Did Trillion-Dollar IPOs Break The Social Contract?

0:00 May CPI printed at the highest year-over-year in in three years. Guys, this is what we've been warning about. This is what we've been talking about. Energy rose 3.9% in May. Accounted for over 60% of all the monthly all items increase. Gasoline is plus 40.5% year-over-year. The last week's payroll is printed 172 versus 95K, which basically means that the Fed can't cut because the economy's already running hot and inflation is going up and so the Fed's in a really tough situation.

0:33 December hike odds jumped from 45% to 70%. Goldman dropped its cut call entirely and I think that basically what we're going to what we're going to see is we're going to see a call for a hike cycle and that is going to really impact the markets in the short term which is why [music] I'm still reasonably heavy in cash. [music] Jonah, man. That music that music always gets me hype to be honest. I'm always like >> Thank you for saying that. I'm going to compose like >> I'm going to compose a few more bangers for the different types of content that we're going to be pushing out. We should have a different one for the interview uh stuff that you do. We should have a different one for the Friday recap.

1:31 >> Um I've already been And for those >> for those of you that don't know, Jonah actually composed and created that intro song. So that is not something that we paid for. That is something that Jonah came up with in his brain because he's classically trained musician. >> Funny enough. >> That's right. I went to classical music uh school in Berkeley, California. Shout out to the crowd in school. >> It's amazing. >> Piano and cello. >> It's amazing that you turned out so normal to be honest.

2:00 >> I got a story about that. I I was um >> Okay. >> I was, you know, part of this little group of classical music uh kids in Berkeley. I was 13 years old. And we were taking our school photo in our little crowd in school sweaters on the steps of our school. And there was, you know, it's a very small school. Not many kids are interested in classical music at that age. We were all pretty elite performers. And as we were taking our little cutesy school photo and our little sweaters on a nice Northern California morning, I remember a bunch of kids from Martin Luther King Middle School nearby, you know, like the big public school with the thousand students were like walking by like nerds, look at you, you suck. And I was I remember that was kind of a moment that where I a seinal moment in my life where I was like, oh my god, I live in a bubble. And then I went to Berkeley High School which was basically a war zone after that by by choice. I wanted to go there just to get I want I wanted to function in society you know >> right no and that's that that's a very important thing to be able to function in society. It's super underrated but very yeah very important.

3:11 >> I'm glad >> I have a question for you that leads to our sort of topic below anthropic model could break the markets. I've been, you know, as a parent, I've been involved in a lot of debates about what AI is doing to children or for children. And I'm curious about, you know, to our topic of living in bubbles. What do you think it would take for a young person like a teenager or even a pre-teen growing up in the era of AI? What like how do you think that this either helps kids or hurts them? And I'll give you the the oneliner uh kind of consensus among parents here in Los Angeles. Okay.

3:51 >> Basically cur people here think that if you're curious >> and if you're hungry and you have good taste and a good value system from your parents, AI is going to be basically be rocket fuel for you as a child and you're going to just pull ahead. But if you are not self-motivated, you don't have inherent taste or inherent values. AI is this era of AI being getting the answer to anything on demand is just going to ruin your effing life.

4:18 >> Yeah. No, I actually 100% agree with this and it's something that I've been thinking about a lot. It's kind of funny that you you brought this up. There's an issue right now where only the self-motivated are going to and only the self motivated are going to succeed. In the past, you go back basically all throughout human history, there were there were lines, there were paths that you could take that would put you in a reasonably good spot to set you up for success. You study hard in high school, you get a good score on your SAT, you go to a good college, you get a good job, you live a good life, you're able to buy a house. And today what's happening is that all of the value in society is slowly being sucked up by the top performers. Basically in order to have a great life in the 1980s you had to be a top 25% person. Now you have to be a top 5% person and in probably call it 10 years from now you're going to have to be a top 1% person in order to do that. And so basically everyone's scrambling for for fewer and fewer spots. I mean, if you look at technology itself, technology is just leverage for the human, right? So, you go back you go back to the go back to the printing press, you're basically just levering a human's ability to produce and distribute all sorts of texts to the entire world. You go you you go to a plane, you're levering the ability of a human to travel across long distances.

5:46 And so, you can accomplish more because you're cutting you're cutting down cost of travel. And AI is just cutting down the cost of building. It's the cost of doing like lit literally it's you can now do anything. I mean go use this fable five and ask it to do anything for you and it will have a reasonable output. It's kind of insane. Anything that has to do with manipulation on a computer which is kind of most of our economy these days. This this model can do for you. So the question is not the question is not what can AI do because the answer is basically everything at at a certain point. The answer is what do you ask it to do and only the self-motivated people the intelligent people with the right frameworks to approach this are going to be able to figure that out. And so that's why I think it's more important than ever to be paying attention and just triing and experimenting with this tech. I mean, basically, think about anything that you would want. I saw this one guy, which was which is crazy. He had his Whoop and he took all of the data from his Whoop during the workday and uploaded it to AI.

6:58 >> Sorry, Whoop. >> So, Whoop. Whoop is this band that tracks your heartbeat, your stress level, basically your general health, your sleep. Uh, and one thing that he that I thought was hilarious is this guy ends up taking all this data from his Whoop and uploading mainly the stress data and cataloging who he's interacting with at his work so that he can figure out who stresses him the most and who calms him the most, which is hilarious.

