America’s Affordability Crisis, Zohran Mamdani, Trump's Economy, & Crypto’s Lost Momentum

0:00This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, Sponsored Jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a$75 sponsored job credit at Indeed.com slash podcast. Terms and conditions apply. This is your fix. I am your host, Stassi Schroeder. Welcome to Tell Me Lies, the official podcast. What's the most unhinged thing of season three?

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1:21So book early. Stay longer. Save more. With Vrbo. That's the way to 30A. Well, I read this statistic. I want you to react to it. Realtor.com says right now the average price for a home in the U.S. is$425 ,000. So therefore, not to be house poor, you need approximately$131 ,000 a year in salary to afford that home. The median income in the United States is$84 ,000. That means half of our people are below that. Respond to that anxiety. It's real. I think you're seeing it not just in the working class, in the lower middle class, in the middle class, in every strata of society, it's getting harder to do what you thought you had earned your way into.

2:05Well, welcome to All Things Markets. This is Mike Novogratz and Anthony Scaramucci. Michael, how are you today? Doing well, Anthony. I'm loving the galaxy sign behind you in the scarf. All right. You're looking badass, but let's start with the macro environment. Okay. You and I both got back from Abu Dhabi last week. Tell us a little bit about what's going on around the world and where do you think things are here in the United States now that we've seen this inflation print? Yeah. Listen, in inflation, these numbers are, first of all, are hard to trust because of the data shutdown that we have with the government.

2:44but certainly looks like inflation is heading lower in the, you know, that that's going to make Trump more aggressive on whoever he picks as Fed governor. It's going to make the Fed feel more comfortable in this, in this debate between, uh, you know, jobs and inflation. And so my gut is whoever we pick, and I think it's either going to be a Hassett or, or, um, Kevin Warsh are both going to be pretty dovish. I think we're seeing short rates. We'll get down to two and a half percent. You know, Fed funds two and a half percent within a year under both of those Fed governors. All right. So let me you and I know Kevin Warsh a long time.

3:25OK. And Kevin was a hard dollar guy back in the day. He was a full on monetarist. What happened? Now he's a dove. So tell me about that transition in your role. Listen, I think, A, power is pretty, you know, B, the Fed share is a pretty powerful thing on your resume. And power is an aphrodisiac. And so I think part of it is you're not going to get the job unless you're doing what the boss wants. Part of it, I actually think Kevin is intellectually honest and thinks this AI boom, productivity boom is going to be unbelievably deflationary and wants to get ahead of it. And that's, you know, listen, it's going to be one of the great questions that we all have to answer over the next, you know, six to 18 months, 24 months.

4:16Does AI just eviscerate jobs and put labor pressure on wages? does it increase productivity so much that we get growth, but we get kind of a Goldilocks scenario or almost a deflationary growth scenario? All right. So let's play ball and bear. Okay. Let's play ball and bear. So let me make the bear case for you. I want you to react to it. If you look at forward S &P earnings, they're peaking. They look like on multiples of pre-2008 global financial crisis they're back to like 2007 pe multiples if you strip out the mag 7 it's a little bit better but the mag 7 seem to be the ones that are driving the capital spend in the economy michael so so are you worried about the pe of the stock market irrespective of where rates are you know kind of yes but um if you look at some of the big mag 7 companies you go out to 27, you know, earnings, their PEs are already low.

5:23They're increasing their earnings at such an amazing pace that, you know, you're 17, 18 times of 27 and people will start talking 27 as soon as the calendar year flips. And so not as expensive as they were. In fact, I talked to one of the great equity investors in the world. He said he's hoping for a 10 % correction because he'll load the boat. And so there's a case that, I mean, Warren Buffett just bought Google, that Google and Meta and Microsoft are not expensive. They're just such dominant companies and they're going to continue to dominate. You know, when I think of tokenization, to pivot to crypto for a second, I was just in Abu Dhabi, there's a lot of talk about tokenization.

