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The stocks that are carrying the market are just making so much money. This AI train looks like it's accelerating, not decelerating. The numbers are staggering in their nominal size. So, you keep wanting to say they can't do it again next quarter and they keep doing it. You're probably going to need to see a hiccup like somebody fall on their knee before it really cracks. But the markets are nervous. So, you're going to see lots of volatility. When you look at the charts, they're parabolic. And when you look at parabolic charts, you get nervous. And you should get nervous.
Welcome to All Things Markets. I am Anthony Scaramucci. >> And I'm Mike Noratz. >> Mike Novogratz. I want to start with the elephant in the room. Everything's moving, Michael. We got record highs on the S&P, the NASDAQ, oil prices seem to be going down. Uh the market is uh the market is is telling you that there's a deal here and everything's going to be fine. And Bitcoin is uncorrelated, Michael. We have an uncorrelated Bitcoin. Uh but it's down 40%. It it doesn't move anymore. What happened?
>> Boo. Listen. >> Exactly. >> Markets always are about heat, about energy, about people's focus and eyeballs and and people telling stories. you know, that's right now it's Korean memory stocks and it's AI and it's data centers and crypto just is in between stories. There's not a there's not a great story for Bitcoin, right? That it could be they're going to cut rates and but they're not going to cut rates, right? We're we're on hold for a while even with Worsh and let me tell you market structure which two weeks ago I I was at 90% passed I'm back down to 60%. Right? The stuff that's happening around this administration with the $1.7 billion dollar slush fund. You know one thing after another just makes it harder and harder for Democrats to say, "Yeah, we should support this guy." Um, and even though he's not supporting Trump, >> the crypto bros don't understand that, Michael, that all of that other stuff that he's doing is hurting the crypto piece of the legislation. Is that fair to say?
>> Yeah. Listen, my my part of my role in in this process has been going going down consistently to DC and I'm going again next week to try to get Democrats to say, you know what, guys, forget about that. If Trump wants to be that administration wants to be corrupt, they can be corrupt. There's nothing you can do to stop it because you're not stopping it, right? The Supreme Court can stop it. The Department of Justice can stop it. Congress can stop it. But passing a crypto bill, which is good for America and good for our industry, and actually gets this issue off your plate, is still better for you. So, plug your nose and do it. And they keep getting there. They get to the finish line. They're ready to go. And then something else comes out. And it's like, okay. And if if we could just take a pause on more hijinks uh out of this administration, I mean, it's, you know, from the $250 bill, all those things are just like needles, and it makes it politically harder for because you really only need these five. Well, listen, you're going to get all but two Republicans, and so you need at least 12, probably 14, 15 Democrats, uh, and you'll have this passed. I would have told you 95% that was done after you know Ruben Gyos and uh the senator from Baltimore whose name just jumped out of my head um, you know c crossed over on the in committee and now I think you know we've got to whip everyone up again and try to get that same it's the same logic nothing's changed I really do believe the bill is good for America it's good for our industry and quite frankly it's good for Democrats because it gets crypto off the off the there's so much other stuff to talk about AI regulation, you know, how we think about financing elections in the future. I mean, you could put a list of 15 things more important than this crypto bill uh for our senators and congressmen to debate. And so, I'd like to get them and they've worked so hard on this. To be fair to everybody left and right, I haven't seen a bill which as much effort that's been put into it as this one.
>> It It's languishing, Michael. and some of the money's been sucked out of it because of the whole AI trade and you know more exciting things that are going on momentum wise. I guess the fear that I have Sailor is now saying that he may sell some Bitcoin. Uh you think he's going to put a pin in Bitcoin?
