Jensen Huang Slams AI Layoffs, Markets Go Haywire & the Great Tax Migration

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. Come on. No!

0:30Michael Novogratz:It's just a golf lesson, champ. Loosen up. I can't. See that Hyundai Santa Fe? Yeah. I only paid. Mmm. Finish up on your own. I gotta run. Deal's so right, it almost feels wrong. The Hyundai Getaway Sales Event. Get 0 % APR for 60 months, plus zero payments for 90 days on the Hyundai Tucson, Tucson Hybrid, Santa Fe, or Santa Fe Hybrid. Now, during the Hyundai Getaway Sales Event. Hurry. Offer ends March 31st. Call 562-314-4603 for details. Zootopia 2 has come home to Disney+. Let's go! Get ready for a new case. We're the greatest partners of all time! New friends. Gary the Snake. And your last name?

1:07Michael Novogratz:The Snake. Dream Team. Get new habitats. Zootopia has a secret reptile population. You can watch the record-breaking phenomenon at home. Zootopia 2, now available on Disney Plus Rated PG. And right now you can get Disney Plus and Hulu for just$4.99 a month for three months with a special limited time offer ends March 24th. After three months, plan auto renews at$12.99 a month. Terms apply. Using AI to cut jobs is basically an alibi, and you're not optimizing, and you should be better at coming up with new ideas for your employees. What do you say to that? Part of a company's responsibility is to its employees.

1:42It's to its shareholders, it's to its employees, it's to the community it operates in, and it's to its customers. We've gotten so far away from that, where it's shareholder, shareholder, shareholder. Look at the money that Meta made last year. breathtaking amount of money, but it's never good enough. And in some ways, that's what makes our stock market go up, up, up, up. But at one point, with Zuckerberg, we're$250 billion. I guess he's mad that Musk is worth$800 billion. But we've lost this idea of responsibility to employees. But how you balance that with taking care of your employees is really complicated.

2:12But we're not doing it well in the US.

2:14Michael Novogratz:Welcome to All Things Markets. I am Anthony Scaramucci. And I'm like Novogratz. Michael, lots of stuff going on, Michael. and a little bit of, I don't know. I mean, you tell me, who's trading the market, Michael? Which administration official trades the market? Because we're going to bomb everything and then we're not going to bomb everything and the markets are moving 1 ,000 points at a time. But tell me what you think is really going on, Michael. We've had things, treasury bond yields jump 28 % in one day, doubling since January. Rising bond market volatility. Gold trades like Bitcoin now in terms of its volatility, Michael.

2:52Michael Novogratz:Cautiously optimistic for it, yes. And so if that doesn't happen, then you think we're going to lay down? And then the secondary question is, how the hell have we stayed where we are, given everything that's gone on from a volatility perspective? So what's interesting is the only market that in large ways was unscathed from this monstrous move in oil, monstrous move in rates is the S &P and the U.S. equity market. like if you had said oh my goodness uh oil's going up to 100 bucks Brent's going 110 uh rates are 50 basis points higher in yield where do you think stocks are it would be 10 to 15 percent lower and they were 4 percent lower um people had hedges in the S &P there was a lot of gamma people believe the stock market's going to look through it um other stock markets Korea got waxed japan got waxed uh gold got waxed silver got waxed so places where people had a lot of risk got waxed um but the s p was miraculous so i was talking to two great traders this morning big investors and they were like i can't tell if that just shows how strong it is or it's the last one to fall you know and i think everyone's having that same conversation uh i think the reality is what is leading the U.S.

4:19market. Think companies like Davidia is an unbelievable earnings machine. And this war and this spike in energy doesn't hurt them as much as it hurts other people. And so maybe because U.S. large cap growth stocks are the driver that's keeping things up. But it was the one thing that has confused every macro trader and an equity investor, really, is how well stocks have traded through this damn war.

