MARKET UPDATE: Meta, Bitcoin, Crude And The Economy Are All Ripping. How Long Can It Last?

Summary

• Avi’s counterintuitive rate call keeps working: 10-year yields pushing above 5% aren’t a reason to sell — they’re the market saying “I don’t trust the Fed anymore,” which means Treasury intervention, money printing, and higher Bitcoin, gold, and crypto. He stays “long and strong” BTC, Intel, and Nasdaq until something fundamentally breaks, and Jonah — who admits the call defies the cycle playbook — concedes that Avi was right, with BTC up 20–30% from the lows.
• The episode’s core trading rule: only go long demand-driven stories, never supply squeezes, because supply always shows up. Diamonds are “the anatomy of a bad product” — a De Beers monopoly disrupted by $6/carat lab-grown supply — while copper, “the most widely distributed competitive commodity in the history of the universe,” just hit historic highs and is “probably on our way to $8.” The 2008 peak-oil panic that dissolved into the shale boom is the canonical cautionary tale.
• Avi’s most actionable crypto call is Zcash: up 30x in a year, the only private asset accessible through regulated venues (Monero isn’t; Zcash is on Robinhood), and allocatable by institutions and pension funds. He fades the $20–30k targets — “maybe we’ll see $5,000” — but recommends rotating part of your Bitcoin stack into it, without leverage. Jonah passes entirely: “I’m afraid to touch it… I’ve been burned too many times.”
• Jonah’s “most optimistic graph I have ever seen”: the cost of AI is declining faster than that of any advanced technology in history — computing took 1940–2001, electricity barely got cheaper from 1892–1973 — and cheaper AI will augment the workforce and flow into GDP and the S&P. Avi adds the induced-demand kicker: companies were capping AI spend on cost, so cheaper AI means a usage explosion, like adding highway lanes.
• The bond-market paradox both hosts discuss: AI is ultimately deflationary, but for now rising equity returns force yields higher — “why hold a bond with a yield of 5% if the stock market yield increases from 11% to 16%?” This period is a devaluation of the U.S. dollar, and Jonah’s proposed hedge isn’t TIPS: “You should buy stocks to avoid it.”
• The casualty is real estate: multifamily and hotels get pressured by rates — luxury hotels now cost over $2M per room to build, and 2010s deals underwritten for 2% refinancings can’t refinance below 7%. Jonah’s playbook is to wait for the 2009 analog — capitulation, fire sale, then a long liquidity-recovery wave — while noting the hotel market is still early: “You may have missed the first inning, but it’s still the second inning.”
• The political clock: Jonah says risk assets can run until the end of the Trump administration, with danger arriving “early to mid-2027” if the current wave of candidates overwhelms the Democratic Party — but his hunch is that the DSA’s socialist trend fails nationally and “the party can last another 6 years instead of two.” Avi’s closing provocation: “income inequality is a made-up problem,” and AI will widen it anyway as the highest-agency people “suck out all the capital” — the answer for most people is megatrends via Nasdaq and S&P, not trading.

Deep dive

1. Lab-grown diamonds at $6/carat — and the potential pivot from jewelry to chip wafers

• Jonah’s dinner-table scoop: the CEO of the world’s largest diamond lab produces lab-grown diamonds for “$6 per carat” — “a diamond the size of Kim Kardashian, rough, for about $100.” The company is moving toward B2B jewelry production, and Jonah says that if this technology can be translated into diamond wafers for TSMC and Intel, “what a company that would be.” Diamond is among the best heat conductors of any material; if wafers can approach silicon’s cost, “you would have a quantum leap in chip production, and you wouldn’t need Elon to send data centers into space.”
• Avi’s market autopsy: De Beers ran a tightly controlled monopoly with artificial prices, and “the moment the monopoly breaks down, prices just completely fall on their own.” Diamond demand is largely proposal-driven, unlike rubies, emeralds, and Paraibas, bought by people who value the stone itself, so lab supply hits diamonds far harder than colored gems.
• The thesis field-tested at home: Avi’s Twitter advice to buy colored stones drew an “I’ll wear anything, it’s the thought that counts” from his wife — which Jonah decodes mercilessly: “She tells you: buy me a diamond, Avi.”

