Is The Soft Landing Officially Dead?

And that's currently my take. Basically, I've been sitting here going, “I'm so bullish I can't see straight. Buy everything. Touch every memory stock. Get balls long. Don't worry about anything.”

And guess what? From the Iran war, when we were saying that, to now, everything kind of 3x'ed. Everyone's talking about the memory bubble now, and people are writing off these numbers. I don't like that. I'm getting nervous.

Which number worries you the most, and what did it do?

The number that worries me the most is that we now have a 95% probability of nothing happening at the next Fed meeting. But instead of a 5% probability of a cut, we have a 5% probability of a hike.

How's it going, Jonah?

It's going great, Avi. Nice to see you. Was the podcast so nice they introed it twice? Shut the fuck up.

No, I mean, it looks like you're in a different backdrop, Avi. I dare say I see a little bit of Armenian architecture in the window behind you.

Yeah. Tell me what you see, Jonah. Where do you think I am?

The real OG listeners know the last time that I streamed 1000x from Paris, I had a black turtleneck on, with a mustache and glasses, and I was really leaning into the Parisian lifestyle. It was great. I enjoyed it.

You know why the French Wi-Fi is so terrible? It's because of that wonderful Parisian lifestyle you alluded to just a few minutes ago.

It's a good lifestyle. Everyone—I walk outside at 2:00 p.m., and all of the cafés are bustling and full of French people and a lot of non-French people, but a lot of French telecom engineers who should be locking down that Wi-Fi at their desks, but they're not.

Interestingly enough, the best school, if you're a quantitative person in France, is called École Polytechnique. That's where the crème de la crème go. But if you're not one of the 10% of people who get in there every year, you go to this second tier of also extremely elite, MIT-level schools. The second tier is basically CentraleSupélec and Télécom Paris. It's very evocative: This is the one for electrical engineers; this is the one for telecom engineers. Then the 2 merge.

1. Paris Wifi & Gemstones

My former business partner is from Supélec. My father-in-law went to Télécom Paris. You would think if the MIT or Caltech of France is called Télécom, they would have their Wi-Fi ducks in a row. They're just too much lifestyle there.

It's really genuinely incredible to experience what I'm experiencing right now, which is, again, a nice hotel with great staff and great service. My God, do they make the bed properly, but they can't deliver a good experience when it comes to Wi-Fi. But that's okay.

There's actually a reason that I showed up to Paris. One of my side hobbies is gemstones. I really love them. I love jewelry, I love gemstones, and I love collecting all sorts of things.

So I came to Paris very specifically because I work with a jeweler here, a phenomenal jeweler called Mellerio. They're the oldest jeweler in the entirety of Europe. They've been around for 400 years. They sold jewelry to Marie Antoinette. They got really big because they sold jewelry to Joséphine, who was the first wife of Napoleon, for those who like their history.

They also currently make the Roland-Garros trophy, which is pretty cool. They're big sponsors of Roland-Garros, and they also make the Ballon d'Or, which, for non-Europeans, is the trophy given to the top soccer player every year.

May I interject?

Yeah, please interject.

It's pronounced “Ballon d'Or,” or, as they say in England, “the Ballon d'Or.”

Yeah, I like it. I'm an American, so—

What? Did these guys sell gems to Louis XIV?

I have no idea who that is.

Louis XIV, the Sun King, the longest-reigning monarch of all time—the GOAT of extravagance and the builder—

Here's something crazy: The Place Vendôme used to have a statue of Louis XIV. It currently has the Column of Napoleon, a statue dedicated to Napoleon's victory at Austerlitz.

This jeweler used that statue on its logo because they used to sell to Louis XIV, and because that's where they were located way back in the day, in the 1700s and 1800s. So there's a ton of history here. They're just really cool people.

But I picked up this tanzanite.

Pretty gem.

It's really, really nice. I actually picked this up a few years ago in India, and I had it sitting with them for a bit because I wanted them to come up with some designs, but I didn't come up with anything that I really liked.

I talk about the tanzanite specifically because it's a really good investment, or it has been a really good investment. I bought this tanzanite for $9,800 2 years ago in Jaipur. If I wanted to, I could probably resell it today for about $30,000.

That's great. The reason is that, specifically with tanzanite, there's 1 mine—there's only 1 mine in the world, in Tanzania, that actually mines these things—and it's estimated to be depleted in about 22 to 25 years.

