If You Don’t Own Assets, You’re Falling Behind In This Economy

0:00What's going on guys today I've got a very special treat for you I sat down in an exclusive interview with Adam Kobesi. In this conversation, we talked about the case-shaped economy, the jobs market, the impact of artificial intelligence, what he thinks is going on with inflation, and the quality of the CPI data. We then get into tariffs, Fed policy, interest rates, and we even get into the 50-year mortgage and also this$2 ,000 tariff dividend stimulus check that's coming from the Trump administration. All that and much more in this conversation with Adam Kobesi. We're live today from the desk of Anthony Pompliano.

0:42Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on YouTube. Right now, we have just over 37 ,000 subscribers. So hit that button, add one more, and let's get closer to that goal. Let's get into this conversation with Adam. All right, Adam, I thought a great place to start this conversation is everyone's focused on the job market. The Fed is using that as the excuse to cut interest rates. AI is this huge trend that's kind of smacking the job market in the face. How are you guys seeing the job market kind of develop here? Are you worried about anything?

1:13So I think, look, the job market is really the whole narrative now for the Fed. For the last two, three years, it was just all inflation, right? Inflation was hot. We needed to get to 2%. That was a top priority. The Fed has a dual mandate right which is to minimize unemployment and also maintain price stability when that mandate swings too far to either direction they start prioritizing that direction right now it's very clearly the labor market is the problem uh not that inflation is at two percent in fact is at three percent and rising which is why you know the fed is basically in this lose-lose situation and why we've been saying this for a while the fed is cutting rates into stagflation they really have to just pick the you know they're picking their poison in a way and in which way they're moving with the power with fed policy so the labor market is absolutely weakening i mean we put out tons of information on this every single day um just every single leading indicator in the book is weakening the unemployment rate is probably close to five four point five percent right now if we were receiving economic data um now that the shutdown is going to hopefully end soon we will probably get that data soon.

2:20But those cracks in the labor market are forcing the Fed to cut rates into a situation where we already have a hot market. We have a hot inflation situation. And then you're kind of adding fuel to the fire. So our thesis has been own assets to be left behind. I'm sure you've seen us tweet this many times. That's really why. I mean, and you're seeing just about every asset in the world going up right now. And it's really just pricing in what's coming next, I think. Now, when you look at the Fed cutting these interest rates, you said cutting into stagflation. Explain what that means for people who may not understand it.

2:53Absolutely. So the stagflation is a situation where the unemployment rate is rising, the labor market is weakening, but you also have high inflation. Ideally, both of those fall at the same time or they both rise at the same time. So you can align Fed policy. right? Like, or sorry, they don't, I should say there's price stability and low inflation, low unemployment at the same time or vice versa. Now they're moving in opposite direction. So you have to pick between the both sides of the Fed's dual mandate. And it just makes it's a very hard situation for the Fed because you're basically making borrowing cheaper, you're stimulating the economy, you're ending quantitative tightening into a situation where inflation is already running hot.

3:37That's only going to make inflation run hotter. And markets know this. That's why you see this run happening in gold. That's why even equities, equities, there's a lot going on in that front. And we've been bullish with the S &P. We continue to be. But in a way, the bearish thesis is almost what's bullish for the S &P 500, right? You're cutting rates into inflation. That's only going to drive nominal asset prices higher. Now, do you believe the economic data? So we get the CPI number, that thing is all over the place. You look at something that's like an alternative measurement, like truflation.

4:07Truflation says inflation is way lower than what the CPI shows. We've gotten jobs data that starts coming out. Then we get some private market data that maybe is a little bit contradictory. How do you look at the quality of the economic data and how much weight you put on it? Yeah, I mean, look, the CPI quality has been objectively deteriorating, right? So a lot of the components of CPI are now being quote unquote estimated or the way it's computed relies on a lot of estimates for some categories where price data might not be as attainable or might not be as clear. The percentage of estimations within CPI is rising.

4:43I can't remember the exact amount, but I think we're above 30 % now. 40%. It was 40 % in September. Okay. Yeah. So that's definitely concerning. Now, what I will say is it's very clear that whether inflation is at 3.1 or 2.9 or 2.7 or 3.2, it doesn't really matter. I think the key thing here is that we're above 2 the fed wants to get to 2 they're not going to get to 2 based on what's happening now and in in the best case scenario we're flat above that target in the worst case scenario we're rising above that target so i don't think it changes my my thesis too much um and like you got to work with the data you have we've we've been critics of this for a while now um even with the labor market stuff you're you get these massive revisions two times in a row you get every single month is a downward downward revision.

