Transcription
Fairness is a funny word because people look at it differently. I don't think anyone disagrees that we should have a fair tax code and fairness, we should set rules and people should play by the rules.
What ends up happening is one guy's got all the food and everyone else is starving. It's just easy to say that doesn't feel fair and so we need to reallocate some of that. I think there's absolutely no doubt we need a reallocation of some of the income and some of the wealth in our country and in the world.
How you do that gracefully without disincentivizing people. How you do that under the banner of fairness. I don't believe in the wealth tax at a state level. I think it's insane. I think taxes really should be at the federal level, but politicians want to get elected and so it's really popular to say tax the rich.
Welcome to All Things Markets. I'm Anthony Scaramucci.
>> And I'm Mike Noratz. Mike Novagrats. What is going on Mike Novagrats?
We are having a ceasefire. Not a ceasefire. Bombs are going off. Oil prices are moving all over the place. I was catching a little bit of a run in my crypto, my Bitcoin. I was super happy. And then Kplat. Now this morning, we're rallying a little bit. But what's going on, Michael? Talk to me, Michael. Talk to me.
I think this is kind of the death throes of this this war. We don't really have commitment to to put troops on the ground. Uh I think you'll see these skirmishes back and forth, but broadly people have moved on and I think the markets mostly have moved on. Uh crypto trades better this month than it did last month. Uh there's some hope on market structure. Not a ton. I say it's 50/50 right now. Um but I think you're you're seeing volumes pick up. Volumes are up 20-30% from a pretty low level, but they're picking up. You're seeing some activity. I mean Robin Hood launched a chain with you know to compete uh and compete in the uh you know the DeFi space and boom uh big usage first day uh three times now. Listen, first day there's a lot of hype, but it was three times the use of Hyperliquid and so that's a big deal. Robin Hood is a you know 15 million customers in the US, a monster uh here domestically at least, smaller overseas um and so you got a lot decent little story showing up around the edges and I think that's brought a little enthusiasm back to crypto. And in you know the big markets, it's the same story. It's you know, Korean memory has a pullback because of this big IPO, Heineken's, and boom, it it's well taken up and everyone wants right back on, right back in the saddle. U you know, AI continues to be harder to trade because of the the amount of volatility, but it's a buy the dip market there still, right? We had you know, the momentum trades, the things that I've been working had huge huge setbacks. So, you know, hedge funds had a bad couple days, but it went right to support and it held and it's it's bouncing again. And so I think I hate to keep using that same stupid expression, keep dancing till the music stops, but that's the way the market is poised. I mean, I read David Ter, who you know, I've talked about a few times here. He's he's got to be top, at least top two investors of his generation. You know, he's he's a little younger than Dra Miller, but his returns are staggering over a long period of time. He runs a I think it's a 20 plus billion dollar fund, which is I think all his own money, and he's up 37% this year. I mean, that's a staggering return for any hedge fund. Uh, but I'm reading lots of hedge funds, if you caught this move, you're up 25 to 40%. And you know, macro funds who are just macro have had a tough year because the macro environment hasn't been great, right? Currencies haven't moved. Interest rates have been harder to predict. There's been one trade and if you had your foot on the pedal, it's been a great year. And that trade hasn't given up yet. That's my That's my morning wrap.
>> Yeah. No, it's a good wrap. Michael, do you ever meet Alex Karp?
>> I have not.
>> Palent.
>> I have not. Have not. Yeah, me either. I've seen watch him.
>> Yeah, I've seen him and I've said I've been in an AI presentation, you know, in a conference event where I saw him speak. Uh I thought his unfiltered CNBC interview, which I watched twice, uh was probably among the most honest things that I've seen on television in a very long time. But he's basically gave you an indictment of the AI business model that they're basically absorbing information from all of us, absorbing information from all the all the companies and a result of which will lead to some sort of human commoditization.
>> But something has gone completely wrong and the basic view among enterprises in this country is I'm going to chill lax uh and waste my time with tokens. I'm gonna get no value and they're gonna get my IP.
