万亿美元级 IPO 是否打破了社会契约？

May CPI printed at the highest year-over-year rate in 3 years. Guys, this is what we've been warning about. This is what we've been talking about. Energy rose 3.9% in May. It accounted for over 60% of the monthly all-items increase.

Gasoline is up 40.5% year over year. Last week's payrolls printed 172K versus 95K, which basically means that the Fed can't cut because the economy's already running hot and inflation is going up, so the Fed's in a really tough situation. December hike odds jumped from 45% to 70%. Goldman Sachs dropped its cut call entirely, and I think basically what we're going to see is a call for a hike cycle. That is going to really impact the markets in the short term, which is why I'm still reasonably heavy in cash.

1. Only the Self-Motivated Will Win the AI Era

Jonah, man. That music always gets me hyped, to be honest.

Thank you for saying that. 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 stuff that you do. We should have a different one for the Friday recap.

And for those of you that don't know, Jonah actually composed and created that intro song. That is not something that we paid for. That is something that Jonah came up with in his brain because he's a classically trained musician.

Funny enough. That's right. I went to classical music school in Berkeley, California. Shout out to the Crowden School. Piano and cello.

It's amazing. It's amazing that you turned out so normal, to be honest.

I got a story about that. I was part of this little group of classical music kids in Berkeley. I was 13 years old, and we were taking our school photo in our little Crowden School sweaters on the steps of our school. It's a very small school. Not many kids are interested in classical music at that age. We were all pretty elite performers.

As we were taking our little cutesy school photo in our little sweaters on a nice Northern California morning, I remember a bunch of kids from the nearby Martin Luther King Jr. Middle School—the big public school with a thousand students—were walking by saying, “Nerds. Look at you. You suck.” I remember that was a seminal moment in my life when I was like, “Oh my God, I live in a bubble.”

Then I went to Berkeley High School, which was basically a war zone after that, by choice. I wanted to go there just to function in society.

Right. No, and that's a very important thing, to be able to function in society. It's super underrated, but very important.

I'm glad. I have a question for you that leads to our sort of topic below: “Anthropic model could break the markets.” 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, in relation to our topic of living in bubbles, what you think it would take for a young person, like a teenager or even a preteen, growing up in the era of AI.

How do you think this either helps kids or hurts them? I'll give you the one-liner kind of consensus among parents here in Los Angeles.

Basically, people here think that if you're curious and hungry, and you have good taste and a good value system from your parents, AI is going to 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, this era of AI—being able to get the answer to anything on demand—is just going to ruin your effing life.

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 brought this up. There's an issue right now where only the self-motivated are going to succeed.

If you go back basically throughout human history, 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, and you're able to buy a house.

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. Everyone's scrambling for fewer and fewer spots.

If you look at technology itself, technology is just leverage for the human, right? You go back to the printing press, you're basically just leveraging a human's ability to produce and distribute all sorts of texts to the entire world. You go to a plane, you're leveraging the ability of a human to travel across long distances. You can accomplish more because you're cutting down the cost of travel.

AI is just cutting down the cost of building, the cost of doing. Literally, you can now do anything. Go use this Claude 3.5 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 model can do for you.

The question is not, “What can AI do?” because the answer is basically everything at a certain point. The question is, “What do you ask it to do?” Only the self-motivated people, the intelligent people with the right frameworks to approach this, are going to be able to figure that out. That's why I think it's more important than ever to be paying attention and just trying and experimenting with this tech.

Basically, think about anything that you would want. I saw this one guy, 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.

Sorry, WHOOP.

WHOOP is this band that tracks your heartbeat, your stress level, basically your general health, and your sleep. One thing that I thought was hilarious is that this guy ended up taking all this data from his WHOOP, uploading mainly the stress data, and cataloging who he was interacting with at work so that he could figure out who stressed him the most and who calmed him the most, which is hilarious.

Now he's like, “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.” People who are creative are going to be able to come up with things and potentially sell things and build things. You just have to realize that the world is your oyster now. You have to get out there.