4:56Michael Novogratz:Let's flip over to oil, though. Goldman Sachs just raised its Brent crude forecast to$110 on average for the March-April timeframe. But how do you price that asset now? Now, you know, Donald Trump is a one man volatility machine. Are we trading oil? Are we trading his social media feed? Or what would you do given tonight you could say, all right, we're going to start bombing again or tomorrow we'll flip the switch back to bombing? I mean, how do you trade something like that? It's very difficult. It's very difficult. Two podcasts ago, I said, when you start having these kind of correlated risk unwinds because there's an event, your best bet is to get to completely cash and then just interday, you know, buy the oversold and sell the overbought.

5:50I wish I had done that. I hope someone on this podcast listened to me and did it because it's been a pretty good place to be. It's very difficult to have core positions, large ones, with that kind of volatility. And we've never had a president that uses social media to put out big proclamations, right? It's the true social feed, and next thing you know, the market's up 3%.

6:16Michael Novogratz:Michael, when we talk about closing the Strait of Hormuz, when you and I were kids, we were like, okay, that would be a disaster. Can't close the Strait of Hormuz. now we've experienced a partial closing of the Strait of Hormuz, right? Because the tankers are getting in that are Yuan denominated. Stuff is still going to China. And the president, thankfully, hasn't bombed any of those tankers because that would obviously lead to an even bigger escalation of a war that nobody wants. But is there now a war premium or a structural repricing of energy that persists even after the ceasefire on the notion that this straight is easier to close than perhaps the markets have been factoring in over the last 50 or 60 years?

7:07I think probably yes. And a lot will depend on what's negotiated. I also think Iran And in the short run was very astute. But in the long run, you can only bluff people about the straighter Hermus once. And now that people know that they can close it and will close it, I think you're going to see a massive infrastructure build in pipelines, maybe even a damn canal. You know, like people are going to figure out a way to live without the straighter Hermus. It's not going to be done in 18 months, but you can bet your bottom dollar that Saudi and UAE are making plans to be Hormuz free. And they, you know, you ever see them build islands in the Gulf?

7:57They will. I'm guessing they will try to neutralize that at one point.

8:03Michael Novogratz:Well, the Saudis have a pipeline. Obviously, they built it in 1981. They're starting to use it, but it's just not going to deliver the capacity that you could get through the strait. Could you see a scenario, though? I mean, and this is good for Russia, by the way. Let me just point out that the Russians like this because it's taking the heat off of them in the Ukrainian war. And it's also giving them more dough because we've relaxed some of our sanctions and their oil prices are a lot higher. And this ties into the Fed. So the scenario where the prices are just higher and the notion that we were talking about with Kevin Warsh even a month ago is not possible, where we can't get a rate cut coming into Warsh's new job.

8:50Yeah. Listen, I think you are going to get some pass to inflation. Right. Food prices are going up. Lots of things are going up in the short run. most u.s central bankers will look at that and say that's a one-off and it's going to be transient um and look through it does it have warsh pause the first meeting he you know i was pretty convinced he was going to get it and cut rates once just to his nod to donald trump and that he thought rates should be lower now he's going to have to convince uh the rest of the board that that's the right move and maybe he takes the first meeting or the first two meetings before he starts that process.

9:29But Anthony, we're losing jobs. Supply shocks in the long run are demand destructive. And so you raise rates to slow demand. And I don't think that demand is going to be the problem. Right. And so I think you probably still see rate cuts by the end of the year in the U.S. And you probably see them in Europe, too, even though you're pricing a lot of hikes.

9:55Michael Novogratz:I want to shift gears abruptly and talk a little bit about tax policy because you made some comments on this podcast related to Democratic state officials and urging them to take it a little easy on taxes because you're getting massive migration. And so Wall Street Journal may have heard you say this, Michael, because they had a pretty intense article, macro article, about red states are focused on cutting, eliminating income tax. Florida is now working on potentially eliminating property taxes. Four of the five richest people in the world now live on the Miami coastline. Tell me about this. And you're a New Yorker and I'm a New Yorker.