2. Trade demand, never supply — copper is the anti-diamond

• Avi’s generalization for the audience: diamonds are “the anatomy of a bad product” — monopoly-controlled, then disrupted by technology, and untradeable — while copper is the opposite: “the most widely distributed competitive commodity in the history of the universe,” with everyone producing and still not enough supply. It hit historic highs this week, a victory lap on last week’s call, with the hosts seeing continued AI-infrastructure demand and “probably on our way to $8.”
• The rule, with its canonical example: supply squeezes eventually break because supply arrives — “suddenly, out of nowhere, some farmer in Idaho finds the largest known deposit” — just as 2008’s peak-oil panic dissolved into the shale boom and abundant U.S. oil. Hence Avi’s meta-principle: “one of the best ways to make money in life is to bet on megatrends. And megatrends are actually the story of demand.”

3. Rates above 5% mean “I don’t trust the Fed” — stay long and strong

• Avi’s framing of the bond selloff spooking the Nasdaq: rising 10-year yields here are “the market saying, ‘I don’t trust the Fed anymore’” — the Treasury will intervene, printing continues, and fiscal irresponsibility wins — which is bullish Bitcoin, crypto, and gold even though it “goes against what you can learn from your CFA book.” His positioning is unambiguous: not selling BTC, Intel, or Nasdaq on rates — “I remain long and strong” until something fundamentally breaks in the rally.
• The demand evidence: Meta announced its AI assistant and “hundreds of millions of people have downloaded” it — podcast friend Ejaz, of Limitless, got a $250 refund for a seven-hour-delayed flight via Meta AI in two minutes. Avi’s split call: inflation hits banks and credit hard, but chips, data centers, and hyperscalers “won’t be affected by inflation as much as you might think.”
• Jonah’s runway: “the music simply won’t stop anytime soon, at least not within a year, probably not within a year and a half.” He says risk assets can run until the end of the Trump administration, with danger around early-to-mid 2027 if the current wave of candidates overwhelms the Democratic Party — “look at the prices of New York real estate indices under Mamdani.” His hunch is that the DSA’s socialist trend fails nationally. Avi responds that Jonah now has to be “almost completely immersed.”

4. Zcash is the new narrative — and Avi’s honest Bitcoin problem

• Breadth is back: Solana’s LetsBonk.fun did roughly $8M yesterday, outrunning Pump.fun, and Zcash is up 30x in a year — outsized returns in a large, liquid asset are exactly what “attracts new participants to the market,” which Avi calls “about the best you can get for cryptocurrency.”
• Avi’s Zcash case: it’s the only asset besides Bitcoin carrying a monetary premium, and “the only private cryptocurrency you can access” through regulated means — Monero isn’t; “you can buy Zcash on Robinhood” — making it allocatable by institutions and pension funds. He fades the $20–30k talk (“I think it’s capable of reaching, maybe, $5,000”), but says to take part of your Bitcoin stack and allocate it — while warning, “I don’t recommend using leverage.”
• His candid tension: he likes Bitcoin, but Intel outperformed it — 45–50% versus 30% from the lows — and is the easier hold. He says he could hold Intel for three to five years, accumulate it when cheap, and wait for $200, $250, or $300, while also saying he could get another $5 out of it.
• Jonah’s abstention, as hedged: “I don’t know how to trade Zcash. I’m afraid to touch it… I’ve been burned too many times. You are probably right. It’s just not for me personally.”