6:08You know, what's tokenization of equity is going to do? It's going to, in time, give access, not to people in the United States who already can go on Robin Hood or you know their Goldman app or Schwab or or anybody's app and buy buy stocks but all over the world and what are they going to want to buy so in in in you know Paraguay or Peru or the Mideast or Brunei or Asia they're going to want to buy the brands give me Apple to be SpaceX give me give me Google and so I think you're going to have even more demand for those stocks. But that's the big question. All right. So you're still a bull then?

6:49I am a nervous bull. And I think the big risk, and it's a real risk and it's hard to quantify, is this whole last few years plus AI has even accelerated, which already was a pretty big inequality gap to an insane inequality gap. And that's going to have political ramifications. I read somewhere that 75 % of Americans think a wealth tax is a good idea. And you sit with Ray Dalio, he thinks something like that is coming. And normally what kills the great bull market is a policy error, right? Or the Fed finally raises rates. They're worried the economy is too hot and they slow down growth and things roll over.

7:37Like we got a Fed that's going to be cutting rates. We got a government that's going to be pumping money in the system, right? Trump does not want to lose these midterms and his polling is heading south pretty quick. He's made a lot of mistakes. And so you can bet your bottom dollar that if it's$1 ,776 for servicemen or something else, he's going to find a way to try to goose the economy. And so that's normally not how bull markets end. What will end this, I think, is a political revolution, i.e. maybe the Democrats win, maybe there's wealth tax, maybe there's a real, this can't go on moment. We haven't hit it yet.

8:16Mondami was the first flare, right? Smoke on the field. Because he's speaking truth to power, he's saying this doesn't make sense anymore right uh and people are like yeah you're right you're right now you can debate how you fix things and like i would argue with him he's not going to fix things the problem let's go to him for a second because you met with him recently i understand you you hosted an event for him what was your what were your thoughts about him so i've met with him a few times uh you know before he was mayor i met with him twice for about an hour each once one-on-one and once with a group of board members from robin hood uh he's thoughtfully smart he really believes what he says he's young and aggressive uh and i was giving him just advice of a 61 year old man who's watched markets his whole life um i i did help uh in a very small way because we're not allowed to make major contributions as a wall street firm uh in this uh transition gig with the idea that he's going to be the mayor i want him to succeed and i want him to have somebody that tells him their version of the truth and not just all the young people he he he campaigned with uh and he's been open to have a dialogue um i personally think most of what he wants to accomplish has to happen at the federal level and that as the mayor he should focus on making new yorkers lifestyle better and so far he's trying to do that and so that's housing it's the stuff you can control it's not tax policy right tax policy is a broadly a federal gig um but we'll see you know, the jury's out.

9:56I like that he picked Jesse Tisch to continue as police commissioner. That was a good sign that he's open-minded to not having all his teammates on his team. And so we'll see. But where he's become a national sensation is he got his finger on this idea of affordability. Trump's now trying to talk about affordability, but this is going to be the issue of the next four years. How do we create a system that feels more fair? You're in such an interesting seat because you're on Robin Hood. You love the city like me. You're a city dweller, but you're also a global thinker and you're on a plane a lot traveling around the world.

10:37Is this affordability issue just here in the United States? Is it here in the United States and Western Europe? Do you think there are other countries that are doing better with this? If they are, how are they doing better or are they doing worse than this? You know, listen, I think it is broadly a Western issue to start with, U.S. and Europe. The reason it hasn't been as political in the developing world is, you know, you look at a place like Vietnam or even China, you were lifting people up. And so the optimism just getting out of the poverty level into the lower, you know, the working class level to the lower middle class level is so exciting that you still have a lot of optimism.

11:20even though they have huge inequality. I mean, India's got inequality like we've never seen, but you're still lifting a ton of people into a better quality of life. And so there's not the same entitlement of what I expect my life to be, right? And so I think they probably have a 20-year gap in terms of to when the population really gets pissed at them. We have an entitlement of what we think our life should be because our parents had it. Right. We at least think we should do as well as our parents, if not better. The American dream is you do better than your parents or your children do better than you.