>> What is your reaction to that? Did you see the interview number one? If you didn't, that's fine, but I just want your reaction to that general state.
>> I saw the interview. I I watched it fascinatingly because he just goes unfiltered. Uh, you know, for better or worse, I guess. And yeah, I mean, I think his his it was a kind of a warning to CEOs as well. He was like, "Dude, don't let them have your information. We'll just they're going to take your alpha." Uh, and I know every CEO that I've talked to is wrestling with the same thing is how do you protect your own information while participating? I listen, I think we're still early and trying to understand this stuff and and it does it does throw up a a warning sign to like how how fast should we go? I I don't think people actually feel like they have a choice, right? Yeah. it's dangerous, but if I don't go, what becomes of me? And so, I still think you're going to see people piling head first, even even with the call it a yellow flashing light um into trying to use this technology to to make their employees and their businesses more efficient. It's just But it listen, it's it's happening faster than we can process as a government, right? as a government to figure out, you know, how to protect, you know, national data. Uh, it was interesting. James Tel Rico, I heard, you know, the the young man running for Senate in Texas, the Democrat, I heard his answer, and I think I maybe said this last week or the week before uh about AI and data centers and the whole process. He said, "Hey, if it really is commodity, if it really is using human knowledge as its data, right, all of it, uh, then we got to share some of the resources. I mean, some some of the upside of it." And I think you're going to see more and more of that kind of thesis, uh, that argument uh, made when it comes to AI regulation, AI tax, AI, uh, you know, how it how it integrates into society. But it it it's hard to see it slowing down. There's too much money that's been bet uh and you know the prize is too big on the other side.
>> Let me let me rephrase it, Michael. Let's say that you were the CEO at Goldman, the CEO at JP Morgan, the CEO at McKenzie, the CEO at Fizer. And the AI is incredibly powerful. I'll fully confess I use it almost every day for different things that I'm thinking about working on. you know, I've even rettaught myself some of the classics, all different types of stuff. But if you're the CEO of a big company, Alex telling you something, would you worry about that or you would say, "Yeah, I'm not going to worry about that. I see this more like the cloud, right?" Because, you know, we put our information up on the cloud and these companies didn't take the information off of the servers and start using it or start selling it. Let me ask you from a Galaxy perspective, you're the CEO of Galaxy. Well, let's go back to just trading for a second, right? There are, you know, six or seven companies now that dominate trading. Jane Street, right? Uh, Renaissance in that hedge fund space, uh, Jump Capital, Susquana, Citadel, they've been using AI for 15 years. AQR, uh, Two Sigma, you know, most listeners don't know these companies, right? These aren't this is not Goldman Sachs or you know Stand Rock Miller uh or Morgan Stanley. These aren't the big brands. They've become the big brands in in Wall Street and they are all AI. They've been doing this for 15 years and they've been winning. When Jane Street makes with one 120th the people makes more than Goldman Sachs quarter after quarter after quarter. Uh it says something, right? And so that thesis is already happening. It's now happening businesswide, right? It's got to morph. And I think that's the hard part of it. Running companies today. Yes. I think you're going to have AI banks that get set up like what what JP Morgan does isn't that complicated. You can figure it out. Now, it's the infrastructure they've built, the relationships, the trust they built, the brand they've built. That will be harder to erode uh with AI than people think. But the process and the knowledge, it's not like JP's got some great knowledge of how to lend money, right? They've just built the connectivity. And the question is how fast can you replace that connectivity? Uh, right? If you think about JP Morgan or J the AI version of JP Morgan without having no people and I don't think that second piece happens as easy as you think.