5. The fastest-depreciating technology in history — and why yields rise anyway

• Jonah’s chart, the spine of his bull case: the price of AI is declining “faster than any advanced technology in the history of the world” — computing took 1940–2001, electricity barely cheapened from 1892–1973 — and as the cost of production falls toward zero, AI will augment the workforce and flow into GDP, while the S&P benefits. “To me, this is the most optimistic graph I have ever seen… If you’re not on this train, you’re missing out.”
• Avi’s induced-demand read: companies were literally capping AI spend because cost outran performance, so cheaper AI means an explosion of use cases — the highway analogy: “Adding two extra lanes to a highway will not improve traffic because it will actually only increase demand.”
• The rates corollary, worth keeping: AI is ultimately deflationary, so bond prices recover long-term, but while companies are winning, “why hold a bond with a yield of 5% if the stock market yield increases from 11% per annum to 16%?” — rising expected equity returns push bond yields higher, and the whole period is “a devaluation of the U.S. dollar” that Jonah says you escape by buying stocks, not TIPS. Jonah adds crypto’s role: agents are now legible to normal people, crypto is a useful agent-payment mechanism, and “AI will save cryptocurrency” — the next on-chain wealth creation won’t be “JPMorgan and BlackRock deciding to sing Kumbaya and create ETFs,” but “little robots that live in the cloud” paying each other in tokens and stablecoins.

6. Real estate is the casualty — hunt the 2009 analog, mind the K

• Jonah’s real-estate warning: multifamily and commercial real estate could be badly pressured outside wealth-concentrated zones such as Pacific Heights, Aspen, Bel Air, the Hollywood Hills, and Beverly Hills. His hotelier friend — builder of “the most popular hotel in America outside of New York City” in 2019, 2020, and 2021 — says a luxury hotel now costs over $2M per room, while 2010s hotels underwritten for 2% refinancings “can’t refinance below 7%.”
• Jonah’s crash anatomy: illiquid markets die in a pattern — crickets, then one capitulation, then a cascade into a fire sale, then buyers and liquidity return — “then something like 2009 happens,” a long safe wave to ride. He hunts these analogs deliberately, citing crypto after FTX in December 2022, and on the current cycle: “You may have missed the first inning, but it’s still the second inning.”
• The K-shape as lived experience: Avi’s Mexico resort went from $700 to $1,200 a night while every top Canadian lake resort — Fairmont Lake Louise, Emerald Lake — was sold out in October; Jonah’s Lake Arrowhead four-star with “carpets the color of urine” cost what Amangiri or Post Ranch charged in 2019. Jonah’s diagnosis via The Romanovs: the middle class is “evaporating,” the split is 20% versus 80%, and there is no longer the old safety net — which Avi says helps explain why people trade memecoins with leverage.

7. “Income inequality is a made-up problem” — and AI will widen it anyway

• Avi’s rant, delivered categorically: “income inequality is a made-up problem” because “the poorest of the poor today often live better than the richest of the rich 200 years ago.” It is a social problem amplified by social media envy, while caste systems once functioned as “social technology” to reconcile people to their lot. “Is the system rigged? No. You’re just not using it properly.”
• His answer to Jonah’s K-shape question: AI “equalizes opportunities for people who are willing to work,” but inequality will obviously increase because “the people with the highest agency will use this to their advantage and suck out all the capital.” For most people the way out isn’t trading: invest dollars in Nasdaq and S&P and bet on megatrends you can’t argue with.
• Jonah’s coping stack: Jensen Huang — “You won’t lose your job to AI. You’ll lose your job to someone who uses AI” — and Santiago R. Santos: “Don’t count other people’s money.” Jonah says his fantasy-football agent may help him win against human leaguemates. His suggested response to the Fractal House he sees from his window, owned by an AQR co-founder, is to study people beating him rather than resent them.
• The closing register, via Yom Kippur: take stock, ask forgiveness, forgive yourself, and look forward. Avi also agrees in part with a commenter that life is more fulfilling when focused on something besides wealth creation, adding: “If you want to take away the fun of something, optimize it.”