Honestly, it's crazy because the normal path to success, as everybody knows, is just no longer there. Even among the high-achieving kids, I assume that your kids are going to be in a good school—

Hopefully.

—surrounded by kids that are reasonably intelligent, for the most part. Now it's less about intelligence. A really, really, really intelligent lazy person is going to get totally smoked by somebody with a medium IQ, but with a crazy work ethic and maybe a little bit of creativity.

That's what the world has come to, right? You can't just laze your way through things anymore, which is terrible for people like me. I used to. That's exactly how I got ahead.

No, I disagree. Let's unpack that. I think it's kind of like the old Kennedy saying: “Ask not what AI can do for you; ask what you can do for AI.”

It used to be that success was a function of your raw intellect, right? I'm lucky I happened to be born with a good brain and good parents, so school was a layup for me. I got straight A's and got into a good school, and then I was pretty much shitfaced throughout college because I didn't need to work, and then landed at a great firm until it went bankrupt.

Which was like 3 seconds after you joined, by the way. Right.

Yeah, it wasn't my fault. But yeah, it happened. Basically, I just kind of cruised through, not on work ethic but on aptitude. To your point, now the credentialing 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 Columbia or 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.

So now let's unpack it. I guess in the past, yeah, you could just kind of get dragged along your path and get through life that way. Now you really have to have good taste, you have to have creativity, and you have to actually care. Maybe enthusiasm is the new magic, and enthusiasm and creativity are kind of the new things that society is going to filter for.

2. The $60 Trillion Wealth Transfer

I don't want to get too philosophical on this podcast, but should we talk about examples of this impacting markets? Everybody's talking about Anthropic, OpenAI, 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 moxie creating something that's making waves? I'm not connected enough.

I'm not sure I've heard about any of this, but basically everybody's doing a startup now. It feels like—

No, for sure. I think half the people I know have quit their investment banking jobs. They're all doing a very similar thing: they're trying to buy companies, improve them with AI, and then flip them to private equity.

That's a very common thing. But 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 otherwise would. 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.

In the long run, this is an opportunity that's open for everybody out there to pursue, 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'll give you a little bit of inside baseball, 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. If you look at what's happening right now, people are cutting their engineering budgets and they're all moving that money to distribution.

Now this turns from something that was fun to do once a week to something that could actually have a meaningful impact. So we step up the production, we hire people, we expand, because that's possible.

No, actually, I gotta comment on that. That's really smart. So, okay, good answer to my question. While everybody's fixated on ZK, NEAR, HYPE, or whatever is rallying and kind of ignoring the opportunity around the edge—we experienced this in crypto. It's called shiny-object phenomenon.

Everybody's fixated on SpaceX, Anthropic, and OpenAI right now. The opportunity at the edge is this whatever-it-is, $60 trillion wealth transfer that's about to occur from baby boomers to millennials and Gen Z. A lot of that isn't just checking accounts with millions of dollars of cash in them. Most of it is equity value in these businesses that are the connective tissue of society, places where AI hasn't permeated because there's a human gatekeeper.

Somebody just needs to buy their corrugated tin roof or some shack from the guy that makes that, right? There's probably a boomer family-owned business running it. Why not be the millennial or the Gen Zer that takes that over and just streamlines it? That's probably going to result in workforce reductions.

Of course. By definition, that's what's going to happen. If you're making a business more efficient, you probably are going to end up needing fewer people.

In the long run, this is an opportunity that's open for everybody out there to pursue, 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'll give you a little bit of inside baseball, 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. If you look at what's happening right now, people are cutting their engineering budgets and they're all moving that money to distribution.

Now this turns from something that was fun to do once a week to something that could actually have a meaningful impact. So we step up the production, we hire people, we expand, because that's possible.

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 who are left at the company. It gets reallocated to new areas. For example, all of that engineering budget reallocated to marketing means marketing firms get more money, which means the owners of marketing get more money.

