Sticky Inflation + Energy Prices: End of the Rally or Pause?

Summary

• Avi de-risked last week and now sits “8.5–9 out of 10 invested”: “the most dangerous thing about a market is when it has no bear case.” His filter is the marginal dollar — “always identify the external source of capital… and if you can’t find it, you better get the f* out of your positions.” Jonah’s rebuttal on AI: the marginal dollar is nowhere near exhausted, because “coding alone seems to be a use case that’s as big as the entire white-collar labor market combined.”
• The bear case the market is ignoring: global crude is projected to hit operational tank bottoms by September. Oil demand is inelastic — “people will not stop driving or flying” — so if bottoms hit, “oil goes to 200, the entire global economy shuts down, the stock market’s down 25%.” Avi is betting against it with real money (“I will be getting carted out on a stretcher”), but says all-time highs against that “clear and present” danger equals complacency. If you’re long stocks, “you’re short that put.”
• Jonah’s read on the geopolitics: Trump is running a “shadow war” — keeping the Strait of Hormuz conflict going without markets noticing — and because he’s getting no pushback, there’s no taco: “we will be 8 million barrels less of oil in the world for the foreseeable future” and oil probably stays above 100. Avi’s pushback: “No way, that’s unsustainable” — an 8mbd shortage holds two months at most before $200 forces resolution.
• The second tail risk: a 50% chance of a rate hike by end of December is now priced, and Kevin Warsh is considering rebasing CPI with real-time telemetry instead of surveying 8,000 people. Jonah’s binary: tolerating 4–6% inflation against a 2% target is trillions in “shadow stimulus, shadow QE” — an honest CPI forces hikes and “could be the most bearish thing we’ve seen since 2022,” savage for equities but more savage for crypto, which is “basically a debasement trade.” Jonah sizes these as 10–15 delta outcomes the market refuses to treat as bearish catalysts.
• “There’s no such thing as crypto anymore” — the asset class hasn’t rallied in aggregate since 2024; individual flows rip individual assets. Hyperliquid ($12B cap, $50B FDV vs. CME’s $6B/yr earnings and $108B cap) is “an easy 2x… but it’s not going to retire you”; Zcash at $10B is Avi’s preferred 10x over 2–3 years because “Hyperliquid is never going to be money — it’s a company.” PERP, called on the show in the 30s, is almost $9.
• The Saylor problem: Avi says one buyer ready to take on ~95% of BTC activity means “Michael needs to stop buying if Bitcoin wants to go up” — “we need a blow-up to go up is the new tagline.” Jonah: “Michael Saylor has lost the plot. There is no bid for his size,” and he’s never seen financial-engineering accumulation at this scale without a horrendous unwind — Avi recalls Lehman CDO-squared vibes. Jonah still calls BTC “a million-dollar token” long term.
• Jonah’s disenchantment and career meta-lesson: “AI has mugged crypto” — blockchain is becoming “commoditized fintech rails,” and young people should get a real job elsewhere. Trading careers are “a constant explore-exploit trade-off”: his own reinvention from Lehman bond desk through oil to crypto beat every peer who stayed in one lane — but pure crypto-only exploit mode leaves you with no adjacent market in 2026.

Deep dive

1. The lack of a bear case IS the bear case

• Avi opens with the framework behind his recent de-risk (sold Intel at a ~116 average; it touched 105 and came back): “the most dangerous thing about a market is when it has no bear case.” Good trades hurt — “95% of your trades that you put on, you will have slight discomfort about. If you have literally zero discomfort… that means it’s not as good of a trade as you think.” Buying the memory trade at the Iran-war lows felt awful and worked; being balls-long at Intel 120 with everything ripping is when to get nervous.
• The resolving test isn’t sentiment but flows: “always identify the external source of capital. Where is the marginal dollar going to come from? And if you can’t find it, you better get the f* out of your positions.” 2020 Bitcoin worked despite consensus because new money wasn’t yet allocated; AI worked because retail and slower hedge funds weren’t actually in Intel, AMD, Nvidia; equities always work because consumers, pensions, and every 401k allocate weekly.
• Jonah’s answer on whether the AI marginal dollar is spent: “No way. There’s so much more investment left” — “coding alone seems to be a use case that’s as big as the entire white-collar labor market combined.” Avi remains invested, but at 8.5–9 out of 10, down from 10.

2. The $200-oil put embedded in every long book

• Avi’s chart from last week: global crude is projected to hit operational tank bottoms by September — not commercial minimums, operational bottoms. Demand is inelastic (“people will not stop driving or flying”), so if they hit, “oil goes to 200, the entire global economy shuts down, the stock market’s down 25%. It would be way, way, way worse than the Ukraine war.”
• The fact that changed his mind: even three carrier strike groups can’t keep the Strait of Hormuz open — “Trump isn’t holding all the cards” — leaving a non-zero chance Iran “ransoms the world.” He’s underwriting against it (“I will be getting carted out on a stretcher if we hit operational tank bottoms… you got to risk it to get the biscuit”), but new highs against so obvious a danger tells him there’s complacency.
• Why the strait probably reopens anyway: oil is “literally the only asset in the world where 90–95% of the world’s population wants that price lower.” Even producers can’t profit from a closure — Saudi Arabia stays below breakeven even if oil doubles because the East-West pipeline moves only half its crude — and Japanese refiners would diversify to American and Indonesian barrels. At the Xi–Trump summit, both agreed the strait stays open.
• Jonah’s silver lining for the US: post-Ukraine, America went from 5–10% to more than 30% of European oil supply — the same customer-capture could repeat post-Iran.