10:43Michael Novogratz:I mean, I've been here my whole life. You've been here for most of yours. And I know you love this city and I love the city, but a lot of our friends are leaving, Michael. So so give me the scenario. What is it that the Democrats do not get about taxation and happy feet for wealthy people? Yeah, listen, the. The inequality story is so powerful for the left, so powerful for America to start with. Right. We really do have it's not the fake inequality. You know, we have not seen inequality like this in our lifetimes. And and so that story is is so infectious. And they say, well, we got to redistribute.

11:25And they're taking the stance that since it's not getting done at the federal level, let's do it here at the state and city level, because that's all we can do. and it's a mistake it is a mistake um and in a world where capital is mobile i think uh you know you you can see you can see the migration to places like texas nashville and nashville's a boontown um and they're not just lower taxes there's less restrictions on building property there's so you know interesting rents are down in austin and they're up in new york and that's with the migration rents are down in nashville and they're up in new york um because they're much freer uh in business you know ethos to to to build uh spec housing and so i think it's a big deal um but i don't think it's going away because the majority of the people aren't doing well and so it's pretty easy to to say let's raise taxes and have a lot of people vote for you um i'm really worried that the democratic party because the the revulsion of what's gone on on in in this administration with ice with this war with the oligarchy, right?

12:50If it's Elon or you name them with the massive fortunes with the government contracts, going to the friends, all of this stuff is really feeding and fueling that populist left. And I really do think 26 and 28, there's gonna be a fight for the soul of the Democratic Party. Is it gonna be populist left with AOC and Bernie? Are we going to come back to the Josh Shapiro's and Wes Moore's and Gretchen Whitmer's and Andy Beshear's and Pete Buttigieg's of the world? And I sure hope it's the second because I think that could win in a general. And it would also provide a better a better foundation for, you know, kind of fair growth in America.

13:35But there's a good, good chance that. When the right does so poorly, we're going to pivot all the way back to the hard left. and that ain't great when you started out i mean same time that i started out i'll make a statement

13:51Michael Novogratz:and then tell me if you think it's true when i started out i said all right new york is the new york city is the land of opportunity that i'm going to make my riches here and i am going to become financially independent working inside of new york city did you feel that way way back in the 1980s when you started so anthony my first year goldman uh some money market salesman and after my bonus i made 85 000 and i remember that because my boss said hey well you make more than your father how do you must feel good about that and i was like yeah but the guy sitting next to me made 600 000 so and i did as much business so i don't feel good about that.

14:36They fired that guy a week later. Uh, that's a true story. Uh, but I was paying $800 a month rent. I lived with four guys. We had a great apartment. We all had our own bedrooms. Uh, right. That's eight times 12. That's 10 ,000 a year. So call it 12, 13 % of my income was going to rent and today that number is 35 to 40 percent and you know you may you have to make a whole lot more than 85 000 uh to live in manhattan even with your mates uh right a four bedroom in fideye uh you're still probably paying 2500 each uh if not more you know so that's 36 000 of rent And so it's gotten so much more expensive to live here.

15:30You know, taxes are a little higher. They're not that much higher, but they're a little higher because federal's come down and state and local's gone up. But, you know, the housing and the other costs have just gotten so much more expensive.

15:46Michael Novogratz:So the secondary question, though, is a 25-year-old Mike Novogratz born in 2001. It's 2026. Is he coming to New York, Nashville, Miami? He's still coming to New York. Listen, the median salary that we paid at Galaxy last year, I believe, was 330K. You know, people get paid well on Wall Street, a lot better than we used to. not everyone gets paid not everyone gets jobs on Wall Street but if you can still get those jobs at Goldman or Citibank or new companies or tech companies but so it's a small group of people that are doing really really well and if you're in advertising or working for a magazine or any of the creative fields you better have a rich parent or you're living in a a suburb or you're living with a whole bunch of people somewhere in one of the outer boroughs.

