D (4:27)

Oh, that's a great question. Way to start a soft hot, Eric. So thanks again for having me. It's always a pleasure to be with you and your wonderful Macro Voices community. I'll also add one quick highlight. We also have the same view coming into last year, 2025. Recall that we thought the Trump administration would kitchen sink the economy from a policy sequencing standpoint. And ultimately we thought the markets would crash to price that in and ultimately recover very sharply and violently to the upside. And that's obviously exactly what happened last year. So kudos to the team at 42 macro for getting that right. Getting into answering your question, I'll jump right into slides. Let's just hop right into it. We'll go to slide 115 where we show our the latest refresh of our positioning model which we refresh daily for our clients. And right now we're observing a historic degree of credit bullish positioning, which makes me very uncomfortable as an investor because typically what happens when you get to this extremes in crowded bullish positioning, you tend to have bad outcomes in financial markets. That doesn't necessarily guarantee a bad outcome of financial market, but it certainly increases the probability of one. So when we look at the positioning cycle indicators that correspond to the short to medium term time horizon, which are the AI Bulls bear spread and the national association of Active Investment Managers stock allocation Survey, both of those latest values for both of those time series are breaching their respective bull market peak thresholds going back to the early late 80s for the AI bulls bear spread, you know, kind of early 2000s for the name survey. So that, that indicates that there's a high risk of a correction over a short to medium term time horizon, which in our risk management nomenclature is one to three months. If you look at the indicators on the far right of that table on the right of slide 115 where we show the AI stock allocation survey, the AI bond allocation survey, the AI cash allocation survey, we use that to proxy investment advisor positioning. We look at The S&P 503 month realized volatility to proxy systematic fund exposure positioning. We look at applied volatility correlations to proxy the gross exposure of our marker neutral hedge fund clients. And then finally we look at the s and P of 100 price, the next 12 month earnings multiple as well as investment grade credit spreads and as well as economic policy uncertainty to proxy various cohorts of the broader buy side and their crowded positioning, whether it be bullish or bearish. And right now the, the competitive indicators are enough of those indicators are breaching their respective bull market peak thresholds that suggest that there's, you know, some, some bumps likely ahead of us over a short to medium term time horizon and potentially a medium to longer term time horizon as well, purely from the perspective of the positioning cycle. And one final thing I'll say on this on slide 1 16, if you go back and look at all those indicators and just look at them in terms of the percentile of implied credit bullish positioning based on the latest values. This is about the third highest crowded bullish positioning we've ever seen on a median on a mean basis and the second highest we've seen on a median basis. And so that would seem to suggest that we're going to have to have a lot of good news accumulate for markets to power through this dynamic.

B (7:26)

It seems to me that there's a lot of parallels here going into the 2000 trading year, boy, quarter of a century ago. I guess I must be getting old or something. But you know, the thing that seems similar to me is everybody was betting then on the Internet being a really big deal, they were right about that. But it just got so far ahead of itself that we ended up having to have the dot com bust before we could a couple of years later get a recovery. And of course they, they were still right. The Internet was a really big deal. It still is. It seems to me the parallel there is AI. I mean it seems like it's the big driver in the market. Everybody's right that AI is going to be a really big deal. But it also feels really overdone. So how do you see, and I guess the challenge there was almost everybody knew there was a bubble but nobody knew how to time it. So how do you see this crowded positioning that you're describing on page one, 115 resolving?

D (8:18)

Yeah, that's an excellent question. I'm so glad you brought up the early 2000s market cycle because it's very akin to what we're experiencing here here in 2026. You know, historically when you have these capex bubbles going back to the 19th century railroad build out, the 20th century consumer durable goods build out as well as the 20th and 21st century Internet CAPEX build out those, those capex bubbles tend to precede secular bear markets and oftentimes, you know, significantly adverse outcomes in the economy as well. The panic of, you know, 1873 led to the Long Depression. The 1929 stock market crash ultimately led to the Great Depression. We obviously saw the dot com bus lead us to the jobless recovery and then ultimately the housing bubble which ultimately gave way to the global financial crisis. So I think if you take a multi year time horizon perspective, things aren't great. I'll just leave it at that. But from a medium term time horizon perspective, which is set at 3 to 12 plus months. 3, 3 to 12 months in our risk management nomenclature, we do see this historic degree of credit bullish positioning resolving itself positively. But this will probably the last gasp higher in that. From that perspective, if we could turn to slide 24 where we show the latest refresh of our macro weather model which we again alongside our positioning model, we refresh six days a week for our clients here at 42 Macro. What we find is that if you look at the current constellation of the six key macro cycles that matter, with those being growth, inflation, monetary policy, fiscal policy, liquidity and positioning, four of the six are currently headwinds for the market. Now again, this model is designed to help project the dispersion within and across asset markets, or really mostly across asset markets over a short to medium term time horizon, which is again one to three months in our risk management nomenclature. And so that suggests that right now we're probably due for a correction and or some violent chop to kind of burn off some of this crowded bullish positioning before we can kind of set the stage to a meaningful move higher. And so, you know, looking at what's currently a tailwind, growth and inflation, they're both currently tailwinds as determined by the the features in the model. But when we look at the things that are currently headwinds, ultimately we have to see these things transition to becoming tailwinds for us to make new highs on a durable basis. And really any meaningful and or explosive move higher, which still may be in the cards, by the way, I don't think the AI Capex cycle is done. We certainly still see a tremendous amount of fundamental support for the market aside from this crowded bullish resisting dynamic. So let's kind of unpack the monetary policy, fiscal policy and liquidity cycles independently because those are headwinds that we ultimately expect will transition to becoming tailwinds over the medium term, which will support a positive resolution to this current credit bullish positioning which is likely to remain a headwind until this market peaks. So on the monetary policy side of things, we had a strong easing impulse in the Fed funds rate, we got a weak easing impulse in the two year nominal treasury yield Fed funds rate spread. We have a strong tightening impulse in the Fed's treasury holdings to marketable treasury debt ratio, we have a strong tightening impulse in commercial bank reserves to commercial bank assets ratio. And then we have a strong tightening impulse in the SOFR IRB spread. So ultimately we think the Fed's response to the tight conditions in the repo market will ultimately be one that is more balance sheet expansion, more reserve management purposes. And ultimately we expect the structural reforms that we've been forecasting at the Fed for years now, we expect the advent of those structural reforms will ultimately push the Fed funds rate lower, you know, kind of make the market more right with regards to established policy bias. So ultimately the monetary policy cycle, which is currently a headwind for risk assets and broader financial market risk taking, will ultimately transition to becoming a tailwind at some point over the next three to six months. So that's why that's one dynamic that could change, that could help this credit bullish positioning resolve positively. On the fiscal policy side of things, that's currently a headwind. We have the strong tightening impulse in the sovereign fiscal balance to GDP ratio, we got a weak tightening impulse in trailing twelve month federal revenue, we have a strong Tightening impulse in trailing twelve month federal expenditures, we have a strong tightening impulse in the treasury general account balance, the bank reserves ratio at 30%, essentially an all time high. The bills, the marketable treasury debt ratio is a weak easing impulse, but not enough to offset the current headwind, that is the fiscal policy cycle to broader risk taking in financial markets. Ultimately, particularly as we get past kind of late Q1, Q2 of this year, early Q2 of this year, we're going to start to see these DZ indicators transition largely as a function of the one big ugly bill and the fiscal stimulus that we're likely to see from that. Our math has the deficit expanding by 3 to $500 billion this year, perhaps doing that again in 2027 as well. So we're in this kind of U shaped fiscal policy dynamic where we've seen a tremendous amount of fiscal retrenchment in the economy which we can unpack later. We've seen a tremendous amount of fiscal retrenchment that ultimately more transition to fiscal easing. And so the fiscal policy cycle, which is currently a headwind for the financial markets, is ultimately going to become a tailwind, a high probability tailwind at some point, let's call it in the next three to six months as well. And then lastly with the liquidity cycle, which is the other cycle that needs to transition from being a current headwind to a tailwind at some point over the medium term to get us out of this awkward position that we're currently in as a function of the positioning cycle. If you look at our global liquidity proxy, that's a strong positive impulse, our 42 macro net liquidity, that's our US liquidity model, that balance sheet TJRP, that is a strong negative impulse. Now we got a strong easing impulse in the move index, which is bound market volatility. We have a strong tightening impulse in the ten year treasury term premium. And then we got a weak tightening impulse in the broad nominal dollar effective exchange rate. So we got a modest headwind right now of the liquidity cycle. Ultimately we think that'll transition to becoming a tailwind over the medium term. If we're right on the transition on the inflections in the monetary policy and fiscal policy cycle, which we see as high probability outcomes.