They haven't figured out how to replicate them in labs. It's a very unique gemstone, and it's getting more demand in China.

All of this is leading to the world of alternative assets. Part of the reason that we do this podcast is because there are so many different places where you can park your capital now. You can park it in the markets, and if you park it in the markets and make a 10x, there's somebody out there who's absolutely clowning you because they bought a Charizard 4 years ago and made 10,000.

Yeah.

There's just so much liquidity right now, specifically in the United States and for things that people in the United States like. This is very important because I've been talking to a lot of Europeans here and taking a lot of meetings, and the constant lamentation of the European is, “How do the Americans have so much money? How are they spending on all of this stuff? Wow, we're actually kind of hurting here. We can't buy all of the stuff and things that Americans have.”

We have a better lifestyle, and we wouldn't trade it for those stuff and things. But I met this 1 Swiss guy who's actually going to come on the podcast because he's a really cool guy. He's 1 of the number 1 collectors of ancient Roman coins and Roman artifacts in general. He resells them, and the guy's worth a lot of money. He's doing very well for himself.

He's telling me, “Every single 1 of my clients that wants to buy from me is either based in China, the Middle East, or America.” He's been in this business for 40 years, and 20 years ago, that wasn't true. 20 years ago, the Europeans were buying. Now the Europeans aren't buying any of it at all, in any way, shape, or form. They just don't have the liquidity to go spend on random Roman collectibles. They're not making money in the same way.

This just makes me even more bullish on America, and very bullish on all the liquidity and all the profits that have been generated by all the incredible companies that are built here. I'm very, very, very bullish on American liquidity. I'm basically long America and short Europe into the ground right now.

And you lived there for a long time, so you probably have a great viewpoint on this.

I guess London is geologically and geographically part of the continent of Europe, but it was only politically part of the continent of Europe for the first—let's call it—7 years that I lived there. Then there was that divorce: Brexit.

I would say 1 of the reasons why Europe is kind of sclerotic and why European stock indices underperform American stock indices is that 1 of the best trades is long SPY, short VXUS, if you're ever going to do a highly leveraged trade.

You basically want to be long U.S. equities and short the rest-of-world equities. It's an index-to-index trade, so it's super low volatility. You could really lever that up, and it's just something that I would bet on for a long time. Why? Because in Europe and most of the world in general, speaking to my broader thesis that I've hammered on in many previous podcasts, there's redistribution.

2. Micron @ $900B

You get great lifestyles. To your point about France, where I probably spent a year of my life—my wife's French—they give health care, really excellent, let's call it top-decile health care in America, that's just free for everybody in France. You can get a crown, which in America would cost $1,000, get your tooth replaced, whatever, some crazy surgery, and it's free. You just walk in, swipe your Carte Vitale—it's basically a green health care credit card—and walk right out of the dentist without paying a dime. In America, that would never happen.

So basically, they spend a lot on social services. They redistribute a lot from businesses to the poor. The top tax bracket where you're sitting in Paris is going to be north of 70% on anything over €1 million worth of income. However, continental Europe is a great place to be a normal person, but it's a terrible place to be a star, an up-and-comer, somebody who's brilliant or hungry or entrepreneurial, or all 3.

And that's why there's this tremendous brain drain. Everybody I know who's incredible, with possibly 1 exception, has left France, right? The U.K. is a little more on the ball, which is why that isn't the case there. But for the most part, France is a great place to be normal, and that's wonderful for most people, but it's terrible for parking assets and terrible for innovation.

3. Fed Regime Change

America's kind of a shittier and shittier place to be normal, which is why I'm so bullish on American liquidity, American excess liquidity, American companies, and American innovation until the political revolution comes and it becomes more like Europe. But I don't think it's going to happen for a while.

Well, I don't know, Jonah, because I'm getting a little bit nervous, to be completely honest. This wholesale inflation number that just printed, oil is still jammed above $100, and we've got Kevin Warsh coming in. He just got confirmed as the new Fed chair, which is, by the way, great. He used to be an adviser to GoldenTree. Candidly, he was almost never right about much. He never got a lot right.

No, I don't know. Every time he would tell us something, we would wait 3 weeks, and then he would change his opinion. He just doesn't seem like a particularly principled person the way Jerome Powell was. Jerome Powell had long-term views and principled views.

