you know, real financial performance?

So, the problem, and again, this fits into the distribution of wealth problem. Um, the profit margins at the aggregate S&P level are up at 15%. But most of this is being driven by, you know, seven to 10 names in the S&P 500. Um, Micron's margins are exploding. Nvidia's margins are up at 70%. The hyperscalers. So, it's, it's a, it's a world of halves and halves, not have-nots. And the reality is the S&P 500 is the S&P 500. It, there's no way to go through it. If those names are, you know, the highest ones, that's great. The issue is right now, and where I see the issue popping up, if margins were to start heading down because this is an inflated number driven by seven companies, and all of a sudden their margins start to drop.

Off, for some reason, it's going to look like the S&P margins are dropping off, and that will scare people. And that's what I think is going to happen. And even if it doesn't scare people, the one thing I will tell you, if you want a signal in the marketplace, if profit margins start dropping, it's not really good. And if you're a quant, meaning a computer, and you're trading off signals, and you get a signal that says profit margins are declining or they've peaked, you start extrapolating that out. And even if it doesn't continue, for the time being, it's kind of a risk signal to reduce risk. That's the problem I see. Is these charts look so good and so explosive? And one of the things I'm highlighting, um, this week, the capex trade. So remember, you and I last year spent the time defending the AI bubble, meaning going against people saying it was an AI bubble.

When we look at these capex numbers, you've seen the numbers for this year. We're now expecting about 800 billion for this year. Last year was, I think, about 400 billion. The year before was, say, 200 and change. At the same time, so we've got combined now for the last two years plus the first quarter of this year. Let's assume it's a trillion dollars so far. Well, that's a trillion out of what's now expected to be an $8 trillion capex build. We're basically about 12% through the build, and we have an enormous amount of shortages already now. So the one thing I will tell people about the buildout, I think for the next year, because of how quickly the shortages and the buildout have shown up, people are underestimating that the capbacks may run into issues, not on the ability to spend more money on it, but the ability of actually building as much as we think to use the chips that we're hoarding right now to compete with other people. I think that is a real risk that is going to show up.

I also think the adoption numbers. I've now spoken to a variety of people, uh, at senior levels at big institutions. As much as AI is being adopted and people are getting, um, anthropic in there, they still don't, they're not seeing the productivity numbers. Um, they're not seeing the actual change. They haven't fired people at most institutions. So I think one of the things that it could become an issue too is the token costs are are are spiking because we've had a lot of people ordering anthropic. The question is, if that starts to flatten out a little bit. We've been in this game of extrapolating the present. So sometimes when you get in the thing of extrapolating exponential numbers, the supply bottleneck starts to become an issue, or the adoption process becomes an issue, or cost becomes an issue. And this is what I wrote about this week. I think the bottleneck or the neg, the next negative trade for AI is not that it's a bubble in terms of the spend. It's that we just can't, we're not prepared for the amount of volume that we need, and the bottlenecks that are showing up throughout it are real.

But then you have the other bottleneck that was just added 3 months ago, which is the Strait of Hormuz. When you combine all those together, and inflation going higher, and the Fed raising rates possibly, we might see a a a immediate shift in profit margin expectations. When we go and we take a look now at, uh, Jeff Bezos, uh, Jamie Diamond, many of these people, they keep talking about taxes. And I find it very interesting because, uh, there now seems to be a coming of, you know, the, uh, uh, butting of heads. It used to be that wealthy people really didn't talk that much about taxes, but they seem to become more outspoken. We had an idea that was proposed by Jeff Bezos this week, which was that the bottom 50% of Americans should not have to pay tax. And so they contributed about 3% of the federal budget. His point was, if you make $70,000, if you're sending 10 or $12,000 to Washington, one, that's an incredible amount of your of the money that you need to live. Uh, it'd be very impactful if you didn't have to send it. But also, Washington's not exactly the best, most capital efficient, you know, kind of, uh, uh, allocators. What I find interesting is I don't know what's going to happen on the tax front, but all of a sudden, again, it's getting back to this idea of like the federal budget, the federal spending is really the thing that I think these wealthy people are attacking. Will we get a change there, or are you convinced that look, this thing is going to, you know, kind of explode higher? The national debt will continue to go up. Government spending is only going to get worse. And Doge, you know, didn't work to the degree that people wanted it to. And so, we just need to be all prepared for, um, you know, kind of more pain from, uh, from the government spending.

