Crypto Collapse, AI Job Apocalypse & The End of Dollar Dominance

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1:27Mike Novogratz:This is what they said they wanted to do. We want to re-nationalize, de-globalize. The reality is it's impossible to completely de-globalize, right? We've got a$25 trillion supply chain built in China. We need each other. But they send the message very clearly through tariffs, through hard trade negotiations, through ridicule and abuse. The rest of the world isn't saying, oh, great, thank you very much, sir. They're doing what they need to do to keep trade alive with the U.S. and they're pivoting elsewhere. U.S. assets as a percentage of reserves are as low as they've been in five years. That's a one-way trend.

1:59Mike Novogratz:We are losing our reserve currency status slowly.

2:02Anthony Scaramucci:By design, Michael.

2:03Mike Novogratz:Yeah, which is crazy.

2:05Anthony Scaramucci:Welcome to All Things Markets. I am Anthony Scaramucci. And I'm Mike Novogratz. All right, let's get into it, Michael. What the hell is going on, Mike Novogratz? Okay, I've been in a submarine out here on Long Island getting, you know, depth charges, crypto depth charges bombing me. Let's start with the crypto, if you don't mind, because you're an expert in this.

2:27Mike Novogratz:You've heard a crypto winter, right? Yeah.

2:30Anthony Scaramucci:Why, though?

2:31Mike Novogratz:What caused crypto winter? We had in five days, kind of like the Arctic blast. Remember that thing that came over and they were like, it was the Arctic bomb or the cold bomb? And we did winter all in about five days. And listen, 60K in Bitcoin is the 200-week moving average. That's kind of held in the other crypto winters. uh i think that's probably a tradable low we probably saw i mean my lips to god's ears we probably it doesn't mean we won't retest it but we probably saw the low of this cycle um why here's the big question is why often you never know till later somebody sold a lot and then you know i said this a few times on the podcast i think after we broke 100 to the upside There was a bunch of frenzy, but, you know, we started seeing sellers of some of the big OGs sold.

3:25Mike Novogratz:We had the big seller. Friends of mine sold some. And it was almost like a seller's virus. And then they used quantum as an excuse. Ah, quantum, quantum, quantum to sell more. And then I think, you know, prices are set on the margin. We had more sellers than buyers. And it created this cascade a little bit synchronized with worries about the equity market, even though the equity market's barely off the highs. But there was that worry, you know, stocks had a bad week. And there wasn't a line in the sand where people came and said, I got dry powder to buy. Listen, we had the world's best salesman already hawking Bitcoin and Larry Fink, right?

4:10Mike Novogratz:Biggest asset manager, you had President Trump. I actually think the president's involvement has, you know, from the administration, it's been great for crypto. But from the first family being as involved as they are, it's been negative. You know, it can make it harder to pass this market structure bill. And it's just the sense of this is supposed to be kind of anti-government. Yeah, well, I mean, the Democrats from their X feed, they put out, yikes, you know,

4:42Anthony Scaramucci:and they linked crypto to Trump. So that's telling you that the Democrats want to be anti-crypto, I guess, or anything that's Trump for Democrats against. I can get to talk to the group

4:55Mike Novogratz:that are around the negotiating counter. You only need a handful of Democrats to pass this bill. They don't want to, they want to go in unison so they have some cover, right? So there are 14 of them. They want at least 10 to cross. And they're getting a lot of shit from their left flank. And on days like yesterday, the left flank, you know, licks their lips and says, I told you you were right. This is all a fraud. It doesn't mean anything. Listen, the guys that are in the room from Cory Booker to Mark Warner, Chuck Schumer, Ruben Gallegos, you name them, they understand it. They understand the importance of getting it done for the U.S.

5:35Mike Novogratz:financial sector, for the U.S. economy, and actually for political reasons. They want this off the table politically. And so I haven't given up hope. I think there's still over a 50, 60 percent chance this gets done. But. You know, the president is on a tear. And the more things he does that seem out of sync with what normal is, makes it harder for, you know, the centrist Democrats to tell their vocal, you know, compatriots, hey, no, shut up. Right?