Jerome Powell was a real slow reactor to things, like—

But he was, and so—

And the lag moves 6 months later, you know.

Yeah, that's also very fair, right? So maybe a good part about Kevin is his willingness to change his views. That could be very valuable, especially—

Fail fast and move on is the best thing in markets.

4. Is Inflation Back?

Brad, can you share my screen? I just put up a chart here. Avi, you mentioned oil and inflation. We just have to touch on this quickly.

Okay.

Hormuz is still shut. The world is short somewhere between 10 and 15 million barrels a day. I'm not in it the way I used to be, but basically, this chart tells you: visible oil inventories in billions of barrels. As you can see, we were building and building and building inventory, building stock. The oil should be worth $40 or $50; it's just oversupplied. And then Allah went and bailed out the Middle East, or most of it, with this incredible Hormuz closure. Actually, Allah picked favorites. Iran's not so happy. But basically, the whole point of this chart is to show you—

It just goes to show that the Shia are not the true—

Yeah, it's the Sunnis—

Sunni party.

Talk religion—no more religion on the podcast. You keep doing your Jewish thing, trading gems; I'll keep doing my Jewish thing, training my dogs to rape my innocent prisoners who did nothing wrong. Let's get back to this oil chart here. Sorry, I digress. Anyway, we're at operational stress levels here. The operational floor where oil legitimately skyrockets to $200 is 6.8 billion barrels of storage. We're going to get there by September at this rate.

I'm pretty sure everybody in the State Department, Department of War, and the department of Trump's hope of not going down in history as the worst president of all time has this on their radar, right? So basically, I'm a betting man. I'm betting a lot of money that this gets resolved before September. We're not going to get to operational—

Yeah. But the issue, I think, is that it's clearly showing up in inflation in some way. I'm not so sure this headline—3.8% year over year—isn't all just because of oil, right? You have PPI, which came in 3 times the consensus: up 1.4% month over month versus 0.5% expected; year over year, 6.0%, the largest 12-month gain since December 2022.

I mean, these are the types of numbers that I've been warning about. Not that I was calling it, but I've been warning about: if we see these types of numbers, you probably have to start lightening up on risk. That's currently my take. Basically, I've been sitting here going, "I'm so bullish, I can't see straight: buy everything, touch every memory stock, get balls long, don't worry about anything." And guess what? From the Iran war, when we were saying that, to now, everything kind of 3x'd.

Everyone's talking about the memory bubble now. People are writing it off. I don't like that people are writing off these numbers. I'm getting nervous.

Which number worries you the most, and what did it do?

The number that worries me the most is that we now have a 95% probability of nothing happening at the next Fed meeting. But instead of a 5% probability of a cut, we have a 5% probability of a hike. What I'm nervous about is that if inflation keeps coming in high, we're going to start having to raise rates, and that's going to hurt the market. That's going to be nuclear for bonds.

More importantly, it's going to be tough for these companies right now to continue to raise debt to fund expansion. It's just going to cut in. Basically, the question is, if we start seeing 4.5% or 5% inflation, we're suddenly in a really bad spot where I think we could see the next fear priced into the market.

Probably what ends up happening is that there's a period of time where things really sell off, whether it's this month, next month, or the month after. In my personal opinion, we probably see lower prices on a lot of these assets than we see today. So I went from 0% cash up until basically yesterday and today. I raised about 15% cash yesterday on the rebound, and today I raised about 15% more. I'm sitting at about 30% cash relative to the 100% deployed I was before.

I'm probably going to look to get up to 50% and then basically try to buy on the next fear. As a trader, when you're in the markets, you always have to think about what the next major fear in the market is. What might actually turn the tide of this market? The answer right now is everyone is saying basically nothing, like we're going to ignore everything.

People have sort of flipped, and I didn't really believe that until I saw the PPI come in today. Basically, nobody—I'm not seeing a ton of fear in the market because of this—and I'm starting to think that at some point over the next 3 to 6 weeks, we're going to start getting nervous about these numbers.

That's my take: you just need to be more careful today than you were a week ago. That's literally the whole take. It's interesting you bring that up. I mean, I was 100% allocated for a long time. I actually took about 7% of my portfolio off the table 2 days ago.

