2025-12-12 21:33:40
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To investors,
The Federal Reserve will begin buying back $40 billion in US treasuries starting today. The purchases are planned to happen over the next 30 days and signal a return to quantitative easing from the central bank.
Historically, the introduction of QE has been very bullish for investors. But this policy shift is happening at a very interesting time. Creative Planning’s Charlie Bilello writes “investors are now paying 26.2 times peak S&P 500 earnings, the highest valuation we’ve seen since 2000 and over 50% above the historical median. A decade ago this same ratio was at 16.8.”
These valuation levels will obviously make some investors nervous if they compare them to the last few decades.
Mike Zaccardi and Torsten Slok show “the historical relationship between the S&P 500 forward P/E ratio and subsequent 10-year annualized returns shows that investors should expect to get zero in return in the S&P 500 over the coming decade.”
Again, investors are looking to capture a return. They don’t want to hear about an expected return of zero for the next decade. Thankfully, these negative predictions are being met with lots of positive news.
E.J. Antoni explains the Atlanta Fed now has the “Q3 GDP estimate increased to 3.6% as exports revised higher, offsetting downward revisions to investment and government. It’s very good news that government purchases might come in flat for the first 9 months of 2025 - that’s incredible progress.”
And Commerce Secretary Howard Lutnick was on television yesterday predicting GDP growth could reach as high as 6% under the Trump administration’s policies.
“Real GDP growth! Not 2% nonsense. This $30T economy can grow 4%, 5%, and under President Trump, you’re gonna see it grow 6%!!…People think, it’s impossible? Lower rates, lower energy, you have that growth, you’re gonna fix America.”
Time will tell whether Lutnick is right or not. Regardless of the long-term accuracy, it is very clear that certain economic points have been improving. Adam Kobeissi shows “US rent prices declined -0.2% MoM in November, to $1,706, recording the largest November drop in at least 15 years. This also marks the 5th consecutive month of flat or negative rent changes.”
That is a big narrative violation. It is these positive developments in the economy that give firepower to Lutnick and others to go on offense against the establishment leaders who have the perception of holding back growth.
In that same interview yesterday, Lutnick went on a rant about Jerome Powell saying:
“Jay Powell is too afraid to lead the greatest $30 trillion economy in the world. We should be leading with our front foot. Instead we are always leaning back as if something bad is happening. We are doing great. Nothing bad is happening. Greatness is happening. We’re growing 4% GDP! Come on.”
Regardless of your politics, it is clear that two things are happening: the US economy is experiencing a boom in GDP growth, while stocks continue to surge higher amid worries about future returns available to investors. There is significant disagreement about what is going to happen in the coming months and years. That is how markets get made though. You need bulls and bears. Buyers and sellers.
One thing I know to be true though…the optimist tend to come out on top.
Hope you all have a great end to your week. I’ll talk to everyone on Monday.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Mel Mattison is one of the leading macro strategists on the internet, known for his deep insights into global markets and digital assets.
In this conversation, we break down why inflation fears are overstated, why rates may fall faster than expected, and how energy and politics are shaping today’s markets. We also cover the rise of young independent investors, growing distrust in institutions, and what all this means for bitcoin, stocks, housing, and the AI-driven economy ahead.
Enjoy!
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Abra - This podcast is sponsored by Abra. Abra is the secure way to access crypto and crypto based yield and loan products through a separately managed account. www.abra.com.
Bitizenship – Get Italian Residency with €250k investment in Bitcoin Startup Italy , maintaining Bitcoin exposure. Book a free strategy call at bitizenship.com/pomp.
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Arch Public - Arch Public’s cutting-edge algorithm tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!)
Defi Development Corp - DeFi Development Corp. (Nasdaq: DFDV) is building the first Solana-focused public treasury, giving investors exponential exposure to Solana’s growth.
Uphold - Uphold is the all-in-one platform to trade, earn, stake, and swap across 300+ assets with real-time proof-of-reserves and any-to-any conversions. Manage your entire crypto portfolio in one place at www.uphold.com
Bitwise Asset Management - Crypto specialist asset manager with more than $10 billion client assets and more than 30 crypto solutions across ETFs, index funds, alpha strategies, staking, and more. Learn more at bitwiseinvestments.com
Xapo Bank: Fully licensed private bank and virtual assets services provider that integrates traditional finance and Bitcoin. Earn up to 3.5% in BTC over USD Savings. Spend globally with a debit card that gives up to 1% cashback in BTC. The Pomp Audience Exclusive: Receive $150 discount when they join with this link.
Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/
Bitlayer - Bitlayer is powering Bitcoin beyond just a store of value, making Bitcoin DeFi a reality while staying true to its core principles of security and decentralization. Learn more about Bitlayer at https://x.com/BitlayerLabs
🚨READER NOTE: If you want to sponsor The Pomp Letter, you can fill out this form and someone from our team will get in touch with you.
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.
2025-12-11 22:08:09
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To investors,
Quantitative easing is back. The Federal Reserve announced a 25 basis point cut yesterday, which brings the federal funds rate down to 3.50-3.75%. The vote had three dissenters, including two people who thought we should have left rates unchanged and Fed Governor Stephen Miran who wanted a 50 basis point cut.
While the interest rate cut is important, it was consensus across Wall Street that the central bank would reduce the cost of capital by 25 basis points. The big surprise coming out of the two day meeting was the Fed’s announcement to restart balance sheet expansion with $40 billion in monthly Treasury bill buys.
My friends at Geiger Capital put it best when they reminded us that Ben Bernanke promised in 2008 that QE was temporary and the Fed’s balance sheet would soon be lower than when they started.
As you can see, the Fed’s balance sheet has continued to grow over time and now Jerome Powell is telling us that it is time to go back higher. This entire situation is highly unusual. Creative Planning’s Charlie Bilello outlined it perfectly:
Stocks: all-time high
Home Prices: all-time high
Gold: all-time high
Money Supply: all-time high
National Debt: all-time high
CPI Inflation: 4% per year since Jan 2020, 2x the Fed’s “target”
Fed: cut rates again today & will start QE on Friday
But as I wrote earlier this week, multiple deflationary forces are headed for a collision with the US economy. We have AI, robotics, tariffs, and a surge in deportations. Each would be worth watching on their own, but they collectively create the perfect storm for the Fed to fail at monetary policy.
Add in weakness in the job market and it becomes clear why the Fed has to get interest rates lower. So now that we know QE is coming back, what will happen to asset prices?
Remember, when the Fed buys bonds, it pushes bond yields down and encourages investors to move into riskier assets in search of higher returns. This “liquidity wave” makes borrowing cheaper, boosts confidence, and raises demand across financial markets.
The biggest beneficiaries of QE are almost always risk assets. Stocks tend to rise because future earnings are discounted at lower rates, making companies appear more valuable. Bitcoin and other digital assets benefit because investors look for assets that outperform cash when money supply expands. Real estate goes up because mortgages become cheaper and investors chase hard assets. Long-duration assets—like tech stocks, growth companies, and venture-backed businesses—often rise the most because their value depends on future cash flows, which become more attractive when rates fall.
So what assets suffer during QE?
One of the big losers should be the U.S. dollar, which tends to weaken when more dollars are created, and short-term cash-like investments, which offer lower yields and become less attractive relative to risk assets. Traditional value stocks, commodities tied to economic stress, and defensive sectors may lag because QE shifts investor appetite away from safety and toward growth and speculation. Overall, QE is designed to inflate financial assets, and historically it has done exactly that.
This means investors are about to be very happy.
I took my analysis of QE’s impact one step further and I asked Silvia, the AI CFO that we built, to explain how the return of QE should impact my personal portfolio. She told me “the rate cuts are highly favorable for your portfolio, particularly your private investments and crypto. Your Opendoor position is also well-positioned to benefit from housing market recovery.
However, the Fed’s signal of fewer cuts ahead means the easy gains may be behind us. The key risk is your extreme concentration in private investments, which makes you exceptionally sensitive to any Fed policy changes.
Your portfolio is essentially a leveraged bet on lower rates — which has worked brilliantly so far, but requires careful monitoring as the Fed slows its cutting pace in 2026.”
You can ask Silvia to analyze your personal portfolio by signing up for free by clicking here.
Hope everyone has a great day. I’ll talk to you tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Jeff Park is a Partner & Chief Investment Officer at ProCap Financial.
In this conversation, we break down the Fed’s year-end shift toward rate cuts and easier liquidity, what it means for markets, and why bitcoin sentiment feels so negative despite strong performance.
Jeff also digs into how AI investment is reshaping the macro landscape, what institutional players like BlackRock and Stripe signal for crypto, and why ProCap’s mission centers on bitcoin and the coming age of abundance.
Enjoy!
Figure - Need liquidity without selling your crypto? Figure’s Crypto-Backed Loans allow you to borrow against your BTC, ETH, or SOL with 12-month terms and lowest rates in the industry at 8.91%. Access instant cash or buy more Bitcoin without triggering a tax event. https://figuremarkets.co/pomp
Abra - This podcast is sponsored by Abra. Abra is the secure way to access crypto and crypto based yield and loan products through a separately managed account. www.abra.com.