By the way, that's one of the reasons I'm so bullish on Google and Facebook: that's where all of the marketing spend is and will continue to be. These companies are like the best buy in the world because they're both producing AI, they're building out data centers, and they're a direct beneficiary of the downstream effects of AI.

3. The Scarce Assets Trade: Ferraris, Birkins, Bones

That's why I'm so bullish on Google over the long run, and I'm looking for places to get back in and concentrate there. But I think it's up to you. You have to figure out what those downstream areas are that you can get into.

One of them that came to the forefront of my mind, Jonah, I'll tell you a story about something that happened to me yesterday. So, 2 years ago, I bought a Ferrari 458. Great car. I'll give you guys some numbers just because it's instructive: I bought it for $270,000 and drove it for 2 years. I put about 4,000 miles on it.

Today or yesterday, I got a call from my Ferrari dealer. They never call me. There's no reason to call me; I just bought 1 car from them 1 time. I get on the phone and he goes, "I'm calling everyone that owns a 458. We're trying to buy them back at 4,400."

I go, "That's nuts. This is a 13-year-old car at this point." So I start to think, well, what's going on? I start grilling the guy. There's no way I got paid $130,000 to go drive a supercar for 2 years. That seems crazy.

The guy says, "Well, look, basically, there's a lot of new money that's entered into this world. There are a lot of people coming online from San Francisco. There are a lot of people that have made—I mean, the stock market has just rallied so much. It's further concentrated wealth at the top.

"There are a lot more people worth $10 million or more today than there were 3 years ago, and they don't know what to do with their money. So they're buying scarce assets. That's where all the money is flowing."

That's why I think you have to rewire your brain and start to think these things could actually be long-term investments. Buying a vehicle—maybe a Ferrari 599, of which there are only a couple hundred—could, in 5 years, massively outperform the NASDAQ.

These people might be worth $10 million, or maybe they're worth $20 million. They put $10 million into the stock market and they have $10 million left to play with. They're not putting their whole net worth in there. They're shoving money into these scarce assets.

There are 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, A.J. Scaramucci. This is Anthony Scaramucci's son. He's basically setting up a vehicle to buy all these scarce assets and take them public.

I actually think that's good. Here's a crazy stat: the Ferrari Daytona SP3—you could buy it, if you have a relationship with a dealer, for, I think, $3 million or $4 million. Immediately after buying it, they're selling for $10 million to $12 million because of that scarcity and because there's just so much money out there that's been made.

People are kind of sick of shoving it into the general index funds, and they're trying to—this is sort of the dinosaur-bone thesis that we talked about a long time ago. People are shoving their money into dinosaur bones as well.

Ken Griffin buys a $44 million Stegosaurus skeleton. Maybe you should be buying a $44,000 skeleton—I think that's likely an Archaeopteryx. They're pretty cool. They're like the first flight; they're the first winged dinosaur.

What you need to do is go to 1 of those custom car-upgrade shops that does Ford Broncos and basically mod your Ferrari 458 into an Archaeopteryx 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.

That is 1 way for us to go viral.

Yeah, exactly.

We're actually pivoting the channel. We're no longer financial content or telling you where to put your money. We're doing stunt MrBeast videos.

I mean, have you guys seen the new thumbnails?

They work. That's why—

I hate you if you're watching this because you clicked on the thumbnail. You're the reason that we have to keep pushing out these thumbnails because our viewership is up. So we're rallying, but we still love you, but we hate you.

Our OG fans are like, "Why are you posting these thumbnails?" I'm like, well, because there are a lot of people who watch. If you have wide eyes, people click on your video.

But we love you. There's so much to unpack in what you just said. I say, everyone has the courage to love their audience, but do you have the courage to hate them?

I've got so many thoughts on all the stuff you just said. I don't own a Ferrari. Most people don't. The way that I see it is—

What I'm trying to say is you could, and it might actually be a very good investment. Instead of putting $300,000 into the stock market, if you're worth $1 million, 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—nothing on this podcast is investment advice—do not do that unless you're really, really tasteful and good at cars. I would say, put it this way: here's a safer bet in the luxury space.

