The Pomp Letter

Today’s letter is brought to you by Sidebar!

Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A trusted peer group, with battle-tested perspective, and proven playbooks, to have real, tactical discussions with to propel you forward.

With Sidebar, senior leaders are matched with a small group of highly-vetted, private, and supportive peers to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius. Together, we’re better prepared to navigate professional pitfalls and push each other to do more, do it better, and do it faster. 

“Providing and receiving support from others who play a similar role to you is one of the best ways to grow your capabilities and succeed.” - Vice President, Roku

“You’re the average of the people you keep closest; Sidebar helps you raise that bar.” - Global Director, Reddit

“Tap into a new level of coaching support, professional development, and peer-driven accountability.” - Senior Director, Credit Karma

Why spend a decade finding your people – join Sidebar today. Join the growing waitlist of over 5,000 top senior leaders, and apply to become a founding member.

To investors,

The national debt problem is very quickly getting much worse. We saw an increase of $275 billion added to the debt in a single day and as it was pointed out online, the US is on track to add $1 trillion to the national debt in a single month.

This is bonkers.

The United States now has $33.442 trillion in debt. We have not run a budget surplus since 2001, which means we have had 22 years of mismanagement, regardless of which political party is in power.

Last year, the national government collected $4.9 trillion but spent $6.27 trillion. This created a budget deficit of $1.38 trillion, which is the fourth-highest of the 21st century.

Not all of the politicians are asleep at the wheel though. Earlier this week, in a story that went largely uncovered, Indiana Congresswoman Victoria Spartz threatened to resign unless a national debt commission is formed. Here was part of her statement:

“I’ve done many very difficult things being one woman standing many times with many very long hours and personal sacrifices, but there is a limitation to human capacity. If Congress does not pass a debt commission this year to move the needle on the crushing national debt and inflation, at least at the next debt ceiling increase at the end of 2024, I will not continue sacrificing my children for this circus with a complete absence of leadership, vision, and spine. I cannot save this Republic alone.”

That is what we call a strongly worded statement.

The problem is just starting though. High interest rates are creating a horrible feedback loop of high interest payments on the national debt. According to Scarlet Fu at Bloomberg:

“The US government is currently spending more to pay interest on its $33 trillion national debt than it does on national defense, according to the US Treasury’s monthly statement. In the current fiscal year through August, the Treasury has spent $807.84 billion in interest on its debt securities. The Department of Defense’s outlay for military programs totaled $695.44 billion in the same period.”

Spending more money on interest payments than the defense budget seems outrageous. Then again, it is 2023 so are we actually surprised by anything insane these days?

I have a confession to make—I was shocked to see $275 billion added to the national debt in a single day. There are few things that surprise me anymore, but that one had my jaw on the ground.

I wish I knew the solution. Unfortunately, it appears that a perpetual deficit is the name of the game for the government. You have to wonder if we would even know what to do with a budget surplus if we pulled off a miracle and created one.

As the old saying goes, “no one is coming to save you.” You have to start thinking about how you will save, invest, and drive income in a world with an ever-increasing national debt. Because that is exactly where it looks like we are headed.

Hope you have a great day. I’ll talk to everyone tomorrow.

-Pomp

Lulu Cheng Meservey is the Executive Vice President of Corporate Affairs and Chief Communications Officer at Activision Blizzard. This conversation was recorded at the BUILD Summit in New York.

In this conversation, Lulu breaks down how you can cut through the noise and make people care about what you're doing, how to tailor your message to people externally & internally, tactics you can use, how to prepare for a crisis way before it comes, and Lulu breaks down why there is no peace time.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

How To Handle The Mainstream Media As A Startup Founder

Podcast Sponsors

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

The number of people employed in the American economy has grown from just under 100 million in 1980 to approximately 160 million today. It doesn’t hurt that the current unemployment rate is sitting at under 4%, which remains near historic lows.

Total employment and the unemployment rate in the United States from 1980 to 2022, with projections until 2028

Even though unemployment is low and almost half the total US population is employed at the moment, there are still 8.8 million open roles in our country.

I believe getting more people to work in the economy can help alleviate a number of problems we face as a society. GDP will grow faster. Companies will make more profits. Wages will increase. The inequality gap will shrink. And the US government will have a smaller burden placed on it for various social services.

But I am not merely talking about a problem from afar. For the last two and a half years, my team and I have helped thousands of people get a new job. We lost count last year around 2,000 cumulative new hires and believe the number to be approximately 3,000 people today.

Some of these individuals I personally trained so they could upskill and transition into the digital assets industry. Others were able to leverage a job marketplace we built to connect with a new employer. And even more people were placed in their new job by Proof of Talent, a recruiting firm we acquired.

Think about this for a second — a small team of less than 20 people were able to help about 3,000 people get a new job over a two and a half year timeline. That is around 3 people per day, every day, for a few years.

Imagine what we could do with a broader mandate than just bitcoin and digital assets?

Well, we are about to find out.

Today we are announcing that our job marketplace is expanding its service area to include any innovative startup company. The marketplace is rebranding under the name Dream Startup Job (website) and it is completely free to use for anyone who wants to get a new job in the startup world.