5:33In a way, you almost have to look at the labor market data on a two-month lag now to really even have any sense of what's happening. But even then, they'll do the 12-month revision eight months later, and they'll revise 800 ,000 jobs out of the data. So all I know is the labor market is definitely weakening. Inflation is definitely running above 3%, and you have to position yourself accordingly. Now, when you look at this case-shaped economy, one of the things that people will look at is One headline will be like, it's amazing time for investors. The other headline will be like, you know, there's so much pain in the economy.

6:03And one thing I keep trying to reiterate to people is like both headlines are true. It just depends on where you're looking in the economy. Like it is an amazing economy for some people and it is a horrible economy for others. How do you start to think through kind of that dichotomy or that paradox, if you will, given that there's only one Fed policy, there's only one economy, but you are having these kind of like different outcomes? Yeah, like I think you hit the nail on the head. this is the best economy of all time for asset owners. If you own stocks, if you own real estate, if you own gold, if you own Bitcoin, you own these hard assets, this is the best possible economy for you.

6:37I mean, look at the S &P 500 up almost 40 % since the low in April. On the flip side, if you go ask a random person walking around New York City, hey, are we in a recession? There's a good chance that at least 50 % of people would say yes, right? So I think what's happening is the wealth gap in the US is broadening and it almost it's it's almost because of a variety of different factors that have kind of culminated to where we are now since the pandemic between stimulus between interest rate policy between supply chain disruptions between really all these different things that have compounded into themselves deficit spending now also driving inflation higher um and that's only going to broaden in my view i mean the the wealth gap is going to continue to broaden i don't even think it's really much it's almost like at this point you can't you can't it's like telling the government hey end deficit spending today like it's it's not going to happen you know so in my view you just have to position yourself as best as possible um and that's why we've really been bullish on all these asset classes because again nominal asset prices are going to continue to rise real estate look at real estate i mean people have been waiting for the real estate market to pull back for five years now even when there's no demand i mean we virtually have no demand in the real estate market, single family homes are still going up year over year, every single month.

7:54I mean, sometimes you'll see like a small downtick of 0.1 % month over month, and it's like huge news. It's just a situation where you need to own assets. And I think asset owners will continue to be rewarded. And that K-shaped economy is going to continue to widen, in my view. Now, let's go to the stock market first. People are talking about this AI bubble, the fact that stocks are going to pull back. We saw over the last week or so, stocks did come down. But then we got the Trump put. He announced the stimulus checks. We get news that the government shutdown is probably going to end. It feels like stocks are kind of right back to the bull market.

8:25How do you evaluate the stock market and whether it's overvalued or if there's a bubble? So my thesis has been pretty consistent over the last few months in the market. And that's that I would say from a valuation perspective, you have a lot of people point to 2001, 2000 similarities saying we're in a bubble. You know, there's some signs of that, I guess you could say. there are some things that are similar but what i will say is look at nvidia's forward earnings for example nvidia you know is now basically almost what 10 of the s &p 500 8 of the s &p 500 nvidia has a lower forward pe than walmart um and i don't think most people realize that like these companies um are growing so quickly that their earnings are growing faster than the stock price which the stock price is already growing at a rate that's almost never been seen before so So I'm not too concerned about valuations.

9:15I think generally, I recall it has been S &P to 7 ,000 by as soon as the end of this year. And I think that's still going to happen. I think we're going to have a very hot run into the end of the year now that this shutdown is kind of beyond us. And the other situation here is you have over$100 billion in Magnificent 7 CapEx per quarter right now. Actually, probably close to$600 billion per year now for just these seven companies. That's an insane trend to fight. I mean, if you're fighting investment of 600 billion, that's more than most economies in the world per year by seven companies. And these seven companies are now around 40 percent of the S &P 500.

9:53I mean, in my view, you're taking a losing bet. So even if you're in the camp that this is a massive bubble that's going to explode, it doesn't necessarily mean you need to sit on the sideline for five years. Right. I mean, I think that's a key point here. Separately, you mentioned the stimulus check. um you know what what i will say is whether it happens or not is still up in the air but one of the things that was um in president trump's post is you know high income earners will not receive a stimulus check in my view the high income earners are going to receive the biggest stimulus check of all time from this and it's not going to be in the form of uh you know the the government sending you a two thousand dollar check no it's going to be in the form of all these asset classes pumping higher again bitcoin crypto i mean look at crypto initially on the news i mean we don't even have the framework stuff of this thing.

