America's Inequality Crisis, Trump v Powell, Global Instability, Venezuelan Oil & Bitcoin?

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0:58Michael Novogratz:We've got risk of regime change in Iran. We have intervention by the federal government into private equity, even though they only represent less than two and a half percent of the overall residential housing purchases that are going to be scapegoated. We have an administration that's threatening the Federal Reserve Chairman with a criminal prosecution. The only story that we're going to tell for the next 10 years is inequality and how we deal with it. We're in the Gilded Age. We haven't seen inequality like that in our lifetimes. And it's getting worse by the day. And the people in power have done everything they can to continue to skew it that way.

1:36Michael Novogratz:Welcome to All Things Markets with me, Anthony Scaramucci. And I'm Mike Novogratz. All right. So, Michael, we are back. Okay. Another wonderful day of great activity and news. I want to start with Venezuela, if you don't mind. It's sort of where we left off last week. So the president is pushing for oil companies to invest$100 billion in Venezuela. And there's also some notion that Venezuela may have a Bitcoin stash. I don't know if that's true or not or what you've heard. A lot of rumor. A lot of rumors about that as well. And we know they have gold. Let's start there, though. I think one thing that the president did overlook is the trust deficit, though, right?

2:18Michael Novogratz:I mean, there's a huge trust deficit. We put all these sanctions on them and now we're saying, okay, well, we're done with the sanctions. We want you to spend billions of dollars of capital, which ties up your capital for 10 to 15 years. Go back in there. What say you? So what I hope happens, and there's a, I don't know, 25 % probability this is what happens, is that we allow the VP to stay in power for three to four months with the U.S. monitoring military and keeping stability so there's not just a chaos. we have elections free and fair elections are the best you can where the u.s is a monitor uh the maduro party uh gets voted out unanimously and they will and the new president either the nobel prize winner or or uh her competitor in the last election emerges as the new president And we're still there to make sure the military stays in check and that there's a peaceful transfer of power.

3:32If that happened, I think capital will flood in. I actually have been planning with my friend's trip down there to look at opportunities. I think capital will flood in. the idea that we're going to hold a illegitimate government where the people don't like the government at all where capitalists don't like the government at all and we're going to hold a gun to their head to do what we want and people are going to want to invest is is asinine it's it's it's not clear thinking and so when you hear marco rubio talk and i don't like marco rubio I'll be clear on that. But he, at least in one interview, outlined the agenda that I just gave.

4:15Hey, we're going to have fair and fair elections.

4:19Michael Novogratz:For the future of this podcast, he's to be called the Viceroy of Cuba, Mike Novogratz. Okay, we're going to call him the Viceroy. How does that sound to you? I'd like to headbutt the Viceroy. Me and him in a ring, put us together. I'll even put one arm tied behind my back. And I'm 61. I'm, you know. No, you're a vigorous 61. You're a former wrestler. I wouldn't take you on. You know, you're the kind of guy, if I saw your girlfriend in the bar, I'd say, let me move away from those two. We'll go back to this. I mean, don't you need a legal structure in Venezuela before Mike Nograss put his capital in it?

4:57Why I was very clear, if we get a free and fair election, or at least a decent election, and a non-socialist, non-Maduro party candidate wins, there will be tons of capital that takes the risk that this is a new regime, especially with the U.S. backing it. Right. What is crazy is Machado. Her policies are so free market. Like this is what every Republican should love. And so like I do think that transition is when you will see people start thinking, hey, this is really a place to invest. You'll have some investment beforehand anticipating that. But if we keep the old party in place, nothing changed.

5:49Michael Novogratz:You know, she may be a capitalist, but is President Trump a capitalist? We're going to have a 10 percent cap on credit cards. We're going to stop the private equity firms from buying into the housing. So he's a populist right now because he's got midterms coming up and his polling is terrible. This ICE fiasco in Minneapolis, you know, could not have come at a worse time for his poll numbers. Americans don't appreciate mass guys shooting people. And you can look at the video like we all have eyes. We all watch the video. You know, the other the Republican or the MAGA side is speeding it up on like 8x to say, oh, look how fast the car was driving.

6:35You know, like we're not stupid. And so I think you're going to continue to see the president. I mean, this idea of 10 % cap on credit cards is word for word from Bernie Sanders. Right. Frankly, to be really clear to the listeners, the executive side doesn't have any authority on the interest rates and credit cards. That would be a piece of legislation. Bernie's been trying to pass it for a couple of years.