Bitizenship – Get Italian Residency with €250k investment in Bitcoin Startup Italy , maintaining Bitcoin exposure. Book a free strategy call at bitizenship.com/pomp.
BitcoinIRA - Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $1,000 in rewards.
Arch Public - Arch Public’s cutting-edge algorithm tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!)
Defi Development Corp - DeFi Development Corp. (Nasdaq: DFDV) is building the first Solana-focused public treasury, giving investors exponential exposure to Solana’s growth.
Uphold - Uphold is the all-in-one platform to trade, earn, stake, and swap across 300+ assets with real-time proof-of-reserves and any-to-any conversions. Manage your entire crypto portfolio in one place at www.uphold.com
Bitwise Asset Management - Crypto specialist asset manager with more than $10 billion client assets and more than 30 crypto solutions across ETFs, index funds, alpha strategies, staking, and more. Learn more at bitwiseinvestments.com
Xapo Bank: Fully licensed private bank and virtual assets services provider that integrates traditional finance and Bitcoin. Earn up to 3.5% in BTC over USD Savings. Spend globally with a debit card that gives up to 1% cashback in BTC. The Pomp Audience Exclusive: Receive $150 discount when they join with this link.
Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/
Bitlayer - Bitlayer is powering Bitcoin beyond just a store of value, making Bitcoin DeFi a reality while staying true to its core principles of security and decentralization. Learn more about Bitlayer at https://x.com/BitlayerLabs
🚨READER NOTE: If you want to sponsor The Pomp Letter, you can fill out this form and someone from our team will get in touch with you.
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.
2025-12-10 23:13:09
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To Investors,
The American economy is booming. At least that is what the GDP numbers are telling us. US GDP grew 3.8% year-over-year in Q2 and the Atlanta Fed is estimating Q3 growth to be between 3.5% - 3.8%.
Historical context is important to understand the magnitude of these numbers. The average GDP growth for countries around the world is approximately 2.9% and the United States has outperformed for the last 80 years by growing GDP on average 3.2% annually from 1947 to 2025.
So what is driving the good times right now?
The answer is very simple: artificial intelligence. Adam Kobeissi shows that approximately 63% of all GDP growth is coming from AI-related spending. This means that without the AI CAPEX boom, the US economy would be in a significantly worse position.
This AI-related spending can be best visualized by looking at data center spending since 2020. Kobeissi writes “spending on data centers in the US has tripled since the release of ChatGPT in November 2022. Spending on structures excluding data centers is down ~20% since the 2023 high. The strength of technology companies has created two “economies” in the US.”
Speaking of two economies, compare the explosion in AI-related spending with the fact that US small business bankruptcies reached a record 2,221 year-to-date. This is up 83% over the last five years. These bankruptcies reflect high borrowing costs, cautious consumer spending, and economic pressures disproportionately affecting smaller businesses.
This second economy also saw US employers announce 1.2 million job cuts in 2025, which is the second-highest in 16 years. These job cuts create a paradox where labor market deterioration coincides with the S&P 500 adding $17 trillion since April.
Think of how crazy that is.
Small businesses are going bankrupt and more than a million people lost their job, but US corporate profits hit record highs in Q4 amid strong demand and pricing power.
If you looked up the definition of opposing outcomes, you would find these data points front and center as they expose inequality between corporate performance and worker outcomes. Plenty of people will use this information to rail against the system. They will stoke populism and claim that the only path forward is socialism.
But we know that is not true. In fact, history shows us over and over again that economic incentives drive outcomes. Programs like Invest America will give people a stake in the capitalist system, while providing a financial head start for millions of young people.
And the data shows that young people, particularly Gen Z, may be more enthusiastic about financial markets than you would think.
Gen Z is starting to invest earlier than previous generations. About 54% of this cohort are beginning by age 21 compared to 31% of millennials and 27% of Gen X.
Additionally, 63% of young adults view the stock market as an excellent wealth-builder. Gen Z favors stocks and millennials lean more into crypto as their primary investment. What is maybe most interesting, younger generations are nearly 3x more likely to hold speculative assets, including crypto-related stocks and day trading.
So what is my big takeaway from all of this?
There are pockets of great data in the economy and financial markets, but those big trends like AI are covering for areas of weakness. That is normal. There are people claiming everything is great or everything is horrible…both of the groups are right.