>> So, let, let's, let's do it this way. Um, we haven't talked about this, but I remember, um, I listened to a podcast today with, uh, with Yan, with John Vanek, who you've interviewed before and who you interviewed at one of the events that, uh, that I was on stage with you at, and it was the first time I, I had seen him speak. Number one, he's very smart. Number two, he's very thoughtful. But you guys had a debate, and I hate to bring up something that, that, that you were wrong on, but I, I'm, I'm bringing it up more for a point. Um, and this was on, can we actually balance the budget and can we actually get, and, and he, he basically was as direct as he said, there is no chance that we can do that. Now, his point, as someone who I find very thoughtful on this, is the clock is ticking every day. So whenever we see the debt clock, that's one thing, but the real issue is of the receipts that we get. So let's assume the stock market's booming, the economy's booming, and right now the receipts that the government gets are effectively equivalent to the entitlements plus the interest expense. So the entitlements, we're running into a shortfall soon, meaning we don't want to have the money to pay for it. We're going to have to refund things to actually go or go borrow the money. How are we going to go borrow more money when our rates are up? So, at some point, if someone has bad credit and they need to come to the market to borrow more money on their house, it's not the original mortgage rate. It's when you run out of income, it's really hard. The, the government is in a very, very difficult situation. Everything is firing on cylinders. We're trying to basically inflate our way out of this problem from everything that I can see, which is why the Fed can't raise rates. But the issue that comes in, as much as the tax, like figuring out all these games, the entitlement thing just stares me in the face every single day. That is the pressure point that is growing. The entitlements grow every year because of demographics, because of the health of people of the country. And that reality is just coming and coming and coming. And so this is the point of when you look around Japan and you look around the UK, the similarity between Japan and the UK are these two little countries that are very important to the global environment, and their 30-year bond yields are just going higher. And they've had issues inside both countries. And I think to pretend like that their issues are not going to be something that puts a spotlight on this situation, we can play whatever games we want with the tax thing. It's not going to fix the problem because the problem gets worse every year, and now we have inflation. And if there's one thing that doesn't get talked about, and I heard Luke Groman talk about this, and I'm going to, I'm going to show it in the video this week. What the Iran situation ended up doing was front-loading the inflation. And the problem is it's putting pressure on the bond yields. Pressure on the bond yields is leading to the dollar rallying. Like all of these things are happening. And now we have rate hikes. So Iran is a far, far bigger situation for the long term when it gets back to the debt and deficit than I think people realize. And I don't want this to be some like doom and gloom thing because we just continue to print our way out and vote our way out. But I think you have to remember that the government is going to have to do something to keep yields in check, and that means buying some. That's very positive for the whole crypto thing, and I think that's the endgame for all of this, honestly, for people that are watching, since most of them are crypto. We go through this routine all the time. You need a crisis for Bitcoin to come out of it soaring, and usually comes out of soaring, whether it's COVID, whether it's 2022 when they stopped raising rates. I think we're getting closer to the government having to do something on the long end of the curve because all these pressures are growing. And this debate over taxes, it means the municipalities are going to have an issue because people are going to keep moving to Florida or moving to Texas, and that's what's happening for wealthy people.

>> What, um, what else are you going to show in your video this week?

I, I'm going to talk, I'm going to give a lot of, again, we, we talk on this, I don't show any slides, we don't go through anything. So when people try to, you know, think about, well, what's different between what I talk about on the weekend, you and I don't go through what I'm going to talk about, and I've spent the week kind of going through with the facts behind what I talk about here. So if people wonder, how does he have all this information in his head? Well, I'm doing a lot of work during the week, just like you, Anthony, is to go through and and be able to talk about these things. We don't prep. We don't go through this, but the shaping of what we talk about is things that intersect. And I think the intersection for this week, guys, is as well as everything is doing. My thematic portfolio has had a huge run. Um, I will say for people who are interested, particularly on the RAIA and FA side, you should tune in because I am getting things listed, uh, not in an ETF for a variety of reasons, but Morgan Stanley and I are working on things to basically have an index that is trackable in at least Bloomberg, but it's very good for institutions who are looking to be more involved. And again, these are a hundred names that I think are going to survive whatever we're talking about here, because the AI buildout is going to happen. The path between here and there, I will talk about. I think we're entering a different regime. And as a trader, as my father taught me when I would go, when he'd teach me, okay, if you're going to the racetrack and you've got a certain amount of money, uh, you may only find three races where there's edge in it for you, and those are the three you should bet. Don't be this person who bets on every race and believes that you have an edge in every race. You want to find things where you've done your homework, where you've done your analysis, and then go through. I think in the case of the memory market, the DRAM market, if you're trading momentum right now, it is not completely collapsed, but I would have one eye open and be ready to kind of reduce your risk and already be taking cash. What I'm doing is rotating into stuff that might be a little early, but I think the downside is limited and the risk-reward is shifted where I think I'm getting back into these good scenarios. So, I'm going to kind of teach people that I'll show them a little bit more on the thematic portfolio, and I will get into a couple more names that maybe they haven't thought about. Uh, and this is in the IP side, which have been left for dead names that are probably more important in the power situation, but they're more defensive. And so if we get in a situation that's less momentum, you're probably going to see the defensive names start to outperform, and that's the place that I would kind of hide my money for the near term.

>> Makes, makes complete sense to me. I appreciate you doing this. Every single person here should go Jordy Visser on YouTube, go hit subscribe, go check out your Substack. I, I think I'm like Jordy Visser, president of your fan club, that's what I've determined. So, uh, everyone.

My man.

>> Yeah, it's my job to go get, you know, get more people to join the fan club. Uh, but I appreciate you doing this, and, uh, and next week we're going to be back in person, I think. Right.

Back in person next week.

>> All right, sounds good. We'll, uh, we'll talk soon. Okay.

All right, bud. See you. Have a good one.