3. Trump’s shadow war keeps 8 million barrels off the market

• Jonah’s framing: Trump is slow-playing — “how can I still be at war with Iran but not have the markets think I’m at war… how do I have a shadow war?” Because it’s working and he’s getting no pushback, there’s no full taco (which would mean ship fees and the blockade lifted) — so “we will be 8 million barrels less of oil in the world for the foreseeable future” and oil probably stays above 100.
• Avi’s pushback, worth keeping: “No way, that’s unsustainable… You cannot have an 8 million barrel a day shortage for the foreseeable future” — with spare capacity unrampable through the blockage, the shortage holds maybe two months before $200 is mechanically forced.

4. Sticky CPI, a 50% hike probability, and the Warsh wildcard

• The market now prices a 50% chance of a rate hike by end of December, with Powell facing his highest inflation prints in 4–5 years. Avi calls Powell “a once-in-a-generation type talent” for managing the soft landing — “bailed out by AI, yes.” Jonah: “Disagree” — the storm Powell landed was “a storm of his own making,” from the “transient inflation” days. “The price of a f*ing onion is $3 right now because of Jerome Powell.” Avi: “How do you know what the price of an onion is?” Jonah: “I don’t.”
• Warsh is considering replacing the 8,000-person CPI survey with real-time telemetry and AI — and Jonah thinks the true number would read well above the “massaged” official figure. Avi’s soapbox against doing it: publishing a 2x CPI print causes panic, and managing inflation is managing consumer behavior — “even if you know something is wrong, if changing it would cause panic, you kind of just go along with the lie.”
• Jonah’s binary on Warsh: as a political pick (Trump “wants rates going to -10% so that his real estate portfolio gets juiced”) he’s bullish; but tolerating 4–6% against a 2% target is trillions of “shadow stimulus… shadow QE,” and an honest rebase forces hikes — “could be the most bearish thing we’ve seen since 2022,” savage for equities, more savage for crypto, “basically a debasement trade.” Jonah sizes the oil and CPI tails at 10–15 delta — real, unpriced, and unwelcome as bearish catalysts.
• Near-term playbook from Avi: Nvidia earnings after the bell — “if you get a big sell-off in these names, you probably want to start nibbling,” but stay careful deploying cash.

5. Saylor is too big — “we need a blow-up to go up”

• Avi’s change of mind: one buyer ready to absorb ~95% of BTC activity is the opposite of a distributed currency — “Michael needs to stop buying if Bitcoin wants to go up. I don’t think he has the sauce anymore.” The episode’s new tagline: “we need a blow-up to go up.”
• Jonah’s rage bait, delivered on purpose: “I think Michael Saylor has lost the plot… There is no bid for his size.” He’s never seen financial-engineering accumulation reach this scale without “some sort of horrendous unwind.” Avi recalls the CDO and CDO-squared tranches he watched at Lehman. The tell was Saylor’s stretch comment: “I got to sell a little bit to inoculate the market against me selling.”
• The only exits Jonah sees: keep buying and pray for dollar debasement, or the McAfee scenario — Saylor disappears, the wallet gets lost, and “the whole ecosystem just deflates by whatever he owes, 3%.” He still holds that Bitcoin is “going to a million-dollar token” long term. Both want Saylor on for “an adversarial podcast.”

6. There is no crypto asset class — just individual flows

• Bitcoin underperforming Hyperliquid and ZEC “so massively” is the tell: Avi notes crypto “has not gone up in aggregate together” since 2024. Avi’s taxonomy: “Bitcoin is a store of value and a debasement hedge. Zcash is the crime coin. Hyperliquid is the perps DEX.” His start-of-year call — privacy outperforms memecoins — is vindicated: “Where’s your Pepe now?”
• Zcash is bluntly “a way to get long crime” — a mixer Jonah wouldn’t be surprised Iran and North Korea are using heavily (North Korea “just stole another $400 million”). Avi’s math: Zcash is at a $10B market cap and could also get to $1B over two to three years, competing with Bitcoin on that level — a 10x over two to three years, more attractive than Hyperliquid’s 2–4x because “Hyperliquid is never going to be money. It’s a genuine company.”
• On Hyperliquid, Jonah is structurally bullish — the first crypto app that’s a better mousetrap than anything else out there, no KYC, best exchange in the world, sharing more revenue than anyone — worth “triple or quadruple” long-run. Avi’s sizing check: CME earns $6B/yr on a $108B cap; Hyperliquid sits at $12B cap and $50B FDV — “an easy 2x, but it’s not going to retire you,” and $200B is “fantastical territory.” Ansem’s framework fits: big runs start with one major asset and one meme asset — Hyperliquid plus ZEC now. PERP, called on the show in the 30s, is almost $9.
• Jonah’s disenchantment: “AI has mugged crypto” — the useful-product version of what crypto promised — while blockchain becomes “commoditized fintech rails” and the retail capital for “random nonsense” is tapped out. His advice to young people: don’t work in crypto, “get a real job.” Avi’s ratification: 1000x is now a global macro podcast.

7. Explore vs. exploit — the career framework Avi wants on every Bloomberg terminal

• Jonah’s arc, as told: high-grade corporate bonds at Lehman → CDS → crossover credit → G10 FX options → oil options → all oil derivatives → physical oil → crypto → precious metals. He’s outperformed those peers still trading high-grade bonds “30, 35 years” on — “but there were many times where, when I was in the process of reinventing myself, I was getting laughed at by those people.”
• The generalization: a trading career is “a constant explore-exploit trade-off.” Pure exploit crushes it when the cycle favors you but leaves you undiversified — crypto-only felt smart in 2021, but in 2026 “you don’t have an adjacent market to go reap rewards.” Pure explore scatters you and “you make no money.” Avi’s verdict: “we need to clip that and put it on every Bloomberg terminal.”