16:52Michael Novogratz:Last question on this topic, and then we're going to move to another topic. But it's five years from now, Michael. Is New York finding newfound religion and you have a tax cutter at the helm as governor and mayor? Or are we going to continue in the direction that we're Well, I think Mayor Scaramucci would do a good job of cutting our taxes and promoting growth. Listen, there are a lot of people that I think could step into the arena that would say, with a$120 billion budget, we don't need to raise it. We just need to spend it better. Right? You want to grow the economy so the tax base grows, but we don't need to spend more we need to spend it better and that was the the editorial that had done a few weeks ago where he was looking at you know what we spend per per per student just going one direction we have less students but a much bigger a much much bigger student budget uh we're spending five hundred thousand dollars a person to be incarcerated at rikers uh last year we were giving away spending not giving a spending about 90 000 per uh per undocumented immigrant here and you know subsidy in between their housing and and and other scaffolding like i think we should take care of undocumented immigrants not 90 000 you'd be better off giving them each 35 and letting them do what they want save the 60 and let them spend the money and so i really think we need to get to a place where government is smaller and we're redistributing because people know what to do with the money people aren't generally dumb they're not going to spend it on you know sex drugs and rock and roll that's that's a myth give a family some help and they normally spend on what's necessary and we set up you you've spent and i have spent our share of money on sex drugs and rock and roll but we'll leave that for a different podcast novocrats but i get it like we need to have big ideas because what we're doing ain't working and the definition of sandy is doing the same thing over and over expecting different results what What the blue states are doing is not working, right?

19:18What our country is doing is not working at a federal level. So we need a much smarter tax code nationwide, and we need much smarter government locally. I wish I had a magic wand and we would just fix it.

19:30Michael Novogratz:I am totally with you on that. I want to go to our last topic, and that's Jensen Wang, who I find, I love this guy. I don't know him. You probably know him. You probably met him a few times. I wish. I know a lot of friends that know him well, and I met his son-in-law, and I got a real kick. I met him once. I shook his hand once in an FBO, only because he was with Melody Hobson, who's married to George Lucas, and she was kind enough to introduce me to him. But I don't know him, but I love him because he's like, all right, I'm paying my taxes in California. I'm not moving to Texas or Miami. And oh, by the way, guys, stop laying off people.

20:12For companies with imagination, you will do more with less. For companies, when the leadership just out of ideas, they have nothing else to do. They have no reason to imagine greater than they are. Then when they have more capability, you know, they don't do more.

20:27Michael Novogratz:He's criticizing CEOs who are laying people off. Now, we did mention last week that Dell had laid off 14 ,000 people. I just want to correct the record here that about 8 ,000 of those people, Michael, were actually a reduction in employees was attrition. 8 % quit or leave on their own. So I just want to make sure we say these things accurately. But Meta is also planning to lay off a lot of people. And Jensen says using AI to cut jobs is basically an alibi. and you're not optimizing and you should be better at coming up with new ideas for your employees. What do you say to that? Yeah, listen, as a society, we're going to have to think about why, right?

21:16I mean, part of the reason you set up a company is because you employ people and you feel good that, you know, the 600 people that work for you or the 300 or the 30 or the 20 can take care of their families. And, you know, my first foreign posting was Japan. In Japan, you weren't allowed to fire people because the culture was once you get hired by a company, it's the company's responsibility to take care of you through your whole career. And that created at one point too much inefficiency. And so they slowly changed it. But there was something really special about this idea that part of a company's responsibility is to its employees.

21:54It's to its shareholders. It's to its employees. it's to the community it operates in, and it's to its customers, right? And it's, frankly, to the world. They're the kind of five stakeholders. We've gotten so far away from that where it's shareholder, shareholder, shareholder. I mean, look at the money that Meta made last year. That breathtaking amount of money, but it's never good enough, right? And in some ways, that's what makes our stock market go up, up, up, up. But at one point, you know, like if it was Zuckerberg worth$250 billion, I guess he's mad that Musk is worth$800 billion. But we've lost this idea of responsibility to employees.