6:58Michael Novogratz:Right. Well, I mean, you know, and I've said this to people when I worked for Donald Trump, we used to go to Bernie Sanders rallies because they were more or less saying the same thing and they were more or less attracting the same people. So populism, it sort of goes 180 and then it circles around and meets each other at the other side. But, Mike, I want to talk to you about this for a second, okay, because this is from realtor.com. And I want you to really think about it before you answer. The average price of the home, the median price, the middle point of the price, I should say, is$432 ,000.

7:32Michael Novogratz:If you want to buy that home and you don't want to be house poor, Michael, you got to make a minimum of$131 ,000 a year. the median income in the United States is$84 ,000. We're$50 ,000 away from that mark. So that means half the people, if they're pushing themselves to buy a home like that, they're missing dental appointments. They're missing medication. They're missing a few, they've got hand-me-down clothing. So step back and answer the question for me about that and populism? Because I understand what the president wants to do. I'm going to give him credit for trying something. But is it the right thing?

8:19The only story that we're going to tell for the next 10 years is inequality and how we deal with it, right? We are in the Gilded Age. We have never seen it in our lifetimes, right? The last time we saw inequality like this was the Gilded Age, right? We haven't seen inequality like that in our lifetimes. And it's getting worse by the day, right? Elon Musk becoming a trillionaire at one point. That's just symbolic of just how bad the inequality is. And the people in power have done everything they can to continue to skew it that way. Part of it was the natural evolution of this technology revolution that we had.

8:59And so let's not even blame people why it's there. Let's just assume it's there. how we deal with that is going to literally determine you know is is america a wonderful place to live or not uh i want to make you economic zor how would you deal with it it's complicated right so first of all you have to observe the problem uh we have a real inequality problem we have we're already 40 trillion in debt and so we just can't keep giving away money so we need to tax more or at least have a tax system that's fair, right? Like what would I do on tax? I'd start thinking of things like step up basis, forget about it.

9:44Like I'd start with the premise of like, what do Americans think is fair? Like what goes into the DNA of Americans? Like as much as conceptually a wealth tax makes sense, it's not an American thing. We have real estate taxes already. That's a wealth tax, but I wouldn't start with the wealth tax. I would capital gains and income be the same level, right? I'd have a total cap on total taxes between federal, state, and local at 50%. No one should give away more than 50 % of their income. I would make grats illegal, right? Like, so what's a grat? Grat is a way that I can put assets in a trust, in a pre-trust, have those assets appreciate and have all the appreciation go into a trust for my children, never having to pay the inheritance tax.

10:34I would lower the inheritance tax to some level, but have no exceptions. So instead of it being 50, 60%, maybe it's a 25 % inheritance tax, but everyone has to pay it. That's an American ideal, right? That everyone gets a fair shot. We all start on the fair, the same starting line. And we created this country not to be a monarchy. Right. Like in England, in the aristocratic families, they still have the oldest son gets everything. So you keep the concentration of wealth. Like I was shocked when I found that still exists in 2020 or 2026. You know, that's not an American ideal. And so I think there's a lot of things we can do just under fairness that will raise a lot of taxes.

11:21And on the other side, you have to cut spending. You have to be smart of where you spend. Like Trump is going to increase military spending by a trillion and a half dollars. Like that's insanity. It's insanity. The money we're spending on ICE is insanity. Listen, Obama deported 3 million people during his term without ICE. You know, it's a new budget. ICE's budget is now bigger than the Marines. And so this performative spending and, you know, we brought in Elon Musk to cut waste fraud and abuse and he failed. He did zero. And now he's tweeting like a maniac, you know, about how much waste fraud and abuse it is.

12:06When he was there, he did nothing because he was unhinged. Right. And so what is frustrating to watch and like we're in a week where Iran could fall and Venezuela is in the process of falling. Two stunning successes for any president. Two defining successes for any president. And Trump is polluting them all, polluting his wins with horseshit, horseshit with ice, horseshit with these populist laws that he has no ability to.

12:42Michael Novogratz:Oh, he's tweeting out that he's acting president of Venezuela. Did you see that on Truth Social? He's got a picture of him that says he's acting president of Venezuela. He's going to tweet out when he picks the next Fed chair, he's going to tweet out on the acting Fed chair. He let the payroll numbers out early and someone asked him about him. He says, hey, when I get the numbers, I tweet them. Like, no regret, no all-minute mistake. I mean, it's like we've moved into the insanity. There was a New York Times interview, five New York Times reporters interviewing him. It's on video. And so he wanted it out there.