And why'd you do that?

My gut. I didn't have an inflation concern; I was more just like, "Man, what a rally. This is bananas. It's time to trade around the position a little bit."

5. Soft Landing Officially Dead?

This is basically the only time the NASDAQ has ever rallied like this. I have a great chart that I'll share later while you're talking; I'll get it on the screen. Basically, the only time the NASDAQ has ever rallied more—or any asset has ever rallied more than the NASDAQ just rallied—was when the NASDAQ rallied in 1999. That's the only sharper major asset rally in the last 200 years.

I wouldn't put Bitcoin in there, but basically, this is almost unprecedented and so violent that prudence and my gut tell me to trade around the position.

I've gotten too bullish on these sorts of rallies before and been carted out on a stretcher. I do think this one has legs for reasons that I can get into, but let's just war-game. Let's get into it.

Yeah, let's war-game a scenario where rates go into a surprise hike cycle because of tariff moves and a few other inflationary factors. I don't think that's going to happen. Let me start with a very quick sound bite: tariffs are getting refunded into businesses. A lot of the inflationary things that should be happening are not. AI is tremendously deflationary.

But let's say that we go into an inflation spiral and they hike rates. The first thing that will happen is that the major hyperscalers, whose revenues we look at 10xing every year, will stop getting us all excited and euphoric. But remind yourself, Jonah, that OpenAI and Anthropic have to raise capital to exist once every 6 months. They have to go and raise more capital because they're still unprofitable as shit.

Basically, that capital will not come. Data center spending will slow, there will be energy bottlenecks, and we could end up in a stagflationary crisis where the big-money flywheel of chip spending slows down for a second. Then Micron, Samsung, SanDisk, and all these stocks that are moving take a breather, and that leads to broader contagion and an equity-market pullback.

The megatrend is still intact, so that would be the buy of the century. But if you have no dry capital to deploy when that happens—and that would be a violent thing to happen—shame on you.

So, basically, this is the first time anybody's ever put this inflation thing on my radar. I still see a hike cycle as a fade. It's just never going to happen. But it's worth monitoring that situation, isn't it, Avi?

No, I mean, we definitely need to monitor it. I think that everything is about probabilities, right? The question that I have as a trader is always, have the probabilities of success changed? Right now, yes, they have changed, because, all else equal, if something goes up in price, that makes that thing worse, not better. You want to hold less of it.

If you have an asset and it doubles, unless the revenues have doubled, unless something fundamental has doubled, you want to own less of it. Intel, Micron, AMD, Nvidia, and all the memory stocks have gone up more than the revenues because they're pricing in a tremendous amount of future growth. That growth, I think, in some capacity requires a lower-rate environment.

If we go into a rate-hike environment, if we start hiking, and maybe we're at 4.5, if we hit 5, we're in big trouble, in my personal opinion, and the probability of that has gone up. Therefore, in isolation, with the probability of that going up and nothing changing on the AI front, I do think that there's still massive growth. I do think that we're probably still going to continue to go up. But all else equal, with this new risk vector, I would like to own less.

Basically, everything is still at the highs. Nothing has really sold off that much. Maybe we're down 3% off the highs. We're up 300%; we're up 200% to 500% from when we first started talking about this during the Iran war. There's no shame in locking in some profit and protecting yourself against this potential scenario, and just monitoring to see how it plays out.

Obviously, I do think that we are in a massive megatrend. I think that energy, memory, and everything related to the AI trade is going to continue to go up. Really, your job as a trader and investor is to not be overlevered when things start to look a little scarier, like they do today.

If you want to lever up, if you want to be 150% to 200% of your portfolio, do that when nobody's on your side. You never want to be overlevered when everybody's on your side and you're kind of just betting that nothing bad is going to happen. I think of myself as levered at 100% of net worth now, because I think that's a pretty substantial amount. We're talking—it's a decent amount. So—

I have a super-important 10-second thought on that. 10 seconds.

6. Memory Supercycle

Okay, go ahead. 10 seconds.

When you're in wealth-preservation mode, when you have a lot to lose, that's the mentality. When you're in wealth-growth mode, you're not overlevered at 100%. And look, I'm obviously still in growth mode. I'd like to make money. I mean, we're up—I think the year-to-date portfolio is now up 60%, which I'll take. It's pretty solid.