>> Okay. I mean, it's it's just an interesting conversation. I mean it, you know, he opened my eyes to something that I didn't see prior, so I wanted to bring it up. I want to go to the California billionaire wealth tax. Whoa. California is going to officially head into the November ballot. Uh they're going to make a referendum on whether or not they're going to tax people at these levels. Remember, this would be a one-time tax on any California resident worth more than $1 billion. They're going to hit them for 5%. Okay. Now, I don't know. You tell me. The existing tax system, the top 1% of the earners are paying 60% of all the taxes in California. So, what's going on, Michael? And uh what do you what do you where is the fairness? And and hear me hear me out for a second before you respond. My thing is you make your money, you t you get taxed on your money, you take what's remaining and put it into savings and you're a good investor and you you decide to be the ant, not the grasshopper. And now you've amassed this fortune for yourself, but then now they want to tax that on top of it. But you've already been layered with taxes on the way into that equity accretion.
>> Yeah. Listen, it what fairness is a funny word, right? If uh because people look at it differently um right if we say we're going to run a hundred yard race every day and the winner gets all the food on the island uh and you're assuming when you made that rule that people would different people would win on different days and after a month the same guy's won every day and he's got a huge stockpile of food and everyone else is starving. The starving people will say hey that's just not fair. uh and the and the and the guy would say, "Well, wait. We set the rules and we haven't broken the rules. It is fair." Um like who's right in that case? And I think that's a little bit of the wealth tax dilemma. I don't think anyone disagrees that we should have a fair tax code and and in and fairness, we should set rules and people should play by the rules. Um when what ends up happening is one guy's got all the food and everyone else is starving, it's just easy to say that doesn't feel fair. And so we need to reallocate some of that. And I think there's absolutely no doubt we need a reallocation of some of the income and some of the wealth in our country and in the world. How you do that gracefully without disincentivizing people. How you do that under the banner of fairness, right? Our tax code isn't fair now uh in that you have some people with the exact same earnings power who have wildly different tax rates because of the structure, right? uh step up basis doesn't feel fair. Uh right, it doesn't seem to make sense. And so there are a lot of there are a lot of uh things that have to happen. And so you're going to see people lurch. I don't believe in the wealth tax at a state level. I think it's insane. I think taxes really should be at the federal level. It bothers me that we don't have leadership both at state and at federal that make that simple proclamation. Actually, I was on the phone with Cath Kathy Hokll yesterday to Governor New York and I was talking about this and she agreed with me. She was like, I I taxes should be mostly at the federal level, the big the big changes. Uh, and so, but politicians want to get elected and so it's really popular to say tax the rich. We're going to have to take more taxes out of the rich. But how you do it, you and I have done very well in society. Um, we're both very blessed guys and uh I I always admire >> the only New York taxpayers left. [laughter]
>> Yeah, exactly. Well, I'm not leaving. So, I think we can going to just take every every every last blood cell. But I I I guess what I what I'm worried about is structure and incentive. What I'm worried about is migration. Now, it turns out that Florida is having an infrastructure problem down there. If you look at the real estate numbers, a lot of the homeowners are selling. they they you know they've almost priced themselves out of the Flidian market and the services because they don't have a state income tax are not as up to snuff in other states like some of the blue states that are you know paying for a lots of their infrastructure through state income tax. So it's a very complicated thing. I'm just worried that you know and I had this conversation actually with Donald Trump in December of 2017 when Trump was talking about capping the state and local income taxes. As I said, you know, the one problem you got to remember is these coastal cities are the engines. They're the innovation engines for the entire economy. They're teeing with immigrants. The immigrants come in. There are poor immigrants going on to become very wealthy. Look at Sergey Brin from from Google as an example. And what you don't want to do is you need the safety net in these areas. So, you want poor immigrants. You don't just want smart immigrants. You want both because you don't know who is who. and you want to be a teeming tractor beam for intellectual capital, you know.