>> Yeah, I'm not sure why. So he he raised a bunch of cash $2 billion and said this is to pay my next year and a half in dividends and things were working well and then out of nowhere he said you know I'm going to use that money instead of paying dividends just to buy back some converts >> right >> now cap structure you know wise converts he owes in dollars and his prefers he doesn't have to pay so it's it's not a an official liability in the same way the the convert is but you know you you miss that preferred once and you know sayanara and so it's in essence it's de facto the same thing in my mind but it's not legally the same thing um but no I understand what he was trying to do because he's got some stuff that he's do on and other stuff he can run perpetually but u you know it's uh it's listen it's taking the air out of crypto right we're we've deflated crypto at a time where everything is running and I just want to go to the S&P for a second. Goldman Sachs and you know Goldman Sachs better than me. Okay. But Goldman Sachs has raised its price target on the S&P to 8,000. Goldman Sachs pretty conservative group. Would you not say that? Do you agree that Goldman Sachs is your target to you think markets are pricing something that other people are not seeing? I think what's happening is you've got like in all great markets that end with more and more narrow breath which means fewer and fewer stocks carry the market at the end of at the end of a big bull run and you're seeing that here but the stocks that are carrying the market are just making so much money and so you've got an earnings I mean you can look at Nvidia and you can like do the math and say hey is that trading 12 times next year's earnings or 14 times but it's not 50 times, right? And so this AI AI train looks like it's accelerating, not decelerating. The numbers are staggering in their nominal size. So you keep wanting to say it can't they can't do it again next quarter and they keep doing it. Um, but I think you're going to you're probably going to need to see a hiccup like somebody fall on their knee uh before it really cracks. And so, but the markets are nervous and so you're going to see lots of volatility. I mean, when you look at the charts, they're parabolic. And when you look at parabolic charts, you get nervous and you should get nervous. And so, it's a much harder time to to just set it and forget it. Uh I I said last last episode, you know, buy some out of the money puts and stay with the market if it's working for you. Um I mean, look at Korean memory stocks. They go up every freaking night. There's something had happened this week that a lot of people aren't paying attention to. There's a senior vice president at Exxon. His name is Neil Chapman. He was interviewed and in the interview he said, "Yes, we are drawing down huge inventories. The strategic petroleum reserves from Europe and the United States have released lots of oil into the system. Uh, but in the next two or three weeks, and again I'm just going to read from what he's saying. He's we're approaching unheard of inventory levels. I mean really, really low levels. You can debate whether this is going to hit those really low levels in two weeks or three weeks. But once you get out three, four weeks from today, it seems unlikely to me that we will be able to sustain these prices. Once you get to that really, really low inventory level, I'm expecting $150 to $160 per barrel of oil, which I think would cause another big inflation shock. Uh, is that priced into the markets? Do you think that that is uh you think that's apocalyptic and unnecessary to think that way? And then that's coming from a senior Exxon executive who was unplugged at a at a meeting.
>> Yeah, that's Listen, $140 oil stocks are lower, bonds are higher, our bonds are lower, price higher in yield. Uh, and we've got a very different world than we do today. The world today is pricing all likelihood the war ending. And I listen, I think the war will end. I think it's already over. And now this is just words smithing to try to get the Trump administration needs something that feels better than Obama. like it's, you know, and even if it's not better than Obama, even if we're gonna put a ton of money, >> he'll he'll say that it's better than Obama, whether it is better than Obama, you know, >> and but you know, Abu Dhabi, Saudi, they've had it. I they they need to get back to to life. Qar needs to get back to life. Uh these places are really hurting and they have a lot of leverage uh leverage on this process. And you know, politically, this war does not play well, period. End the story. And so Trump wants out and this is just I think I think they have a deal and I think you're going to see it in the next week or so. Um, and the market's starting to tell you that, right? Oil's down to 88 bucks. Uh listen, once we get a deal, forget the next contract. the second or third oil contract will get down to $6570 again and we'll be like, whoa, that's that's interesting and this will have come and gone. Uh it will be, you know, inflation that has to go through the system. We're going to get some bad prints, though. We got a good print yesterday. Um, and the market liked it, but I think we still have some bad prints coming. And so I kind of think the fixed income markets uh are going to be rangebound. I think we kind of had the high yield that we were going to have just whatever we got to 520, I think. on the 30-year. Um, that was probably it for a while. Same thing with two years. Um, but I don't think they're going to rally a ton and so kind of a boring market for the summer. What do you think, Anthony, on fixed income?
>> Okay, you're not you're not worried about it then? So, listen, I I I'm worried because we are I'll quote our mutual friend Lloyd Blankfine. I'm worried because 2008 is burned into your head and burnt into my head, but it's 18 years ago, Mike Novagrats, and we haven't had any real role any real pain in the overall market. So, it's interesting. Crypto has crashed a few times.