7:26 So now he's like, oh, like the my my product manager is the most stressful person on the team and my senior dev is the least stressful person on my team to me. And it's just people that are creative are going to be able to come up with things and potentially sell things and build things. And you just have to you just have to realize that the world is your oyster now. And you have to get out there and you know honestly it's it it's crazy because you know the the the normal path to success as everybody knows is just no longer no longer there. And so basically what's going to happen is even among the high achieving kids I mean I assume that you know your your kids are going to you know and they're in a good school I assume you know surrounded >> hopefully >> surrounded by kids that are reasonably intelligent >> for for the for the most part and you know now now it's less about intelligence I mean a >> a really really really intelligent lazy person is going to get just totally smoked by somebody with medium IQ but with a crazy work ethic and maybe a little bit of creat creativity. That's what the world has come to, right? You can't just laz your way through things anymore, which is terrible for people like me. I used to that that's that's exactly how I got ahead. So, it's just >> h I disagree. I mean, okay, so let's unpack that. I think, >> you know, it's funny. Let's take the old Kennedy saying, ask not what AI can do for you, ask what ask what you can do for AI. I think it's like >> I think it's kind of like okay so you know it used to be that success was a function of your raw intellect right like I I'm lucky I h happened to be born with a good brain and good parents and so school was a layout for me I got straight A's and got into a good school and then just was pretty much shitfaced throughout college because I didn't need to work and then landed at a great firm until it went bankrupt. But, you know, basically, >> which was like, which is like 3 seconds after you joined, by the way. Right.

9:23 >> Yeah. Yeah. It [clears throat] wasn't my fault. Um, but yeah, it happened. So basically like I I just kind of cruise through not on work ethic but on um aptitude to your point now it kind of like the credentiing system of the universities doesn't really work anymore because somebody with hustle out of UC Santa Cruz could totally kick the ass of somebody like me out of Colombia or you know another Ivy League school just by using these tools more efficiently even if that person doesn't have the aptitude to get straight A's throughout throughout Cool. [clears throat] So now let's unpack like you know it I guess in the past yeah you could just kind of get dragged along your path and get through life that way.

10:08 Now you really have to you have to have good taste, you have to have creativity and you have to like actually care. So maybe it's like uh enthusiasm is the new mag enthusiasm and creativity is like kind of the new thing that that people that society is going to filter for. Um, now I guess you know I don't want to get too philosophical on this podcast, but should we talk about examples of this impacting markets? Like what, you know, everybody's talking about anthropic and open AI and SpaceX? These are the big things that we're going to get to later in the podcast, but are there any examples of anybody with just like Moxy creating something that's that's making waves? I don't I I'm not connected enough. I'm not sure I I've heard about any of this, but basically everybody's doing a startup now. It feels like >> No, for sure. I mean, I I think half the people I know have quit their investment banking jobs and are trying to Well, they're all they're all doing the a very similar thing, which is they're trying to buy companies and improve them with AI and then flip them to to private equity.

11:13 >> That that's that's a that's a very common thing. But, I mean, that's, you know, that's that's market efficiency, right? if they weren't doing that, if that wasn't happening, then there would probably be a large sector of the economy that just wouldn't move forward as fast as it would would otherwise. I mean, I I think it's not necessarily a bad thing, and maybe it's not the most creative thing in the world, but it's also something that you can do. I mean, you right now, if you want, as an individual listening to this podcast, can get really, really, really, really good at using AI for specific purposes, whether it's marketing, whether it's video creation, whether it's copy, whe whatever, whether it's building a backend for inventory tracking. I mean, think about anything that you can possibly do. And then you don't have to go to a large business to sell. You can go to a small business. Go to any small business in your town. Maybe they're not using AI. Pitch them. pitch him on the concept. That's actually uh by the way, >> no actually I gotta comment on that.

12:08 That's actually really smart. So, okay, good answer to my question, you know, while everybody's and we we experience this in crypto. There's it's called like shiny object phenomenon. Everybody's like fixated on Zeke or near or hype or whatever is rallying and kind of ignoring the opportunity around the edge. Everybody's fixated on SpaceX, Anthropic, and Open AI right now. the opportunity at the edge is like this whatever it is $60 trillion wealth transfer that's about to occur from baby boomers to millennials and Gen Z and a lot of that isn't just like uh checking accounts with millions of dollars of cash in them most of it is like equity value in these businesses that are sort of you know like the the connective tissue of society places where AI hasn't permeated because there's a human gatekeeper right like somebody just needs their just needs to buy their corugated tin roof or some shack from the guy that makes that, right? And there's a probably a boomer family-owned business running it. And like, you know, why not have be the millennial or the genzer that takes that over and just streamlines it? So, you know, that's probably going to result in workforce reductions.

13:13 >> Of course. I mean, of and and by by definition, that that that's what's going to happen. I mean, if you're making if you're making a business more efficient, you probably need you probably are going to end up needing less people >> in the long run. But this is an opportunity that is open for everybody out there to do, right? I think one of the things that you have to remember is that there are a ton of different downstream effects of AI and it's up to you to figure out, hey, where can I actually insert myself? I mean, I'll give you a little bit of inside bowl just even on this podcast. One of the reasons we're taking it more seriously is because AI is making the media business much more lucrative.