>> So, an Anthony, I was I was at the White House on Tuesday. Uh, believe it or not, they let me in uh at the Rose Garden for the the Trump bond ceremony, right? this this idea that Brad Gersonner and a bunch of people had, but Brad really spearheaded it to put savings account investment accounts away for children so when they're 18 to 21 they get they get a nest egg and and Michael Dell kicked in $5 billion dollar shout out Michael Dell to really jumpstart this thing. But lots of people are now participating. Galaxy was one company that said, "Hey, we'll do that for all our employees." Lots of companies have said that. And so I got I got the nod. And while I was sitting there in the rose garden, which certainly doesn't look like it used to, right? Yellow tables or yellow umbrellas. Uh but one thing he did interestingly is the tables only sit four. And so when you're sitting there for the lunch, you got a real conversation. You know, the table of 10, you got the guy next to you. Table of four, you got the four all talking. And and there was a CEO of one of the biggest banks in America, investment banks, who was sitting next to me. and you know he's a center-right guy but very thoughtful uh and knows Trump well and uh there was a White House representative at our table and and all of a sudden I know he said hey let me tell you something we need immigration you guys have done a great job of stopping the the the the wildly open border and that was necessary but right now the US has zero immigration and we need immigration we need smart immigration and we need labor we need all sides and so you got to turn the immigration pipes back on and the rent from the White House was like, "Yeah, I I get it." I was like, "How are you going to do it?" And I don't think they have a plan. Uh but the US model, right, of this pyramid, right, that the that the tax base keeps growing because we've got this $40 trillion of debt, uh is at risk when you have no new taxpayers. And when you have net no new no new no new no new no new no new no new no new no new no new no new no new immigration you you got a big problem here and so the US has got to get back to 2 million people a year probably that's the number uh plus or minus a couple hundred thousand and we're not there yet and so it was very fascinating though that that became the most interesting part of the whole day actually that conversation let's go to the Trump accounts for a second though I think this is a masterful idea and and I want to give Michael Dell Michael Novagratz Donald Trump I want to give all the credit in the world Brad Gersner all all the people that have worked on the design. We just we were we were tag along. We were tag along.
>> Okay. But you know what? If you're in the Rose Garden for the ceremony, you're part of the the conclave of people that were part of the policy promulgation. And so I'm going to give you credit whether you want it or not. All right? But here's the bottom line. In an ownership society, think like an owner for a second. If you're giving a kid equity and an equity account and they now own a piece of Dell computer and a piece of Galaxy and a piece of Goldman Sachs or you pick the companies, how does that change the culture for a young kid in your mind?
>> Yeah, I think that plus I think it's an amazingly good idea because it's not just the initial money, you know, your uncle, your your father's next company. there's lots of people that can invest in those accounts over time, right? Uh and so [snorts] hopefully it's not just the initial money that compounds over time. And so all of a sudden you're looking at one point, not at 6 years old or 12, but at one point at 13 years old or 14, you're say, "Hey, I mean, I used to ask my mom all the time, hey, do we have any rich relatives? Are you sure? Do we have any rich relatives? any great uncles out there that might pass away and leave me something like when I was like 12 years old, right? Like I was a I guess I had a desire to make money at one point, but that seemed to be the easiest way. But like so I I do think it starts focusing people at a younger age on what wealth is and you know you then need you didn't make it that way, Michael, but you married into it. Okay, because I I attribute Suki for all of your success. Okay, I just want to make sure you know that.
>> All right, keep going.
>> Oh, yeah. My uh my grandmother used to tell the grandkids uh my mom's mom, she said, "It's just as easy to marry a rich guy as a poor guy." She would tell my sisters. [laughter]
>> I think it's a fabulous thing though. I mean, for me,
>> whatever the plus and minuses are of the administration, and I've been pretty outspoken. I think this >> this is the best thing they've done. This is a great idea and I and I know it's at $500,000 according to the administration right now. They've already received an initial deposit. I hope we can get it to $50 million.
>> I asked one of my my guys from uh our philanthropy side. I was talking about that and he he he signed his kid up uh and he said he's got a young baby uh and said in all of my experience with government, state, local, federal, signing up was the smoothest onboarding process. Uh I know Robin Hood is doing the accounts or at least a big big chunk of the accounts, but he said getting that account signed up in uh because you have to you have to proactively sign yourself up. He said was so smooth. He said, "Hats off that government can actually work work well if you get smart people working on it." So, shout out to Robin Hood there.