>> Yeah, I I it's so funny because I have suffered a lot of pain in those 18 years, >> right? Well, me too. Well, well, because we're crypto guys, so crypto has gotten crushed, but the markets haven't gotten crushed. And I feel there's some level of complacency in the markets that I'm personally worried about. Doesn't mean I'm going to get underinvested as a result of it. But I do think that if you saw a 25% decline due to some exogenous factor, it would not be an impossibility. And again, I'm channeling our old boss and mutual friend Lloyd Blankfine just talking about, you know, understanding of risk. The other thing going on, Mike, and we talked a little bit about it last
>> let me make one comment which is so interesting. Well, I think it's interesting, maybe it's not interesting because we've had this 18-year bull market that every family office, almost every investor I know, even if they feel underinvested, are actually overinvested. Let me explain. Like, I have not caught this Korean memory trip trade or quite frankly even the NASDAQ trade. I've been fighting and buying puts and bingong Chinese stocks and you know and and and that said between all the assets that I've accumulated in these 18 years private this a SpaceX this whoop this band here I'm so long to the market even though I might not be long those individual stocks I'm long through privates I'm long through venture funds I'm long and so many investors I know have shifted more of their into those products because the products grew a lot. And so I think people are longer than they think they are in a real correction would like a real correction, right? An '08 kind of correction would be a lot more painful because again the the nonmarktomarket portfolios have grown immensely. Uh and you can see that in all the statistics. Um and even on the same thing on fixed income, you know, uh a lot of people don't have any fixed income cushion anymore. Right now there's no correlation between fixed income and risk. So usually you buy the front end, rates sell off and it's a good trade and it's not work that's not working anymore. And so there's no real reason to even think of fixed income as a as a risk hatch.
>> Yeah. Okay. All right. And then since you mentioned SpaceX, let's go right at it. I didn't read the S1, but two of my obviously research guys at Skybridge went through the S1. Full disclosure, we own some SpaceX as many of us were lucky enough to participate in SpaceX over the years, but the valuation numbers based on the fundamentals of the business are, let's say, misaligned. Now, it's Elon Musk, and so we're going to give Elon the benefit of the doubt because he's just an amazing operator, but we're talking about a $1.8 trillion valuation. Um, what do you think, Michael?
>> You know, I told this story before. I once tried to set short Tesla and I was making money, losing money, losing money, making money. And I finally got back to break even and my friend pulls up to my driveway. He's like, "Dude, you have two Teslas in your driveway. Why you Why are you shorting this thing? They're the best cars on the market." And I was like, "Good point, good point, good point." Um, it's hard to short Elon. He has a mystique about him. He has a cult around him. Um, yeah, on any paper, it looks like one of the most expensive IPOs in history. Um, everyone who's in the institutional asset management world has to buy some SpaceX. Retail wants SpaceX. And so, there's going to be at least a six-month period of chaos where new buyers, old sellers, and then you'll reach an equilibrium. And there'll be talk of SpaceX's Tesla merger and and we'll see. It's it's it's as speculative uh as Bitcoin. And what I mean by that is when you're that far away from a PE, it's all speculative. It's all a story. It's a narrative. And can you get enough people focused on this narrative that they care about it? My answer probably is yes because it's Mars, it's space, it's low-level satellites, it's Starlink. I mean, freaking American Airlines put Starlink on their flights and their stock went up 6%.
>> Yeah, I think it was America. >> I saw that. >> One of the airlines. >> Sorry, it was United. It was United Airlines and they're putting it on their whole fleet. >> Um, you've you've been on a Starlink based plane, I'm assuming. I put my kids on one. They're playing video games with each other. They're downloading 4K video on an aircraft, right? And you can do Zoom calls from a Starlink based plane. Mike, I'm not saying the commercial airlines will let you do that, but I mean it's incredible situation. No.
>> Yeah. And so it's a good enough story that the eyeballs are going to be here. And so I think again it's there'll be amazing trading opportunity for the bold. Uh, it's not something like I'm long. Uh, I will probably if I can get a chance at anything close to these levels take my money and you know go to the barber shop uh and and and have a celebration. Uh, but I'm not going to short it. Okay. I want to go to my favorite pope. Okay. There's a pope by the name of Leo the 14th. My favorite by far so far. I mean I've been alive for 62 years. I think this guy's my favorite. Not just because he's an American.