But maybe the real lesson here is that we should trust the kids. They are enthusiastic. They are pouring capital into financial markets. They see value in AI, bitcoin, crypto, and robotics. These young people are predicting the future. We all should just make sure we are listening.
Hope you all have a great day. I’ll talk to everyone tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
I recently sat down with John Pompliano to dig into what’s really at stake at the upcoming Federal Reserve meeting - whether the move should be 25 bps, 50 bps, or nothing at all.
We breakdown how those decisions ripple through markets and why bitcoin’s unique monetary policy is becoming impossible for the world to ignore. Plus, discuss the shift as bitcoin miners move into AI infrastructure - why it’s happening, how they’re doing it, and what it means for investors.
Enjoy!
Figure - Need liquidity without selling your crypto? Figure’s Crypto-Backed Loans allow you to borrow against your BTC, ETH, or SOL with 12-month terms and lowest rates in the industry at 8.91%. Access instant cash or buy more Bitcoin without triggering a tax event. https://figuremarkets.co/pomp
Abra - This podcast is sponsored by Abra. Abra is the secure way to access crypto and crypto based yield and loan products through a separately managed account. www.abra.com.
Bitizenship – Get Italian Residency with €250k investment in Bitcoin Startup Italy , maintaining Bitcoin exposure. Book a free strategy call at bitizenship.com/pomp.
BitcoinIRA - Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $1,000 in rewards.
Arch Public - Arch Public’s cutting-edge algorithm tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!)
Defi Development Corp - DeFi Development Corp. (Nasdaq: DFDV) is building the first Solana-focused public treasury, giving investors exponential exposure to Solana’s growth.
Uphold - Uphold is the all-in-one platform to trade, earn, stake, and swap across 300+ assets with real-time proof-of-reserves and any-to-any conversions. Manage your entire crypto portfolio in one place at www.uphold.com
Bitwise Asset Management - Crypto specialist asset manager with more than $10 billion client assets and more than 30 crypto solutions across ETFs, index funds, alpha strategies, staking, and more. Learn more at bitwiseinvestments.com
Xapo Bank: Fully licensed private bank and virtual assets services provider that integrates traditional finance and Bitcoin. Earn up to 3.5% in BTC over USD Savings. Spend globally with a debit card that gives up to 1% cashback in BTC. The Pomp Audience Exclusive: Receive $150 discount when they join with this link.
Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/
Bitlayer - Bitlayer is powering Bitcoin beyond just a store of value, making Bitcoin DeFi a reality while staying true to its core principles of security and decentralization. Learn more about Bitlayer at https://x.com/BitlayerLabs
🚨READER NOTE: If you want to sponsor The Pomp Letter, you can fill out this form and someone from our team will get in touch with you.
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.
2025-12-10 00:08:25
Lava’s bitcoin line of credit (BLOC) allows you to unlock your bitcoin’s purchasing power— instantly, flexibly, and securely— without selling your bitcoin.
Now through the end of the year, Lava is offering a special promotional rate to all borrowers. Anyone who opens a BLOC this month will lock in a 5% interest rate, fixed for a full year. This is the last month to secure this rate for 2026.
With Lava Refinance, you can easily bring your existing loans over to Lava and access the lowest fixed interest rates in the industry. Their white glove client services team will help you through the whole process.
Lava allows you to borrow dollars in real time with no monthly payments, open terms, and full flexibility. Plus, you earn 5% APY on your USD balance, buy bitcoin with zero fees, and off-ramp globally.
Grow your bitcoin wealth— without ever selling your bitcoin.
To investors,
Jerome Powell and the Federal Open Market Committee start their two day meeting later today and the market is closely watching whether the Fed will cut interest rates or not.
Polymarket odds have a 25 basis point cut at 95%, while no change sits at a 5% chance.
If the Federal Reserve cuts rates, this will mark the third consecutive cut of the year (following 50 basis points in September and 25 basis points in October) and serve as “insurance” against deepening labor market risks, even as inflation remains sticky above the 2% target.
But I want to lay out the argument for the Fed to actually make a 50 basis point cut tomorrow. First, we know the labor market is softening, which is raising fears of a broader slowdown or recession if the situation is not addressed aggressively.
Nonfarm payrolls added only 119,000 jobs in September. This is a sharp deceleration from post-pandemic averages and the report came in below expectations. Due to this deceleration, the unemployment rate has ticked up to 4.4%.
We have also seen layoff announcements surge to 1.17 million year-to-date. This is the highest level of layoff announcements we have seen since the 2020 pandemic. Simultaneously, hiring plans have reportedly hit their lowest level since the end of the Great Financial Crisis.