13:24and it literally is a man who thinks there's no boundaries and who's just waxing poetic like a, you know, it's almost like the movie King Lear or the play King Lear or Ron was the great Japanese version of it where the king goes mad and we've got the mad king. And none of the people around him, Susie Wiles or J.D. Vance or Peter Thiel or anything, is saying a damn thing because they're either benefiting or scared or their policies are being enacted. And so finally you had Tom Tillis said, no, no, no, no, no, no, no. We're not doing this with Chairman Powell. I'm not going to approve anybody for Fed governor or new chief and you need me.

14:12So you want to try to bring up bogus charges on the current Fed governor to pressure him to move rates? Not on my watch. So we finally had a Republican. Of course, he's not running again with stones who said enough. There have been so few Republicans who have put themselves in harm's way to say, this is an American. This is not what I believe in. And again, I'm giving Trump all the credit for the shit he's doing that's good. But the stuff that he's doing that's bad, we've, and I think this last two weeks in some ways is the beginning of the end. I think J.D. Vance's career is kaput after his performance on the Minneapolis stuff.

14:55He looked like just a buffoon.

14:59Michael Novogratz:I've been saying that for six months. I mean, Trump will put him through the woodshipper. He's not going anywhere. But go back to the markets for a second, because you got a couple things here, because I know you look at this stuff. 9.3 million Americans, 5.7 % of the workforce now hold multiple jobs. That's the highest number in the nation's history since we've been recording this. So the country is struggling, Michael. Now, the haves are not struggling. I understand that. But the have-nots are struggling, and they come after the haves eventually. So square that with what's going on in the stock market and the overall market.

15:41It's the same thing that happened during the Biden administration. The economy I mean, numbers, the macro numbers were okay and the stock market ended on the highs, but most people in America didn't feel it. And it's just the same thing in the Trump administration. Stocks, all-time high today. Looks like they're going to break 7 ,000 on the S &P and we're going to go much higher, right? Economy is strong. I think it's going to get stronger. And most Americans don't feel it. Affordability gets harder and harder and harder. and again you asked me earlier on what do you do you there's gonna we already have ubi in america right like we're we're not a complete capitalist society right between federal state local we're about 35 40 percent in tax that gets spent on people um we need to learn how to spend that much more efficiently.

16:36I would love a more direct transfer of wealth to people, not through the government, but directly. It's one of the things that crypto wallets could help with. But I think we're going to need some version of UBI in this transition into this AI world because we haven't even talked about what AI is going to do. It's a complicated world. It's going to get more complicated and we have politics that don't allow nuance.

17:06Michael Novogratz:So if I sat in, I'm in the war room with you, but I take you back to your days at Fortress and you're a macro trader. And I sit down with you and I say, we've got risk of regime change in Iran. And again, risk or opportunity, let's say more opportunity potentially than risk. We have intervention by the federal government into private equity, even though they only represent less than two and a half percent of the overall residential housing purchases that are going to be scapegoated. We have an administration that's threatening the Federal Reserve Chairman with a criminal prosecution. Okay. You and I were talking about Lloyd Blankfein's book.

17:52Michael Novogratz:When I finished his book last week, I was like, well, that was a rules-based world. And it was still a crazy world, but now we're in a post-rules-based world. But I'm in the investment meeting with you. And so what are the right things to buy, Mike? Listen, it's why people are selling the dollar. They're buying gold. They're buying silver. They're buying copper. Hard assets. Real estate is a hard asset. You want to be in hard assets. You want to be nimble. I was talking to one of my friends who also has four kids and I was like, you know, our kids are lucky that their dads spent their whole careers preparing themselves for chaos because managing family wealth in the next 15 years is going to be brutal.

18:40Like I just gave you what I think is the right portfolio. That could change, right? What goes wrong in the first quarter to that portfolio, you know what? Everyone's already getting leaning short the dollar. U.S. economic data picks up much stronger than you think. Powell stays, he pals the Fed chair for a couple more meetings and he doesn't cut rates. And even though we all think Kevin Warsh or Kevin Hassett or Rick Reader is going to be a do the president's bidding dove, they look at the world and they're like, I just can't, I can't, I can't cut rates. And all of a sudden the dollar rallies.

19:20That's not my base case, but I could easily see that happening. And so I think we're going to be in this hyper volatility mindset. Maybe the vol numbers don't see hyper vol. We're going to have to be very quick to be able to pivot and change as the facts change. But right now it's we're printing too many dollars. We have too much debt and we're going to debase the currency. And so that's gold, silver, hopefully Bitcoin at one point, if it ever eats through all these sellers. Right. What's so frustrating about being a Bitcoiner is. I told this story. Eight months ago, six months ago and four months ago, and I said, hey, you got my gold, silver and Bitcoin.

20:05And I had some gold, some silver and a lot of Bitcoin. I should have had a lot of gold, a lot of silver and a little bit like Bitcoin.