I believe that startups are the single greatest tool we have to change the world. The definition of insanity is a small group of people believing they can create something from scratch that disrupts a group of incumbents and is adopted by millions of people globally. The odds are low, but the potential reward is high.

These innovative startups need the best talent they can find. Every job role is applicable. Whether you are an engineer, an operations manager, an accountant, or an entry-level customer service agent, there is a startup out there that is looking for you.

If you want to check out some of those open roles, you can now do so at Dream Startup Job.

We still have hundreds of open roles at the top bitcoin and digital asset companies, but today we are launching the expansion into industry-agnostic startups with our partners at Eight Sleep, Varda, Flowhub, and Traba.

The pool of potential companies to work at is now bigger, so my goal is to eventually help 10 people per day get a new job. Slowly, but surely, we will keep making progress.

The more people employed in the American economy, the better off we all are. Hopefully our team can do a small part in cranking that employment rate even higher. If you have ideas on how we can partner, or how we can improve our solutions, please don’t hesitate to reach out. If you would like to list your open roles at your startup, you can do that by clicking here.

Have a great day. I’ll talk to everyone tomorrow.

-Pomp

Avlok Kohli is the CEO of AngelList. This conversation was recorded at the BUILD Summit in New York.

In this conversation, we talk about the culture of shipping speed at AngelList, fundraising environment, how cap tables are usually wrong, treasury management, hiring, private equity, and numerous industry trends.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

How To Improve Your Startup Immediately

Podcast Sponsors

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

Today’s letter is brought to you by Sidebar!

Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A trusted peer group, with battle-tested perspective, and proven playbooks, to have real, tactical discussions with to propel you forward.

With Sidebar, senior leaders are matched with a small group of highly-vetted, private, and supportive peers to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius. Together, we’re better prepared to navigate professional pitfalls and push each other to do more, do it better, and do it faster. 

“Providing and receiving support from others who play a similar role to you is one of the best ways to grow your capabilities and succeed.” - Vice President, Roku

“You’re the average of the people you keep closest; Sidebar helps you raise that bar.” - Global Director, Reddit

“Tap into a new level of coaching support, professional development, and peer-driven accountability.” - Senior Director, Credit Karma

Why spend a decade finding your people – join Sidebar today. Join the growing waitlist of over 5,000 top senior leaders, and apply to become a founding member.

To investors,

Federal Reserve officials are now saying the quiet part out loud—they intend to keep interest rates high for an extended period of time.

This strategy is in-line with the central bank’s commitment to get inflation in the US economy under control. After manipulating the cost of money to 0% for years, the Fed had to reverse course at a record pace. The rise in interest rates from 0% to 5.25% happened at a pace that was never seen before, yet the estimated damage to GDP growth and the labor market never materialized.

The economy is still growing and unemployment is under 4%.

But consumers are now realizing that a long-term shift has happened in the economy. Originally, many citizens planned to wait out the Fed’s interest rate hikes. They thought they could buy a home or car next year. They could use their savings built up during the pandemic to outlast any negative wage growth. And they saw increased interest rates as a way to drive a little extra income from holding bonds.

The problem is that the Fed has been in demand destruction mode for almost two years now and yesterday’s press conference signaled a long-term commitment to keeping rates high.

This means the American consumer has a choice. They can continue to put their life on hold for a few more years or they can throw their hands up and subject themselves to more expensive capital.

As Gina Heeb pointed out in the Wall Street Journal this morning, consumers are spending more of their income to cover housing costs, being forced to pay more on their car loans, and their credit card debt is exploding higher.

Based on this data, it appears that consumers are finally starting to live their lives and deal with the cost of capital increase. This makes sense from a psychology standpoint. It wouldn’t be too difficult to convince someone to put off the purchase of a home or car for a few months, but once you begin to talk about years, people don’t have the patience.

The average cost of a home, a mortgage payment, a car loan payment, and other ordinary living expenses will continue to rise nationally as rates remain persistently higher than they have been for the last decade.

The interesting part is that current interest rates are not necessarily higher than the historical average, but there is an entire generation of millennials who have spent their adult lives in a low interest rate environment. It had become the new normal. Every investment decision was based on an assumption of low interest rates. So was every purchase decision.

Now that rates are higher, and the Fed is signaling a commitment to long-term higher rates, this generation of consumers and investors will have to recalibrate. The irony of the situation is that boomers were slow to acclimate to low interest rates because it was foreign to their lived experience, but now millennials are likely going to be the ones who are slow to acclimate to high interest rates.

There is no specific cure to the problem. The pain will continue until young people realize the world has changed and they now live in a new regime. Their investment decisions now have to account for 5% interest rates. Their car and mortgage payments are going to be higher than they anticipated.

But that is the price for living today. It may not seem fair, but the worst mistake would be sitting around complaining rather than living life. Time is the most finite resource we get. Letting the central bank steal it from you because they made capital expensive sounds like a bad plan.