Lastly, private-sector indicators like ADP jobs data and Challenger layoff reports have weakened even more in November. These trends suggest job growth is insufficient to match labor force expansion. The case for a 50 basis point cut related to the labor market is a larger cut would bolster employment and prevent a vicious cycle of reduced spending and further hiring freezes.
But the argument for a 50 basis point cut doesn’t solely rely on the labor market.
The government inflation metrics, which I believe to be wildly overestimating inflation, also provide support for a larger interest rate cut. Core PCE inflation is currently around 3% (about 1% above target), but disinflationary forces mitigate reacceleration risks. This should free the Fed to focus on their dual mandate employment goals.
Critics claim goods prices remain sticky due to tariffs and fiscal stimulus, but falling crude oil prices, excess rental supply, and declining home prices introduce deflation risks that give the green light for deeper cuts in my opinion.
On top of these converging forces, Fed projections and market-implied inflation show expectations anchored near 2%. This is obviously lower than consumer surveys which are projecting closer to 4% expectations, but we know the surveys are corrupted and likely further off than the market consensus. A 50 basis point cut would align with the Fed’s October statement committing to adjust policy “as appropriate if risks emerge,” so America’s central bank could easily frame the larger cut as targeted support rather than a policy pivot.
So we have a weakening labor market and an inflation environment, but ultimately the decision to cut more than 25 basis points still has to be made by humans that make up the FOMC.
Thankfully, there are a few common sense folks inside the building that seem to believe in the benefit of a larger cut. We know the FOMC is unusually divided right now and this could lay the foundation for a surprise aggressive cut.
Governor Stephen Miran has recently dissented twice in favor of 50 basis point cuts. He argued in November it’s “appropriate” for a large December cut to counter labor risks. At the time, he said about the severity of the December cut “at a minimum 25 [basis points], but failing new information... 50 is appropriate.”
Miran isn’t the only one. New York Fed President John Williams and San Francisco Fed President Mary Daly have signaled support for looser monetary policy. Williams explicitly said he views a cut as “insurance” against labor slippage without jeopardizing inflation goals.
So what do analysts think is going to happen inside the Fed?
Analysts at Nomura forecast a dovish dissent from Miran pushing for 50 basis points, while others will have potential hawkish dissents against even a 25 basis point move. This highlights the unusual 60-40 split between committee members on easing policy.
This internal dynamic, which is rare because we almost never see opposite-direction dissents over the last 35 years, could tip the balance toward bolder action or a more aggressive interest rate cut.
So what are my expectations?
I think we will merely get a 25 basis point cut. I wish it was a 50 basis point cut, but I just don’t see the Fed building enough internal support to be more aggressive. The market dynamics warrant the larger cut. The economy would be better off with the larger cut. Unfortunately, the Fed plays it too safe though. They are scared of seeing themselves in the mirror, let alone making a bold decision.
So now we all wait and see what happens. The Fed will conduct their FOMC meeting. Trillions of dollars will speculate on what one man, Jerome Powell, will say at the press conference tomorrow.
And the world will keep spinning, the American economy will continue strengthening, and stocks will surge higher in the coming months. The Fed can’t stop this train, regardless of how bad they are at managing monetary policy.
Hope you all have a great day. I’ll talk to everyone tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Jordi Visser is a macro investor with over 30 years of Wall Street experience, and he also writes a Substack called “VisserLabs” and puts out investing YouTube videos.
In this conversation we break down the major forces driving markets today — bitcoin’s price action, accelerating institutional adoption, the latest AI developments, internal tensions at OpenAI, and an overlooked industrial company he believes will be critical to the future economy.
We wrap with a sharp look at the Fed, interest rates, deflation signals, and why easy money is still flowing through the system.
Enjoy!
Figure - Need liquidity without selling your crypto? Figure’s Crypto-Backed Loans allow you to borrow against your BTC, ETH, or SOL with 12-month terms and lowest rates in the industry at 8.91%. Access instant cash or buy more Bitcoin without triggering a tax event. https://figuremarkets.co/pomp
Abra - This podcast is sponsored by Abra. Abra is the secure way to access crypto and crypto based yield and loan products through a separately managed account. www.abra.com.
Bitizenship – Get Italian Residency with €250k investment in Bitcoin Startup Italy , maintaining Bitcoin exposure. Book a free strategy call at bitizenship.com/pomp.
BitcoinIRA - Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $1,000 in rewards.
Arch Public - Arch Public’s cutting-edge algorithm tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!)
Defi Development Corp - DeFi Development Corp. (Nasdaq: DFDV) is building the first Solana-focused public treasury, giving investors exponential exposure to Solana’s growth.