10:39And I think Ethereum was a 5 % on that news. Stocks, you saw what happened in 2020 and 2021. Couple all that stuff I mentioned, rate cuts into stagflation, all this CapEx, the AI revolution, and then you throw in probably 400 to$500 billion of stimulus checks from the US government. I mean, you're really bold to bet against that. And that's really what our view has been. Now, when we go and we take a look at things outside of the stock market. You mentioned Bitcoin and cryptocurrencies. So there's lots of people calling for a big bear market. They're saying, hey, the four-year cycle still exists.

11:14At the same time, there's people who are saying, well, the institutions are here. There's a persistent bid. We seem to be closing above this 50-day moving average. And that's kind of bullish to go back up. How do you guys evaluate Bitcoin and cryptocurrencies? And do you think that there will be prolonged bear markets? Or do you feel like this is just kind of a normal pullback in the grander scheme of a bull market? Yeah. I mean, we don't see this as like the beginning of some major crash and like five year bear market type of thing. I think if you're a Bitcoin investor, which obviously you are, and anyone who has been at least watching this asset class, not even investing in it, you know that 20 to 30 % downswing is almost like a normal every single, you know, this could happen on any given month type of thing.

11:56And I think those that's the beauty of crypto, right? You have so many opportunities to get in. And every time that this happens, there's calls that come out that say we're going to zero. And when people say we're going to zero, that's when you buy. And it's like, it's almost like clockwork with Bitcoin. It's incredible how sentiment shifts so rapidly. We fell back below 100K. I think we're, you know, we're back above 100K now. I still think all-time highs for Bitcoin, probably see 200 ,000 Bitcoin, you know, within the next 12 to 24 months. it's just going to be, like I said, the best period of all time-owned assets.

12:31And Bitcoin is definitely one of the assets at the forefront of that push. Now, at the same time, we're going to get a new Fed chairman coming up here at the end of the year, kind of beginning of next year. We'll see when they actually announce it. Do you think that having a new Fed chairman will change monetary policy in a material way? Or do you feel like Powell, now that he's actually cutting rates and we'll see what he does in December, but it does feel like he's kind of doing what the administration wants to be done. Although maybe he's not doing it as fast or as aggressively, but he is kind of headed in the right direction.

13:00And so that Fed chairman change may not have as big of an impact as it would have had maybe over the summer when Powell was refusing to cut. Yeah. Yeah. I mean, that's a good point. So I think we're definitely cutting. I don't think it's at the rate that Trump wanted. Trump was calling for a 200 basis point rate cut at a single time. But so I think we're - Would have been wild. Would have been wild. Listen, I mean, I think we're moving closer to where we need to be. What I will say is I don't think any I don't even think Trump wants a chairman that's going to go in there and just say, oh, yeah, you know, rates to zero and let inflation go to 10 percent.

13:34Like, I don't think that's really what his point was or point is. And I think as we move further closer down to to where Trump wants to be or where the new Fed chair wants to be, that gap between Powell and whoever the new the chairman is, is narrowing. And look, Trump has even said in the past, you know, he calls for these crazy rate cuts and it shocks markets a little bit. But he always says, and if inflation rises again, then you raise rates again. Or if inflation rises again, then don't then stop cutting rates. So I think there's definitely it's not going to be an all out free for all. I think it will be a period of easier monetary policy.

14:09I definitely think that the new Fed chair will be far more receptive to what President Trump wants. And again, that only supports my my view even better. So I think in this market, you have two camps, right? You have the people who are complaining and basically saying X, Y, and Z, this is not fair. This is a problem, et cetera, et cetera. But then you have the people on the other side who are just saying, honestly, we can't do anything about what's going to happen. You just have to react to the position accordingly. And as a result, this has been one of the best runs ever. So I'm in that camp.

14:41And I think you just got to continue to react to things at face value. I mean, that's really how it is. What do you think the impact of the government reopening will be? I mean, look, I think for everyday stuff, it's going to be it's going to be back to normal, I guess. Right. You're going to be able to take a flight without having to worry about being canceled. As far as the market goes, there was some volatility last week. But on average, I mean, if you look back to the 1970s, the government shutdowns don't really have much of a long term impact on the S &P 500 either direction. We really didn't.