22:32And listen, it's a tough act because your job as a CEO is to build a wonderful company, right? And to make money and to return money to your shareholders. But how you balance that with taking care of your employees is a really complicated one. But we're not doing it well in the U.S. Michael, who's right though?

22:53Michael Novogratz:I mean, you know, you're a leader. You've built several successful businesses. You're CEO of Galaxy. What is your personal philosophy on this? And when you're thinking about job cuts and so forth? I think you got to think of all your stakeholders. Listen, we've cut jobs plenty of times in Galaxy because we had to. We had to because this crypto business is volatile as heck. And all of a sudden, our revenue, we thought we're going to be here, jump drops to here. and you're like, oh, I don't want to, I've got a responsibility that the people that I keep, that we have a business into our shareholders.

23:30So I think you really have to balance those stakeholders. You know, Paul Jones got involved in a, actually helped set up a thing called Just Capital. It was really interesting because what Just Capital did was it interviewed hundreds of thousands of Americans and said, what do you care about at a company? so it got what americans cared about and made a scorecard and then it ranked every company and it generally was around how they take care of their employees is their product good for us or not good for us you know how they how is their stock done so you get all this ranking and then it would rank these companies and create an index and what he found was the more just companies outperformed over time, like four or 5 % versus the broad index.

24:19And so there is a world where you run a, and I'll call it just with those quotation marks. And I think that's my philosophy. Like given our other forces, given the other inputs, let's run the most just company we can. uh i try to make sure every employee has equity uh that people have career opportunities when when people want to leave because they see opportunities the way i usually just hug them and say if i can't create a space where you're self-actualized i'm glad you're finding one um i wish sometimes i built a company that has an organic growth because we make widgets that just it's easier and easier to scale it.

25:09Like the crypto business is a hard business. You know, you kind of come in every year, you roll up your sleeves and, and you go back to work and kind of make your money starting from scratch, just like wall street firms and lots of them. You know, some of these other businesses, the exchange businesses has organically grown and grow on the same customer base. I'm always jealous of some of those businesses. But no matter what your scenario is, I think you've got to really think through those different constituencies. What's weird is like Delaware law says you only have one constituency that cares and that's shareholders, right?

25:50Like that is Delaware law, which is a mistake. And there's another, not everything is a Delaware listed company. I forgot there's another designation of companies that I think Ben and Jerry's was one in a few that allows you the capacity to think about other stakeholders. But that's the exception, not the norm.

26:12Michael Novogratz:Listen, I think it's well said. All right, last question. I'm going to let you go. 69 ,000, Michael. Went to 67 ,000. You know I'm talking about Bitcoin. But over the weekend, I was thinking, wow, it seems like it's holding okay. Now it's bounced up to 71-ish thousand. What do you think of Bitcoin here? I think Bitcoin trades well. It just does. It doesn't trade stunningly well, but it's outperformed a ton of other assets in this wartime. And there are buyers that come in when it drops. There are not a lot of sellers left. and so i'm optimistic i'm i'm hopefully uh optimistic i should say uh again i don't see an i don't see a scenario where it explodes north but i think it can grind up to 80 80 will be some fight and we'll see then all right brother we'll see you next week uh i uh let's hope let's hope the war is further well i mean look the mark let me tell you something the market is saying that so So we better really hope that because if something, they start bombing desalination plants, I think the market's going to be rudely awakened.

27:27Michael Novogratz:Yeah. We'll see. We're this close to really bad stuff. Right. And I mean, a lot of bad stuff has happened. Don't get me wrong. And there's a ripple and this is going to last longer just to kind of get shit flowing again. But you start hitting the desalination plants or the big oil and gas plants outside of what they've already done. and like this could be a multi, not a multi-week, multi-month, but a year, multi-year problem. If this was a political podcast, Michael, you and I would have a sweepstakes right now running on who did Trump actually talk to from Iran, who he supposedly talked to. We'd have a sweepstakes.