It won’t be easy for many people to figure it out, especially because we are talking about income and rising expenses, but it is possible. And all we can ask for is a chance to live an extraordinary life that makes us happy.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Pomp

Paolo Ardoino is the CTO of Tether. In this conversation, we talk about the rise of stablecoins, whether the market is winner-take-all or not, treasury management, how they ensure the peg stays actually backed by dollars, regulation & audits, accumulating bitcoin, banks, FDIC insurance, and more.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Tether Co-Founder Explains Reserve Strategy

Podcast Sponsors

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

John Maynard Keynes once said, “When the facts change, I change my mind.”

This classic investment advice is equally true in our personal lives, so Keynes’ words rang in my head as I left New York City at the end of 2020. The city had become a skeleton of what it once was.

I had lived on the island of Manhattan for years and fell in love with the density of ambitious people, the contagious energy of every day life, and the serendipity that comes from packing 8.5 million people into 300 square miles.

New York City was home. I never thought I would leave. But here I was leaving the island for South Florida.

I didn’t feel guilty. I had given New York a chance during the pandemic. My wife (Polina) and I got married in Manhattan with no guests in July 2020. I was almost late to the ceremony because I was stuck in an Uber that couldn’t get around a miles-long protest.

Polina and I stayed in our apartment the entire year. We had not followed in our friends’ footsteps as they fled to rural Airbnbs or returned to their childhood bedrooms for months. We were New Yorkers. And New Yorkers can handle anything.

But as weeks turned into months, and months turned into almost a full year, we realized things were only going to get worse in the city that we loved. On a spontaneous trip to see a friend in Miami during November 2020, we decided that we would move to South Florida for the winter. “Just a few months,” we told ourselves. We will come back to NYC once it gets warmer.

Newsflash, we never came back.

The unconstitutional mandates took hold. The crime got worse. People continued to flee the city in droves. And on the opposite end of the country, Miami was booming. It seemed like someone new was moving to town every day. Founders. Venture capitalists. Hedge fund mangers. Movie stars. Musicians. Professional athletes. You name an industry and someone well-respected from it was moving to South Florida.

The good times were rolling.

As Polina and I settled into our new Miami life, we felt it was important to be all-in on living there. We bought a home. We bought a car. We had our first child at Jackson Memorial Hospital. We opened up an 8,500 square foot office in the heart of Brickell.

It was a real-time creation of the perfect life.

Unfortunately, something felt off. We noticed it fairly early into our stint in the suburbs. Could it be a monotony that came with seeing fewer people every day? Did we miss being able to walk to a coffee shop downstairs? Maybe we were just nostalgic about our past life and the addition of a new child was messing with our minds? None of it made sense, but you know when something is off.

It took two trips to NYC to realize what had happened. We had used our brains to move to Miami. Every aspect of our new life made rational sense. The weather was amazing. The taxes were low. The business was growing.

But our hearts were still in New York City.

Every single decision point told us that Miami was the better place to live, yet when we visited New York City, we felt more alive than ever. The city has an energy to it that is impossible to describe if you have never experienced it. We needed to leave to fully appreciate what it really means to live in the greatest city in the world.

I was a big believer in Miami’s growth story. I still am. People and capital are still moving to the city. F1 racing. Citadel. Messi. The list goes on and on. But those positive things can be true, while it is also true that Polina and I are personally happier in New York City.

As Keynes said, “When the facts change, I change my mind.” We made the decision to move to Miami with our brains. We are making the decision to move back to NYC with our hearts.

Dear New York — “We’re back.”

If you see me on the street, stop and say hello. Many of you do this already and I love meeting each of you. If you have an event that you’re putting together, send me an invite. If you have a company that is interesting, send me a message.

Polina explained her perspective on our move, which I highly suggest reading.

And I’ll leave you with a sentence someone recently told us, “New York City is the modern-day Rome.” And that is exactly where I want to be.

-Pomp

Peter Johnson is the Co-Head of Venture Investments at Brevean Howard Digital.

In this conversation we talk about the epic rise of stablecoins, how they have become the killer app of blockchain technology, where stablecoins are being used, why they are being used, and who is using stablecoins.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Pomp’s Appearance on Fox Business with Liz Claman Yesterday

Podcast Sponsors

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

* Range - Get started today with code POMP15 for 15% off any quarterly plan for your first year.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

* Trust & Will - Estate planning made easy. They are fast, secure, and simple to use. Get your will or trust created today.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

Today’s letter is brought to you by Sidebar!

Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A trusted peer group, with battle-tested perspective, and proven playbooks, to have real, tactical discussions with to propel you forward.

With Sidebar, senior leaders are matched with a small group of highly-vetted, private, and supportive peers to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius. Together, we’re better prepared to navigate professional pitfalls and push each other to do more, do it better, and do it faster. 

“Providing and receiving support from others who play a similar role to you is one of the best ways to grow your capabilities and succeed.” - Vice President, Roku

“You’re the average of the people you keep closest; Sidebar helps you raise that bar.” - Global Director, Reddit

“Tap into a new level of coaching support, professional development, and peer-driven accountability.” - Senior Director, Credit Karma

Why spend a decade finding your people – join Sidebar today. Join the growing waitlist of over 5,000 top senior leaders, and apply to become a founding member.