B (14:07)

Darius, so many things I want to dive a little bit deeper on this slide. 24. Let's start with the monetary policy aspects of this. You know, something our regular listeners know I've been kind of stuck on for the last several weeks is it seems to me that A dovish policy error by the Fed is a near certainty this year. And the reason I say that is President Trump is being extremely heavy handed in terms of just demanding that anybody he allows onto the FOMC board is going to have to vote for a reduction, a continued cutting of policy rates. And as Jim Bianco has warned, at some point if you cut too much, you end up having that blow up in your face. I don't think the President fully understands that. And you end up with the back end of the curve revolting. As the bond market starts to get afraid of runaway inflation. How does that thesis fit into your model and how does that jive with what you're thinking?

D (15:04)

Yeah, that's, I think that's one of the key risks in financial markets. However, I think that risk is dissipating at the margins. If you look at slide 54 where we show trends in key inflation swap rates, you know, we've been declining for a couple of quarters now across the 1 year, 2 year, 5 year and 10 year tenor of these inflation swap rates, which suggests that the bond market is getting less concerned about the prospect of a Federal Reserve that ultimately makes a dovish a policy error that reignites inflation. If you look at slide 55 where we show various market based estimates of neutral and R star, you know, if you look at the second panel on this chart here where we show the floor fed funds rate at three spot 11%, 3.11%. You know, that's the market in our view, that's the market's estimate of the neutral policy rate, which is again the minimum value on the OIS curve about 5 years. Given that we're in an easing cycle, we'd be using the terminal rate if we were in a hiking cycle. And if you look at that value relative to the effective fed funds rate, we're still about 64 basis points north of that in effective fed funds rate terms above neutral. So it's highly unlikely that the Federal Reserve creates any sort of meaningful inflation without at least getting the policy rate to a easing bias. Right now there's at least a couple two to two and a half rate cuts, if you will, between the current effective fed funds rate and neutral. So it's very likely that the Fed is still actually applying downward pressure upon the economy and labor markets and ultimately upon inflation. And you know, if you got one final thing I'll say on this is the, if you look at the bond Market on slide 57, the bond market is not overly concerned about sticky inflation either. So right now the 10 year treasury yield is currently about 4.15%. Historically, with data going back to the early 70s, the 10 year treasury yield tends to be about 100120 basis points above the fed funds rate. And so that's essentially saying the bond market thinks the fed funds rate should already be somewhere close to three, three and a quarter right now would be totally fine with that outcome based on its current pricing. And so that kind of leads me to the next few slides which says, okay, what could actually go right on inflation? We're also concerned about tariffs, which, you know, our math and our analysis has always suggested that tariffs were a, you know, regressive hit to aggregate demand that would ultimately wind up in lower aggregate demand and ultimately lower inflation. The San Francisco Fed eventually published a paper confirming what we had already, you know, signaled to our customers back in April when we were telling them to get long. The, you know, if you look at on slide 58, the middle panel on slide 58 where we show Zillow rent index a strong negative impulse in the Zillow rent index, you know, with a three month annualized rated change of 1.8%, you know, that's going to continue to drag down shelter inflation and housing, housing pce inflation to levels that are below trend. They're already modestly below trend currently. And we ultimately think the trend of disinflation in shelter and housing inflation is likely to being ongoing. And then finally on slides 59 and 60, we have to remind ourselves that this is a labor market where the unemployment rate is still gradually increasing. And in labor market where the unemployment rate is gradually increasing. And you have on slide 60, you know, super depressed labor market turnover as evidenced by the structurally depressed private sector hires rate of 3.5% well below the pre Covid trend, the structurally depressed private sector crits rate at 2.2% below the pre Covid trend. And then the structurally depressed private sector layoffs and discharges rate at 1.2%. That's below the pre Covid trend. We know that this is a labor market that has a very limited turnover. It's a labor market that also has a gradual increase in unemployment rate. So ultimately it's a labor market that should, if you look at slide 59, have slower wage growth. Workers who change jobs tend to experience faster wage growth, which by definition workers who do not change jobs tend to experience slower wage growth. So we're essentially replacing workers who are changing jobs with workers who are staying put and, or being fired and put into the ranks of the unemployed. And so ultimately we think the wage growth dynamic is disinflationary, the housing inflation dynamic is disinflationary, and obviously we continue to see a disinflationary impulse across, you know, the energy complex, which is displacementary as well.

B (19:06)

I want to come Back to Slide 24 now and talk about some of these short to medium term outlooks, the one to three month traffic lights that you have in the center of the slide there. I appreciate these are short term outlooks, one to three months. I'm very curious on some of these asset classes how that compares to your longer term outlook, because I certainly, I don't have any reason to dispute what you say in terms of short term cycles, but it seems to me something like commodities. A lot of notable people who I respect feel that in the bigger picture we're kind of at maybe the ending stages or final stages of an equity bull market and the beginning of a secular commodity bull market. Obviously you've got a red light here on commodities, at least in the short term. So I'm curious about longer term. And then I look at something like gold. Okay, it does feel like it's up an awful lot recently. Maybe it's overdue for a bigger correction than we've seen. But at the same time, if I look at the fundamentals, you know, it depends, I guess, on the reason that you think gold has been so strong. A lot of people think it's been so strong because central banks are losing trust in the US Government and they want some independence from US treasury paper as their primary reserve asset. Given geopolitical developments of late, I don't see that trend reversing anytime soon. The other reason that people will cite for buying gold is that, well, it's really just about the size of the debt reaching a point where, where it's unserviceable. And you've got a serious concern about the long term viability of the U.S. treasury market. Well, I don't think that argument's going away either. So how do these short term signals jive with your longer term views?

