America’s Debt Problem, Bitcoin, Gold, & Silver Collapse, Overpriced Stock Market, Fed's Next Move

0:00Michael Novogratz:When you want your spring break to feel like... And your kid's pool day to feel like... And your hotel bed to feel like... Ooh, and room service to feel like... Because at Hilton, hospitality feels like... Your cabana's ready. Would you like fresh towels? It matters where you stay. Book now at Hilton.com. Hilton. For this day. that the american people don't really understand it if you ask the man or woman on the street mike about the deficit they don't understand it they want their social security payments they want their medicare health insurance and they don't understand the imbalance that has been created that's we in my opinion and perhaps yours is unsustainable that was just on a call with the

0:50Anthony Scaramucci:senator from louisiana bill cassidy and he has forwarded a bill on social security reform his bill basically is we're going to take a trillion and a half dollars of the social security trust fund and put it into the market. And, you know, in 40 years, he thinks that takes 20 % of the U.S. debt problem away. Politics need to be the art of the possible because you're right. You're not going to convince people I need to take your benefits away for the good of the nation. We just are not a nation that has that DNA.

1:18Michael Novogratz:Welcome to All Things Markets. I'm Anthony Scaramucci. And I'm Mike Novogratz. All right. Mike Novogratz, man, a year has taken place in the last week. You know how that sometimes happens in history. So let's start with the macro gold, silver, and continued pullback in crypto. What do you make of all this? Then we'll get to Kevin Warsh, and then we're also going to talk a little bit about the Fed and what's going on in the world of legislation. Let's start with the macro.

1:51Anthony Scaramucci:though. When you're in macro as long as I am, you get to understand and sense and see what market tops look like, right? We had a market top in silver and most likely in gold. I would say we had a market top in gold and silver. What does that mean? It means for the foreseeable future, we're not getting back to those prices. What are tops, the characteristics of tops? One is a spectacular spike in volume, which we had in both silver and gold, a spectacular spike in narrative right which we had central banks buying tether buying four billion dollars of gold all the story out if you add one basis point of allocation to gold you know how much it moves to price uh perfect narrative and just price action right silver is 35 off the highs silver had gone to 85 percent above its 50 day 50 i'm sorry 15 week moving average if you look back 30 years it had never been more than 55 percent and so on any momentum indicator any overextended it was as overextended as it's ever been by almost double and then you get a trigger the trigger happened to be kevin warsh uh and i'll get to him in a second and you see the unwind.

3:14Anthony Scaramucci:What normally happens after this unwind is you'll bounce up and you'll try to look like all the people that missed it the first time will buy it and it will get about two thirds of the way and it'll roll back over. At that point, it's a better short, even though the story doesn't change. Debasement of currency. So what happened to create that final surge and then spark? mark the surge came out of davos it came out of the carny speech it came out of pierce starmer saying you can't trust the u.s it came out of the u.s saying in lots of ways we're going to be a lot more isolationist than not globalist really strongly and people say okay then you're not gonna be the reserve currency and because we can't buy china and the other currencies aren't great Our outlet's gold and silver.

4:08Anthony Scaramucci:And so gold and silver became the easy reflexive buy to, you know, bad U.S. or at least different U.S. in Davos. Now you have a fire all set up just for the spark to reverse. And that spark was Kevin Warsh. And Trump is savvy, right? He was losing control of the market a little bit. and you pivot away. And you got to feel bad if you're Rick Reeder because you're thinking, what if they pick me? No one was going to trust me. Like Rick and Kevin are pretty similar guys, right? They both are men of integrity. They both have a lot of market experience and a lot of market respect. I would say Rick more than Kevin because a lot more people know Rick than know Kevin.

4:54Anthony Scaramucci:You know, Kevin has been an analyst in Stan Druckmiller's office, quite frankly, since he left the Fed. professor at Stanford as well. And so what did Kevin's appointment do? Really simply put, it took the tail risk of inflation away. Kevin's dovish. He's going to cut rates. Trump wants him to cut rates. So that's convenient. But Kevin is not going to hand over the reins of the central bank to Donald Trump or any president. Right. He gets a six year term. He can't get fired really. And so it's a little bit like a Supreme Court justice, just with a truncated term. And people know and think of him as a mini Drucker motor, as a man of integrity.

5:43Anthony Scaramucci:And, you know, if you want to be conspiracy theorist, you could say he's married to Ron Launer's daughter. He's in the pocket. No, he's his own guy. He is disciplined. He taught me about intermittent fasting. I wish I could have that discipline because, you know, it seems to eat one meal a day and you lose a lot of weight and stay healthy.

6:02Michael Novogratz:Do you do intermittent fasting?

6:05Anthony Scaramucci:Only when I'm too busy to eat. Yeah, okay. All right. I like at least two meals a day.

6:10Michael Novogratz:Come on. Novo, let me tell you something. We're getting up there, man. Let's enjoy our meals, okay? I'm your Italian brother, Novo. I enjoy my meals and I like to drink after. I like to drink after. Don't be listening to Kevin Warsh on like food, okay?