To investors,

It has become obvious to me that American manufacturing is an essential component of our national security strategy moving forward. We need American companies building American technologies, including semiconductors.

As I researched this topic more, I was introduced to the team at Auradine. They are tackling two things I am interested in — American manufacturing and bitcoin mining. The founders are highly successful Silicon Valley entrepreneurs who are dedicating their time and resources to tackle a very difficult problem.

I asked Viswesh Ananthakrishnan, Head of Product Management, at Auradine to write a guest post on why it is critical to have US suppliers design & manufacture advanced semiconductors and systems for Bitcoin mining. Here are Viswesh’s thoughts:

Advanced semiconductors are crucial components in Bitcoin mining solutions, providing the computational power necessary to solve complex mathematical problems and earn mining rewards in the form of Bitcoins. At present, China has a manufacturing monopoly on ASICs used in Bitcoin mining. However, the size of the Bitcoin mining industry (by market capitalization) outside China is disproportionately much larger.

This lopsided distribution shows that even though China may have a stronghold on the manufacturing front, other countries and regions are contributing significantly to the overall growth, development, and profitability of Bitcoin mining. The decentralized nature of Bitcoin allows participants from around the world to engage in mining activities, resulting in a diverse and widespread ecosystem beyond the borders of any single country.  It only makes sense that the design and manufacturing of Bitcoin mining ASICs should follow suit.

Unfortunately, the US semiconductor industry’s share in global semiconductor production capacity has seen a sharp decline over the last 30 years, falling from 37% to just 12%. This decline has been driven by increased competition from other countries and a lack of investment in domestic manufacturing capabilities.  Recent events have demonstrated how vulnerable US businesses are to supply from overseas ASIC manufacturers. The COVID-19 pandemic had a significant impact on the semiconductor supply chain, causing disruptions and shortages that have affected a wide range of US industries.

Indeed, it has become crucial for the US to invest in and support its domestic semiconductor industry to ensure long-term growth and stability, in general for the broader economy and also specifically for the Bitcoin mining industry.

“Making more semiconductors in the United States […] will strengthen our national security by making us less dependent on foreign sources”

– Joe Biden, 46th President of the United States, July 2022

In response to these challenges, the Biden-Harris Administration has launched efforts to bring semiconductor manufacturing back to America through the CHIPS and Science Act. While these efforts represent important steps forward, there is still much work to be done to rebuild the U.S. semiconductor industry and ensure its long-term competitiveness.

Meanwhile, the economic significance of the Bitcoin mining industry in the US cannot be overstated, with a projected compound annual growth rate (CAGR) of 9.3% between 2023 and 2029, starting at $9 billion in 2022. The maturation of capital markets and the development of financial instruments have played a key role in the quick ascent of the Bitcoin mining industry in the U.S. In recent years, there has been a surge of interest in Bitcoin and other cryptocurrencies from institutional investors. Recently, several asset management firms, including BlackRock and Fidelity, have filed applications with the SEC to launch Bitcoin ETFs.

“The role of crypto is digitizing gold. […] Let’s be clear, bitcoin is an international asset, it’s not based on any one currency and so it can represent an asset that people can play as an alternative.”– Larry Fink (CEO of Blackrock), in an interview with Fox News, July 2023

The development of Bitcoin ETFs could further accelerate the growth of the Bitcoin mining industry in the U.S. If approved, these ETFs would make it easier for investors to gain exposure to Bitcoin through existing financial infrastructure and eliminate the need to hold the cryptocurrency themselves. This could lead to a surge in demand for Bitcoin from US investors and further growth of the mining industry in the U.S.

Local governments can play a crucial role in supporting their local Bitcoin mining industry by providing regulatory clarity, investing in infrastructure, offering tax incentives, promoting education and research, collaborating with industry associations, and supporting entrepreneurial initiatives. This support can foster economic growth, technological innovation, and job creation within the cryptocurrency mining sector. Examples from around the world, such as Crypto Valley in Switzerland, Inner Mongolia in China, Texas in the US, Alberta in Canada, Iceland, and Kazakhstan, demonstrate the different approaches governments can take to support their local mining industry. By providing a supportive environment for Bitcoin mining, local governments can attract and retain mining operations, contributing to the local economy and promoting the growth of the broader cryptocurrency industry.

In conclusion, recent developments in the geopolitical landscape and the strained relationship between the US and China in the advanced semiconductor and related technologies sectors portend a serious threat to the growth of several US industries. Specifically, US-based Bitcoin miners face significant challenges with the unpredictable supply of cutting-edge ASICs, potential security issues, and continued profitability.

It is critical for the United States to invest in designing and manufacturing advanced semiconductors for Bitcoin mining. This will help ensure a resilient supply chain, promote economic vitality, and maintain technology leadership in this rapidly growing industry. Continued investment and support for the domestic semiconductor industry is essential to achieving these goals and ensuring the long-term competitiveness of the U.S. in the global market for advanced semiconductors and systems.

Hope you enjoyed this guest post from Viswesh Ananthakrishnan, Head of Product Management at Auradine, on why it is critical to have US suppliers design & manufacture advanced semiconductors and systems for Bitcoin mining. Have a great day and I’ll talk to members tomorrow.