D (20:47)

Yeah, great question. I would invert them from a longer term perspective. I mean, not even necessarily long term. So just from the perspective of the medium term, which again in Arbor's Manager Nomenclature is 3 to 12 months. Yeah, I think the next few months could easily be choppy because we don't have enough accumulated good news from the perspective of each of these six key macro cycles, namely the five that aren't the positioning cycle to cause the markets to make US a meaningful move higher over a short to medium term time horizon. However, if we're right that the monetary policy cycle will inflect from a headwind to a tailwind, if we're right that the fiscal policy cycle will inflect from a headwind to a tailwind, and ultimately both the confluence of those two things, with the ongoing tailwinds in the growth and inflation cycle persisting, then it's likely that the liquidity cycle will inflect from a headwind currently to a tailwind. So ultimately of all that, it becomes true. Where you have five of the other six key macro cycles, exposition cycle, all being tailwinds for asset markets, then you're obviously going to see an inversion of the the traffic lights in the middle of the page there you can have green light for stocks, green light for gold, green light for Bitcoin, green light for commodities, and red lights for the bonds and the US Dollar. So that, that is, that is what our fundamental research summary is currently anticipating. If you go to slide six in this presentation, we don't have time to unpack the everything on the fundamental research summary, but one thing I call out on slide six is the words. The color coding of the words is associated with dynamics that are bullish for risk assets being green and dynamics that are bearish or risk assets being red. So from a fundamental research perspective, and this slide on slide 6 summarizes everything in this 160/plus slide presentation, most of the stuff that we're pitching to our clients and have been since late April, since we authored the Paradigm Sea theme in late April of last year, most of the things have been bullish and are likely to become increasingly bullish over the medium term. And so that's why we have so much conviction that the monetary, fiscal, monetary policy, fiscal policy and liquidity cycles on slide 24 will inflect from headwinds to tailwinds. So kind of answering your question, going back to this, you touched on something briefly on slide that is kind of near and dear to my heart and is kind of the guiding principle for our research. It has been for a few years now, which is this geopolitically driven supply demand imbalance in the treasury bond market. If you go to slide 73, where we show the approximate next 12 month marketable treasury debt supply as a percent of global savings, you can see that we have a meaningful deviation from the long run mean of this time series in terms of the latest value of 39% of global savings in terms of how much the percentage of the flow of global savings that the US Government is capitalizing itself at some of the respective of rolling over maturing debt. The annualized fiscal year to date budget deficit as well as the annualized divestment from the Fed's portfolio, which obviously since is that now actually a tailwind from that perspective, but a very modest tailwind in terms of 40 billion a month of armor. It's about 223% of us the flow of US savings and so obviously both of those are about a double relative to their long run means. So we have all this debt supply, but we don't necessarily have the same demand dynamics that we used to throughout the great moderation and ultimately the period of time that you know, kind of created the, that created, that featured the conditions that created the durable performance of the let's say 60, 40 portfolio. If you go to slide 95 where we show some of the foreign dynamics in the treasury market, you know we've been losing foreign ownership for over a decade now. Foreigners peaked out at 56% of the total marketable treasury debt market back in June of 08. We're now at 31% currently. My apologies. Slide 102 where we show these various cohorts of the marketable treasury debt market. We see that the Fed, the blue line, the Fed's share of the marketable treasury debt market has been declining for a few years now. It's now down at a lowly 14% from peaking at around 25% in mid 2022. We see commercial bank's share of the marketable treasury debt market has been pretty stable over the past couple of years, but it's still at a very structurally depressed level of 15% which is down from a high in the early 2000s of around in the low 30s. And then obviously the black line which is foreign official sector treasury holdings for foreign central banks, their reserve management that's declined from about 40% to 13% since peaking out in 08. And so the residual of all that declining flow from these price insensitive buyers because central banks manage buy Treasuries for reserve management purposes. They buy Treasuries to implement monetary policy via QE or some other form of a large asset purchase. And then they commercial banks, they buy Treasuries because of regulation, banking regulation. You were losing all these price insensitive buyers and replacing them with price sensitive buyers, which are the light blue line in this chart which are now at 58% of the total marketable treasury debt market, up from 36% in late 2020. 1 so this is not a good dynamic and this is a dynamic that is likely to sustain this structural uptrend in term premia on slide 103 that we highlight. If you had a normal level of term premia in the bond market, and normal being somewhere around, you know, let's call it just side 2%, if we had a normal level of term premium in the bond market, the 10 year treasury yield would be 5 and a quarter as opposed to 4.15%. And so ultimately the excess yield that we should ultimately be having in the bond market is being replaced by gold, by the capital appreciation by gold. And this is something we explicitly forecasted and called out and helped our clients position for starting in the summer of 2023 when we first authored this fundamental research view this geopolitically driven supply demand imbalance in the treasury bond market as part of our investing in a four turning regime framework. And ultimately this is why you saw my fellow Yelly Janet Yellen, she pivoted to dovish net financing policy in the summer shortly after this presentation was printed. And then you had our fellow Yali Treasury Secretary Scott Bessen get on the job after 18 months of lambasting the double SNP financing policy, actually rubber stamp it and promise to keep it going for the foreseeable future now that he's on the job. So in our view, we think we're right on this supply demand imbalance. And as a function as that supply demand imbalance, we're seeing institutional investors, which is something we called for, institutional investors increasingly adopt gold as a diversifier away from the treasury bond market.

B (27:01)

So if I can just assimilate everything you've said so far, it sounds like we should interpret your view as saying, look, there's some really good reasons to be cautious about, let's say the first quarter of 2026. Maybe it's being a choppy time, time for some overdue corrections to play out. But beyond that, longer term, if we go back to page six, which is your longer term fundamental outlook, really it's almost all green. So you're very much still long term bullish, but also feeling like we're overdue for some corrections before that can continue, is that a fair summary?

D (27:35)

That is an absolute fair summary. That the relative frequency of green words on the page on slide 6 in our fundamental research summary relative to the red words in the page implies that from a fundamental standpoint based on everything we know today and can forecast today with any reasonable degree of precision, suggests that we have an incredibly positively skewed return distribution with regards to the medium to longer term time horizon doesn't mean the market has to go up every day between now and then or even has to go up. It just implies that unless something changes in a material manner to alter the relative frequency of red and green words on that page, it's highly likely that this current crowded, bullish positioning that we're all very concerned about right now gets resolved in a meaningfully positive manner. When you kind of look out, let's call it 6 to 12 months.