I'm married, unsurprisingly, and I get dinged for the occasional Chanel. [laughter] There are pros and cons. Anyway, unsurprisingly, I get dinged for the occasional luxury item. Let's just say a Chanel bag or something from Hermès, or God knows what. So, the equivalent of the Ferrari SP3, whatever, is the Hermès Birkin bag, right?

Those things, if you're networked enough to be able to buy one, you could resell it right away for triple the price. But most people don't. When you say “networked enough,” isn't that just spending enough money at Hermès?

I went to Hermès the other day to pick something up for my lady, on Rodeo Drive, and you go in there and it's a scene. There are people just hanging out in there, buying stuff, talking to the sellers, basically trying to get the Birkin bag. It's all a show, which is shocking to me.

So the Ferrari SP3: if you can hoard those, keep them factory-sealed and fully traceable, you wait a couple of years and resell them for whatever. The plain old Chanel bag that you don't need to be a networked person to buy used to cost $5,000 in France. Now it's like $11,000 or $12,000 or something. These are compounding way faster than the S&P.

I do agree with your luxury-item thesis, but zooming way back out, a lot of the listeners of this podcast started listening to us because we were talking about crypto. What I want to say is, if you've ever traded crypto, it is a phenomenal classroom for the anatomy of a wealth-creation event.

Avi, you sent me that Jordi 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 3 greatest wealth-creation events of our time: OpenAI, Anthropic, and SpaceX. I kind of disagree. Bitcoin was a 30-million-x-er from the Bitcoin pizza, or if you bought the Ethereum ICO, that's like 130,000x.

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 this AI space—let's call it the technology wave, the 3rd wave of technology that we've seen in my lifetime—is going to propagate through society.

One area is luxury goods. Another is sort of trickle-down effects to industries that will be disrupted by the technology that's getting rolled out. Maybe just being short Verizon is a good bet if Starlink becomes a thing.

Starlink is actually phenomenal.

4. The Social Contract Is Broken

I wouldn't want to be a legacy telco that can't serve rural areas right now. There's no service driving down Melrose sometimes. It's ridiculous. There are all kinds of ways that this will play out. This is why, by the way, the SpaceX IPO is going to be really interesting. We should probably talk about that a little bit.

Basically, what I'm saying is, just to finish the thought—I'm sorry, I was almost done. I know I was rambling—it's already too late to capitalize on the frontier of this shit. You have to look at the 2nd-, 3rd-, and 4th-order knock-on effects.

Maybe that just means, if your passion is boats, you find a millennial-minded, AI-enabled yacht brokerage in the French Riviera or in San Francisco, or buy one from an older person because that business is going to boom as the wealth trickles through. It's probably too late to be a San Francisco-based real-estate agent, but maybe you network and figure out where that wealth is going to go and set up shop in Aspen or Austin.

I don't know. Finding the knock-on effect is what I was getting at with this, and invest or deploy—invest either your time or your capital—there. Ferraris, honestly, that's not the stupidest idea. There's probably going to be an uptick in used Ferraris.

I mean, they're not, and I think it's going to continue. This is not just me talking my book. It's kind of happening with used supercars, specifically Ferrari, because they play the scarcity game. Getting an allocation to a Ferrari is very similar to getting an allocation to a Birkin or getting an allocation to a Rolex, in a way that you can just walk into a Lamborghini dealer and buy a Lamborghini. Those obviously depreciate a lot more.

The other thing that I want to point out is that there are really 2 main reasons—well, 3 main reasons—that I think scarce assets are going to continue to go up, and why you should maybe not just look at investing only in index funds and the stock market. Maybe you want to diversify into scarce assets, whether it's real estate, cars, wine, art, or these one-off assets.