Nice.

All I'm saying is that now, for the first time in a while, I'm just slightly nervous about the market, and I'm going to want some cash to buy these dips in these megatrend assets.

Can you imagine a scenario where the market gets spooked and starts puking out of these positions? The reality is that a lot of people in these positions are short-term traders now. There's a lot of retail buying memory stocks. Everyone is shoving this stuff up, and that means that there could be a cascade.

When I see the potential for a cascade, and also something looming on the horizon with this inflation, you want to be ready to take the other side of panic. My bet is just that there's a much higher likelihood of panic and that, in a high-volatility regime like what we're seeing now, the value of cash goes up.

The higher the volatility, the better the value of cash. That's just always going to be the case, because vol up is also vol down. You might wake up one day and see Intel back below 100, and if you don't have cash, you're shit out of luck. You should probably be buying that. And so—

Yeah. I think there also are some other trades that you can take to offset this. Maybe you want to stay long these assets. Maybe, like I said, go short the 3x leveraged ETF, because you can take advantage of the alpha decay there. Maybe you want to bet on inflation coming—go out there and short bonds to hedge your portfolio. Maybe buy some short-dated puts, or get extra levered on a short bond position just to hedge the book.

You can express multiple different views here. You can say, well, I don't want to give up this upside opinion on Nvidia and memory, and I don't want to sell my uranium here, which again, I wouldn't suggest. I think uranium is in a really good spot. I still think so. You saw some news recently that Trump is going to be expediting some nuclear permits, which is going to be phenomenal. And we're going to get—

Nuclear.

Nuclear. It's embarrassing as a chemical engineer, but it is what it is.

I think we've sort of beaten this to death. Jonah, what do you think?

We haven't.

Go ahead. Go ahead.

Memory, like Micron, trades at 35x earnings. Per the rule-of-thumb DRAM price-appreciation rubric that we set out on the last podcast, earnings could literally triple, or probably will triple, in the next year or less. So, in my view, Micron is trading at less than 15x forward earnings.

I think Micron is super real. Sure, it's trading like a memecoin, and you want to have dry powder to deploy if it sells off, but it's a memecoin with a use case, right? It's not like the memecoins that you and I were slinging back in 2024, like Slerf and Boden.

I do think the memory thing is a genuine bottleneck. Again, it wouldn't be the 1000x podcast if I didn't reminisce about my days as a professional commodities trader. A bottleneck is when things really break out of the range.

To me, Micron stock is just a commodity. Memory is a commodity. Inside the world of components, it's referred to as a commodity. It's not even innovative to say it's a commodity. This commodity is as bottlenecked as Cushing was for WTI at various points in the past, or like any natural-gas bottleneck during a polar vortex from Calgary to Chicago.

Prices can go parabolic in commodities when a bottleneck manifests itself and demand is highly elastic with respect to price, which it is for memory, because there's no slowing down humanity's desire to replace human coders or augment them with autonomous coding agents.

To me, Micron stock is as real as any rally you'll ever see. It is not tulips. It is not Cardano. It is a commodity that should continue to moon.

I don't disagree with you, Jonah. The only thing that I'm saying is that there's clearly a ton of momentum built into this stock, and in the market right now, people are not worried enough about the macro environment.

When that worry percolates, when that narrative percolates—if you remember, Citrini releases an article talking about AI doom, and things cascade a little bit because all these funds are like, “Oh, my God.” Software collapsed and then bounced 15%.

Part of being a trader is understanding where the risk vectors lie and what you need to protect yourself against.

And this is something that I think the average person probably needs to protect themselves against: don’t go all in right now, right here, especially when you just saw these inflation prints and when you saw PPI come out the way that it did. You can’t really go all in here. You need to start protecting yourself a little bit. That’s all I’m saying.

With that said, any dip is a buy because this is a fundamental rally at the end of the day. This is a genuine fundamental rally.

I would add an asterisk to that. There are fundamentals. Technicals are when positioning drives markets. Fundamentals are when underlying supply and demand drive positioning.

This is important. Hear me out.

No, I hear you out.

This is a demand cycle driving the rally. It is not a supply shock. It’s not like all the Micron stuff is stuck in Idaho because of a supply factor.