11:57I shouldn't. Oh, listen, there's that anxiety now. You know, Michael, I read this statistic. I want you to react to it. Realtor.com says right now the average price for a home in the U.S. is$425. So therefore, not to be house poor, you need approximately$131 ,000 a year in salary to afford that home. And then to also have some disposable income for emergencies, prescription drugs, etc. The median income in the United States, that means half of our people, but the median income in the United States is$84 ,000. That means half of our people are below that. and we do know this from the statistics and the surveys, lots of people skip medical visits, they skip dental visits, they won't repair the car.

12:46Respond to that anxiety. It's real. I think you're seeing it not just in the working class, in the lower middle class, in the middle class, in every strata of society, it's getting harder to do what you thought you would earn your way into even quite frankly the lower rich what used to feel rich in places like new york you know you're making big salaries as a wall street salesman now they feel like ah i can't afford it anymore uh for the same job for the same salary because everything that you used to do got more expensive and that that is i think the number one issue in politics right now um and because listen, if you live in the rarefied era of hedge fund managers or crypto currency CEOs, you're above that stress level.

13:43But almost 80 % of my friends aren't. And it's real. I want to go to our favorite subject. You're my favorite subject, which is crypto. Okay. And I want to ask you the following question about Bitcoin. And I'm going to channel our buddies. Okay, we have some other big crypto whales, Bitcoin whales. I feel like Bitcoin, every time it gets a bid, Michael, it gets slammed to the mat. Okay, you're a wrestler, right? Every time you feel like you're going to win a point in a wrestling match, the opponent to Bitcoin flips it to the ground and starts the pinning process. What do you say to that? So there's a great book that your speculative listeners, the traders out there should read called The Hour Between the Dog and the Wolf.

14:37And he talked about the psychology of a bull market, which is all testosterone fed, and the psychology of a bear market where it's cortisol. And he's in a bull market, you see guys sitting around the trading floor talking about women, talking about cars all pumped up. What about their lift? and a bear market what happens is the market falls it starts coming back oh thank goodness thank goodness and even though you had promised yourself you were going to cut some of your risk if it came back you now are have endorphins pumping into your body and you're like it's good i can do it tomorrow you go on a walk and it rolls right back over you and you go back into fight or flight and so he says in a bear market traders get these little look like beer bellies right cortisol bellies and their hands are on their hips and all the guys start slunching their whole their shoulders a little bit you know that's the market we've been in in crypto for the last you know three months uh every time it feels like it's going up yeah you breathe a sigh of relief and then you get punched so but what is it michael is it whale selling is it uh i think we under we We underestimated the damage of Black Friday, the flash crash, October 9th.

15:50It was a psychologically damaging and liquidity damaging thing for retail. And crypto at its prime, the primary user of crypto has always been retail. Certainly, we've got a lot of institutions in Bitcoin and more in Ethereum and Solana some. But that process really beat up retail. and all investors are momentum-based, right? Like growth stocks and crypto are momentum-based instruments. And so we haven't had enough juice to get the narrative going again. And I think you're gonna go in this kind of choppy, sideways, less liquid range until we take out 100. And it's not gonna be easy to take out.

16:39You're gonna need new money coming in. A lot of the guys that burned, there's sellers of calls above. So a lot of the big holders say, well, I'll sell calls to make some income. That works until it doesn't. It works until vol gets so low and then there's a catalytic event. Hassett becomes the Fed governor and pushes up much faster, pays for rate cuts. The budget keeps blowing out, right? Our old boss, Lloyd Blankfein, you said, be careful picking pennies up in front of a steamroller. Remember that? expression. I just read Lloyd's biography on the flight over. So shout out Lloyd Blankfein. It read like, it's the first book I've read in a while in one sitting.