13:53 So if you look at what's happening right now, people are cutting their engineering budgets and they're all moving it to distribution. And so now this this turns from something that was fun to do once a week to something that could actually have meaningful impact. So you know, we step up we step up the production, we hire people, we expand because that's that's possible. So the the thing to remember is that money doesn't disappear. If you fire a ton of people, if you fire half your workforce, it's not like their salaries go away. It's just that money gets reallocated. It gets reallocated to the shareholders. It gets reallocated to the people that are left at the company, gets reallocated to new new areas. So, for example, all of that engineering budget reallocated to marketing means marketing firms get get more money, which means the owners of the marketing uh, you know, get more money, which by the way is one of the reasons that I'm so bullish on Google and Facebook is because that is where all of the marketing spend is and will continue to be. And so these companies are like the best buy in the world because they're both producing they're both producing AI. They're building out data centers and they're a direct beneficiary of the downstream effects of AI which is why I'm so bullish on Google over over the long run and I'm looking I'm looking for places to get to get back in to concentrate there. Uh but I think it's up to you. You know, you have to figure out what are those downstream areas that that you can get into. And one of them that sort of came to the forefront of my mind, John, I'll tell you a story of something that happened to me yesterday.

15:28 So, two years ago, I buy a Ferrari 458. Great car. And I'll give you guys some numbers just cuz it's instructive. I buy it for 270K and I drive it for two years. I put about 4,000 miles on it. Today or yesterday, I get a call from my Ferrari dealer. They never call me. There's no reason to call me. I just bought one car from them one time. And I get on the phone. He goes, "I'm calling everyone that owns a 458. We're trying to buy them back at 4400." I go, "That's nuts.

16:00 This is a this is a 13-year-old car at this point." So, I start to think, well, well, what's going on? So, I start grilling the guy. Like, there's no way I got paid 130K to go drive a supercar for two years. That seems crazy. And the guy says, 'Well, look, basically, there there's there's a lot of new money that's entered into this world. There's a lot of there are a lot of people coming online from SF. There are a lot of people that have made I mean, the stock market has just rallied so much.

16:27 It's further concentrated wealth in the top. There are a lot more people that are worth $10 million plus today than there were than there were three years ago. And they don't know what to do with their money. And so, they're buying scarce assets. That's where all the money is flowing. And that's why I think these things you have to rewire your brain and not start to think these things could actually be long-term investments. Buying a buying a a vehicle maybe, you know, Ferrari 599 that you know they're only a couple couple hundred of those in 5 years could massively outperform the NASDAQ because these people maybe they're worth 10 million, maybe they're worth 20 million.

17:04 They put 10 million bucks into the stock market and they have 10 10 million left to play with. They're not putting your whole net worth in there and they're just buying they're they're shoving into these scarce assets and they're just more people than ever concentrated among the top and a lot more money concentrated among the top luxury items are just going up up up up up. This is kind of the thesis. I don't know if you know this guy AJ Scaramucci's this is Anthony Scaramucci's son. He's basically setting up a vehicle uh to go buy all these scarce assets and take them and take them public. Um because I actually think that's good. I mean, here's here's a crazy stat. the uh Ferrari SP3, you could buy it if you have a relationship with a dealer at I think 3 million, 4 million and immediately after buying it, they're selling for 10 to 12 because of that because of that scarcity and because there just so many there's just so much money out there that's been made and people are kind of sick of shoving it into the general index funds and they're trying they're trying to, you know, this is this is sort of the dinosaur bone thesis that we talked about a long time ago. People are shoving their money into into dinosaur bones as well. It's Ken Griffin buys a $44 million Stegosaurus skeleton. Hey, maybe you should be buying a $44,000 I don't know, Archopter skeleton. I think that's what it was. It's an archaopter was the one that I was looking at. Those are pretty cool.

18:35 They're like the first flight. They're the first wing dinosaur. Uh what you need to do is basically get for go to a custom sort of one of those car uh upgrade shops that does like the Ford Broncos and get your basically mod your Ferrari 458 into the Archopterics skeleton. So, you're driving a dinosaur around with a Ferrari engine and you wear the skull >> and you make dinosaur screaming noises as you blast down Sunset Boulevard.

19:09 >> That is one way That is one way for us to go viral. [laughter] >> Yeah, exactly. >> We're actually We're actually pivoting the channel. We're no longer We're no longer financial content or telling you about, you know, where to where to put your money. We're doing stunt we're doing stunt Mr. Beast videos. >> [laughter] >> I mean, have you se Have you guys have you seen the new thumbnails? >> They work. You know, that's why I kind of like I >> I hate you if you're watching this because you clicked on the thumbnail because you're the reason that we have to keep pushing out these thumbnails because our viewership is up.

19:44 So, we're rallying, but we still love you, but we hate you. I mean, it's it's like our our OG fans are like, "Why are you posting these thumbnails?" I'm like, well, because there are a lot of people that watch because if you have wide eyes, people click on your video. >> But but we love you. I mean, there's so much to unpack in what you just said. I say, >> you know, everyone everyone has cou everyone has the courage to love their audience, but do you have the courage to hate them? [laughter] >> Let let me let me I've got so many thoughts on all the stuff you just said.

20:12 So, I don't I don't own a Ferrari. Most people don't. The way that I see it is in um >> what I'm trying to say is you could and it might actually be a very good investment. Like instead of putting 300k and if you have if you're worth a million bucks, instead of putting 300k into the stock market, maybe you should be buying scarce assets instead. >> I will respectfully debate the idea that putting your money into a used supercar is a good investment. It could be, but please, that is not nothing on this podcast is investment advice, but please do not do not do that unless you're really really tasteful and good at cars. I would say like, put it this way. Here's a safer bet in the luxury space. Um, I am married, unsurprisingly, uh, I get dinged for the occasional Chanel.