Although, funny enough, apparently the Samsung union called a strike from May 21 to June 7. That’s another reason why Micron and SK Hynix are going higher, which is kind of interesting.

On that, Micron should not rally on this. In components land, there’s a concept called FFF: form, fit, function. It’s basically a way of describing fungibility between 2 types of components on a board. A 32-gigabit LPDDR4X chip built by SK Hynix and the equivalent chip built by Samsung are pretty fungible. That’s probably top-tier fungibility. There are types A, B, and C.

Just because Samsung calls a strike doesn’t mean that the entire Micron portfolio should rally. That would be a supply shock that doesn’t last long. There’s a lot of friction for engineers to redesign a circuit board. It would take weeks or months, and then there are the flow-throughs and flow-downs to the assembly line.

I don’t think Micron will win business if Samsung has a strike. Meanwhile, if there’s a rising tide of demand, it should lift both ships. But if you were a Samsung-Micron pairs trader—which sounds like a nightmare given the Korea-U.S. situation—I wouldn’t be trading that pair.

Oh my God. Is the Korean market just absolutely ripping, man? This is another thing that makes me nervous because I look at the Korean market, and the amount of leverage in the Korean market has literally doubled. We’re at more than $20 billion in leverage in the Korean market. All it takes is for the market to sneeze, and suddenly you’re down 30% across the board. I want to have cash to buy that.

Candidly, I think if you followed this trade, you’ve done all right this year. The key is that you’ve got to stay alive during a bubble, because the worst feeling in the world, Jonah—the absolute worst feeling in the world—is when you blow up while things are going up. You blew up because it went down 15% and you were overlevered, or it went down 30% and you were overlevered. You have to look for those particular scenarios where that can happen.

Here’s the thing: Micron is at $700 billion. How much of the next 2 years is currently in the price of Micron? How much of the next 2 years is currently in the price of SanDisk at 35 times earnings? What’s a reasonable multiple for you? Maybe you want to see it long term at 20. So we need at least 2 times growth.

It depends on what your projection for earnings is, though, right? When you look at P/E, you’re looking at price times the most recently reported earnings. I’m not a stock analyst. I don’t really understand this stuff. You’re not looking at Avi and Jonah’s projection of future earnings.

Which research outfit just projected that memory is going to rally 46% in the next 3 months? Basically, that’s my projection.

The other thing that I get nervous about is Coatue. You see that Coatue guy?

Which Coatue guy?

Coatue—the momentum guys.

The momentum guys, the chasers, the people who just run after the most recent rallies and try to shove as much money in as possible, and then somehow always end up losing. They did this with crypto back in—

I mean, they exist because they’re profitable. They’ve been around for a long time.

Every time I feel like they enter an industry, they somehow manage to mark near the top. I remember when they came into crypto; they basically marked the top of the whole thing.

I’ve got to look at how they’re structured. I think their actual traders and investors are a different team. They’re long-term allocators, and their actual hedge fund is a different team. Maybe the hedge fund people are just shoveling money over to burn it in the venture-capital, long-only-style vehicles.

They just released a video basically detailing, “Hey, guys, I just want you to know that agents are going to be really big. Agents are going to be huge.” I’m sitting here like, “This is what everyone was talking about 3 months ago. This is why everyone’s buying CPUs, buddy. Get with it.”

Micron’s at $900 billion—the most recent price action, as Scott very accurately commented.

Holy shnikes. Yeah, we’ve got to update the—

Yeah, we’ve got to update that.

Brad, what are you doing? Brad? [laughter] Help us. 10,900.

We had old numbers.

Stale numbers, so—

Stale numbers. It’s okay.

To me, I think we’re at a crossroads here. Obviously, a rate-hike cycle would take a lot of hot air out of this market. However, the last time there was a rate-hike cycle, there was so much more hot air in the market.

That’s true.

What I want to underline here is that, unlike 2022, where prices were being buoyed by supply shocks that people thought were demand-driven supertrends but were not—they were really just short-term supply shocks—rates got hiked, and tons of hot air came out of particularly crypto, but also equities.

This time, we’re in the middle of a demand supertrend across a number of different economic verticals. I think OpenAI and Anthropic are too strategic to the United States. They’re too big to fail at this point. I don’t see them going the way of Lehman Brothers. Sure, there’s some hot air in there, and there’s a little bit of hot air in Micron stock, but my projection is that DRAM prices are going to quadruple in the next 18 months or less. So whatever—as long as Micron’s P/E is less than something silly, I actually think it’s probably undervalued.