>> We're going to we're going to go to bullish and bearish. Okay. Just uh California, they're going to pass a wealth tax in November. Bullish or bearish?
>> I think it passes. So, if the California vote goes through, Michael, it's called Proposition 40. Uh Gavin Newsome has no power to veto it because it was voted on by the people, not the
>> What are the odds on that? What are the odds on that?
>> Right. Right now, according to uh they're 51%.
>> All right. Iran peace deal goes back into effect by the end of the summer.
>> Yeah.
>> Okay. Okay. Who's going to win the World Cup? France is favored.
>> France looked so good yesterday. Uh I'm going for England, though. I just It's there. It's time,
>> right? It's really interesting. I think England is going to win and I just there's something going on in that team right now that's Nick liked to
>> I mean if I if if I was betting I'd probably bet on France but emotionally I'm I'm going England. I'm actually going down to the semis. I haven't gone to a game yet down in Atlanta. Uh we'll see who's going to be in them. But uh England's got Norway today which will be a fascinating game.
>> All right. So, so Grock becomes an actual competitor to Claude and Chad GBT.
>> I don't think so. But, you know, listen, I'd want to say that because, you know, anytime I've shorted Elon, I've been kicked in the uh midsection. Um, it just feels like they're way behind at this point. He's got data, though, and data is a big part of this.
>> What What are they missing? They got the data. So, what are they missing? Compute. What are they missing? Software engineers. You know what's interesting is it's hard for me to figure out. I I watched this movie just I keep trying to really understand AI and I don't really get much better at it. There was a movie on it, a documentary, and the way it was described is like they were like, "How does it work?" And a bunch of AI scientists said, "Well, we don't even understand completely, but think of it as you put compute in a box and you dump data into the box and it just kind of works." And I was like, "No, it's got to be there's got to be something more than that that I can try to understand." Like I it really is hard for me to answer that question honestly to know why, you know, Anthropic works better than Grock works better than OpenAI uh at a different at a certain point. I know it does because when you use it, you're like, "Wow, this really is, you know, this really is pretty uh pretty special when you're when you're using Fable right now." I I haven't spent any much time on Fable, but my guys who've used it were like, "Oh my goodness." You know, big jump up. Um I I don't know why, so I can't answer. What do you think? What do you think?
>> All right. But on Grock, I think Grock catches up. I think they all I think Claude is resoundingly ahead. There's no question about that. But I think that this is like a match sailing rage and they generally catch up to each other. This will be like the Goldman Sachs, Morgan Stanley, JP Morgan sort of thing. You know, Goldman was ahead of those guys for many years. They sort of more or less caught up with each other in certain ways and and that's my opinion and what do I know? Do you think AI models move away from selling tokens for a service? And so, you know, again, you know, would it would it move to more of a structural model or like here's my budget for AI this year? No, because you got to allocate computer resource and so the token thing makes the most sense to me. Um, but you know, what's the volatility of token price going to be? That's an interesting question. Does it do they do they guarantee token price? Do they is it an open market? Is it used? you know, does does it surge or not surge like electricity does? Um, yeah, that that's going to be fascinating to think about. I know a lot of companies have backed away from saying, "Hey, hey, we spent way too much on tokens. They weren't useful. Here's your new budget and it's smaller." Um, but I get what I keep telling myself is we're in the first out of the first inning in usage.
>> Right.
>> Right. Most companies haven't figured out how to use it yet because of this fear of their data and fear of security breach.
>> All right, la last bull and bear ready. SpaceX is now SpaceX AI. It trades below its IPO price in the next three months.
>> Lots of stock unlocked. That's why I'm asking.