B (28:18)

Darius let's talk about President Trump, who has been, let's say, not bashful about implementing policies that are quite bold and non consensus. He doesn't seem to be going too far out of his way to keep the opposing Democratic Party happy. They're getting more and more upset. It seems like as we near the midterm elections later in the year. It seems to me the closer we get to the midterm elections, the more markets are going to start to get sensitive to, hey, wait a minute, what happens if the Democrats take the House in November? And that really starts to weigh on the President's ability to continue to press some of the bold policies that he's been pressing. How do you think about how politics and fiscal policy plays into the whole outlook for the next year or so?

D (29:09)

Excellent question, Eric. I think the outlook for bold fiscal policy is one that requires a rearview mirror. If you go to slide 91, we already passed the one big ugly bill and the vast majority of the impact has yet to be felt in the economy. Most of it is likely to occur in 2026 and 2027 where we're likely to see a 1 to 2 percentage point positive fiscal impulse in both years. And that's a meaningful, meaningful delta relative to consensus expectations. Transition from slide 91 to slide 26 here. If you look at slide 26, the our consensus short run potential real GDP growth estimate, that's the blend of 26 and 27. Right now it's only at 2% and I'll tell you we're going to go at 2 slightly, maybe slightly above 2 here back in 2025 with a 3 to $400 billion tariff shock with the highest average annual level of economic policy uncertainty as measured by the Baker, Bloom and Davis index with time series back to the mid-80s ever in the time series. And oh by the way, can't stop tweeting changing policy every five to 10 minutes. I don't know how we don't grow at least 3, perhaps even 4% in 2026 and 2027, 4% seems a bit much, and we probably need to see some sort of productivity boom, which I think we should touch on after we hit on fiscal policy. It's very likely that we're going to grow 3 at least 3% in 2026 and 2027 as a function of what we highlighted on slide 91, and we're already starting to see it. If you look at slide 88, where we show our fiscal policy monitor, if you look at the impact that the tariff policy and really largely the tariff policy has had in terms of reflating the federal tax revenue, tax revenue was up 9% on a calendar year to date basis through November in 2025, and whereas expenditures are only up 1%. So you've had this significant fiscal retrenchment that kind of led us to minus 5.4% budget deficit in 2025 on a calendar year to date basis, versus 6.8% for 2024. So we've had a 130ish percent basis point fiscal retrenchment in 2025, which is pretty meaningful. It's very meaningful. But the thing about looking ahead with regards to the impact of the one big ugly bill that's going to reverse and reverse meaningfully in 2026 and 2027. If you look at slide 89, where we show our fiscal policy monitor on a fiscal year to date basis, so we have a couple of months of fiscal 2026 in the data already. We're gonna you see at the bottom there that one of the bottom rows there, federal budget balance, we're going from a 5.8% deficit to GDP ratio in fiscal 2025 to a 9% deficit to GDP ratio in the first two months of fiscal 2026. Now it's not going to stay at 9%. It's going to go down from 9% to something that's probably closer to 7% or maybe even seven and a half, 8%. But this is a meaningful fiscal expansion that's taking place as a function, partially as a function of the one big ugly bill, but also as a function of what our friend, our mutual friend Luke Groman over at Forest for the Trees calls the true interest expense, you know, the runaway freight train. That is true interest expense. And that's for those who may be new to the framework. That's the aggregated sum of Medicare, National Defense, net interest, and Social Security together. They're about, you know, on a fiscal year to date basis, they're about, you know, $4.7 trillion annualized 2/3 of the federal budget. They're 16% of GDP and they've been compounding growing at about 9, 10% per annum. Whether you look at, on a, you know, a fiscal year to date basis, on a calendar year to date basis. So we have double digit growth in two thirds of federal expenditures which we know are have a low probability of ever being legislated down, let alone flat or sorry, flat let alone down. In fact, the signal that we got from the one big ugly bill legislative process was that these things are untouchable and then when they do get touched, they go up faster. And so in our view this is a runaway freight train from a fiscal policy standpoint, from a messy and uncomfortable fiscal policy standpoint that will ultimately require some very creative solutions and an erosion of a further erosion of central bank independence, which is something we've been explicitly forecasting since we authored that Investing Journal for Attorney Regime presentation back in the summer of 2023 which featured that geopolitically driven supply demand imbalance in the treasury market analysis.

B (33:47)

Let's continue on that topic around central bank independence and go more into monetary policy. Since we've been talking fiscal policy here, it seems to me like there's a lot of room, especially as we get to potentially a changing mix. You know, if the Democrats take the House, if there's confirmation difficulties after that, and the President not getting his way with who he wants to put in various FOMC positions and so forth. What could happen with respect to fiscal policy if we have kind of a revolt, if you will, against some of the President's bold policies?

D (34:21)

Yeah, I mean, look, in our view it's highly unlikely that we get a revolt partially as a function of our jobless recovery thesis. We are of the view that AI is productivity enhancing and ultimately will be job replacing, maybe not at an alarming rate, at least in 2026, but on a multiyear, taking a multi year time horizon, it's very likely that this technology causes some meaningful societal disruption in the form of a higher unemployment. And if we're right on that view, or even partially right on that view, you're talking about a Federal Reserve that's going to take consistent and persistent threat to its maximum employment mandate in a way that essentially forces it to do what the President wants. If you go to slide 79, Fed Chair Powell already started kind of alluding to this at the December FOMC press conference where he kind of highlighted, you know, some of the structural changes in the economy. You know, he didn't say what I just said. But I'm not even sure the Fed chair or anybody at the Fed is allowed to say what I just said. But the reality is what I just said is in my opinion and I'm opinion of 160 slides of research that we pump out every month to our customers, it's a high probability outcome. So let me walk you through that that thesis here over the next couple of slides. So the slide, slide 80 shows the blue line and slide 80 shows labor share of national income where we show nominal play composition compensation divided by gross domestic income. That's down at an all time low of 51.3%. We show capital share of national income at the red line which is corporate profit, using corporate profits as a proxy for that as a share of gross domestic income that's up at 13.3%, an all time high. We've had a secular downtrend in labor share of national income without AI, a technology that can replace people just due to globalization, just due to among other things the neoliberalism era and the various forms of tax treatment that caused this, that have contributed to this dynamic. Obviously things like NAFTA and China joining the WTO as causal to this as well. We've had a secular bear market in labor share of national income. Without a technology that can literally replace labor and it's already replacing labor. If you look at the youth unemployment rate, that's already replacing labor. If you look at slide 41, the bottom panel of slide 41 where we show the long term unemployed as a percent of total, uh, we're up at a structurally elevated 24.3% which compares to a long run mean of this time series of 16.4%. When you get fired now or you lose your job, you know, for whatever reason, it's very, very difficult to find a new job. And this is because every company in the world is incentivized to wait and see to see how much of their biggest cost expense, the biggest, you know, expense in most businesses is labor to see how much of that expense they can take down with the, with the development and adoption of AI. And so ultimately if you go to slide 81 where we show how this is likely to impact the economy, you know, this top panel shows the, you know, the time series of non farm productivity in three month annualized, six month annualized and year overrated change terms. And then in this kind of the third to fourth panel, the third panel shows the time series, the same dynamics of unit labor cost inflation, the light blue horizontal line show the pre Covid trends of each and we're somewhere around 2% for both. The promise of AI is that we go from a trend 2% productivity economy to a trend 3% productivity economy, which ultimately implies that we're going from a trend 2% unit labor cost inflation economy to a trend 1% unit labor cost inflation economy. And so ultimately we're talking about a significant tailwind for corporate profits and we're talking about a significant headwind for inflation in terms of how productivity has historically impacted both of those cycles. And so, you know, every company, whether they implicitly understand what I just said or they all inherently understand this as business owners and as business operators. And so ultimately we just think this, you know, kind of low hire, low fire environment where the unemployment rate continues to gradually rise, particularly as more and more companies throughout the economy adopt AI and find creative ways to use AI to hold back labor, their most, their biggest expense. You know, we think this dynamic is gonna be ongoing. It's a secular dynamic that will ultimately require the Fed to implement dovish monetary policy, regardless of how politicized they may appear to be in the context of what the signaling that's coming out of the White House.

