Speaker 1Happy Wednesday out there, Team 42. It's your skipper here at Darius Delta to present our Macro Minute for Wednesday, November 11th, 2026. Happy Veterans Day out there to all my military friends and family. We're very, very grateful, deeply appreciative of all the sacrifices that you guys make so that we can do what we do. We can't do what we do without you guys, so thank you. We really appreciate you. So as always, we'll start with the executive summary from today's lead-off morning note, so let's dive right in. What did we learn today that will likely have the greatest impact on your portfolio? The news of Anthropx IPO being oversubscribed and CoreWeave's beaten raise strongly challenged the durability and severity of the current risk-off inflation market regime. That's bullish. What key macro data or policy signals supported our current active themes or consensus expectations? The October trim mean CBI data strongly supported our staking inflation and play action pass to set up the run theme. What key macro data or policy signals challenged our active themes or consensus expectations? What key macro data or policy signals did we analyze in today's lead-off morning note that may have a significant impact on asset markets? So number one, what key macro data or policy signals did we analyze in today's lead-off morning note that may have a significant impact on asset markets? So number one, more on the Anthropx and CoreWeave. In yesterday's lead-off morning note, we wrote, the fact that AI stocks are not following through on last week's carnage amid the NVIDIA scandal signals growing investor fatigue in the bear case. Amid relatively light positioning, the upside risk is that the Anthropx IPO is oversubscribed and gaps higher in the secondary market, signaling renewed enthusiasm for the AI trade. No change to these data-driven, robustly researched views. Number two, community resistance to AI infrastructure is building across the U.S. and Europe. Number two, community resistance to AI infrastructure and has reshaped the political landscape. Amid this backdrop, NVIDIA says data centers' builders must win over local communities. All told, while risk of near-term redistributive policy surrounding data center development may be priced in, we do not believe the market is seriously entertaining the risk of the invisible hand of income and wealth redistribution, dramatically altering the return on invested capital assumptions of data center CapEx in the general election cycle and beyond. In our view, the number one reason anti-data center sentiment has such high bipartisan support is the K-shaped economy crisis and all the perverse fiscal, monetary, regulatory, and foreign policy outcomes that have perpetuated the historic cantaloupe effect that is the key driver of the nationwide affordability crisis. Refer to yesterday's CPI report for more details. So just quick on that, in our view, we just think the folks who are suffering and have been suffering, for a half a decade now, on the bottom of the K, see the opposition to data centers as their only tool to basically stick it to folks on the top of the K for creating all these, you know, perverse fiscal, monetary, regulatory, and foreign policy outcomes that are siphoning income, wealth, and consumption from them to the folks at the top of the K. And so I don't think they hate data centers or AI, or maybe some people do, but the reality is we just think that this is a button they can press to slow down, to cause harm to the folks at the top of the K. And if you don't expect them to hit that button, then you must expect that the nationwide affordability crisis will be solved by 2028. And finally, number three, Chicago Fed President Austin Goolsbee, who's a 2027 voter, called the latest inflation report borderline disturbing. Borderline disturbing indeed. Philadelphia Fed President Anna Paulson, who's a current voter, said elevated inflation is non-transitory. Dallas Fed President Lori Logan, a current voter, supported at least two more 25 basis rate hikes and possibly a faster pace than this fall. And then Fed Governor Chris Waller, a current voter, said a 50 basis point hike in December may be necessary. All told, hawkish sentiment surrounding the near-term outlook for Fed policy continues to increase. This dynamic may actually spur rotation back into the secular supported AI theme because investors may correctly view Fed tightening as more of a risk to the cyclical side of the economy than to the AI theme. To this point, global equity hedge funds cut risk at the fastest rate in over a decade, down 11% from June through early November per Morgan Stanley Prime Book's data. So there's definitely opportunity here in scope. For them to lever back up into the trade to the extent the market starts to send signals that, hey, if the Fed's going to tighten the economy to a slowdown and deal with this nationwide affordability crisis, then ultimately you got to go buy the stuff, the growth factors in the market, which is obviously very clearly AI, at least for now. So wrapping up with a question, as always, from our community, this one says, winding down in Iran and fatigue in the bear case. It says, per today's lead-off morning note, there seems to be an actual winding down in Iran alongside fatigue in the bear case. Could this be the end of the current risk-off inflation market regime and the start of a reflux? Or even Goldilocks market regime? So love this question because it gives me an opportunity to educate, which is something