>> Yeah, me too. I think that happens. There's too much stock unlocking and there's been a lot of uncertainty in the markets. You know, somebody said had me laughing. We we installed our crypto to buy SpaceX and then we're going to be selling our SpaceX to buy crypto. That's what somebody told me. We'll see if that happens.
>> Think about it. The the the IPO price was 1.75 trillion and everyone thought that was a a stretch. And you know that's 135. We're still trading at 150. So that's 10% higher. So we're trading at, you know, about two trillion. Uh yeah. Does it trade down to one trillion? Maybe. I I think that's probably the floor just because he's Elon and that would be 100.
>> Yep.
>> Do you do you think uh the selling of SpaceX stock will I mean I was saying it teasingly but now I'll ask a more serious question. Do you think that's going to affect the crypto markets at all? Feels like a lot of the AI and SpaceX sucked capital out. Would it get sucked back in? I think there's some rotation that happens. What you see it when Momo sells off, crypto does a little better. So, there's probably some rotation. I think the more direct thing you're going to see is you're going to see when people sell SpaceX, you're going to see some high-end real estate get bought, right? You're going to see the Yellowstone Club go up in value. Uh you're going to see elite things because remember that stock is held by so few people. Right? I don't know how many people on SpaceX side, but it's not tens of thousands, you know, or hundreds of that. Like, it's a small amount of people that have a lot of it. And they have a lot, right? Because it was again anywhere from a a six to one to 100 to one bet for people. And I think you're going to see discretionary elite uh, you know, high-end spending jump.
>> All right. We'll see what happens. I mean, listen, it's been a fascinating discussion. What made you smile this week, Michael? If you see me driving a new fancy car, that's because I sold SpaceX. [laughter]
>> You're gonna be you're gonna be buying a car with it.
>> Don't go by me. I'm love cars. I got more cars than people in the house, you know? So, I'm I'm all about cars, man.
>> If you're buying it, I want I want I want to ride shotgun in it. Okay. Just make sure
>> Yeah.
>> Make sure there's a seed for me.
>> I'm not a car guy. I'm a party guy. I spend my money on parties.
>> All [laughter] right. All right.
>> Well, you know what? here with might be a smile this week. Uh,
>> you know, I have one daughter who's expecting our first grandkid in October. Uh, her sister who's 11 months older called me up with a big smile on her face and her and she said, "Oh, grandpop, you're going to have two more grandkids these grandsons a couple months later." And so that put a big smile on my face. I'm going to go from, you know, cool dude to grandpop of three, uh, you know, by the new year. I mean, you can be a cool you can be a cool grandpa, man. Nothing make me smile more than that. I think that's awesome. I mean, I wish my kids would listen to this. Okay, I got kids at your kids' ages. I got no grandkids. I had to make my own grandkids, Michael. That's a whole other topic. Okay, but you know what made me smile actually are these Trump accounts. Man, I think it's a brilliant thing. And I think people, you got to take the good and bad sometimes in politics, but that is really good policy. And I'm I'm I'm applauding people that are
>> Trump's like I never I didn't want to name them after I didn't want to call them Trump accounts but you know they they they said they yet no one will sign up unless we call them Trump accounts.
>> Right. Right. Right. Exactly. Yeah. Yeah.
>> Watching Donald in the Rose Garden is so interesting because it's almost like pro wrestling when you go to pro wrestling and the guy's about to get pinned and the guy one two and before he hits the tan the guy moves his shoulder and everyone says just two just two. Right? It's everyone in the audience knows what they're supposed to do, right? It's like a It's like church almost call and response.
>> Been there, Michael.
>> I was I was sitting there just mesme like what what are we doing? He's he's DJing the He's got his own iPad. He's putting the music on. I was like, "All right."
>> Well, you know, they give him that iPad because when they want to piss him off, they show him what people are saying about him and they and then he fires out the tweets. But that's a political podcast, not a business one. All right, that's it for all things markets this week. Uh, with Michael Novagrat, Anthony Scaramucci signing off. We'll see you guys next week.
>> All good.