B (38:40)

Darius, let's pull all of the things that we've talked about together into okay, where are the trades for our investor audience? Because we've talked about monetary policy, fiscal policy. There's so many different things you're talking about, really a very bullish longer outlook with some serious cautions about the next three to six months. So how do we position for that?

D (39:03)

Yeah, that's a great way to put it. Maybe not even the next three to six months, I think, but certainly by six months and probably by three months, it's likely that we could be resolving our way through this uncomfortable setup from a credit bullish positioning standpoint. But again, that does imply we're probably going to chop around perhaps violently in the interim, if not even correct. You know, again, we're in this. When you're at this extreme in terms of incredible bullish positioning terms, you know, it doesn't take much a squirrel get hit by a bus and markets could correct. So I want investors to be aware that, you know, just because the, you know, frequency of green words relative to the frequency of red words in the fundamental research summary on slide 6 is so over overwhelmingly, positively skewed from a return distribution perspective, it doesn't necessarily mean that, you know, we're out of the woods yet. However, when it comes to how we think investors should be positioning for these emergent and developing market risk. The fundamental research has no bearing on that answer for us at 42 macro. As you know from our previous discussions, Eric, you know, we're systematic investors. We rely exclusively on our institutional grade risk management overlays to help our clients. And myself, you know, as someone who uses our KISS model portfolio to manage his entire liquid net worth, we rely exclusively on that as it relates to what investors should be doing in their portfolios at any given time. So I'll just briefly touch on KISS and ultimately touch on the KISS system itself. And then I'll conclude with where KISS is currently allocated. So if you jump to slide eight, you know, just real brief, you know, kiss, there's sort of three core elements of our KISS model portfolio, which is short for keep it simple and systematic. Number one is our factor selection. So this is a 60, 30, 10 quantitative trend following strategy that is designed to expose investor portfolios to productivity growth. And it's also designed to help investors outperform, outrun financial repression and monetary debasement via allocations to gold and Bitcoin. And where KISS really shines is in its risk management. We use our market regime now casting process to incorporate volatility targeting into the strategy. And then we use our volatility, just a momentum signal, to incorporate dynamic position sizing into the strategy. And so anybody on the buy side understands that, you know, volume targeting and advisory sizing, you know, these are the two of the core hallmarks of institutional risk management that KISS uses to create a positively rescued return distribution in investor portfolios and in my own portfolio. So if you look at jump ahead to slide 12, just a couple numbers I'd hit on on this backtest is rolling out of sample backtest. If you look at kiss relative to 60, 40, 60% stocks, 30% gold, KISS has an upside capture ratio of about 300% and a downside capture ratio of about 60%. So you're essentially getting 60% of the downside of 60, 40, 300% of the upside. Effectively, if you wanted to compare KISS to a naked long portfolio, 60% stocks, 30% gold, 10% bitcoin, which is what KISS is when it's maxed out. It's not always maxed out, but that's what KISS is. When it's maxed out, you'd have an upside capture ratio of about 90% and a downside capture ratio of about 50%. So you're essentially getting 90% of the return you would have in these high beta asset classes with only about half of the downside, which obviously creates an incredibly positively skewed return distribution from the spectrum of investors with a very minimal max drawdown, particularly relative to the frequent crashes that we've seen in 60, 40 and 60, 30, 10 stocks. Gold, Bitcoin Naked long. So where we are today in KISS, you know, KISS is 10% cash on slide 13. It's at 10% cash. It's at 100% of its maximum exposure of 60% stocks. Both the top down and bottom up expansion overlay are giving it a green light to be fully invested in the equity market here. Gold, it's at 100% of its maximum exposure of 30% in gold, both the top down, the bottom upper expansion over there, giving it a green light to be fully invested in gold as well. And then it's at 0% of its maximum exposure of 10% in Bitcoin. The top down overlay is giving bitcoin the green light. But the bottom up expansion overlay, which again would use to feature dynamic position sizing into the strategy, that's giving it a red light. And so, you know, right now KISS is, you know, more or less, you know, let's call it 90% invested. You know, we think that the gold position can do reasonably well in a choppy market environment. Obviously if stocks are choppy and, or correct, that's not going to feel so great. But ultimately we think what KISS is, what markets, what the, what the risk management systems that feed into KISS are likely looking ahead to is where we started this conversation on slide 24, which is four of the key six key macro cycles that influence the momentum and dispersion within and across asset classes are currently headwinds. And ultimately we think based on our fundamental research, which again is Summarized on Slide 6, based on our fundamental research, we think three of those four which are currently headwinds will eventually transition to tailwinds and ultimately make KISS right over a medium term time horizon perspective, which again is 3 to 12 months in our risk management nomenclature. I think all bets are off when you get beyond 12 months. Like I said when we started this conversation, it's highly likely that this bull market concludes or transitions to a secular bear market as we've seen historically following all these major technological revolutions that feature Capex bubbles.

B (44:02)

Darius, I can't thank you enough for a terrific interview. As we close, tell us a little more. This slide deck that our listeners have seen a snippet of, that's actually more than 160 pages. You send this out to who this is for, what kind of Investor. Who's your service for? How do people find out more about it?

D (44:19)

Yeah, Eric, thank you for this brief opportunity to kind of embellish what we do. You know, I'm one of the things I'm most proud of in my entire life is the breadth and depth of our, of our customer base. When we started 42 macro half a decade ago, it was designed with the express intent that I just, I don't, we don't believe that the gatekeeping exercise that is institutional insight and institutional risk management process that is either kept via prime brokerage gates or you know, 2 and 20 or 3 and 30 accredited investor gates. We just don't think those gates are appropriate in a K shaped society of which, you know, I come from the very bottom of that K shaped society. So we, you know, we built 42 macro to break down those gates and supply an institutional grade, you know, insights and more importantly institutional grade risk management of portfolios to every investor on the world, in the world. And we do so at price points that meet people where they are in terms of what they can afford as opposed to what we would prefer to charge, what we easily could charge if we wanted to gate this thing up and turn it into a hedge fund. And so we're very proud to say that many of the world's top financial institutions across the asset manager, pension fund, insurance fund specific wealth, fund space are customers of ours in so much that your barber could be a customer of ours, your Uber driver could be a customer of ours and they very likely are. You know, we're very proud to say we work with some of the best investors in the world and we work with many of the more most novice investors in the world. They're all kind of here benefiting from built and I'm incredibly proud of that. As someone who, like I said, you know, comes from the very bottom of the bottom, I want to make sure that, you know, we're lifting everybody up with these insights and these risk management signals.