21:02 [laughter] >> Um, there are pros and cons. Anyway, unsurprisingly, I get dinged for um the occasional luxury item. Let's just say a Chanel bag or something from Hermes or god knows what. So, the equivalent of the Ferrari SP, whatever, is the Hermes Birkin bag, right? Those things, if you'reworked enough to be able to buy one, you could resell it right away for triple the price. Uh but most people don't. When you say network enough, isn't that just you spend enough money at Hermes?

21:35 >> Uh, I mean, like I went to Hermes the other day to to, you know, pick something up for my my lady and, you know, on Rodeo Drive and you go in there and it's like a scene. There's like people just hanging out in there, buying stuff, h talking to the sellers, trying basically it's all like a show to try and get the Birkin bag, which is shocking to me. Um, so that's that Ferrari SP. If you can hoard those, keep them factory sealed and fully traceable, you you know, wait a couple years, you resell them for whatever. Just the plain old Chanel bag that you don't need to be aworked person to buy that thing, you know, used to cost 5,000 on a summer in France. Now it's like 11 or 12 or something. You know, these are these are compounding way faster than the S&P. So, I do agree with your luxury item thesis, but zooming way back out, a lot of the listeners in this podcast started listening to us because we were talking about crypto. And what I want to say is if you've ever traded crypto, it is a phenomenal um classroom for the anatomy of a wealth creation event. So, uh, you know, Aby, you sent me that Jordy tweet earlier about how it's annoying that you had to be an accredited investor with a $1 million minimum net worth to capitalize on the three greatest wealth creation events of our time, OpenAI, Anthropic, and SpaceX. I kind of disagree. Like, Bitcoin was a 30 millionxer from the pizza uh Bitcoin pizza or if you bought the Ethereum ICO, that's like 130,000x.

23:04 So, I'm not I'm not saying that most people did achieve those returns. In fact, obviously, by definition, most people didn't. But just watching how that wealth creation rippled through the crypto community is very instructive for how, you know, this this AI uh space, you know, let's call it technology wave, the third wave of technology um that that we've seen in in my lifetime, how it's going to propagate through to society. So one one area is luxury goods. Um another is sort of like trickle down effects to industries that will be disrupted by the the technology that's getting rolled out. You know maybe just being short Verizon is a good bet if uh Starlink becomes a thing. You know >> Starling is actually phenomenal.

23:50 >> Um you know I wouldn't want to be a legacy telco that can't serve you know rural areas right now. I there's no service in uh you know driving down Melrose sometimes. It's ridiculous. Uh, you know, there's there there's all kinds of way that uh this this is why, by the way, that the SpaceX IPO I think is going to it's it's going to be really interesting. I mean, we should probably talk about that a little bit.

24:15 >> I mean, basically what I'm saying is like just to finish the thought, I'm sorry I was almost done. I know I was rambling. Basically, what I'm saying is like it's already too late to capitalize on the frontier of this [ __ ] You have to look at the second, third, and fourth order knock-on effects. And maybe that just means if your passion is boats, you found a, you know, millennial uh minded AI enabled yacht brokerage in uh in the French Riviera or in San Francisco instead of uh or or buy one from from an older person because that's that business is going to boom as the the wealth trickles through. you know, it's probably too late to be a San Francisco based real estate agent, but maybe maybe you network and figure out where that wealth is going to go and set up shop in Aspen or or Austin. I don't know. Just find the knock-on effect is is what I was going on going at with this and invest or deploy. Invest either your time or your capital there. Ferraris, honestly, that's not the stupidest idea.

25:10 There's probably going to be an uptick [clears throat] in used Ferraris. Um, >> I mean they're not and I think I think it's gonna it's actually going to continue. This is not just me talking talking my bag. It's kind of happening with you supercars specifically Ferrari because they play the they play the scarcity game. So getting a getting an allocation to a Ferrari is very similar to getting allocation to a Burkin or getting an allocation to a Rolex in a way that you can just walk into a Lamborghini dealer and just buy a Lamborghini. So those obviously depreciate a lot more. And the the other the other thing that I I want to point out there there really two main reasons why I think that scarce assets well three main reasons that I think that scarce assets are going to continue to go up and why you should maybe not just look at only investing in index funds and and the stock market and maybe you want to diversify into scarce assets whether it's real estate whether it's cars whether it's wines whether it's art whether it's these one-off assets I think that there will be a tremendous bull run here because one you have a massive wealth transfer of trillions of dollars as you were talking about that's going to go from boomers to millennials and Gen Z. And the general approach of people under the age of 35 is that they're a lot more active with their investments than older people are. That they're more likely to go invest in these types of alternative assets because the social contract has been broken. And [snorts] I really think that this is an important point. the SpaceX IPO, the OpenAI IPO, the Anthropic IPO. All of these companies are coming out at multi- trillion valuations. So 1 million to 1.5 or 1 trillion to 1.5 trillion, maybe even higher depending on when anthropic and open AI go live. And that in itself has broken the social contract of the public markets with the American people. If you go back to the Google IPO, less than 100, I think it was 20 billion. If you go back to Facebook, it was it was a h 100red billion people because there's so much more money in the private markets because people have become wealthy and sucked up money from both the middle class and and the bottom. You have this massive wealth disparity and it's getting worse because the people at the top continuously provide funding for these companies which means that they can they can end up staying private longer. This is the problem. If you have one person that's worth a h 100red billion and 99 people that are worth $1 versus having a hundred people worth$1 million that's that will obviously the the the former will obviously incentivize company to stay private much longer because you don't need the money from the public markets. It's not necessary and so this is totally warping the returns. all of the returns are getting pulled forward into the private market and that by definition means that the index funds are probably going to have lower future returns than they did in the past. That would be my guess. And so people have to start investing either you have to start getting access to private to private companies which is why these tight these assets like robo strategy are popping up and doing well because they're giving you access to the private markets or you have to go invest in something else like alternative uh you know like like alternative assets that might outperform the the general index fund. People feel a little bit jipped. That's why I think sports betting is taking off. That's why Khi's taking off. That's why poly market I mean poly market's kind of getting cooked by khi. Well done, TK. But yeah, polar market's getting cooked there.