Uphold - Uphold is the all-in-one platform to trade, earn, stake, and swap across 300+ assets with real-time proof-of-reserves and any-to-any conversions. Manage your entire crypto portfolio in one place at www.uphold.com
Bitwise Asset Management - Crypto specialist asset manager with more than $10 billion client assets and more than 30 crypto solutions across ETFs, index funds, alpha strategies, staking, and more. Learn more at bitwiseinvestments.com
Xapo Bank: Fully licensed private bank and virtual assets services provider that integrates traditional finance and Bitcoin. Earn up to 3.5% in BTC over USD Savings. Spend globally with a debit card that gives up to 1% cashback in BTC. The Pomp Audience Exclusive: Receive $150 discount when they join with this link.
Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/
Bitlayer - Bitlayer is powering Bitcoin beyond just a store of value, making Bitcoin DeFi a reality while staying true to its core principles of security and decentralization. Learn more about Bitlayer at https://x.com/BitlayerLabs
🚨READER NOTE: If you want to sponsor The Pomp Letter, you can fill out this form and someone from our team will get in touch with you.
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.
2025-12-08 22:17:31
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To investors,
The US economy is getting hit with multiple deflationary forces at the same time. These converging trends are forcing the hand of the Federal Reserve towards lower interest rates and more money printing.
First, we know that artificial intelligence and robotics are squeezing an insane amount of inefficiency out of every corner of the system. Companies can now drive more profits with fewer employees, which is usually referred to as “good deflation.” This is when supply expands faster than demand.
So where can we see this happening in today’s economy? We see example after example of productivity surges, cost compression, and quality enhancements. This fosters a “deflationary boom,” where goods and services become cheaper, enhancing consumer purchasing power and supporting GDP growth without overheating.
AI is not only making companies more productive, but we are reaching a point where AI can write its own software. Eventually, technologists promise us that humanoid robots will be doing many things in society, including manufacturing and assembling more humanoid robots. This type of exponential productivity is hard to understand today. It is probably the most important deflationary trend though.
Elon Musk, the founder of numerous multi-billion dollar companies at the intersection of AI and robotics, recently discussed how these technologies should create deflation and help address the national debt crisis.
Take a listen:
It seems like deflation is the obvious end state when Elon explains his view on these technologies in relation to the growth of America’s money supply.
But Elon understands that AI and robotics are still not making a big enough impact on the economy to reach a deflationary state yet. Part of that gap is because of the ridiculous amount of money that is being printed by the US government, but another aspect is that AI and robotics remain in a relatively nascent stage.
Elon’s estimation is that the US economy will hit a deflationary period in three years:
Now Elon Musk is known for aggressive timelines and plenty of critics will argue that his estimation is off by a decade or more. I wouldn’t be so sure though. The pace of innovation, and the acceleration in adoption for AI and robotics, tells me the deflationary impact is much closer than most people realize.
These technology trends are not happening in a silo either.
The second big trend we have to pay attention to are demographics and proposed policy shifts. Both of these are curbing consumer demand and shrinking the labor supply, creating a potential “deflationary shock.” Economist David Rosenberg highlights three converging forces:
Aging workforce: The US median age is 42.3 (up from 36 in 2000), with the dependency ratio (the number of non-working people vs people of working age) rising to 37% by 2035, reducing spending on discretionary goods.
Immigration restrictions: Tighter policies limit population growth and low-wage labor inflows, suppressing household formation and service-sector demand.
Tariffs: broad tariffs (e.g., on imports) could slash consumer spending by raising costs, leading to a demand cliff.
These three factors could weaken aggregate demand, which can cause prices to fall as businesses face oversupply and cut prices to clear inventory. On the positive side, lower demand might stabilize housing and services inflation, but it risks a vicious cycle of delayed spending and job losses, especially in retail and construction.
Getting this balance right is very important. You want deflation without recession. This can only be done by creating positive supply-side factors rather than a collapse in demand. This is often called “good deflation” or “growth deflation,” where prices fall due to increased productivity, technological advancements, or efficiency improvements that boost output and real incomes.
As one example, we are seeing this “good deflation” happen in energy costs over the last year. The decline in energy costs are due to increased domestic production, milder global demand, and efficiency gains from renewables and AI-optimized grids. US gasoline prices are projected to drop 3% (11 cents/gallon) in 2025 vs. 2024, with energy inflation at -1.6% year-over-year as of July 2025.