I think there will be a tremendous bull run here because, first, 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. 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. They're more likely to invest in these types of alternative assets because the social contract has been broken. 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 multitrillion-dollar valuations. So, $1 trillion to $1.5 trillion, maybe even higher, depending on when Anthropic and OpenAI 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, it was less than $100 billion—I think it was $20 billion. If you go back to Facebook, it was $100 billion. 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 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 end up staying private longer.

This is the problem. If you have 1 person that's worth $100 billion and 99 people that are worth $1 versus having 100 people worth $1 million, the former will obviously incentivize a 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.

People have to start investing. Either you have to start getting access to private companies—which is why these types of assets, like robo-strategy platforms, 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 assets that might outperform the general index fund.

People feel a little bit gypped. That's why I think sports betting is taking off. That's why Kalshi's taking off. That's why Polymarket—Polymarket's kind of getting cooked by Kalshi. Well done, Tarek. But, yeah, Polymarket's getting cooked there.

Why is that happening? Do you know what's going on there?

They just don't have product direction. I think that's the main issue: they're not innovating as fast. They're not launching products like Kalshi did. 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 a major thesis. So you have the wealth transfer, you have the social contract 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 that the majority of people can be useful because you just need to hunt an animal and kill it. Then fewer people need to be successful, because farming is slightly more difficult; it takes a little bit more brainpower, so you need to be slightly more intelligent. Basically, the way that human history has gone is that fewer and fewer people are useful over time as technology takes the job from the useless people.

Today we're sort of hitting the apex of that, which means that wealth is just going to be concentrated even further at 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, we are going to see huge pushes for redistribution, most likely, because by that point I think we're going to have even worse wealth inequality.

So technology is going to lead us there, and that's probably going to end the bull market.

Yeah, that's going to be the death knell, when the bell tolls.

Not that I have anything against Democrats. I think it’s actually a very interesting trend. I’ve been talking a lot about L.A. today. I’ve got a little L.A. poster in the background here, I think—

Made in L.A. Yeah. Where’d you get that?

It’s just a poster that I got on art.com. Basically, the way that I would think about this is, let’s keep talking about L.A. for a second. Let’s assume that there was no fraud. Spencer Pratt.

Yeah. I voted for our boy from The Hills, Spencer, Mr. Crystal. I thought he was funny. I thought he made cool ads. I thought it was interesting what happened with the late ballots.

By the way, when I went to vote here in L.A., they were like, “How do you spell your last name?” My last name is a little hard to spell, so I pulled out my driver’s license and handed it to them. 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.”

I thought it was just that ID wasn’t required. It’s literally that they do not want to see it, or they’re not allowed to see it. It was the most uncomfortable moment I’ve had in months. Anyway, I was like, “Okay, I’ll just—V 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, let’s discard all those.

A single reason for there not to be voter ID laws, other than to allow illegal immigrants and noncitizens to vote—like, what? I mean, that’s what Elon says. He says it’s just for fraud. I’m trying to steelman it. I almost can’t, but I think their argument—

I don’t know what the steelman argument is.

I think their argument is that underprivileged people can’t get it together 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 steelman the case against it, but whatever. It is what it is here.

Let’s assume that there was no fraud. The people of L.A.—the city just burned to the ground, not because of a freak accident, a meteorite, or a natural disaster. It was unavoidable. The winds were coming, they were forecasted, and the freaking reservoir was empty. Entire neighborhoods burned to the ground and a bunch of people died.

You would think in any normal environment, when a catastrophe of that scale and magnitude occurs, the people responsible for basically something the size of 5 Manhattans burning to the ground unnecessarily would get fired and replaced by competent people. And these are high earners, right? LADWP, the water facility that manages the reservoirs—the head of it earns like $600,000 or $700,000 a year.

Nope. The people of L.A. are literally saying, “The rich people in the Palisades—their views, their big houses, their AI wealth—and, you know, anybody… I want to vote for the Democrat.”