>> He's a villain. >> What's that? He's a Villanova guy. >> He's a Villanova guy. I mean, he's our guy. >> The Nicks are Villanova. Like, he is almost a New York Nick. This is >> although I'm sure he's I'm sure he's a Bulls fan. But, but Pope Leo is concerned about AI. And he brought one of the anthropic guys to the Vatican to talk about this this week. and he's worried about AI eroding human judgment by offering instant answers and simulating care without a genuine relationship. So what do you think? He's, you know, he went into the democracy destabilization and things like that. Uh, this this moral authority coming from the pope. Should we be more concerned?
>> Yes. I mean I I have said this I think either on this podcast or another podcast. Right now we the real group about who's around the table building AI are some brilliant engineers. I would think we should have historians and theologians and anthropologists and ethicists uh also around that table because this is going to be the biggest technology shift in ever really. And yeah, should you like there are AI girlfriends and AI therapists and and forget the privacy issues around your AI therapist. You you have an AI girlfriend, Michael?
>> Not yet. Not yet. >> What about an you have an AI therapist? Have I >> But no, I I've used AI for some therapy like questions sometimes, mostly out of curiosity. And it's really interesting how how good it is. Um, but of course then you think, oh shikes, Elon now has all my all my deepest secrets, right? Like that idea of you know if you're a good Catholic you used to go into the confessional and it was you and the priest right with the little curtain between it like there was privacy there and a and a like we don't know where privacy exists today I at all we have to assume it doesn't uh and it even not only it doesn't it can legally be legally be used against you and so even that simple issue if I'm talking to my AI confessor, you know, did I just get myself in trouble? Uh, and so I I just think we should slow this down a little bit and we should make sure there's that there's we answer the question why why is this so important for us? Why do we want it? How is it going to help us? Uh because you are this close to having AI smarter than humans. And once you have AI smarter than humans, it doesn't care why. Then it answers the question why. Not we answer the question.
>> I look it's a problem. But Mike, I'm just saying, you know, we talk about AI for a second, you can and I just want to remind everybody the, you know, you you can get act you could have a civil litigation and if there's a subpoena for some reason, criminal litigation, forget about it. They'll get access to every chat that you've ever had. But there is discovery opportunity on your AI that you have to be careful about.
>> So, >> and but I think that question hasn't been fleshed out enough, Anthony. I mean, right, your answer is right. My question is, should it be should there be privacy element? That's not >> right. Is the AI your Roman Catholic priest? That's a really good That's a really good point. I I don't know. I want to >> Well, it's not, but I kind of think there part there should be a part of it that is >> right. But maybe so, >> uh, Claude just came out with 4.8. And I'll just let everybody know, I spend the money. I spend $200 a month on Claude because I want to see the robust nature of Claude. And this is like having a 350 IQ partner on just about everything. Uh, and and so to me, I'm very worried that these jobs are gone forever, Michael. and there's no near-term replacement to these jobs. Does that worry you as a macro trader and a macro investor?
>> Yeah. Listen, we are going to go through one of these transitional periods where a lot of people get laid off and they will need to find new work and it's going to be different work and it might be better work. It might be less less less good work. It might pay more. It might pay less. We have no idea. But we do know one thing. A lot of people are going to get laid off. Um, and a lot of people who have jobs they thought they had worked their whole life for and they had studied for and they had earned skills for. And so there's a emotional uh component to this. It's painful. We we were wrestling me and me and a friend talking yesterday and they had one kind of stubborn stubborn senior person on this and they were like, "Oh my god, I think it's existential for him. he realizes if if if coding isn't important then who am I because I spent my whole life as a coder you know and I'm 48 years old I made a ton of money I'm a CT like like there's a and the same thing's going to be for lawyers and the same thing is going to be for accountants and the same thing is going to be for traders I mean I don't think we will have a lot let me step back for a second because I think I I think I I I I went to the conclusion first here's the debate Right? This is the Sam Alman anthropic debate, right? Uh and I meant to say that job listings are up 18% for software engineers, but when I look at Claude, I think they're going to kill the software engineers. And and and the market has told you that at various times by prices dropping, but the debate is in are we going to have more jobs in software engineering or less jobs in software engineering and AI? And I'll I'll go first and say I think they're going to crush software engineers over the next three years. What are your thoughts?