These cheaper energy prices act as a broad disinflationary tailwind, including lower input costs for manufacturing and transportation. This boosts household disposable income (ex: saving the average driver ~$150/year on fuel) and supports profit margins for energy-intensive industries. However, prolonged declines could hurt oil/gas producers (ex: job cuts in Texas), contributing to regional economic slowdowns. Nationally, it reinforces the Fed’s path to 2% inflation but amplifies deflation risks if paired with weak demand elsewhere.
Specific to energy costs, these drivers are predominantly supply-side (AI and increased energy production) or demand-constraining (demographics/policies). This combination promotes sustainable growth but raising risks of a sharper downturn if they intensify. Again, remember the balance of deflation without recession is really important to get right.
The United States has been able to accomplish this many times throughout history. Here is a list of example time periods:
We have done it before, which means we can do it again. Technology, demographics, and policies can bring prices down and create an economic boom.
Elon Musk knows it is possible. He is quite literally trying to create that future. But for all the talk of inflation, it seems like many investors are ill-prepared for a world where deflation dominates the economy.
As Stanley Druckenmiller once said, “Every serious deflation I’ve looked at is preceded by an asset bubble, and then it bursts.” And there are plenty of people screeching about an asset bubble given current prices. So now the question becomes “will the asset bubble burst and bring deflation?”
I will let each of you answer that question for yourself.
Hope you have a great start to your week. I’ll talk to everyone tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Jordi Visser is a macro investor with over 30 years of Wall Street experience, and he also writes a Substack called “VisserLabs” and puts out investing YouTube videos.
In this conversation we break down the major forces driving markets today — bitcoin’s price action, accelerating institutional adoption, the latest AI developments, internal tensions at OpenAI, and an overlooked industrial company he believes will be critical to the future economy.
We wrap with a sharp look at the Fed, interest rates, deflation signals, and why easy money is still flowing through the system.
Enjoy!
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BitcoinIRA - Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $1,000 in rewards.
Arch Public - Arch Public’s cutting-edge algorithm tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!)
Defi Development Corp - DeFi Development Corp. (Nasdaq: DFDV) is building the first Solana-focused public treasury, giving investors exponential exposure to Solana’s growth.
easyBitcoin - Stack sats with easyBitcoin.app—earn 1% extra on buys, 2% annual rewards and 4.5% APY on USD. Download it at easybitcoin.app today.
Bitwise Asset Management - Crypto specialist asset manager with more than $10 billion client assets and more than 30 crypto solutions across ETFs, index funds, alpha strategies, staking, and more. Learn more at bitwiseinvestments.com
Xapo Bank: Fully licensed private bank and virtual assets services provider that integrates traditional finance and Bitcoin. Earn up to 3.6% in BTC over USD Savings. Spend globally with a debit card that gives up to 1% cashback in BTC. The Pomp Audience Exclusive: Receive $150 discount when they join with this link.
Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit Simple Mining here.
Bitlayer - Bitlayer is powering Bitcoin beyond just a store of value, making Bitcoin DeFi a reality while staying true to its core principles of security and decentralization. Learn more about Bitlayer at https://x.com/BitlayerLabs
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2025-12-05 22:06:43
You can now access Italy’s Investor Visa with a €250K equity investment into Bitizenship Italia, a Milan-based Bitcoin startup. Visa approval arrives first, investment happens only after authorization. The company operates with a Bitcoin-aligned treasury, non-custodial L2 staking, and clear redemption windows every 24 months.
To date, Bitizenship has facilitated €25M+ in Bitcoin-aligned residency investments.
A compliant, Bitcoin-native pathway into one of Europe’s strongest economies.
Private placements now open.
To investors,
It is no secret that I have been very bearish on US treasuries as a long-term store-of-value. The asset that is deemed “safe” in a modern portfolio has actually been the one thing that seems designed to degrade in value over time. TLT is down about 40% over the last 5 years and it has booked a negative return over the last 12 months.
This failure of the legacy system to provide real yield leaves an opening for the new players to offer a solution to the problem. Whether that is crypto companies and products, or it is modern fintechs, there are technologists assaulting the finance industry with innovations and yield-bearing products.
I asked the team at Coinbase to put together a guest post outlining the various ways they are helping users drive yield using some of these new technologies. You can read it below and I hope it is valuable to each of you.
Traditional savings accounts just don’t cut it anymore. You work hard to put extra cash in a savings account for the long-term, but all you get in return is a trickle of interest that barely keeps up with the rate of inflation. Your money should work harder for you, and crypto makes it possible.
The crypto ecosystem provides a long list of tools designed to help you generate real returns on your crypto and stablecoin holdings, no matter your comfort and expertise level.