28:41 >> Why is that happening? Do you do you know what's going on there? >> They just don't have product direction. I think that's the main issue is that they're not they're not innovating as fast. I mean, they they not launching per like she did. Uh their their interface is still much more crypto focused. But I want to get back to this key point, which is that the social contract has been broken. And this is this is a major thesis. So you have the wealth transfer, you have the social contract being being broken and then you have an increase in capital among the wealthy because of AI. AI is concentrating capital even further among the productive. Basically the whole arc of human history has been the majority of people can be useful because you just need to hunt an animal and kill it. And then less people need to be, you know, le less people are going to be successful because farming is slightly more difficult than, you know, t takes a little bit more brain power. So you need to be slightly more intelligent.

29:36 Basically the way that human history has gone is that less and less people are useful over time as technology takes the job from the useless people. And today we're sort of hitting the apex of that, which means that wealth is just going to be concentrated even further in the top. Which is why at some point, as Jonah's thesis has gone over and over, he's hammered this point home, and you need to hear it too. When the Democrats win in 2028, if they win, if they win in 2028, uh we are going to see huge pushes for redistribution most likely because by that point, I think we're going to even have even worse wealth inequality. So technology is going to lead us there and that's probably going to end end the bull end the bull market.

30:19 >> Yeah, that's that's the that's going to be the death nail that when the bell tolls. Not that I have anything against Democrats. I think it's actually a very interesting trend. You know, I've been talking a lot about LA today. I've got a little LA poster in the background here. I think >> made in LA. Yeah. Where'd you get that? >> Let's keep It's uh it's just a poster that I I got on art.com. I mean, basically the way that I would think about this is like, you know, let's keep talking about LA for a second. Um, let's assume that there was no fraud. Spencer Pratt.

30:51 >> Yeah. Or went out for for our boy from the hills, Spencer, Mr. Crystal. I I thought he was funny. I thought he made cool ads. I thought it was interesting what happened with the, you know, late ballots. Um, you know, by the way, when I went to go vote here in LA, I tried, they were like, "How do you spell your last name?" And my last name is a little hard to spell. So, I pulled out my driver's license and handed it to them.

31:13 And the woman literally behaved as if I'd just unzipped my pants and exposed myself. SHE WAS LIKE, "AH, OH MY GOD, DON'T show it to me. I can't look at that. Oh my god." Uh, because it's illegal here to Not only is it like I I thought it was just ID not required. It's literally like they do they do not want to see it or they not are not allowed to see it. It was the most uncomfortable moment I've had in months.

31:40 Um anyway, I was like, "Okay, I'll just B is in Victor, A N is in November, you know, like space, B is in Bravo." And she was like, "I can't look at your ID." Anyway, so like let's discard all those. >> A single reason for there not to be voter ID laws other than to allow illegal immigrants and non-citizens to vote. Like what? I mean, that's what Elon says. He says it's just for fraud. I mean, I'm trying to steel man it. I I almost can't, but I think their argument >> I I don't know what the steel >> I think their argument is that like underprivileged people uh can't get it together with with an ID and so it potentially makes it harder for them to vote. I don't know. To me, it seems so redonkulously stupid that I don't get it. I can't even steal man the case against it, but whatever. It's it is what it is here. Let's assume that there was no fraud. The the people of LA literally like the city just burned to the ground out of not not because of a a freak accident or a meteorite or a natural disaster. It was unavoidable.

32:44 The winds are coming. They were forecasted and the freaking reservoir was empty and entire neighborhoods burned to the ground and a bunch of people died. You would think in any normal environment when a catastrophe of that of that scale and magnitude occurs, the people responsible for, you know, basically something the size of five Manhattan burning to the ground unnecessarily would get fired and replaced by competent people. And these are high earners, right? Like LWP, the water facility that manages the reservoirs, like the head of it earns like 6 or 700 grand a year. Nope. Uh the people of LA are literally saying the rich people in the palisades their views their big houses them their AI wealth and and you know anybody I'm you know like I want to vote for the Democrat.