Basically, what they’re saying is, “I don’t care if—forget Altadena. Let’s just pretend that didn’t happen. The people in the Palisades are rich. It’s cool if that burns. Burn the rich, tax the rich. We don’t care if Karen Bass is incompetent. She was educated in Cuba and believes in redistribution, and it’s not fair what’s going on with us.”

Honestly, they may be right in certain respects. My dad was a world-famous union lawyer, a labor lawyer, and he used to say, “Technology for technology’s sake should not be the goal of society.” Now, obviously, that’s an inexorable trend that’s impossible to fight, but here we are. 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?

5. Crypto's Real Use Case

Spencer Pratt wasn’t going to redistribute, but Karen Bass wants to, so why not? Regardless of what your politics are, regardless of what my politics are, if you’re an investor and you’re looking to build wealth, this is the most important phenomenon to watch, because basically everything is a fade until this happens, and then just literally liquidate your assets and hide them when it does.

Yeah. I’m very bullish on Monero. I’m bullish on Zcash. 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. If you need to hide your capital from what you believe is government overreach, there’s really only one way to do it, and that’s with crypto.

How? Isn’t it all on-chain, traceable, and KYC?

You can take it with you, right? The government can’t seize it without physical force, and this gives you time, right? The alternative is that you have a bank account. Where do you put your money? How do you get your money out of the U.S. banking system if one day people try to seize it?

If, 30 years from now, a law goes through that says any assets over $100 million get seized by the U.S. government, and then they just flip a switch and freeze your bank accounts, you’re cooked. It’s over. They can’t do that without physical force, without physically coming to your house and forcing you to divulge the private keys, right? That’s the value of crypto.

This is what people always forget. 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, strong governments, and generally competent leadership—which, regardless of how you phrase it, the U.S. has. That’s how we’ve lasted so long as a country. We have a competent judiciary where we don’t generally do things that are unconstitutional. We don’t generally infringe on rights. Obviously, there are cases, but the U.S. is pretty good.

If you look at other countries, look at Britain, for example: policemen showing up at your door for posting memes. It’s not really a great look. Then you look at Somalia, and there’s literally no government. So why would you hold any money in a bank in basically any African or Middle Eastern country with authoritarian leaders? They can just take it from you at any moment.

This is really the value-add of crypto. That’s what it has been from the beginning, and it will continue to be. That’s why it has value: in a world where the government either is bad already in the current moment or turns against you at some point, crypto has tremendous value.

This is what people forget, and they think of it as just a tool for speculation. It genuinely is a non-sovereign digital, untraceable—well, not untraceable, but hard-to-trace—currency, right? So if you want to pack up and go, I mean, this is—as 2 Jews, it would have 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.

That’s the value-add of crypto, and that’s why it ain’t going away anytime soon. It ties into your thesis where, at some point, when redistribution takes hold, crypto probably becomes valuable again.

6. CPI HITS 3-YEAR HIGH

Until then, maybe we’ve spent 40 minutes and we haven’t talked about the markets that much. We’ve talked at a high level about philosophy. Until then, 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 3 years. Guys, this is what we’ve been warning about. 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.” That’s good. I like that.

It’s one of these things where it was completely overlooked. There was really no bearish thesis. Companies are printing money hand over fist, and people are forgetting that inflation is coming.

I think it says here energy rose 3.9% in May, accounting for over 60% of all the monthly all-items increase. Gasoline is up 40.5% year over year. Last week’s payrolls printed 172k versus 95k expected, which basically means that the Fed can’t cut because the economy’s already running hot and inflation is going up. The Fed’s in a really tough situation.

December hike odds jumped from 45% to 70%. Goldman Sachs dropped its cut call entirely, and I think that basically what we’re going to see is a call for a hike cycle. 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 megatrend assets.

So I really didn’t like the way that the CPI printed. I think this is a good time, if you haven’t taken profits on a lot of your positions that are up since the Iran war bottom, to start cutting down. Obviously, 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.

I like that. So would you say that Kevin is washing his hands of the cut cycle?

I’m probably going to go now. No, listen.