6:23Anthony Scaramucci:Yeah.

6:23Michael Novogratz:Call your Italian brothers on food.

6:24Anthony Scaramucci:I like to drink after 8 p.m. There's no drinking after 8 p.m. I'm going to say, oh, you got to be kidding. All right.

6:29Michael Novogratz:All right. Well, all right. Well, all right.

6:30Anthony Scaramucci:I lasted a day on that. But listen, so what did the market say?

6:34Michael Novogratz:Everything you were saying about Warsh was going beautifully. He told me about the eating habits. Now it's going this way.

6:39Anthony Scaramucci:So he took the tail risk out.

6:41Michael Novogratz:Right.

6:42Anthony Scaramucci:Right. We're not going to have turkey. He's not going to allow turkey. No one thinks Kevin Warsh will allow turkey. And listen, he doesn't have complete say, right? the government treasury and congress it you know has control over the budget but it's an important leg of the stool and in some weird way if i was president or my favorite democrat was president you very well might pick kevin warsh and and scott bessen to be one and two right like i was calling it the dream team. Listen, Besson has become far more political than I ever thought he would, but that's the job. Warsh took the job that's by definition apolitical.

7:24Anthony Scaramucci:And so, you know, it's a good thing for America that Warsh is in that spot.

7:30Michael Novogratz:So I don't know Kevin as well as you know, Kevin, but believe it or not, I was in the Trump orbit when they interviewed Kevin the first time. And Trump, there were three picks, okay? There was Kevin Warsh, Jerome Powell, Janet Yellen. Okay. He dispatched Larry Lindsey. Unfortunately, he didn't like Larry Lindsey's appearance. Okay. We're just talking very honestly on this podcast. Larry likes to eat the Italian food just like you and me. Larry, like you and me, is not intermittent fasting. But anyway, to make a long story short, those three, he said Warsh was too hawkish. and he said he couldn't pick yellen because yellen was a obama pick and so he went with jerome powell at the suggestion of mnuchin one of the reasons why steven is on the outs with trump is he blames him for jerome powell why are you laughing i'm just telling you everything i know i'm gonna give me the good i'm giving you the good dad that's good skinny okay so but kevin i like i met kevin through professor neil ferguson and i've read a lot of kevin's stuff and i think he's a Great pick for the Fed, and I know you agree with me, but let's go to market valuation.

8:45Michael Novogratz:And let me just read you these facts, and then you respond, Mike Novogratz, right? S &P at all-time high. Dow Jones, all-time high. Current P.E. ratio, Shiller P.E. ratio, 40.32. Historical average, Mike Novogratz, 17.3. Okay, we're trading at a wild dot-com bubble peak valuation, okay, which on March 1st, 2000, was 44.19. This is the second most expensive market in 155 years. Okay, I'm just reading the stats. You're the macro guru. So I now want you to respond to all of those stats. Go.

9:30Anthony Scaramucci:Yeah, there is enough to get you really worried. And at one point, there's a shot we'll have a big correction. On the other hand, you've got a technology in AI that we've never seen. The kind of productivity gains. It's such a powerful story. I said this last podcast. I really think it's going to create a bubble beyond the tech bubble. Right? Bubbles are created around stories that you can't take your eyes off of. And this is one of them. Uh, and it will end just like the tech bubble did. I just don't, don't know if we're there yet. Now that said, right before this podcast, I went out and bought 400 million bucks of 1%, 4 % out of the money puts for the end of March.

10:19Anthony Scaramucci:I just think every portfolio should have some disaster insurance in it. Cause you're not going to know when it happens. My base case is still stocks higher. um and that's mostly driven by a strong economy the fact that inflation is falling and so worse is going to be able to cut so we're gonna have a fed cutting rates into a strong economy

10:42Michael Novogratz:and you have a story that's powerful uh oh so michael you didn't live through the nifty 50 and i didn't live we're both the same age but tell the viewers and listeners what the nifty 50

10:54Anthony Scaramucci:was what were the nifty 50 yeah the 50 biggest names uh in the stock market and during the original bubble right the one we all read about 1929 1930 this was where all the volume and all the frenzy and all the story showed up so we've gone from the nifty 50 to the powerful four okay yeah it was the mag seven and now it's like well yeah well well let me do that because i i did

11:19Michael Novogratz:the math on the mag seven so let me just give you the mag seven ready 35.7 percent concentration of the s &p 500 in the mag seven in the dot-com era again march 2000 the top 10 names were 24 percent okay so current mag 7 35.7 and you say yeah i i think listen they continue to make money uh

11:52Anthony Scaramucci:they continue to beat earnings and they have the growth story of the world now they're not all going to win and at one point something's going to fall right everyone i think if you ask macro and equity long short to predict what ends it it'll it'll be a problem with you know open ai you saw elon now is going to take grok right xai and merge it with spacex uh and then people people or at least uh speculate that one day he'll merge that with tesla and it'll be the the the new berkshire hathaway of the of the future uh we'll see but you know elon's got so much momentum in his following it's hard to think the spacex which already has cash flow from the from the satellite business and from the renting out uh you know pushing up saddle uh pushing up rockets into space uh it it's hard to think that that doesn't trade well right i'm guessing all of a sudden that's a two trillion dollar company and you know out of nowhere two private companies merged together and you had a trillion dollar company.