15:10We had a record. We're at a record shutdown right now on S &P 500. It's two percent from a record high. So I don't necessarily view that as like a bull or bear thesis. I think it will be good to just restore stability for everyday Americans and kind of get things moving again and hopefully not repeat this all on January 31st when this short term funding bill expires. Now, another thing that's been announced is the 50 year mortgage as an idea. What's your take on this good idea or bad idea? I mean, look, I know, I don't think it's a great idea. I think the argument is you have a lower payment. The flip side is you're paying double the amount of interest over those 20 years compared to the first 30.

15:49And I think the situation with homeownership is honestly just it's very upsetting to say the least. Like you, the median home buyer is now 40 years old. First time home buyer. I mean, that's like, we've never had that before. I think in the 1980s, it was like 28 years old for the first meeting, first time home buyer. So there's definitely an affordability issue. I feel like the 50 year mortgage thing is kind of brushing the dirt under the rug. Kind of just saying, you know what? We'll deal with it later. Just lower the payment.

16:23Again, there's not much else I can say on that front. I think it's the math says you don't necessarily want to put more debt on consumers. You don't want to make debt more accessible, but you also want consumers to own homes. There might there must be some other way that you can incentivize that or at least get because even when rates drop, right, like prices are high and prices are probably going to rise further. You need some sort of combination of higher supply and lower rates on the market. Right. And that's definitely very hard to do. But listen, I think 50-year mortgages are, in a way, just kind of sweeping the dirt under the rug.

16:58Last thing I want to ask you about, I saw you talking about the median value of U.S. consumer stock market portfolios have now hit$300 ,000. It's a record level. Basically, as you've been saying, the asset owners, they're killing it. $300 ,000 is the median value of a U.S. stock market portfolio. They're getting rich. How do we read into this? Yeah. So look, the median value is through the roof. What I will say is that doesn't necessarily mean that everybody is sitting on$300 ,000, right? Because I think most Americans or I know most Americans are not really sitting on any stocks at all. But the people who are and again, own assets have be left behind.

17:35This is my thesis are winning. I mean, this is like 300 ,000 median is insane. I mean, I don't I don't think any country in the world has something like that. Maybe maybe some like small, you know, Monaco type thing. But that's crazy for the scale of the US. So and asset owners, stock owners with AI, with all these different trends that are happening in the market right now are seeing unprecedented gains. So, again, I think there's no better time to own stocks. I think we are heading to S &P 7000. And I ultimately think in this market, you just have to you have to play the cards you're dealt. The cards we're dealt right now are the situation where every dip is being bought.

18:14momentum is strong. And all these kind of monetary macroeconomic policies are kind of aligning in the same direction in our view. Now, you write this great letter. I read it all the time. I think that you guys do a fantastic job. Your X account is one of my favorites out there. Tell everyone a little bit about what you guys are doing and how they can subscribe. Absolutely. Yeah. I appreciate the kind words. So we do basically macroeconomic analysis through a few key asset classes that we trade the S &P 500 crude oil gold natural gas commodities in general bonds as well as Bitcoin and what we do this is our 10th year now actually of the Cobasi letter we publish a annual report fully transparent report of everything that we've invested in um and benchmark that against the S &P 500 we've outperformed the S &P 500 um since inception and and continue to do so and I think right now this is probably one of the best market for traders in history.

19:09It's incredibly profitable to trade this market. So we strive to kind of guide our subscribers to outperform market benchmarks. It's been a great year so far. I think on X, we also, as you mentioned, we post a lot of big macro takes, kind of crucial financial information for investors, completely free for anyone to follow. And yeah, I'm excited for what's coming next. I think 2026 is going to be a great year. And where can people subscribe? You can check us out at thekobesiletter.com. And then on all social media, we're at Kobesi Letter. So that's K-O-B-E-I-S-S-I. I know we were talking about the spelling and pronunciation of my name.

19:47Amazing. All right, Adam, thank you so much for taking the time to do this. We'll definitely do it again in the future. Thank you. Thanks for having me, pal. Man, I always really like talking to Adam. He's got tons of great information. I appreciate you guys paying attention, and I hope that it was valuable to you. Please remember to subscribe on YouTube, and I'll see you guys live tomorrow from the desk of Anthony Pompliano.