-Pomp

Peter Johnson is the Co-Head of Venture Investments at Brevean Howard Digital.

In this conversation we talk about the epic rise of stablecoins, how they have become the killer app of blockchain technology, where stablecoins are being used, why they are being used, and who is using stablecoins.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Pomp’s Appearance on Fox Business with Liz Claman Yesterday

Podcast Sponsors

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

* Range - Get started today with code POMP15 for 15% off any quarterly plan for your first year.

* Auradine - A new bitcoin miner powered by the world’s first 4 nanometer silicon chip technology.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

Today’s letter is brought to you by Sidebar!

Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A trusted peer group, with battle-tested perspective, and proven playbooks, to have real, tactical discussions with to propel you forward.

With Sidebar, senior leaders are matched with a small group of highly-vetted, private, and supportive peers to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius. Together, we’re better prepared to navigate professional pitfalls and push each other to do more, do it better, and do it faster. 

“Providing and receiving support from others who play a similar role to you is one of the best ways to grow your capabilities and succeed.” - Vice President, Roku

“You’re the average of the people you keep closest; Sidebar helps you raise that bar.” - Global Director, Reddit

“Tap into a new level of coaching support, professional development, and peer-driven accountability.” - Senior Director, Credit Karma

Why spend a decade finding your people – join Sidebar today. Join the growing waitlist of over 3,500 top senior leaders, and apply to become a founding member.

To investors,

People have been predicting a recession for months. But the economy doesn’t seem to care. The S&P 500 is up 15% year-to-date and nearly back to all-time highs. Unemployment also remains stubbornly low at 3.5%.

As Charlie Bilello points out, “after a record 25 consecutive months of negative real wage growth, wages have now outpaced inflation on a year-over-year basis for 3 straight months. This is a great sign for the American worker that hopefully continues.”

But the Federal Reserve is not out of the woods yet. In fact, the Fed is likely in an impossible situation. They have raised interest rates more than 500 basis points in about 18 months, which is the fastest pace on record. Headline inflation has fallen from over 9% to less than 4%, yet there are lingering concerns that inflation could reverse and accelerate again.

These inflation fears are largely driven by the fact that numerous economic measurements continue to come in at higher levels than expectations. According to Bloomberg’s Lisa Abramowicz, “investors are throwing in the towel on hopes for near-term central bank rate cuts. Global bond yields are at the highest levels since 2009 as economic data keeps coming in hotter than expected.”

She goes on to highlight that “a San Francisco Fed study estimates that US consumers have about $190 billion of excess savings left and that it'll likely be depleted during the current quarter.”

Then we can look at something like retail sales — Bilello states “after adjusting for inflation, US retail sales fell 1.3% over the last year, the 9th consecutive YoY decline. That's the longest down streak since 2009. Nominal retail sales increased 2% YoY vs. a historical average of 4.7%.”

But Kathy Jones says is more excited about the “large upside surprise in retail sales. Retail sales increased 0.7% vs. an expectation of 0.4% month-over-month. The control group, which feeds into GDP, increased 1.0% vs. an expectation of 0.5%.”

So what exactly is going on in the US economy? Are we headed towards good times or bad times? Up or down? Pain or bliss? The short answer is that no one knows.

The Federal Reserve has to use these conflicting data points to determine whether they have done enough rate hikes. If they have, then inflation will continue to come down, the Fed will eventually cut rates, and asset prices will continue their decade-long trend of up-only. But if the Fed misjudges this, and they mistakenly pivot now prematurely, then we could see an accelerating inflation trend that catches the central bank unprepared.

Jeff Cox wrote for CNBC:

“Federal Reserve officials expressed concern at their most recent meeting about the pace of inflation and said more rate hikes could be necessary in the future unless conditions change, minutes released Wednesday from the session indicated.

That discussion during a two-day July meeting resulted in a quarter percentage point rate hike that markets generally expect to be the last one of this cycle.

However, discussions showed that most members worry that the inflation fight is far from over and could require additional tightening action from the rate-setting Federal Open Market Committee.

“With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” the meeting summary stated.”

The public narrative in recent weeks has switched from “the Fed will have to continue hiking interest rates and a recession is on the horizon” to “the Fed is done hiking interest rates and the good times are coming back.” These meeting minutes reveal that the central bank has a different view of the economy.

It is nearly impossible for a human to use backwards-looking economic data to make monetary policy decisions that impact the future. There are too many moving parts and an economy is too complex. The Federal Reserve will do the best they can, but the conflicting data is compounding the challenge in the current environment.

Regardless of whether the Fed continues to hike interest rates or not, someone is going to complain that the governing body got it wrong. Inflation never shows up — people will say it was never going to come anyways. Inflation comes roaring back — the “hike interest rates forever” crowd will be screaming “I told you so!”

Unfortunately the people caught in the crossfire of the monetary policy debate are everyday Americans who simply want to live their lives. They want to plan their future, including choosing a city to live in, a home to purchase, children to raise, and a job to obtain. These big life decisions are directly and indirectly impacted by the cost of money, whether people realize it or not.