B (45:57)

Well, we'll look forward to having you back on later in the year after we see how this choppy period that you're anticipating plays out. Patrick Ceresna and I will be back as Macro Voices continues right here@macrovoices.com.

A (46:16)

Now back to your hosts, Eric Townsend and Patrick Ceresna.

C (46:20)

Eric, it was great to have Darius back on the show. Now listeners, you're going to find the download link for the post game Chart deck in your Research Roundup email. If you don't have a Research Roundup email, that means you have not yet registered@macrovoices.com go to our homepage macrovoices.com and click on the red button over Darius's picture saying Looking for the downloads Patrick.

B (46:43)

Darius had quite a few interesting Market Takes what's on Deck for this Week's Trade of the Week Eric what really.

C (46:49)

Stood out for me in Darius's work is just how extreme this crowded, bullish positioning has become. His positioning model is sitting near the most extended levels he's ever seen, both on a mean and median basis, which statistically lines up with a much higher probability of bad outcomes over the next one to three months. Not necessarily a crow crash, but either a meaningful correction or some pretty violent chop as the froth gets burned off. So for this week's Trade of the Week, I want to respect that setup and walk through a way to stay broadly constructive on the cycle, but explicitly hedged a near term positioning risk to express that I'm structuring a 95 by 85 put spread on the S&P 500 index with the index around 6920. That means buying the April 16th, 6600 put about 98 days till expiration for about 106 and financing part of that by selling the April 5900 put for around 36 for a net debit of roughly 70 index points. Call it about 1% of the index level. Structurally, that gives you a defined risk hedge that kicks in about 5% below spot and runs protection down to roughly 15% lower. The spread is 700 points wide, so you're laying out about 70 to make up to 630 if we get a proper flush into that zone, roughly a 9 to 1 payoff on a move that lines up very well with the kind of one to three month correction Darius is worried about while only costing about 1% in carry to have this insurance on.

B (48:37)

Patrick Every Monday at Big Picture Trading, your webinar explains how retail investors can put on our most recent trade of the week. For those listeners that want to explore how to put on these trades in greater detail, don't miss out on a 14 day free trial@bigpicturetrading.com now let's dive into the postgame chart.

C (48:56)

Dick all right, Eric, let's get to these equity markets. What are you thinking here?

B (48:59)

Well, Patrick, my view has similarities to Darius's take, but I look at this from a slightly different angle. The Trump administration is getting bolder and bolder in their policy initiatives. Now. Now if and that's a big, big if if they are successful in all these endeavors and pull off the objectives that they have without running into either court or opposing political party resistance and can actually achieve the things they're setting out to do. I think it's strongly positive for equity markets, but we're into regime change operations that Trump specifically campaigned to end, and now we're seeing factions of the Republican Party no longer supporting him. Meanwhile, he's just doubling down with talk of Greenland, Colombia, Mexico, Cuba. It's almost anybody's guess as to where the next act of adventurism in the world is going to occur from the Trump administration. If the president's initiatives meet sufficient political resistance or court injunctions, that whole story could derail and derail quickly, bringing about an abrupt and deep correction in equity markets. So my view is similar to Darius's in the sense that I think volatility will be the name of the game in 2026, with plenty of upside possible by the time it's over. But I also see a very real possibility of a strongly negative outlook depending on how these bold policy initiatives work out, whether they're derailed by his political opponents and so forth. So I don't see it quite the way that Darius does in the sense of we'll get through the turbulence in the first few. I think that turbulence could potentially last through the midterm elections in November. So most of the year we'll see what happens.

C (50:45)

Well, Eric, I want to take a look under the hood and better understand what's happening in these markets. Now, Darius has shared where we are on the state of the market, but from a price action perspective, the market is still currently behaving, making higher highs, higher lows. But what is interesting is the sector rotation that's going on underneath. On page four I have a chart of the MAG7 ETF showing those seven behemoth large market cap stocks and the fact that they are materially not participating on the upside and in fact remain below their 50 day moving average. So overall we're seeing that, you know, these stocks that represent one third of the of the S P500 index from a market cap weighting are simply not participating in this and it's creating a drag on the market that is creating a divergent momentum. But when we then look at the rest of the market on page five, I have the breadth by looking at the number of stocks trading above their 50 day moving average. And we're on this index trading up at the highest level in several months, up in around 61%. While we're nowhere near overbought conditions on this where we would trade normally up to 70, 80%, but it's been improving. And so on page six, I'm showing the S P 500, but the equal weight index, which removes the market cap weighting and makes them all obviously equal in their influence. What we can see here is that this has legitimately bullishly broken out, demonstrating that breadth, that widening that's happening. And so what sectors have been performing well over last month? Basic materials are up almost 10%. The healthcare stocks have been working, the industrial stocks and and defense contractors have been ripping, and financials have been incredibly strong. So you're seeing this one component of the market driving what the technology and MAG7s are a huge drag. And so there's a sector rotation going on. The question is, is this sector rotation the theme of the next couple weeks, or is the lack of participation of the MAG7 an indication that the market is exhausting itself and we're going to see Darius's scenario develop at this mom, there's no technical evidence of that, and it's probably gonna need some sort of a trigger. Will something like the jobs numbers be that trigger? We're gonna find out. But as of this moment, it's a market that is just sector rotating under the surface. All right, Eric, let's talk about this dollar.

B (53:36)

I'm still in the dollar down cap in terms of overall direction, but with the big caveat that there's plenty of room for a big rip higher if certain policy initiatives on the table play out. And it seems like the President is getting less and about really bold policy initiatives, even some that frustrate members of his own party. So my overall bias is still down for the US dollar, but I definitely agree with Darius that volatility is going to be the name of the game, especially for the first few months of the year.

C (54:05)

Well, Eric, at least from the sources that I follow, there's a pretty predominant US dollar bear thesis going out there. But what continues to be particularly interesting here is that in spite of all of that, there was an opportunity for the dollar index to break down below that critical 98 level to really solidify a downtrend. But instead that support line is held. And while I wouldn't want to call this a bullish breakout on the dollar index, it's certainly strengthening off its worst levels after establishing a double bottom throughout the third quarter of the year. We have a scenario now where the dollar just isn't breaking down, it's more consolidating sideways. And so the question Here the next surprise move. Well, to me I'm keeping it super simple. This one point range between 98 to 99 has been a consolidation area and a neutral zone that I the way I put in in that context. And so if we had a legitimate technical breakout above 99, it would indicate that some sort of new accumulation is being introduced into the dollar that may drive a short term trend. Trend. Will we get that breakout or will the US dollar stay in its primary downtrend? Is pretty much gonna be decided right here as we are testing this 50 day moving average right near that 99 level. So let's see how this plays out. All right, Eric, we gotta talk about oil.