>> I I I completely agree. Listen, it's not it's not coincidence that AI speakers were booed at four different universities, you know, commencement speakers who spoke about AI >> artificial intelligence. Interesting >> because kids in college aren't getting jobs and we have the first time that college unemployment is higher than high school unemployment. Like, so they're feeling they're the tip of the spear. Uh, ironically, they're probably the guys that will be fastest and best to figure out how to use AI. Uh, we see it in our firm. It's it's certainly the younger you are, the better you the more the more willing you are. Uh, and you know, there's there's two kinds of employees even at good firms. There's people like me that use it for 15 20% of their time and it's it's search plus it's and then there's people that go the next step that are literally you know creating an army of agents that work for them uh not work for their company that work for them you know and if you don't get into that second bucket uh you're going to get left behind. So, Michael, it's now time for bull bear. I'm going to give you the five things here. Okay. And you can tell me bowler bear, thumbs up, thumbs down.
>> Yep. >> SpaceX IPO prices above $1.8 trillion on June 12th. Is that going to happen, Michael, or there'll be a downgrade in the price prior to June June 12th in terms of the valuation? I think it's going to price >> right around there. >> Right around. Okay. It's going to be a frenzy. I still worry that that frenzy, it goes 18 to 23, closes at 16, you know, and that's the that's the top of the market for a while.
>> Okay. 30-year Treasury, Buller bear. It hits 6% before year end, but do you think the Treasury bond market recovers? >> I think the bond market recovers. There's there's foreigners foreigners that want to like as a taxpayer in the US, you know, 5 and a half% doesn't thrill everybody because after tax it's a lot less. But if you're overseas buyer, five and a half% treasury is a pretty nice safe place to put your money.
>> Open AI anthropic, they go public this year. >> I think at least one of them >> at least one of them goes public. Okay. AI productivity gains, they justify the capex level spending that we're seeing. >> They will. They haven't yet. They haven't yet, but they will. They really will.
>> Okay. Our friends at Goldman Sachs are saying 8,000 on the S&P. The S&P hits that by the end of the year. >> Yeah. Well, I think so. Yes. Again, this is how far the SpaceX bubble goes. uh this the let me call it the SpaceX frenzy but I think it's if SpaceX is higher than 1.75 by the end of the year spa the S&P will hit 8,000 and SpaceX is back to a trillion we will have seen oh [ __ ] that was the that was the top the market's going to be very correlated like this this breath is narrowing and narrowing and so like >> but you're bullish you're bullish >> I still think the the bubble's not over >> okay okay let's go to our friend Kevin Walsh He's got an FOMC meeting coming up. He raises rates before cutting them. Are you bullish on rates or bearish on rates?
>> I'm neutral. He's going to keep rates where they are for the next two to three meetings and then he's going to try to cut. >> He's not going to raise rates. >> No, no chance Kevin Worsh is raising rates. I'm putting it at I'm putting it at less than 10%.
>> Okay. I think if he raises rates, he's going to get hit so hard with the ray gun from Trump that it would not be worth it to him or the integrity of the Fed and what we're calling Fed independence. So, I agree with you on that. Michael, I want to go to one last thing before we leave. And this is u this is a $1.3 billion block trade that was conducted via a dark pool on Tuesday in the Black Rockck iBit eyesshares, the Bitcoin ETF. And I wanna I wanna I want to talk about that for a second because most of our viewers that chime in, they don't know what a dark pool is. So what's a dark pool, Michael?
>> Yeah, listen. So markets trade either on an exchange like equity markets trade on an exchange or they trade off the exchange and then get crossed. And so this this was a giant block that got sold 2% below where the market was trading, which is a pretty tight spread on a billion three >> for that level of volume, right? >> You know, I I'd say that's world class execution uh or whoever bought it. I'm not sure they made money or not. Um and so it's an OTC trade in essence that trades off of uh the main exchange.