And I mean, the operating margins on these companies are freaking insane. SK Hynix is at, what, 72%? That’s just disgusting.

Yeah. They’re literally manufacturing tanzanite there without any competition.

For those who joined late, this is a tanzanite that I picked up. Very beautiful. Look at that. Look at that gemstone. You see how it reflects the light?

It’s like a little galaxy in the middle of it. Beautiful. I know. I’ve got to figure out what to do with it. It’s so much cooler in person. You just spin it around on your finger and you’re like, “Oh my God, this is why I love gemstones, by the way.”

That’s cool for you. Micron cares about—

Sorry, what was that?

Micron makes the gemstones that everyone cares about.

That’s true that they do. Wait, go on. Sorry, what did you say?

What I was going to say—oh man, I totally blacked. I did want to talk about one thing, which is the flip side: if we can figure this out, maybe we’re looking good.

7. Trump-Xi Summit Kicks Off

Trump going to China right now with this group of CEOs, I think, is phenomenal. Hopefully he actually gets there and they have a productive meeting, because the whole point is that they’re bringing over companies that would really benefit from accessing the Chinese market if we can figure out the right way to do it.

There’s actually one company called Illumina, ticker likely ILMN, and I just bought it solely because it was the smallest company on the list. It’s a $22 billion stock. It’s actually doing all right. It hasn’t really moved much; it’s up 2% or something like that. They’re a genome-sequencing company, and they got kicked out of China because China put them on a list not to do business with them. China has been doing this a lot to a lot of our U.S. companies.

If Trump can go there and negotiate some sort of deal, that’s going to be a potential boon, right? I’m just reading this recent comment: “Obsession makes perfect sense with Jewish India [?].” Thank you, Shockwave. I appreciate it.

But if Trump—I mean, watch what happens here very closely. Also, I think the Illumina trade might work out. If he’s successful, maybe they’re going to be able to sell in China again, and that would be phenomenal for the stock.

Just as a short-term trade, it’s not really baked into the stock price. It hasn’t gone up much, so I have a sort of flyer out on that. I bought some stock—I bought a just-stock position, no options there. But if Nvidia gets H200 export approval, that’s big. That’s huge.

I don’t think it’s going to happen.

You don’t think it’s going to happen? Why don’t you think it’s going to happen?

These summits, to me, always commence with a sort of air of optimism. Xi Jinping—we know his behavior patterns. Much like, in the beginning, Trump was unpredictable, and now we kind of know how he operates. Xi Jinping has been around for at least 15 years, and the way he operates is that he fosters a climate of optimism and mutual possibility, and then stonewalls. If you walk through his door, it tends to be a trap on the other side.

I don’t think Trump is just going to allow China all the Blackwell chips that they need because of some beer clinking and whatever else is going on at this summit in Beijing. I think what’s more likely to happen is, “Don’t take Taiwan, don’t steal our IP, and we’ll talk about giving you all of the—”

I don’t know. Think about this: He could have done this without all of the CEOs on board.

No, hang on. Hang on. Basically, just to finish what I was saying, I think the United States wants China not to invade Taiwan for at least as long as it takes the West to divorce itself from Taiwanese supply-chain vulnerability and Chinese supply-chain vulnerability.

If you’ve read Apple in China, a fantastic book about supply-chain vulnerability in China and Taiwan, I recommend everybody read or listen to Apple in China. If you read that, you realize it’s going to be a decade, at least, if everything goes right. It’s a quick read, too. You’ll put it away in a weekend. Awesome, awesome, life-changing economic book. Best of the decade, in my opinion.

Anyway, that and The World for Sale, basically. I think Xi Jinping has designs on Taiwan, and his designs on Taiwan and on global economic and geostrategic dominance rely on the opposite of what the US wants. They rely on maintaining scarcity under Chinese control, so I just don’t see him conceding any of these points.

It’s kind of like, hey, Jensen wants to export the very technology that China needs to achieve its goals. Why? How could there be—I take your point. Why would the CEOs be there? I think it’s Trump posturing. I don’t think a deal is possible. I don’t think a grand bargain is possible.