12:59Anthony Scaramucci:That's not a nowhere. SpaceX is, I think, 15 years old. Yeah. Or maybe even older.

13:05Michael Novogratz:Yeah. No, SpaceX is 2002. So it's 24 years old. 24 years old. Right. So, you know, you didn't see the memo. Maybe you misplaced the email. But it says right here that Mike Novogratz is the Fed chair for the following two meetings. Okay. June 16th, 2026 and July 28th and 29th, 2026. So you've been named the fed chair. And oh, by the way, you have carte blanche, Mike Novogratz. You have no committee that's going to vote. You're going to make the decision on where rates are going to go. So go ahead, fed chair, Mike Novogratz. What would you do with rates? Because The next couple are still Jerome Powell's.

13:47Michael Novogratz:That's March and April. But in June and July, those are yours. What do you do with race, Mike?

13:53Anthony Scaramucci:You know, it all depends what Powell has done. Assuming Powell has done nothing, there'll be so much more data by the time you get to June. Right. Inflation data, jobs data will be getting closer to the midterms. why I say that is important because I think Trump realizes his poll numbers fell more in the last four weeks than they have, I think, any time in his career. And so they're going to do something to try to juice the economy. Right. That's not just because it's Trump. Any politician who's in power coming into election tries to juice the economy. And so my guess is you're not doing a

14:36Michael Novogratz:thing you're sitting there okay so so okay so now we're we're stopping the play acting chairman kevin he gets approved assuming tillis everybody gets on board and the criminal proceedings go away for jerome powell uh chairman warsh no rate cut in his first two

14:56Anthony Scaramucci:meetings i think he cuts rates in his first two meetings because he really books listen there's a real fair debate about inflation and what causes it right so i'm going to take you back to 2012 we have bernacki does qe2 and everyone was worried about inflation oh my god we're going to get inflation oh my god we're going to get inflation you can't flood the market with this much money and not have inflation and guess what no inflation japan was qe infinity no inflation we didn't really get consumer price inflation until COVID. And that very well could have just been because of the supply shock.

15:40Anthony Scaramucci:And so, Anthony, we might look back 20 years from now and have studied these 40 years and said technology, measured or unmeasured, and globalization, did such an amazing job of keeping consumer inflation low that there was nothing that could raise it that the only thing that got it up was supply shocks right tariffs were a version of a supply shock uh but as tariffs go away the the the pounding of productivity a pounding of excess labor you know with productivity gains with outsourcing with you know water falling to its equilibrium level if you want to think about it globally as opposed to just in your own little pond maybe that's just the mega deflation trade and that's what everyone got wrong in 2013 and 2014 and 2015 when they thought inflation was coming and so if that argument tends to be the right one worse can bring rates back down to two percent uh now what no one talked about is that's the environment for spectacular asset inflation, right?

16:59Anthony Scaramucci:Inflation of stocks and properties and collectibles and things that rich people own. That's the formula for wealth inequality, which we see and benefit from the two of us because we own assets. And that's the formula for revolution if it's tax revolution if it's revolution like you're seeing in uh in the streets at places we agree but so warsh might you know have an environment where even though the economy is doing fine if inflation is still low he's going to cut rates okay so i'm going to

17:38Michael Novogratz:make a prediction for you because uh he is obviously uh a mentee of stan truck and miller or say they're business partners. And about seven, eight years ago, Stan was on a college tour. You may remember this. What was Stan talking about on the college tour? Well, the chain clicks back. The generational theft of baby boomers taking money from their children and grandchildren through this deficit spending. So I'm going to make a prediction that Warsh is going to go on a campaign once Trump has been neutralized effectively or lame ducked completely, he'll go on a campaign to discuss deficit reduction and how to try to contain the deficit.

18:23Michael Novogratz:Let me push back a little bit. Let's say you. I'm going to push back a

18:26Anthony Scaramucci:little bit. So there's two key roles, right? There is Treasury Secretary and Fed Governor. Traditionally, Fed governors have said, hey, that's not my lane. That's the administration and Congress's lane. I can tell you what I think about it, but it's not my lane. My lane is inflation and jobs. I got a dual mandate. I'm going to put one in front of the other every once in a while based on context. But that's my lane. and yes lots of deficit spending needs to get funded in the long run that's not great it creates inflation but i don't see the inflation i'm just inflation and and so i think if you gave him both hats you're 100 correct what is surprising is we would have said the same thing about besant and the reality of politics has not allowed Besant to carry through on that commitment to, you know, he was trying to get the deficits down to 4%, let alone, I'm sorry, 3%, let alone 3 % by the end of his term, right?