B (55:32)

Okay. I think the segment of market participants who are not oil trading professionals are frankly very badly misinterpreting the relevance and time sensitive relevance of the Venezuelan news to the market outlook, creating an artificially bearish short term sentiment that frankly just doesn't jibe with the actual fundamentals. Commodity markets, especially the oil market, cannot be forward looking like equity markets. Even though people see things coming, the market has to balance supply and demand in the here and now. And the reason, particularly with crude oil is if we don't have any place to store the oil, if too much is being produced, it leads to real problems. If not enough is being produced, it leads to even worse problems. So we've got to balance in the here and now. That means that commodity markets cannot be forward looking, but they are subject to big swings as speculative repositioning reacts to perceptions in the market as is happening right now. Now the idea that Venezuelan oil is going to flood the crude oil market and crash prices starting next week is just plain silly. The first thing happened last week was people jumped to that conclusion thinking, okay, President Trump just took all the oil from Venezuela, he's going to send the oil companies in, they're going to start producing oil next month and it's going to just flood the market. Our friend Dr. Anas Alhaji took a very careful look at this. He did about an hour long presentation on it on Twitter Spaces that is recorded and available. I strongly encourage anyone interested in the oil market to listen to that full interview with Dr. Anas El Hadji that's linked in your research roundup email. But what he said is to bring just 1 million barrels of additional Venezuelan production back online will take at least three years. So that's good news for the coming energy crisis, but it doesn't affect the 2026 outlook for oil prices at all, save for some repositioning overshoots as we're seeing right now. So by 9am on Tuesday, we were back up to the 50 day moving average resistance line. Looked like the market was about to break out higher because the cooler heads, the more knowledgeable oil traders were correctly understanding that, you know, we're not going to flood the market next week or next month with Venezuelan oil. That's a story that's years down the road, not weeks down the road. Then came President Trump's announcement that Venezuela would immediately turn over 30 to 50 million barrels of oil. Wow, that's a lot of oil. Well, actually when you consider that we generally measure in millions of barrels per day of oil production. 30 to 50 million barrels 1 time shot is not as much as it sounds like, first of all. But the question to ask then was after President Trump said Venezuela is going to be turning over 30 to 50 million barrels of oil immediately, question everybody should have asked is, oh, that's interesting. Does Venezuela actually have 30 to 50 million barrels of oil that they could turn over? Even if that was what was agreed to. That perception though, that they were suddenly going to flood the market with that oil, brought us back to the oh boy, it's gonna crash prices. And that led to more investor sentiment driven selling. The dumb money started selling hand over fist, taking WTI crude back down to a 55 handle by Tuesday's close. Just one little detail nobody bothered to ask about is do they actually have that oil? No, they don't say. Both Dr. Anas El Hadji and also our other good friend in the oil business, Rory. I reached out to both of them on Twitter and they responded very quickly saying Basically no way. Dr. Anas Alhachi says maybe there's 11 to 12 million barrels of floating storage in Venezuela, maximum. There may also be some land based storage, but even if they had the maximum number that anybody thinks, which is maybe 15 million barrels, that gets you to 20 to 25 million barrels total, every drop of oil that they might have. So turning over 50 million barrels next week or whatever the President announced ain't gonna happen. It's still more importantly, even if it did happen, that 50 million barrels would only really change the market for a matter of weeks before it was absorbed into the market. It's still gonna take three years or more per Dr. Alhaji, in order to bring another million barrels a day of Venezuelan production online. And it's gonna take lots of investment in. Now it does seem like the Trump administration is poised to potentially subsidize that investment and make it happen quickly. But there's also the question of whether he will face political and court opposition to his efforts to do so. Now, to be clear, I personally can eventually see a very plausible scenario where if this is allowed to continue, it could eventually lead to the point where Venezuela really does become a game changer in the coming energy crisis that I have predicted. Perh supplying as much as 5 million barrels a day of exports after being fully developed. What does that mean? That means that story will play out in the mid-2030s, long after Trump is out of office and probably not on the scale that I just described of 5 million barrels a day until after the 2032 elections, two more election cycles from now. So this is a long term story. If we were to really get all of Venezuela, which is the largest oil reserves, even bigger than Saudi Arabia Arabia in the world, it would take a decade and massive, you know, tens, if not hundreds of billions of dollars of investment in order to get that really happening. Our producers are already working to get both Rory Johnston and Dr. Anas Alhaji back on the show in coming weeks. We'll get you more perspective on this oil market as this story develops.

C (61:37)

Well, Eric, first off, we have to highlight that crude oil technically remains in a very clear downtrend. It's repetitively making lower highs and failing at the 50 day moving average when you can basically connect a descending trend line along all those highs to depict that downtrend. Now what we are seeing though is negative news and crude oil really isn't selling off hard on negative news and it's certainly not making lower lows. And to me, if we see a scenario where there's bad news and crude oil stops breaking down on that bad news, then that means that we found a new fair value zone for crude and it could be a trading bottom that is established. It is incredibly premature to make a bull call here, but one of the things to solve here in the first month of the year is are we seeing a basing formation developing on crude or does the prevailing downtrend still take it to the next level down? Overall, it would take a legitimate breakout above the $60 level to bullishly turn this trend up. And that's still just and so there's going to need to be some real momentum shift for the bulls to even have a shot here. All right, Eric, let's talk about these precious metals. What's going on here in gold?

B (63:00)

The sharp correction in the last few days of the year was easy to see coming and hey, we warned you about it. Several times here on Macro Voices, so hopefully none of our listeners got hurt in that move. I added 10% to my longs on the retest of the breakout region at 2370 and then I added another 15% at 2300. Even so, I'm now up 25% of my position size after buying this dip in size. The correction cleared out the extreme overbought stochastics as much as the fundamentals were strong. As I've been warning for weeks, we were flashing extreme overbought on those short term technical stochastics oscillators that now we've gone all the way back down, at least on the slow stochastics and almost all the way there on the RSI to an oversold condition on the short term chart. That clears the way for a substantive move higher. And I'm convinced that the medium to long term fundamentals are still super bullish. The Trump administration isn't about to back away from its bold policy initiatives and that only strengthens the argument for central banks to continue to diversify out of Treasuries into more gold. But there is a short term risk on the near horizon. So this correction that we've just seen might not necessarily be over yet. It could be that the final low is still to come and believe me, if it gets down to 4200, I'll be buying more. What's on the horizon is this. The Bloomberg Commodity Index is going to be rebalancing. It's a scheduled event January 9th through 15th. Basically what's happening is that commodity index, because gold has performed so well, it's creating forced selling for the various funds that track the BCOM index. They have to sell. It's not a discretionary thing. They have to sell and they have to sell between the 9th and the fact 15th of January. So the correction that we just saw could have been front runners anticipating that move. And you never know how these scheduled things are going to play out. It's obvious to think oh well that means if they're going to sell, it's going to force the price down. But of course people saw that coming. They were front running it. They game it and sometimes it actually ends up doing the opposite of what you thought when the actual event happens. So we'll see how this plays out. But if we do get down to a new low, an undercut low, and especially if it gets down as low as 4200, I'll be adding even more more to my longs closer to 15 January when that forced selling should wind down, because I'm convinced that we are setting the stage here for the next major leg higher targeting somewhere between 4,900 and 5,100 over the next several months. But again, that risk between now and January 15th is for potentially some turbulence in the market.