6:16Anthony Scaramucci:Before we move on to Agenda AI and the software issues, I just have this last question on crypto. Anybody blown out? I mean, you're sitting at Galaxy, very large exchange. It feels like somebody got margin called and we went from 87 ,007 trading days ago to 60 ,000. Ba-boom. Or that didn't happen.

6:45Mike Novogratz:Look, I used to have two hands. I lost a hand. I think people lost a lot of money if they were on crypto. I have not.

6:54Anthony Scaramucci:There are other parts of your body, Novigratz, that you could have lost. Thank God it was just a hand. Let's just put it that way. I would say we've had all our clients meet their margin calls and it's not been frantic.

7:09Mike Novogratz:uh we talked to come a few of our competitors uh that we have good relationships with and they've had the same experience um there's a ton of volume coming out of abu dhabi in the mid east and there is speculation though absolutely not not verified that you know there's a big seller i don't know if it's from venezuela or or where that's been selling and they've been selling through proxies in the Mideast that then sell through Binance. So Binance has been a huge portion of this volume. Again, that's just speculation.

7:48Anthony Scaramucci:And so we won't know if the selling is over for six months then, right? Because it could still be another big leg of selling as far as we know. We don't know.

7:57Mike Novogratz:I saw buyers yesterday for the first time. Okay. And not in huge size. you know they came in they bought you know 10 million 15 million 3 million and so we're we're closer to the buy range than the sell range at this point if you what worries me more isn't will bitcoin go back below 60 000 i don't think it will i think we put a tradable bottom in what worries me is that after beatdowns like this there's a lot of volume in the last few days and there's a little bit of volume for the next few days and then volume slow and people are like oh and so we bounce it i don't know if we bounce this 80 or uh you know between 70 and 80 and then we just kind of die for a while until and then we're gonna we're gonna need something to reduce the thing and so what could that be listen kevin morse is going to cut rates but he's not in till june uh battle help uh the market structure bill if it passes would help a lot but i'm guessing there's something i'm not thinking about that's going to get crypto going again um but my real base case is we go into a pretty quiet three to four months after we bounce and hit a new range volatility will die and volumes will die.

9:24Mike Novogratz:And that's not great for the business. Right. But the long-term narrative in your mind

9:27Anthony Scaramucci:is not lost here, right?

9:30Mike Novogratz:It's damaged but not lost. Listen, every four-year cycle, crypto gets kicked in the midsection and then poked in the eyes and then spat on and danced on. And it resuscitates itself, you know, like Lazarus, it rises from the dead. um why there are 250 million people around the world that have bought into this bitcoin community they're not going to just turn it off right there's there's so much vested interest right uh people own crypto they wanted to go higher so they're going to figure out how do i re regroup and rebuild narrative now there's never been a leader we've had you know little demigods within the crypto community from brock pierce at one point and you know cz and michael saylor and um you know larry fink uh to a degree and so you'll see new new salesmen plus old salesmen arise and they'll tell a similar story with their own twist and that will end up building momentum again but it doesn't happen overnight like when humpty dumpty breaks takes a while to piece them back together.

10:43Anthony Scaramucci:All right, let's talk about something else that is potentially breaking, at least the market is worried about it. And that is the software engineering job for the human being, Michael. We've learned that Claude Cowork has created a application or a artificial intelligence that will allow for full software development, including reading files, organizing files, drafting documents, but full software development. They're calling it the SaaS-pocalypse. What do you think about all that? Is that overblown?

11:25Mike Novogratz:You know, I don't know. I don't think so. I was talking to one of the best investors in the world yesterday uh real simple guy and he uh but literally just a beast one of one of the i'd say the five best investors the last 30 years and you know he's long chips and power uh in other stocks and he's short software and we were talking about what companies are safe and we brought up he brought up spotify well spotify's got a mode and everyone uses spotify and he was like how fast before chat gpt hey give me my 10 best songs what are the songs played by and download them on youtube and you're going to be able to someone's going to figure out how to how to chat gpt spotify or grok or claude spotify and create a product that's not 12.99 a month but is three dollars a month um the the destruction of businesses without moats uh is happening and again what's interesting is the bull case for stocks is also you get to use this stuff to cut your costs right goldman's cutting a thousand employees a year out uh margins go up borsche is going to cut rates and you've got much more profitable companies with less people, right?