17:20Right. Yeah. Well, it's very readable. I read it as well. And I'm going to have him on our open book podcast. I love him. He's a very thoughtful, very insightful guy. But I want to go to this though. Is 2026 a big year for Bitcoin? I would have thought, let me rephrase If you had asked me, I would have said 2025 is going to be a great year for Bitcoin. The shackles are off. The regulatory environment is going to improve. And we're going to the moon. We're going to end the year at 150. We're sitting here at about 88 ,000 as we're speaking. So I totally got that wrong. And now the sentiment is decidedly negative, Mike.

18:02Yeah. So what do we have going for us? The sentiment really does stink. and there's a macro story that I can come up with that potentially becomes a good enough narrative to get sentiment going again. That's the bull case. I think there's still more healing to do. I'm not worried that we've seen the all-time high in Bitcoin. I just am not. There is a gigantic apparatus behind this asset. There's a belief system. It's not going away. But it didn't do what it was supposed to do this year. And so it's going to go sideways until it starts behaving. And I don't think, like Wall Street's a selling machine.

18:50And we're just getting a lot of these big RIA platforms, you know, geared up to sell. And so I don't think that's going away. We also have an administration that owns a lot of Bitcoin. Personally, they're connected to it. They bet their gig on it. What really is happening, and I picked this up in Abu Dhabi in a very extreme way, is there is unbelievable optimism around the transition to a world where digital assets and blockchains are more important. And that's going to show it with neobanks. Every day, someone else is talking about their, what I call neobank, right? They're offering, they're bringing that's going to have crypto and tokenized stocks and prediction markets all on one app, right?

19:36like we're going to bank the unbanked. A lot of that's overseas. So couldn't be more bullish on building out the infrastructure of crypto. It's a little bit like the internet, you know, after the internet had trouble, you had some of the greatest years of growth in terms of building the infrastructure. And so there's no bear market in building crypto infrastructure coming for TradeFi and for crypto. How we get momentum back in crypto pricing has always been about narrative. And we're going to have to see that pick back up and prices beget prices. And so in some ways, you don't need to get bullish until we break 100.

20:18Mike, you brought up Abu Dhabi and I want to get you to react to this. I was there in Abu Dhabi with you at the chance to interview Brian Armstrong and Atoli from Solana. When I go to Abu Dhabi, I see the future. And I think that there's an economic paradox of being early. And just hear me out for a second. If you build your airport in 1930, well, now you're layering onto the airport. If you build your telecom system with copper wire, there's still copper wire in the ground here in the U.S. But if you are starting and you build your airport in 2021, which Abu Dhabi just did, and you're building gleaming skyscrapers and gleaming infrastructure, your lateness to the economic game almost makes you more innovative.

21:01Where we are lagging with 1930s-style water mains here in New York and 1930s-style infrastructure. What is your reaction to that? And what does it say about MENA and the future there and juxtapose it to the U.S.? Yeah. So it felt like more so than it ever has, and I've been going there for 25 years, more, 30, that Abu Dhabi is having its moment, that it's become a real place, that it's an important place in the global architecture of financial market cities, almost more so than Singapore, which is kind of shocking given the scale that Singapore had. And so hats off to those guys. Let's remember, it's still 11 million people in the Emirates, 1 million Emirates.

21:53It's a tiny place. It is giving a good model for what an Islamic country can look like, right? Hoping Saudi's following. Like we don't have a lot of, there are 55 Islamic countries and there are not a lot of good models. And so that's the biggest hope. And I do think, you know, it's a long way for them to get to a place of domestic, you know, consumption, right? You know, like when you think of that just as the giant scale of the GDP of the U.S. and China, you know, we're not even in the same conversation. And so I do think there's a lot to do there as a business, right? There's a lot of capital.