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 cycle—let's not forget the scar tissue from 2022—would be disastrous for all assets, including crypto. Maybe that's what finally stops “Sailor” out: just a big old kick in the nuts.

7. ANTHROPIC MODEL COULD BREAK MARKETS

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 big hacks torching the market. I think it just comes down to the fact that everybody's focused on that. Everybody's focused on quantum risk. People should just focus on rate hikes.

A lot of this is predicated on a shaky housing bubble and a shaky AI, and, you know, none of these companies generate free cash flow. Or, if they do, it's so tiny that it certainly wouldn't justify a $1.75 trillion valuation. I would consider all of what's going on—all of the froth in markets—to be a hangover from the zerp era and profligate money printing during COVID and post-COVID, and maybe a bit of euphoria over a new tech trend.

I don't think it's going to last if rates hike. This capital is not that abundant. It's only abundant when you can borrow at SOFR plus 1%, like Google. Speaking of Google, you mentioned Google. It's funny: I have a buddy who works there, and he was telling me that on a rainy day on the Google campus, you'll see people literally walking from one building to another using a $6,000 MacBook Turbo as an umbrella because that's how abundant money is there. We're definitely well into the later innings of this particular bull trend.

For sure, and you see it with everyone being a day trader now. Every single person is day trading. While that's actually a good thing for making money, because it means technical analysis is working better than ever in these markets—it's working very well because there's a significant amount of retail money using it—it does mean that we're probably close to the limit of marginal buyers unless the market continues to really print cash.

You and I called for caution a month before this pullback. We were right about that. I would say there's going to be a lot of dispersion. There is objectively a large liquidity event on the horizon. It's not right away. SpaceX, Anthropic, and OpenAI—those people have lockups. 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.

And 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 San Francisco real estate. It's going to go into Ferraris. It's going to go into basically Pokémon cards. It's going to go into collectibles.

I don't think it's going back into the markets, because a lot of these people who work at these companies and have made a ton of money genuinely believe the best thing to own is their equity. They're very bullish on AI, and so they're very unlikely, I think, to diversify out.

All these wealth managers are now calling people they think are in the AI business. In the last 3 weeks, I've gotten 100 calls from JPMorgan. I don't know why they think they're like, "Oh." I was talking to my friends, and a lot of my— for some reason, the wealth managers are really on an uptick right now, just calling random numbers, trying to get them to come over to the banks, because they're anticipating all of this new money coming online.

They're hungry entrepreneurs. They're hungry for trickle-down effects. You know, John at JPMorgan, please stop calling me. I'm not going to—no, I'm not putting my money with JPMorgan. Sorry, buddy. Unless you sponsor the podcast. If you sponsor the podcast, then maybe.

8. Gold, Uranium & The Cash Barbell

But I guess what I'm trying to say is that this wealth 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 to be buying scarce assets, which is what we've been seeing in the trends. So watch out for those dinosaur bones to go parabolic in the next 2 years.

Now, maybe speaking of another scarce asset that's doing really terribly is gold. Gold is down a ton while inflation is hitting 3-year highs, and I was kind of curious as to why this is happening. So I dug into it.

The trend of the last 6 years—basically since COVID, wow, it's been a long time—is that central banks have been accumulating gold. They've been accumulating gold to hedge against inflation, and so a lot of this gold rally is an anticipated defense against inflation. A lot of people are wondering, "Wait, inflation is hitting—why is gold now going down?"

The answer is that people are using their hedge. They're monetizing it. Turkey sold, I think, half of the gold that they've bought in the last 5 years, and they're borrowing against their reserves to defend the lira as the lira is crashing because inflation is taking hold. Russia has obviously been doing this for a while.

Central banks are no longer buying gold at the rate that they were buying before, but net-net, they're still buying. 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 buying. I think that, again, gold is, at the margin—the price of gold is set at the margin. When you have new marginal sellers come in and the hype around gold for retail has died down, this thing starts to come off.

Gold is a reflexive asset, too.

Gold is a very reflexive asset.