33:33 >> Don't don't don't anybody till you get in trouble. >> Yeah. I mean don't anybody basically what they're saying is like I don't care if the forget Aladina let's just pretend that didn't happen. Like the the people in the Palisades are rich. It's cool if that like burn the rich, tax the rich. Um we don't care if Karen Bass is incompetent. She was educated uh in Cuba and believes in redistribution and it's not fair what's going on with us. And honestly, they may be right. Like in in a c in certain respects, like tech, my dad was a a world famous union lawyer, labor lawyer, and he used to say technology for technologies sake is should not be the goal of society. Now obviously that's an in inexurable trend that's impossible to fight but like you know here we are and to the extent that some of these technologies are displacing human beings and their families and the cost of living is insane they are not irrational to want redistribution even if it comes at the hands of a candidate who's obviously incompetent right because you know Spencer Pratt wasn't going to redistribute um but Karen Bass wants to so why not right like I'm this this trend is like what regardless of what your politics are, regardless of what my politics are, if you're an investor and you are looking to build wealth, this is the most important um phenomenon to watch because basically everything is a fade until this happens and then just literally liquidate your assets and hide them when when it does.

35:00 >> Yeah, I I'm I'm very I I this is why, by the way, I'm bullish on Monero. I'm bullish on Zcash. I'm bull on I'm bullish on owning money. This is what people forget and I'll say this just once about crypto, but it does genuinely have a use case and that is if you need to hide your capital from what you what you believe is a government overreach, there is really only one way to do it and that's with crypto. If >> how isn't it all onchain and traceable and KYC, you know, >> you can take it with you, right? the government can't seize it without physical force and this gives you time, right? So the alternative is that you have a bank account and where do you put your money, right? How do you get your money out of the US banking system if one day it's people try to seize it? If in 30 years from now uh a law goes through that says any assets over a hundred million get seized by the US government and then they just flip a switch and freeze your bank accounts, you're cooked. It's over.

36:08 They can't do that without physical force, without physically coming to your house and forcing you to dulge the private keys, right? That's the value out of crypto. And this is what people always forget. And this is why we go through lulls in the market when people forget that crypto is not built for first world countries with strong judicial systems with strong governments and with competent with generally competent leadership which you know of regardless of how you phrase it the US has very competent leadership right that's how we've lasted so long as a country we have a competent judiciary that where we don't generally do things that that are unconstitutional. Uh we don't generally infringe on rights.

36:54 Obviously, there are there are cases, but the US is pretty good. If you look at other countries, I mean, look at Britain, for example, policemen showing up at your door for posting memes. It's not really a great look. I mean, and then you look at Somalia and there's literally no government. So, why would you hold any money in a bank uh you know, and basically any any African or or Middle Eastern country with authoritarian leaders, they can just take it from you uh at any moment. And this is this is really the value add of crypto and that's what it has been from the beginning and will continue to be and that's why it has value is because in a world where the government either a is bad already in this current moment or turns against you at some point crypto has tremendous value and this is this is this is what people forget and you know they they think of it as just this tool tool for speculation. It genuinely is a non-s sovereign digital untraceable well not untrace but hard to trace currency right so if you want to pack up and go I mean this is you know as as as as two Jews it would been incredible if our ancestors had been able to take their wealth across the border when they fled Germany but they couldn't right it was all confiscated from them because it was really easy to confiscate wealth so that's what the value ad out of crypto is and that's why it ain't going away anytime soon and kind of lies into your thesis where at some point when the redistribution takes hold, crypto probably becomes valuable again. But until then, I mean, maybe we spent 40 minutes, we haven't talked about the markets that much talked talk talking high level philosophy. Until then, crypto is very and the the rest of the markets, by the way, are extremely hampered. I don't know if you saw May CPI printed at the highest year-over-year in in three years. Guys, this is what we've been warning about.

38:40 This is what we've been talking about. This is why I was nervous about the market a month ago when the last CPI printed. I said, "Look, this is what's going to cause the market to pause." Cause the market to pause. This is what's going to cause the market to pause. That's good. I like that. Um, it's it's one of these things where it was completely overlooked. There was no there was really no bearish thesis. Companies are printing money h hand over fist and people are forgetting that, hey, inflation is coming. I think it says here energy rose 3.9% in May accounted for over 60% of all the monthly all items increase. Gasoline is plus 40.5% year-over-year. And the last week's payroll is printed 172 versus 95k uh expected which basically means that the Fed can't cut cuz the economy's already running hot and inflation is going up and so the Fed's in a really tough situation. December hike odds jumped from 45% to 70%.

39:50 Goldman dropped its cut call entirely and I think that basically what we're going to what we're going to see is [snorts] we're going to see a call for a hike cycle and that is going to really impact the markets in the short term which is why I'm still reasonably heavy in cash but as always looking to bid those mega trend assets. So that's you know I I I really didn't like the way that the CPI printed. I think that this is a good time if you haven't taken profits on a lot of your on a lot of your positions that are up since the Iran war bottom by obviously you don't you don't have to trade. You can always just be an investor, but if you bought assets to trade, maybe now is a good time to start cutting down.

40:35 >> I like that. So, would you say that Kevin is washing his hands of the cut cycle? >> I I'm probably going to go now. No, listen. People don't just >> I'm probably calling it. >> People tune in for the market commentary, for the banter, and also for the dad jokes. Never forget that. Anyway, no, I agree with you. I think that a hike a hike cycle, let's not forget the the scar tissue from 2022. A hike cycle would be disastrous for all assets, including crypto. That maybe that's what stops Sailor out finally is just a a big old a big old uh kick in the nuts. I honestly though, there's a lot of talk about mythos or fable or whatever it's called ruining markets. I don't think that's going to happen. I don't think we're going to have I don't think we're going to have like big hacks torching the market. I think it's just comes down like everybody's focused on that. Everybody's focused on quantum risk. People should just focus on rate hikes. A lot of this is just a lot of this is predicated on a shaky housing bubble, a shaky uh AI anth, you know, like none of these companies generate free cash flow. Um or if they do, it's so tiny that it it certainly wouldn't justify a $ 1.75 trillion valuation.