22:38It's a great platform to reach Africa and South Asia, right? I'm wildly bullish the next 20 years on Nigeria and Africa, the growth dynamics and the energy. They're all young people. And so I think they're well positioned and they're very strategic. But I think we got to be careful that we don't confuse the scale with the massive scale of these big economies. So, Michael, we've talked about macro, Fed rate cuts coming. We talked about this wall of worry. You're a cautious optimist. I'm also with you on that, cautious optimist. But let's talk about an economic dashboard where Mike Novogratz gets worried.

23:24the trader, the macro trader, Mike Novogratz, what would you have to see on the dashboard? Excess leverage, policy tightening. Tell me about you're flying and right now the ceiling and visibility is more or less unlimited. We'll say it's Kavu, but when the clouds come, what do they look like? Yeah. If inflation starts ticking back up, problematic, right? Because we want to, A, we need to fund this$40 trillion deficit, so lower rates are good for that. And the yield curve is already steep. If it starts steepening at an accelerating rate, it can grind steeper. But if it starts gapping steeper, oh shit, that's problematic.

24:11And then I've got my finger really on the pulse of politics. I think it's probably tailwind for a while because trump's behind but if they get wiped out in the midterms it's the efficiency or the efficacy of of his his his presidency is going to go way down uh there's going to be all kinds of investigations there's going to be just a lot of noise uh and you're going to be gearing up for 2028 where unless things change you're going to have the administration flip back to a democratic and then it's a question of is it a is it a bernie aoc mandami the wing of the democratic party or is it a you know josh shapiro uh westmore wing of the democratic party uh and that's a big difference in terms of how markets will react and so markets don't love uncertainty and so in some ways i think we have the makings of bull market until we get closer to the election next November.

25:16The average person, when I'm walking in the street, the average person you say, is Trump a lame duck president? They say, no, he looms larger than life. But you're a political aficionado for 40 years. When that midterm is over, one, is Trump running again? I say, no, What do you say? And then number two, you've seen other lame duck presidencies and you've seen that we could pull out the stock almanac together. What happens in the last two years of a presidential cycle where the president can't run again? What are your thoughts on that? Listen, I think this is going to be different because of the character.

25:54Right. Trump is just an enigmatic. You know, we've never seen anything like it. So will he run again? I don't think so. But he's going to act like he is. He's going to go back and forth. And so we're going to have all that drama. Who's going to be the nominee on the Republican side? We'll see. I don't think they have a strong one. I honestly don't in this current crop. But, you know, you never know. Things change and somebody hits a note and people, you know, gather behind it. A lot will have to do with how the economy does, right? The famous lines, it's the economy stupid. That's going to continue to ring true.

26:43If, you know, we might get inflation coming down for lots of reasons, right? We pushed immigrants out. We not pushed inflation up, but AI replaces it. You know, oil prices, I'm long oil and it's been a crap trade. Right. Oil price is low. It could go lower. And so you might get. You know, lower inflation and decent growth. And I still don't think that's going to be enough to deal with the inequality. But we'll see. Trump's got a lot of building he wants to get done in the next couple of years. his ballroom, his arch. And so you could also see an argument where he's just trying to cement his legacy.

27:32He is not shy of ego. You think Galaxy will be called Trump Galaxy before his term is over? I mean, because I'm sort of feeling like Skybridge could end up be calling Trump Skybridge. What do you think? We're going to put a little hair on our astronaut. last question Michael we've got 30 seconds to go in this podcast uh it's Christmas what is the Novogratz team doing for Christmas how do the Novogratz celebrate the holiday we always go out to our our place in Amagansett uh my parents have a house out there big Christmas celebration the next day we're going off skiing uh in Jackson Hole uh I've got a boutique hotel that me and some partners built and yeah i've been to that hotel i've been to there i've been to the restaurant at that hotel which is a fabulous place we've had a couple of great dinners there for our blockchain symposium out there awesome um all right well listen i wish you a very merry christmas happy holidays uh and thanks for joining uh again and we'll be back with a another episode of this you're back by popular demand my friend there we go the next time i'm gonna ask you the questions all right we'll do the sharing