If we don’t know the cost of money a month from now, it becomes nearly impossible to plan your future life with any degree of accuracy. That has always been the case, but seems more obvious today than ever before.

Hopefully we can escape this complex, uncertain, and chaotic time with minimal damage to the economy and the financial health of Americans. I am hoping for the best but preparing for the worst. I suggest you do the same.

Hope everyone has a great day. I’ll talk to you tomorrow.

- Anthony Pompliano

Darius Dale is the founder & CEO of 42Macro.

In this conversation we talk about global liquidity, what drives it - both in private & public sector, and how to understand its future impact on asset prices.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

My Appearance on CNBC with Brian Sullivan Last Night

Podcast Sponsors

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

* StartEngine - Sign up for a StartEngine account today explore live investment opportunities where you can start investing with as little as $100.

* Range - Get started today with code POMP15 for 15% off any quarterly plan for your first year.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

I found a number of interesting data points while I was digging into the bitcoin market over the weekend. First, there are now more than 1 million addresses on the bitcoin network with at least 1 bitcoin. That is growth of more than 100,000 addresses to this club in less than a year.

The percent of bitcoin in the circulating supply that has not moved in the last two years is now at a new all-time high of 56%. This means that more than one out of every two bitcoin in circulation has not moved in two years.

The percent of circulating supply that has not moved in 5 years is also at an all-time high of 29%.

Over 70% of all bitcoin addresses are “in profit,” which means they acquired the current bitcoin they are holding at a lower price than today’s price point.

Although there have been many people selling their bitcoin at a loss in recent months, bitcoin holders who have sold in the last few days are selling at a profit again.

Miners had been selling bitcoin throughout the second half of 2022. These same market participants have been buying/holding bitcoin year-to-date. It is a strong sign to see the lack of sell pressure from miners in the market.

Using the new data platform Velo Data, we can see the best day for bitcoin futures returns in a given week is Tuesday. The average futures return over the last year on Tuesday is more than double the average return for any other day of the week.

Bitcoin is still down more than 50% from the 2021 all-time high in price, but the digital currency’s compound annual growth rate for the last decade remains more than 75%.

The narrative over the last few months has been focused on the regulatory environment, along with a continued belief in the mainstream media that bitcoin was a bubble. These data points, along with various fundamental analysis, suggest that bitcoin is actually in a very strong position.

Any time you have a highly illiquid asset that could potential see a large influx in demand (Wall Street ETF applications as one example), it is worth paying attention to. The supply/demand lesson you learned in Economics 101 still rules the day.

Hope you all have a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

Anthony Pompliano breaks down billionaire David Rubenstein’s thoughts on bitcoin, BlackRock, and why he believes bitcoin is not going away.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Joe Rogan and Post Malone Discuss Risks of CBDCs

Podcast Sponsors

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

* StartEngine - Sign up for a StartEngine account today explore live investment opportunities where you can start investing with as little as $100.

* Range - Get started today with code POMP15 for 15% off any quarterly plan for your first year.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

Today’s letter is brought to you by Sidebar!

Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A trusted peer group, with battle-tested perspective, and proven playbooks, to have real, tactical discussions with to propel you forward.

With Sidebar, senior leaders are matched with a small group of highly-vetted, private, and supportive peers to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius. Together, we’re better prepared to navigate professional pitfalls and push each other to do more, do it better, and do it faster. 

“Providing and receiving support from others who play a similar role to you is one of the best ways to grow your capabilities and succeed.” - Vice President, Roku

“You’re the average of the people you keep closest; Sidebar helps you raise that bar.” - Global Director, Reddit

“Tap into a new level of coaching support, professional development, and peer-driven accountability.” - Senior Director, Credit Karma

Why spend a decade finding your people – join Sidebar today. Join the growing waitlist of over 3,500 top senior leaders, and apply to become a founding member.

To investors,

Dave Portnoy, the founder of media company Barstool Sports, just pulled off the greatest business deal of the last decade. This transaction will be studied in business schools for years to come.

To understand how this happened, we must first understand what makes Barstool Sports special. I wrote an article more than 6 years ago that explained it in the following way:

“The Barstool Sports magic is driven by charismatic personalities, a cultural obsession with memes / humor, and a system level evolution in distribution platforms. Gone are the days of writing long form, serious content. The last five years have ushered in an acceleration of shareable, humorous content in reaction to the shift in consumer interests and decreasing attention spans.

The focus on “clicks” by media empires was once a recipe for success, but is now a bee line to negative unit economics and the inherent fall from grace that follows. Somehow a formerly small, unknown sports blog from New England avoided the errors of their idols and figured out the media model of the future.”

Simply, the company figured out how to do something different and it resonated with a large audience. Readers and viewers were not the only people who noticed. Barstool Sports was able to solicit a number of different investors to put money into the business over the last few years.

* January 2016 — The Chernin Group buys 51% of Barstool Sports for a rumored $7-10 million

* January 2018 — The Chernin Group invests $15 million at $100+ million valuation

* January 2020 — Penn National buys 36% of Barstool Sports for $163 million

* February 2023 — Penn National buys the remainder of Barstool Sports for $388 million

As of February 2023, Penn National owned 100% of Barstool Sports and they had paid $551 million for it. Not bad for a company that started out 20 years ago as a free physical newspaper handed out personally by the founder.