12:49Mike Novogratz:It all still points to a social engineering problem in that you need less workers, people with assets make more money. You know, inflation is interesting. I look back and the only time I've seen real inflation literally since the 90s has been with the supply shock of covid all the money printing in qe1 and qe2 with bernacki never created any inflation but it created asset inflation and i think we're in that same environment where we're going to see consumer price inflation go lower uh and because we're gonna be able to deliver products and services cheaper and cheaper And we're going to see asset price inflation continue to go up.

13:38Mike Novogratz:And so you could see a world where this just continues.

13:42Anthony Scaramucci:And let's play Fed chair for a second because there's going to be lots of political pressure, Michael. You know, if Dario Amadei is correct, that entry level white collar jobs, about half of them will be displaced in the next one to five years. those are affluent people a lot of suburban housewives are going to be pissed off michael and they're going to descend on washington and their reps and they're going to descend on the politicians pressure on the federal reserve uh do you think there's going to be a political

14:22Mike Novogratz:implication to all of this oh it's going to be one of the big issues i think it's going to be a bigger 28 issue than 26 issue because 26 is local. You know, it's Congress and the Senate and 28 is the big national issues. But it certainly is going to be the major issue in 28. And it might be one of the major issues in 26. Right. Again, I always think in New Jersey, you can't pump your own gas. Right. Every other state, you just get out, you pump your gas, you get a cheaper, you know, the self-serve rate, not in New Jersey, full serve only, right? Governments can enact laws to keep people employed.

15:00Mike Novogratz:And you're going to see that. You're just definitely going to see that. I saw there's, you can have driverless cars, but there's got to have a driver in them. And, you know, figuring out certainly the transitional employee, right? a person who's losing his job because of new technology and doesn't have enough time to develop a new skill set. We'll call that the transitional employee. But what does the young guy do? I was with my 23-year-old son last night and he's hoping to get a job today working for this very cool architectural magazine, one of the only ones out there. And I was laughing. I was like, all right and he's smart and he is sees around corners and i was like i wonder if i can use chat gpt or claude or whatever whatever which one i want to use uh to analyze things as well as my son can right maybe not as well as my son because he's my son and he's a superstar but probably better than the average kid uh who doesn't have as much education or knowledge and so even like jobs like that the beat reporter chat gpt uh i just think it is going to be so easy to displace people that we're going to have to figure the social engineering of this out and it's you know you hate to use the word ubi but it's some we've always had ubi we just don't call it that right we've got a social safety net it's going to get to become a bigger and bigger issue and And how you do that with dignity, how you do that with incentive, how do you do that so you don't incentivize bad behavior and lazy behavior?

16:48Mike Novogratz:It's a real challenge.

16:50Anthony Scaramucci:I think it's causing liquidity to dry up, though. Am I wrong in saying that? Take a look at the risk off across all markets. It's leverage longs are drying up. The MAG-7 is getting hit. The SaaS stuff, as we just mentioned, getting hit.

17:09Mike Novogratz:Yeah, but this week was the single largest disparity of winners and losers I've ever seen, right? Software got destroyed and old economy stuff exploded. There's still so much money on the sidelines that wants to be in the stock market. And so, you know, it felt like a bear market on, you know, what it was today, Wednesday and Thursday. how about this Wednesday when it felt the worst the equal weighted S &P was at an all-time high like we're at the highs of stocks with all this happening with the chaos in DC and it is chaos right uh it could be strategy you know like you know Trump is a very unique character in the annals of history and but it's chaos and so normally the markets don't like that They're just looking through it all.

18:03Anthony Scaramucci:Michael, any rotation that you're seeing, meaning, you know, yes, the equal weight is up, but are we rotating? Small caps seem to be outperforming large caps right now. Some of the dividend payers are getting a defensive bid.