>> Weirdly, you like it, right? Let me let me let me make a statement and then ask you to agree or disagree. I like the transaction. Meaning it shows that there's a tremendous amount of liquidity in Bitcoin to the extent you want to get into Bitcoin or get out of Bitcoin because of that tight spread of execution. U it's a sign that the Bitcoin markets are continuing to mature. Is that >> Yeah. Fair. Listen, when we we last year we sold an immense amount of Bitcoin for one client, >> nine nine billion, right? >> Nine billion. Um, you know, we were lucky to sell it or they were lucky that they sold right into one of the greatest buying frenzies of all time in Bitcoin where Sailor was buying handover fist and so but even then we did 9 billion without moving the market more than 3 4%. So there is liquidity in Bitcoin. Now, if everyone comes out and wants to sell a billion dollars, you know, 10 guys at once, the market's going to go lower. But there was there's enough people to buy it. That was down 2%. And so, you know, Bitcoin's down about 15% on the year, 40% 40 a little more than 40% from the high. Uh, by no means has this been a good year. If you step way back, by no means it's a disaster. It's just a meh. I use that word meh. Meh. Crypto feels meh.
>> Well, I mean, but you see, you are an experienced crypto person. I'm less so than you, but I've been through two bare markets. Now, pursuing to the four-year cycle, this is garden variety bare market for Bitcoin. It's not even severe pain for Bitcoin.
>> It is. The one thing I would question, I I I know everyone lives and breathes and but believes in the four-year cycle, but like that became kind of a self-fulfilling thing. That doesn't have to be fact, right? like yes the supply contracts a little bit each four years um it's not enough quite frankly to really change anymore to change the trajectory of the market and so psychology maybe gave people a good excuse to sell the people that played the four-year cycle look like geniuses right now right if you had sold last uh December uh November December you really you know you're you're cooking with gas right you sold 120 you know it got all the way to 60. It's at 7273,000. I I I think 72,000 is going to hold right where we are. If not, we're going to go back to 60, which will stink. But I think these low7s are going to hold and we'll see.
>> Um, but we need, you know, we need we need a new story. And so market structure, like I said, I'm going to DC next week. I'm going to put my big smile on and bring candy and flowers. Uh, like I do believe, and I'm not doing this just to be self-interested, I literally do believe the market structure bill is good for America and is good for this industry. Um, and I think it's going to get passed still, but man, oh man, it's getting harder.
>> All right. Well, that's the show, Mike. Any made you smile this week before I let you go?
>> Um, you know, we got summer finally. Like, we have real weather. I mean, this weekend was freezing and now it's like nice. And let me tell you, the Knicks and New York, >> IT'S THE FINALS. >> KNICKS IN [ __ ] FOUR, BABY. >> UH, it can't be more exciting. This this this next week, uh, I hope WMY, you know, a bunch of my friends on Saturday are flying, even though they're wild Nick fans, they're flying to Oklahoma, uh, city to see the Thunder, you know, Spurs, just to see that game seven. That's going to be chaos. I mean, listen, listen. I I don't even know who to root for because both both of those teams are so good. Of course, I want the lesser of those teams to to win because I'm such a big Nick Mick fan, but I kind of want Webby just because he is like there's something so unique about I mean, he literally is an alien. He is so gifted. I mean, I from a from a Nick's perspective, I'd rather have, you know, OKC. From a fan perspective, I want to see WBY. So, I I think Michael, and I could be wrong about this, I think that uh New York is about to explode again on the upside of economic activity. And you said this to me once about cranes in New York that what was the number that you gave me versus Miami? I mean, everyone's talking about the growth in Miami, but there's more crane activity in New York than any other city, right? one building in Hudson Yards was at that point bigger than the entire development of what was going on in Miami. Like the scale doesn't like to compare. Now this is shift right. I get that we've got some you know left-leaning policies. They just passed this pier Pier to tear if I'm even saying it right tax. But I mean this city is booming Michael.
>> Yeah. >> And and the Knicks are part of that story. You know, >> we are part of the K-shaped economy, right? Like, let me tell you, I was in Wilmington, Delaware for a court case and it's not booming. Uh, I had the nicest hotel. I had eggs benedict, two cappuccinos, and it was $23. I was like, is that for the tip? That was the whole price. I mean, you know, down to Laconda Verde here, it ain't a bottle of Aquapenna, man. For that, you know, the talent of America is rushing here. every young kid. I mean, it the city is on fire.
>> Well, it's great stuff, Michael. Great great another great show. And we'll be back next week with all things markets. And uh thanks for joining us, guys. All good, guys.