20:14Michael Novogratz:didn't work i mean but yeah but bitcoin has outperformed gold over two years it's underperformed by 45 i'm talking about this last chapter of real yes i know real last six months yeah yep and i think that's because a bunch of whales are selling and i and i believe we'll eat through them at one point and then we'll play catch up so but mike i want you to think about this for a second because you're you're saying something that it's hard for me to believe and i'm also saying it by the way i I think you and I have been anesthetized by what's going on. Said differently, if it was 1995 and you and I are at Goldman Sachs and Bill Clinton said he's bringing a criminal prosecution against Alan Greenspan because he's not doing his bidding.

21:02Michael Novogratz:I think the markets would have had a totally different reaction to that. Yeah. Are we anesthetized now? I think the world has gotten used to the fact that half of what comes out of Trump's mouth is a test balloon bullshit. Right. You're not really going to. You know, this is going to be a show trial, but Powell will be out way before even there's a hearing. And this is for politics and publicity. I mean, it's kind of rich. They're saying, well, you speak. spent too much on rebuilding the Fed and you didn't have permission. And, oh, I just ripped down the whole East Wing without permission either.

21:51I mean, like the hypocrisy is, it would be funny if it wasn't our country. I mean, it's like, we're literally in lunacy land and, you know, we have a long way to go with somebody. Like, Anthony, you were there, right? At least for 11 days.

22:11Michael Novogratz:Yeah, but I was there for a year. My mistake was that you keep moving the goalposts, Michael. You understand what I'm saying? And we're doing that economically. Our economists are doing that. Our Fed watchers are doing that. We're saying, okay, that's not normal, but let's move the Gold Coast because maybe 75 % of it won't happen, 50 % of it won't happen. But what if some stuff really starts to happen? Well, the question is, are we at that? What was in the famous trial of McCarthy? He said, is there no decency? Are we at that moment with what we just saw in Minneapolis, what we're seeing with Trump's behavior, where Republican senators are going to say, Republican congressmen are going to say, I'm literally going to D.C.

22:57in about an hour to ask a lot of these questions. Are we at that point where they're going to say, this is not America? because it really becomes a Republican business community responsibility to at one point say, we pushed the goalposts too far. Like we've got to push them back.

23:16Michael Novogratz:So just so you know, it was Joseph Welch's question to McCarthy in 1954. He turned to McCarthy and said, have you no sense of decency, sir? At long last, have you no sense of decency? Have you done enough? And just a reminder, Harry Truman despised Dwight Eisenhower, despised him. He loved him during the war. He made him the Supreme Commander of NATO after the war. But Truman could not understand how the Republican president, five-star general with all of his power, didn't put down McCarthy. And so he allowed McCarthy to continue to bubble up. And so here we are. Will that happen here, Michael?

24:12I, you know, we'll see. I'm going to, next week we'll talk about what I learned in D.C. The obvious answer is probably not because it hasn't happened until yes. It did feel a little different over the last few days. like i think i haven't seen the the recent polling on what people think about minneapolis but i would bet you a super majority of americans i 70 70 plus percent are disgusted by it uh and that doesn't bode well for you know the maga cause uh and you know listen trump trump's not trump's an amazing politician he will he will if he asked you he'll throw christine ome under the bus he'll pivot he'll uh you know like he and so that that doesn't mean you know it's a knockout blow by any stretch uh we got a lot of rounds before the midterms let alone before his term is out but what scared me anthony was the first time in my life having watched all the different cnbcs and foxes and cnb of of these republicans and democrats looking at the exact same picture saying completely different things.

25:27And like, are you guys insane? Is that there is a higher chance than I ever thought possible that we're gonna have the midterms and one team's gonna win by a lot and the other team's gonna say, oh, those results don't count. You guys cheated. And they're gonna fly in the FBI and they're gonna take the voting machines and say, oh, we just checked them ourselves. Or you guys did cheat. I mean, Trump already said they made a mistake not getting the voting machines in the 2020 election. And so I think that the possibility of us really losing democracy is higher than it's ever been in my life.

26:03Michael Novogratz:Yeah, listen, I mean, we're on a nice edge. And what I don't get about the markets is it's not factored in the markets. And I hope I'm wrong about it. And I hope that things normalize in some sense of way, but it doesn't feel that way. But remember, remember when you're devaluing your currency, right? Stocks go higher. Commodities go higher. Real assets go higher. So if you told me the Iranian currency is going to be worth 70 % less in a week, the stock market will go higher, not lower because it's the no-show, right? I'm with you. So we're going to wrap here, but before we wrap, this is three rapid fire questions.