41:52 This is really just um I would consider all of what's going on, all of the froth in markets to be a hangover from the zerp era and profleagate money printing of COVID and postcoid and uh maybe a bit of euphoria over a new tech trend. I I don't it's it's not going to last if rates hike. This capital is not that abundant, you know. It's only abundant when when you can borrow at, you know, sofur plus 1% like Google. And oh, speaking of Google, you mentioned Google. It's funny. I have a buddy who works there. He was telling me that, you know, on a rainy day on the Google campus, you'll see people literally walking from, you know, one building to another using a $6,000 like uh MacBook Turbo as an umbrella because that's how abundant money is there. Like we're we're definitely well into the later innings of this uh particular bull trend. And I think >> for sure and you see it with everyone being a day trader now. Like every single person is uh is day trading. And um while that's a good thing actually for for making money because it means one technical analysis is actually working better than ever in these markets. It's it it's working very well because there's a significant amount of retail money that is that is using it.

43:03 Uh it does mean that we're probably close to the limit of marginal buyers unless the market continues to really print cash. I mean >> you and I called for caution um a month right before this pullback. We were right about that. I would say like there's it's kind of going to go there's going to be a lot of dispersion, right? There's there is objectively a large liquidity event on the horizon. It's not right away. SpaceX, Anthropic, and Open AI, like those people have lockups. Um they will borrow against those >> additional supply that's going to hit the market and this is what people >> Yeah, it's going to hit the market and then filter through into maybe your Ferrari 458.

43:43 >> And that's this this money is going to go into scarce assets. I'm telling you guys here. I'm telling you guys right now. It's going to go into Austin real estate. It's going to go into SF real estate. It's going to go into Ferraris. It's going to go into basically Pokemon cards. It's going to go into collectibles. I don't think it's going back in the markets because a lot of these people that work at these companies that have made a ton of money.

44:05 They genuinely believe like the best thing to own is their equity. Like they're they're very bullish on AI. And so they're very unlikely, I think, to diversify out. I mean there there all these uh wealth managers now that are calling people that they think are in the AI business. Like I get I'm on the last like three weeks I've gotten a hundred calls from JP Morgan. I don't know why they think they're like oh and and I and I was talking to my friends and a lot of my like for some reason the wealth managers are really on an uptick right now just like calling random numbers trying to get them to come over to the banks and it's because they're anticipating all of this new money coming online.

44:39 >> They're hungry entrepreneurs. They're hungry for trickle down effects. You know, John at JP Morgan, please stop calling me. I'm not going to like, no, not putting my money with JP Morgan. Sorry, buddy. Unless you sponsor the podcast. If you sponsor the podcast, then maybe. But I guess what I'm trying to say is that this this world is probably not going to be reinvesting into index funds. They're probably not going to be reinvesting into chip companies. They're probably going and actually buying scarce assets, which is what, you know, we've been seeing in in in the trends. Um, so watch out for those dinosaur bones to go parabolic in the next two two years. Now maybe speaking of another scarce asset that's doing really terribly is gold.

45:20 Uh, gold is down a ton while inflation is hitting three-year highs. And I was kind of curious as to why this is happening. So I dug into it and well the trend of the last three years has been gold during the last five years actually basically since co six years wow it's been a long time since co trend of the last six years I keep stepping it up is that central banks have been accumulating gold and they've been accumulating gold to hedge against inflation and so a lot of this gold rally is anticipated defense against inflation so a lot of people are wondering wait inflation is hitting Why is gold now going down? And the answer is that people are using their hedge.

46:06 They're monetizing it. Turkeyy's Turkey sold I think half of the gold that they've bought in the last 5 years and they're borrowing against their their reserves to to go defend the LRA as the LRA is crashing because inflation is inflation is taking hold. I mean, Russia has obviously been doing this for a while. Central banks are no longer buying gold at the rate that they were buying before. Um, but net net they're still buying. Like net they're still buying. It's just that they've slowed down and there are specific central banks that are cutting back on their on their buying. And I think that again gold is a margin is is at the margin. The price of gold is set at the margin. And when you have new marginal sellers come in and the hype around gold for retail has sort of died down, this thing starts this thing starts to come come off.

47:00 >> Gold is a reflexive asset, too. >> Gold is a very reflexive asset. >> We we called it on the pod like do not mess with gold in the ninth inning of a gold rally. It is it a lot of people were buying it because it was up and now they're selling it because it's down. A something that we advise against on this podcast. it's amateur hour sort of like rookie trading. Um, a lot of that was going on and frankly like to your earlier point about how crypto is portable. You know, one of the the interesting stories I hear a lot from the Iranian the Persian community here in in Los Angeles is that they got all their gold. They tried to take gold with them when they were fleeing the revolution and it just got confiscated at the airport. Like it it is a metal like it will get detected, right? So, I you know, it it doesn't have that crypto-like use case. I don't know if that's a reason why it's selling off, but you know, to me, gold is just not something that you can set and forget.