Yeah, I think that’s reasonably fair. I guess let’s watch. That’s the answer. I think you made a lot of very good points there, and I don’t really have strong rebuttals against them.

The only thing that I’ll say is that Trump knows that the US stock market relies on growth, that the US stock market is his approval rating, and that it’s the savings bank of the entirety of the United States now. He has a vested interest in the short term in making sure that market goes up, making sure that by the end of his term that market goes up. One way to do that would be to open up China, right?

That’s not okay, though. Trump does not like “China giveth what China can taketh away,” right? If we start—

What? Hold on. What China giveth, China can taketh.

China can taketh. China giveth and China taketh away.

I mean, how do you say “giveth” and “taketh” in Chinese? If we have any Chinese people out there, hop in the comments and let us know.

Yeah. Anyway, we’ll get there. Also, happy belated Golden Week to all you Chinese fans of the 1000x podcast.

I just do not see Trump mortgaging the future of the US stock market for another 20% sugar-high rally. I don’t see it happening.

You’ve got to watch what’s happening there. You’ve got to watch the news that comes out of there, because this will directly impact the long-term view of the markets.

I mean, if we do get a deal, which Jonah doesn’t like, okay, let’s do that. Let’s put a probability on a deal being struck to allow the export of Nvidia chips to China. Jonah?

15%, and I’ll tell you why very quickly. Xi Jinping is the gatekeeper. Everybody knows that a détente between China and the US would be great for the global economy. He’s literally been stonewalling it because he’s just a paranoid freak.

He’s been closing China ever since he took over. He’s so paranoid that he has people fishing his shit out of the toilet so that people can’t get his DNA. That’s got to be a joke. What are you talking about?

Go read the article about them scrubbing his DNA and spraying the tables that he eats at during these summits. He’s the most paranoid human on earth. He’s purged everybody. Why would he just open up suddenly to get some Blackwell chips and give up all of the scam artistry that he’s been pulling for 15 years? I don’t see it happening, but yes, 15%.

That was Putin, by the way. I just looked it up.

No, no, Xi too. I’ll send you the article afterward.

Are you serious?

8. Clarity Act Markup

Absolutely. It was in The New York Times and The Wall Street Journal.

Okay. I do want to hit on crypto for all the people that are asking us about it, really quickly. Bitcoin looks kind of shit, I’m not going to lie. We’re almost at the ex-dividend date for STRC. It’s been trading at 100. We couldn’t make it above 82. Clarity isn’t going to do anything for Bitcoin. I’m staying away right now. I’m basically hands-off.

We were both bullish in the 60s. We were bullish in the 70s.

I really thought that we would be able, on this recent rally, to get to 90 or something. We couldn’t really do it. Not looking good, guys. It’s not looking good.

I’m sorry.

Even TON and all these other things—I mean, TON almost went up 35% after being like, “Oh, Pavel,” you know what I mean? It went up from 1.30 to 2, and then we talked about it when it was 2.10. Then it went to 2.80, and now it’s back down to 2.20. I’m like, you know what? That’s not great price action.

I'm actually still bullish long-term if Pavel really takes this seriously. I've got to make sure that he's staying on top of it. We talked about VVV very quickly, which then proceeded to pull a ridiculous move, and I'm on the sidelines right now because it looks like it kind of popped a little bit, but I'm rebidding that thing because I do believe in it.

Basically, I think Bitcoin's in a tough spot, Jonah. Of what I reduced in my portfolio that I alluded to earlier in the pod, about two-thirds of that was BTC—GBTC, to be specific. I want to rebuy at lower levels. I'm still long-term bullish. I do think that in this world, obviously, if China and America kiss and make up, I don't think Bitcoin's as globally relevant, but I certainly think that Bitcoin will become more relevant over time.

I think it's the easiest 10- to 15-bagger in those risk assets right now over a 10-year time frame. I'm just trying to be nimble and lighten up ahead of what I perceived—what I kind of gut-felt were—the same headwinds you saw: the stock market mooning, the Nasdaq mooning, and Bitcoin trying as hard as it can.

Plus, you have Saylor supposedly buying. I mean, it's tough. It's really tough.

Saylor is starting to really become a problem for this asset.

We're going to talk about that on the next podcast. We're going to do a whole section on why Saylor's becoming a problem. We'll dive into the details.