But the deal between Barstool Sports and Penn National did not come without challenges. Penn is in the casino and gambling business, which is highly regulated. Dave Portnoy and Barstool Sports are a regulators’ nightmare.

So it was clear how Barstool could bring more awareness and users to Penn, but it also became obvious that Barstool was making life more difficult for Penn as well.

This is where ESPN comes in. The media company has been trying to figure out how to get into the gambling business for awhile now. Their traditional revenue business is struggling as consumers ditch cable networks and the overlap with gambling for a sports broadcast network is a no brainer.

ESPN is a media company. Penn National is a gambling company. And yesterday they announced that the two companies are going to enter into a 10-year partnership. Penn will pay ESPN $1.5 billion over 10 years, along with grant them $500 million of warrants to purchase 31.8 million Penn common shares. There will be a new sportsbook, called ESPN Bet, that is launched out of the partnership.

This left open the question — what about Barstool?

Barstool and ESPN have a long history of not getting along. They have tried to work together in the past, but a TV show collaboration lasted less than a week. Portnoy and the Barstool team have also spent years mocking and ridiculing ESPN and their staff. It would be an understatement to say the two companies despise each other.

Penn National had to make a decision about what to do with Barstool. It appears they couldn’t sell the property to a competitor, which is not surprising given how controversial Barstool has become over the years. So Penn did the next best thing — they sold the company back to founder Dave Portnoy.

The announcements yesterday read “Dave Portnoy buys back Barstool Sports!” Suspiciously there was no purchase price though. Since Penn is a public company, I knew they would have to disclose the information so I went to read the public filing. My mind was blown when I read the details of the deal.

Dave Portnoy paid $0 to purchase 100% of Barstool Sports. Yes, you read that right. The man who started a company that was purchased for $551 million less than 9 months ago is now back in full ownership of his business for no additional money.

Penn National made Dave agree to a non-compete, which means he can’t launch a sportsbook in the future, and a number of other non-monetary covenants, including a rumored clause that won’t allow other gambling companies to advertise with Barstool Sports. Penn also negotiated to receive 50% of any future sale or monetization event with Barstool.

Those concessions from Dave and his team are cute, but they still paid $0 to get Barstool back. And during Dave’s video announcing the deal yesterday, he mentioned that he will never sell Barstool again, so my guess is that Penn will never see another dollar from Barstool Sports.

Dave Portnoy is now the full owner of a cash-flowing media empire that does hundreds of millions of dollars. He monetized his ownership once and then he just pulled off one of the greatest business deals of the last few decades.

What a wild world we live in.

Hope you all have a great day. I’ll talk to you tomorrow.

-Pomp

Podcast Sponsors

* Velo Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem.

* StartEngine - Sign up for a StartEngine account today explore live investment opportunities where you can start investing with as little as $100.

* Range - Get started today with code POMP15 for 15% off any quarterly plan for your first year.

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

To investors,

This weekend I worked with the team at Bay Area Times to publish an overview of the US economy using 78 different charts. You can watch the video on YouTube or on Twitter. Here are five of my favorites:

Most of the GDP growth is coming from the western and southern United States.

There have been three of the five largest bank failures in US history this year.

We have erased the past 20 years of gains in life expectancy after the metric fell to 76 years.

And California has 70% of the top Artificial Intelligence startups in the United States.

If you are interested in better understanding the US economy, I highly suggest watching this video. It takes about 10 minutes to see everything and it is jam-packed with information.

The team at Bay Area Times explains the news every morning in 5 minutes or less using graphics and visuals. You should subscribe to the email. It is completely free and will make you more informed.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Pomp

Remi Adeleke is a former Navy SEAL, and also the author of 2 books, "Transformed: A Navy SEAL’s Unlikely Journey from the Throne of Africa, to the Streets of the Bronx, to Defying All Odds" & "Chameleon: A Black Box Thriller.

"Chameleon" is his brand new fiction story of his life, and many of the experiences he went through. This man has not only gone from being a Navy SEAL, but he has also broke into the media & entertainment industry.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

My Fox Business Appearance From Last Week

Get Better Crypto Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem: velowaitlist.com 🚨

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe

Today’s letter is brought to you by Sidebar!

Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A trusted peer group, with battle-tested perspective, and proven playbooks, to have real, tactical discussions with to propel you forward.

With Sidebar, senior leaders are matched with a small group of highly-vetted, private, and supportive peers to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius. Together, we’re better prepared to navigate professional pitfalls and push each other to do more, do it better, and do it faster. 

“Providing and receiving support from others who play a similar role to you is one of the best ways to grow your capabilities and succeed.” - Vice President, Roku

“You’re the average of the people you keep closest; Sidebar helps you raise that bar.” - Global Director, Reddit

“Tap into a new level of coaching support, professional development, and peer-driven accountability.” - Senior Director, Credit Karma

Why spend a decade finding your people – join Sidebar today. Join the growing waitlist of over 2,500 top senior leaders, and apply to become a founding member.