For a dependable and truly effortless way to earn in the crypto space, generating rewards on stablecoins is a great entry point. Many centralized exchanges (CEXs) or financial platforms offer programs where users can earn rewards simply by holding a stablecoin like USDC in their accounts. The basic mechanism is straightforward: you hold the asset on the platform, and the platform pays out rewards often in the form of a competitive Annual Percentage Yield (APY).
While generally considered a lower-risk crypto earning method because stablecoins are designed to be pegged to a fiat currency like the U.S. dollar, users are typically still exposed to the risks inherent to the centralized platform itself.
A longstanding method for earning passive income on countless crypto assets is staking, which is available on blockchains that use a Proof-of-Stake (PoS) consensus mechanism. Instead of letting your cryptocurrencies sit idle, you can put them to work by securing the network and earn rewards.
What does that mean?
It involves committing your crypto to help validate transactions and create new blocks on the blockchain. In return for performing this critical function, you receive staking rewards, typically in the form of newly minted coins. It’s a symbiotic mechanism that can passively increase your crypto holdings over time while directly supporting a network’s security and efficiency.
As with any financial endeavor, there are nuances that you should consider before staking your assets such as lock-up periods for your assets and protocol penalties that could “slash” your funds.
You can explore high potential yields by engaging directly with the onchain economy and lending your crypto. This process involves depositing your assets, typically a stablecoin like USDC, into a decentralized lending protocol (a common example being Morpho, among others like Aave or Compound). Here’s how it works:
After depositing your crypto, the lending protocol uses smart contracts to connect you directly with borrowers who are typically looking to borrow stablecoins, often against other overcollateralized crypto assets. This removes TradFi intermediaries.
The rewards you earn accrue automatically as interest paid by the borrowers, offering consistently higher yields (often above 5-6%).
Onchain lending protocols often prioritize flexibility, allowing users to withdraw their funds at any time, though this is dependent on the specific protocol’s design.
Lending your assets onchain introduces new risks, such as smart contract risk and the fluctuating utilization rates of the lending pool. You should make sure to understand these deeply before diving in.
As TradFi interest rates trend down over the coming years, it’s time to stop letting inflation eat away at your savings. Whether you want to pursue stable growth or aggressive yields, there’s a wide onchain world of choices waiting for you to supercharge your assets’ earning potential.
Ready to earn more today? Sign up or log in to Coinbase and start growing your savings!
I recently sat down with Darius Dale, the Founder & CEO of 42 Macro. In this conversation, we break down the growing divisions inside the Federal Reserve, the real odds of a December rate cut, and who may lead the Fed next. Darius explains how Fed policy is moving asset prices in every direction and why markets are pricing something very different from what the Fed is saying.
Enjoy!
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Bitizenship – Get Italian Residency with €250k investment in Bitcoin Startup Italy , maintaining Bitcoin exposure. Book a free strategy call at bitizenship.com/pomp.
Defi Development Corp - DeFi Development Corp. (Nasdaq: DFDV) is building the first Solana-focused public treasury, giving investors exponential exposure to Solana’s growth.
BitcoinIRA - Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Pay less taxes. Earn up to $1,000 in rewards.
Arch Public - Arch Public’s cutting-edge algorithm tools ignite profits, harnessing razor-sharp data analytics to nail perfect entries, exits, and risk management. Turn volatility into opportunity and do it hands free with Arch Public. (Oh, and yes, try us out for FREE too!)
Uphold - Uphold is the all-in-one platform to trade, earn, stake, and swap across 300+ assets with real-time proof-of-reserves and any-to-any conversions. Manage your entire crypto portfolio in one place at www.uphold.com
Bitwise Asset Management - Crypto specialist asset manager with more than $10 billion client assets and more than 30 crypto solutions across ETFs, index funds, alpha strategies, staking, and more. Learn more at bitwiseinvestments.com
Xapo Bank: Fully licensed private bank and virtual assets services provider that integrates traditional finance and Bitcoin. Earn up to 3.5% in BTC over USD Savings. Spend globally with a debit card that gives up to 1% cashback in BTC. The Pomp Audience Exclusive: Receive $150 discount when they join with this link.
Simple Mining offers a premium white-glove Bitcoin mining service. Want to grow your Bitcoin stack? Visit https://www.simplemining.io/
Bitlayer - Bitlayer is powering Bitcoin beyond just a store of value, making Bitcoin DeFi a reality while staying true to its core principles of security and decentralization. Learn more about Bitlayer at https://x.com/BitlayerLabs
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.