47:54 You got to monitor that position closely. And uh it's not going to perform well in a hike cycle. Um that's for sure. >> 100 100% agree. I mean, so I think that that that's the last piece of why gold is performing poorly is that uh rate hike cycle. So, I'm kind of looking I I do think gold is going to have another mega rally at some point and I'm looking for entries on it. I'm looking I'm looking for a good trade. I'm probably looking at 3,300 to 3500 an ounce to to get back into gold. I do think that commodities are just coming off in general. People have been asking me about uranium.

48:31 Uranium has come off a ton. Candidly, the chart looks absolutely terrible, but I'm still convicted in uranium as a mega trend bull thesis. And so, I lightened up some uranium. I think I mentioned on the last podcast or the podcast before that, lightened up some. I I went to cash with about half of my portfolio. Obviously, that included uranium. And I'm looking for spots to rebid basically on Urra probably below 40 is a good is a good place to bid. Maybe if we get back down to the breakout area like 2830 that would be kind of a crazy buy.

49:07 Probably unlikely to get down that far. But you have to remember these are mega trend assets. These are things that are going to happen. We are going to invest in nuclear output in in the United States. We are going to be pouring billions of dollars into data center buildouts. We are going to need to rejigger our entire electrical grid system. And these companies will end up making more money over the next 5 to 10 years. Probably a 5 to 10xer in in this thing. And you just can't get shaken out by short-term nonsense. Now, you can trade right when we're talking about this. You can definitely protect yourself to the downside, which is what which is what we're doing, but it doesn't mean the price action doesn't mean the thesis is broken. And that's what people need to understand is that you can trade around an asset to try to generate more P&L for yourself without necessarily believing that that mega trend has actually changed in any meaningful way. And that's what we're doing here. We're trading around it, but still betting on the long-term thesis.

50:07 One of my favorite mega trend assets that I've been long since 2024, it's up I don't know, I think it's up like 25% this year, is MLPX. Um that's a pipeline. It's basically like a rea for for pipelines. Uh basically you get >> you get cash flows from hydrocarbon commodities like oil and gas flowing through pipelines and it you're long a bunch of different pipeline revenue streams. I like these sorts of MLPS um like MLPX because basically what I'm looking for in this environment to set and forget the sort of mega trend assets. I want stable inflationprotected cash flows that are backed by mega trend thesis. And to me like there's never going to be a shortage of demand to move energy around the country, right? That's especially as the demand for power grows and shifts, commodity volatility will constantly it's not like we're going into sort of a steady state for oil transportation or gas transportation.

51:18 It's a very dynamic market. It's AI pill, right? The these data centers are going to pull more power. You know, um electric vehicle thesis are going to move the demand for oil around the country. Refineries are getting old, new refineries getting built. Politics are shifting. refinery demand from point A to point B, you're always going to need to move stuff, right? Energy infrastructure and also like these these pipeline flows are inflation linked, right? In a scenario where the cost of everything goes up, the dividends that get thrown off by these sort of infrastructure projects also go up. And it's also very tax efficient because you can depreciate the pipeline against the cash flows from that that that come from the uh the sort of royalties uh that people pay to put put energy commodities through the pipe. So, you know, these are the sorts of things like everything's down today. MLPX is up.

52:08 Like, these are the sorts of things that if you're looking to just be lazy and invest in the these things are cheap and their dividend yields are mega and um they're they're tax efficient. They're they're smart bets. I like them. Um the other the I've had a lot I've had almost no success in my career shorting things um with a few exceptions during COVID, but uh I have had a lot of success waiting for catastrophe and then buying crazy dips. So, you know, I'm a little more cash heavy than I'm used to right now. I'm I've lightened up a lot on crypto at higher levels. I've lightened up even on the S&P and and equities, not on MLPX.

52:51 Uh, I I I'm ready to go, you know, face first back into the markets if there's a serious pullback. But I would want to see like a December 2018 style rinse or a March, April 2020 style rinse to feel confident deploying cash. Basically, I want to get to the point where I'm like tax loss harvesting a big percentage of my portfolio uh like I did during the tariff tantrum of last year in April of 25 before feeling confident that I should be plowing more capital into plowing cash into the markets. I think there's still a long way to go, especially if uh if the rate hike what what is it like a 70% chance of a rate hike by December?

53:36 >> 70% chance of rate hike by December. >> That's freaking bonkers. And if that starts getting pulled forward to September, like look out below. I'm not bearish or bullish. I'm just like readying dry powder because it's been a good run. Uh you know, you're getting your phone is ringing off the hook from the Ferrari dealership now. Now we're in full froth mode, right? Like we are we well I think I think that's a good place to wrap it. We are in full froth mode.

54:02 So just be careful out there, guys. We'll keep you updated when we're going to come in and buy the market. And on the next podcast, we got some interesting next show. We're calling it a show now. It's no longer a podcast. Calling it a show. >> The show. >> The show. On the next thousandx show, we'll we'll talk to you about some specific assets that we've been eyeing. But thank you, Jonah, as always. This is a lot of fun.

54:25 >> Thank you, Avi. It was great talking to you as [music] always. Love it. >> [music] [music] >> Nothing said on the ThousandX podcast is a recommendation to buy or sell any investments [music] or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of 1KX Media. Our hosts, guests, and the 1KX team may hold positions in the company's funds or projects [music] discussed.