To investors,

The Federal Reserve was mocked relentlessly during the pandemic for their atrocious understanding of their impact on inflation. After cutting interest rates to 0% and helping print trillions of dollars, the central bank was confident that inflation would be transitory.

They were wrong.

Inflation peaked at over 9% in the United States and the CPI metric remained above 5% for about two years. There was nothing transitory about the inflation that ravaged the bottom 50% of citizens who have no investable assets. As if that was not bad enough, the Fed appeared to compound the problem by jacking up interest rates over 500 basis points in just over a year.

This was an important development because the Fed had previously given guidance in 2020 and 2021 that interest rates would remain below 1% for years to come. Since individuals and businesses planned their lives off that guidance, the central bank violated their trust when they did the exact opposite.

These two mishaps make it clear why very few people believed the Fed when they stated their intention to achieve a soft landing of the US economy back in 2022. The idea was the monetary policy leaders would be able to increase interest rates and drain liquidity from the economy without experiencing a significant increase in unemployment or a meaningful contraction in economic activity.

Everyone from market participants to former central bankers highlighted the near impossibility of this task. But, in a stroke of genius or a batch of good fortune, it appears more likely every day that the Federal Reserve may pull off their soft landing target.

Yesterday, the central bank raised the interest rate by 25 basis points to a target range of 5.25% - 5.5%, which is the highest interest rate range in 22 years.

This steep of an acceleration in the interest rate has never happened before. The consensus view has been a recession would be imminent because you can not increase interest rates this quickly without breaking things.

After receiving more data, the answer appears more complicated than we previously thought.

First, we already experienced a recession last year. The GDP data for Q1 and Q2 2022 was negative, so this met the standard of a recession in most people’s eyes, especially given the recession definition has long been “two quarters of negative GDP growth.”

You probably don’t remember that recession though. Why? The National Bureau of Economic Research boasts of having a monopoly on calling a recession. You can’t make this stuff up. The organization has said that two quarters of negative GDP growth does not automatically qualify as a recession, but instead they will let the American people know when a recession has actually occurred. It would be funny if it was not so absurd.

The second piece of nuance related to a recession and the financial tightening pursued by the Federal Reserve is how resilient the US economy has been throughout this period. Jeff Cox of CNBC explains why the economic strength is a leading indicator that the odds of a recession are diminishing:

“Economic growth has been surprisingly resilient despite the rate hikes.

Second-quarter GDP growth is tracking at a 2.4% annualized rate, according to the Atlanta Fed. Many economists are still expecting a recession over the next 12 months, but those predictions so far have proved at least premature. GDP rose 2% in the first quarter following a large upward revision to initial estimates.

Employment also has held up remarkably well. Nonfarm payrolls have expanded by nearly 1.7 million in 2023, and the unemployment rate in June was a relatively benign 3.6% – the same level as a year ago.”

This leads us to question how the Federal Reserve could aggressively hike interest rates, yet nothing is breaking in the economy? Well, that is not necessarily true.

The third piece of nuance is related to the areas of damage, which have been in unexpected corners of the economy. Historically, a central bank’s pursuit of quantitative tightening would lead to high unemployment and GDP contraction. While those have stayed strong and bucked the historical trend, we have seen numerous banks blow up in the last few months.

Three of the four largest bank failures in history have occurred in the last seven months. We continue to see regional banks failing on a weekly basis. So this means that the Fed’s actions didn’t impact the average consumer in a way that was previously predicted, but instead it literally killed financial institutions — and the Fed continues to tighten financial conditions despite banks breaking.

So where does this leave us now?

The Federal Reserve is going to wait for more data on inflation and jobs before deciding whether to continue hiking interest rates or not. They should get two full months of data before they need to make another decision, which will give them a good idea of how strong the economy really is at the moment.

The odds of a recession are diminishing by the day as well. The longer that interest rates stay above 5% without unemployment growing aggressively or GDP contracting in a material way, the less likely it is that we will see the pain of a widespread recession.

If this happens, which is increasingly looks like it will, the Federal Reserve will have pulled off the impossible — a soft landing. It is still too early to celebrate. There are a variety of things that could go wrong, but if a soft landing is achieved then we should congratulate the Fed on a job well done.

After their recent mistakes and inaccurate predictions, the central bank could use a win on such an important stage.

Hope you all have a great day. I’ll talk to everyone tomorrow.

-Pomp

Remi Adeleke is a former Navy SEAL, and also the author of 2 books, "Transformed: A Navy SEAL’s Unlikely Journey from the Throne of Africa, to the Streets of the Bronx, to Defying All Odds" & "Chameleon: A Black Box Thriller.

"Chameleon" is his brand new fiction story of his life, and many of the experiences he went through. This man has not only gone from being a Navy SEAL, but he has also broke into the media & entertainment industry.

Listen on iTunes: Click here

Listen on Spotify: Click here

Earn Bitcoin by listening on Fountain: Click here

Navy SEAL Rebuilds Life After Nigerian Government Steals His Family’s Wealth

Get Better Crypto Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem: velowaitlist.com 🚨

You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit pomp.substack.com/subscribe