We called it on the pod: do not mess with gold in the ninth inning of a gold rally. A lot of people were buying it because it was up, and now they're selling it because it's down. Something that we advise against on this podcast. It's amateur hour, sort of like rookie trading. A lot of that was going on.

Frankly, to your earlier point about how crypto is portable, one of the interesting stories I hear a lot from the Iranian, the Persian community here in Los Angeles is that they had all their gold. They tried to take gold with them when they were fleeing the revolution, and it just got confiscated at the airport. It's a metal—it will get detected. So, it doesn't have that crypto-like use case.

I don't know if that's a reason why it's selling off, but to me, gold is just not something that you can set and forget. You have to monitor that position closely. It's not going to perform well in a hike cycle. That's for sure.

100% agree. I think that's the last piece of why gold is performing poorly: that rate hike cycle. I'm kind of looking—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 for a good trade. I'm probably looking at $3,300 to $3,500 an ounce to get back into gold.

I do think that commodities are just coming off in general. People have been asking me about uranium. 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. I lightened up some uranium. I think I mentioned on the last podcast, or the podcast before that, that I lightened up some. I went to cash with about half of my portfolio. Obviously, that included uranium.

I'm looking for spots to rebid, basically, on URA. Probably below 40 is a good place to bid. Maybe if we get back down to the breakout area, like $28–$30, that would be kind of a crazy buy. 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 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. These companies will end up making more money over the next 5 to 10 years—probably a 5-to-10x-er in this thing.

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 we're doing, but it doesn't mean the price action—it doesn't mean the thesis is broken. That's what people need to understand: you can trade around an asset to try to generate more P&L for yourself without necessarily believing that the mega-trend has actually changed in any meaningful way.

That's what we're doing here. We're trading around it, but still betting on the long-term thesis. 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. That's a pipeline. It's basically like a REIT for pipelines.

I want stable, inflation-protected cash flows that are backed by a megatrend thesis. And to me, there’s never going to be a shortage of demand to move energy around the country, right? That’s especially true as the demand for power grows and shifts. It’s not like we’re going into sort of a steady state for oil transportation or gas transportation. It’s a very dynamic market.

It’s the AI build, right? These data centers are going to pull more power. The electric-vehicle thesis is going to move demand for oil around the country. Refineries are getting old, and new refineries are 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 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 sorts of infrastructure projects also go up. And it’s also very tax-efficient because you can depreciate the pipeline against the cash flows that come from the sort of royalties that people pay to put energy commodities through the pipe.

So these are the sorts of things: everything’s down today, MLPX is up. These are the sorts of things that, if you’re looking to just be lazy and invest in them, are cheap; their dividend yields are mega, and they’re tax-efficient. They’re smart bets. I like them.

The other thing is, I’ve had almost no success in my career shorting things, with a few exceptions during COVID. But I have had a lot of success waiting for catastrophe and then buying crazy dips.

So, I’m a little more cash-heavy than I’m used to right now. I’ve lightened up a lot on crypto at higher levels. I’ve lightened up even on the S&P and equities, not on MLPX. I’m ready to go face-first back into the markets if there’s a serious pullback.

But I would want to see 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 tax-loss harvesting a big percentage of my portfolio, like I did during the tariff tantrum of last year, in April 2025, before feeling confident that I should be plowing more cash into the markets.

I think there’s still a long way to go, especially if there’s, what is it, like, a 70% chance of a rate hike by December?

70% chance of a rate hike by December.

That’s freaking bonkers. And if that starts getting pulled forward to September, look out below. I’m not bearish or bullish. I’m just readying dry powder because it’s been a good run.

Your phone is ringing off the hook from the Ferrari dealership now. Now we’re in full froth mode, right? We are—well, I think that’s a good place to wrap it. We are in full froth mode. So just be careful out there, guys. We’ll keep you updated when we’re going to come in and buy the market. But thank you, Jonah, as always. This is a lot of fun.

Thank you, Avi. It was great talking to you, as always. Love it.