C (65:43)

Well, Eric, there's a very clean bull trend in gold still very well underway. Old dips keep being bought. Even that one big down day that we was very quickly bought on, dip and gold pushed right back to its previous high. So we're in a situation where there's just no argument that the bulls remain in control of this trend. The bigger question is, is that are we going to see the other precious metals come under some selling pressure and does that take a little bit of the steam out of this huge bull momentum that we're seeing or is this thing going to just keep plugging away? Overall, there are measured moves up to 4,900, even 5,000 on the up. And so if we can get that breakout to a 52 week high, then there's no reason why we can't tack on $300 more an ounce in the first quarter of the year. All right, Eric, let's touch on uranium and uranium stocks here.

B (66:39)

Well, Patrick, the uranium miners mostly closed up and near their intraday highs on Wednesday even as the S and P was modestly down on the day. And that's yet another sign that this market is heating up and we're seeing uranium and uranium equities breaking away mainstream stock market and really accelerating what I think is a very strong bull market that's been in a technical correction since the 15th of October. Looks like that's finally ending and we're maybe about to break substantially higher. Let's see how that plays out. We're seeing more and more bullish fundamentals with announcements from Energy Secretary Chris Wright almost daily now coming out as he continues to talk up the formative nuclear renaissance. Renaissance, the strong case for increasing America's enrichment capability which will increase demand. One of the cautions that I've described in the past for this uranium bull market is, hey, you only got a certain amount of demand that's possible based on the amount of enrichment capacity that we have. And Russia controls a lot of it, by the way. Well, as we're now aggressively building out more uranium enrichment capacity, it just speaks of more demand coming for uranium in coming. A few names like NextGen Energy have already broken out well above their October 15 highs when this technical correction started. Others like Denison Mines are almost there. The ETFs are lagging behind, particularly the URA ETF, which has quite a few small modular reactor names like Oklo and NuScale in their portfolio. Those are not performing as well as the uranium stocks have been in the last couple of weeks. That's the reason URA is kind of the laggard there, but it has already broken out of its symmetrical triangle. Pat to the upside, that ETF is particularly important because a lot of the institutional money follows that one. It's the one that has the most liquidity and it also has the only liquid enough options chain to support options trading on the underlying uranium investments in size. So URA is a very important name in this market and it is already starting to break out, catching up to some of its pure uranium play peers which are already mining much higher. So all signs are bullish. The one big risk still on the table is the unwind of the AI trade that would clobber all things, including uranium stocks or all things nuclear, including uranium stocks. The bull thesis for uranium itself does not in any way shape or form rely on AI. But you know, that's not how markets work. If AI unwinds, so will the uranium miners just because of basketing of the uranium miners into AI trading baskets. And it will be a big buy the dip opportunity if it should, should happen.

C (69:22)

Well, I agree with your views there, Eric. We certainly saw a technical turn up in uranium. And so it'll be very interesting to see whether the bulls can follow through, because you can see that certainly a few of these individual names are really pressing while the URA ETF continues to drag a little bit. But when we're looking at uranium itself, this kind of 80 to $85 has been a substantial resistance point for the entire fourth quarter of the year year. And so the question here is, will we see the underlying commodity start the year with a breakout to a higher high? That could certainly add some bullish tailwind to the whole story throughout the first quarter. Now, I also wanted to just touch on the copper chart here on page 11. And we saw a breakout to a fresh new high. Clearing that tariff pop that we had back in July, seeing the $6 handle finally hit hit. We're in a very clear bull market on copper. But the question is, is that is the this move already a little bit overextended? Certainly some of the upside targets for a bull continuation could see 640, 650hit on the upside. Let's see whether the copper bulls can keep this going.

B (70:40)

Patrick, before we wrap up this week's show. Let's hit that 10 year treasury note chart.

C (70:44)

Yeah, so the 10 year treasury yield has been in a purgatory limbo for the entire month of December and rightfully so. Things got quiet and there is a lot of data that is needed for the Fed to know whether to pivot on their policy path. So at this juncture the first news will be the jobs numbers here on Friday. And now will it be an outlier number or is it just going to come in line? It certainly is the first trigger point that could get things moving again here. Whether or not we're going to get a breakout above the 420 level, or whether we're back under that 50 day moving average, it could be decided early next week folks.

B (71:25)

If you enjoy Patrick's chart decks, you can get them every single day of the week with a free trial of big picture trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com Patrick, tell them what they can expect to find in this week's Research Roundup.

C (71:39)

Well, in this week's Research roundup, you're going to find the transcript for today's interview as well as the trade of the week chart book we just discussed here in the post game, including a number of links to articles that will we found interesting. You're going to find this link and so much more in this week's Research Roundup. That does it for this week's episode. We appreciate all the feedback and support we get from our listeners and we're always looking for suggestions on how we can make the program even better. Now for those of our listeners that write or blog about the markets and would like to share that content with our listeners, send us an email@researchroundupacrovoices.com and we will consider it for our weekly distributions. If you have not already, follow our main account on X Acro Voices for all the most recent updates and releases. You can also follow Eric on xericstownsen. That's Eric spelled with a K. You can also follow me at Patrick Ceresna on behalf of Eric Townsend and myself, thank you for listening and we'll see you all next week.

A (72:49)

That concludes this edition of Macro Voices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. Macro Voices is made possible by sponsorship from BigPictureTrading.com the Internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information, please register your free account@macrovoices.com Once registered, you'll receive our free weekly Research Roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the Internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered you we have, the more we'll be able to recruit high profile feature interview guests for future programs. So please register your free account today@macrovoices.com if you haven't already. You can subscribe to Macro Voices on itunes to have Macro Voices automatically delivered to your mobile device each week, free of charge. You can email questions for the program to mailbagrovoices and we'll answer your questions on the air from time to time in our Mailbag segment. Macro Voices is presented for informational and entertainment purposes only. The information presented on Macro Voices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on Macro Voices are those of the participants participants and do not necessarily reflect those of the show's hosts or sponsors. Macro Voices, its producers, sponsors and hosts, Eric Townsend and Patrick Ceresna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macro Voices. Macro Voices is made possible by sponsorship from BigPicture Trading.com and by funding from Fourth Turn Capital Management, LLC. For more information, visit macrovoices.com.