I'm obviously extremely passionate about. So you have to separate the fundamentals from the quantitative risk management signal. The quantitative risk management signaling is what will determine whether or not we've entered or exited from the current risk-off inflation market regime to a new risk-on market regime, which would be Goldilocks, risk-on with the disinflationary bias, reflation, which is risk-on with the inflationary bias. You know, you need quantitative risk management signaling, specifically critical price thresholds, being breached in the most important factors of the market, critical volatility thresholds being breached in the most important factors in the market. You need covariance matrices to understand the entire surface of volatility, both within and across asset classes, and to see how that's changing at the margins in ways that may support or refute the continuation of the current market regime condition. That's all on the quantitative side. It takes half a million dollars of data per year and a tremendous amount of computation every single day in order to determine that. On the fundamental side, you know, the fundamentals can lead or lag the market regime. And so on the fundamental side, we're obviously seeing, you know, data this week from the Anthropix IPO being over-swiped, Coe's beaten Ray, strongly challenging the AI bear case, and ultimately, what did we see yesterday? We saw the winding down of the Iran war. These are the types of fundamental catalysts that can cause changes in positioning that will ultimately cause those thresholds being breached, the volatility surface changing in ways that will be supportive of a risk-on market regime. And so, you know, I say this all the time, you know, our process is, you know, it's a risk-on market regime. And so, you know, I say this all the time, you know, it's a risk-on market regime. And so, you know, I say this all the time, set up here at 42 Macro to be the second investor in a confirmed trade. This is going all the way back to Marty Zweig, the trend is your friend, and all the sort of litany of Y-side risk management that is sort of born out of that. We obviously layer on Ben, my man abroad and his understanding, his deep understanding of volatility into our risk management process, because we too, based on his data and our own data, volatility tends to be a leading indicator for broad changes in markets. And so, when you combine the trend is your friend, plus understanding the entire ball surface and the critical thresholds of volatility for each asset class, you can kind of create a very robust process as we've created that allows us to be, you know, hopefully in each new market regime, the second investor in each new market regime. And the reason we do that is so that we eliminate the risk of what we call type two errors from our portfolios. Type two errors are false negatives. That's what happens when you try to fade at the current market regime. So, we're in a risk-off inflation market regime, but you start positioning for Goldilocks and reflation. You can make a lot of money positioning for Goldilocks and reflation late in a risk-off market regime. However, you can also lose a tremendous amount of money if people have found out in secular markets like the dot-com bus and the global financial crisis. You basically get carted out. If you're a professional investor, you go, you wind up not being a professional investor, at least the least transitory on a temporary basis. Some folks never make it back into the industry. They wind up selling insurance. And so, and so that's, that's the whole point of our process to eliminate that risk altogether. And so, in order to eliminate that risk altogether, we have to sacrifice some upside by not being the first investor in the, in the trade. We want to recognize when the first of participants in the trade, you know, join the trade faster than other investors so that we can put our buy orders in ahead of the street's buy orders so that their flows can make us rich in a risk-on market regime. Or when we noticed a new market regime is developing to the downside, then we want to put our sell orders in ahead of the street so that their sell orders don't make us poor. So, that's the whole point of our process to be the second, you know, we optimize our systems and signals so that we can be as close to the vanguard of a new market regime as possible with all the risk management pivots and asset allocation pivots that we make in our portfolios and our members portfolios. But the reality is, is obviously it's a, it's always an evolving process in terms of learning what we need to learn to make, to compress that latency between when the new market regime starts and when our process signals in and picks it up. So, that's the name of the game of institutional risk management. That's what we're all doing across the global wall street, the global buy side, and we're all competing with each other to compress that latency. Some folks are a little bit more cowboy. But hopefully, I think we found a good happy medium in terms of, you know, you know, eliminating type two errors at the frequency of a false positive, or sorry, a frequency of a false positive type one errors that we have in the context of this risk management process. That's the downside of a process like ours. You have, you know, false positives, what folks will say false alarms, some folks say whipsaws. That is our designated bad outcome in the case in process. We want, we want those bad outcomes. We don't want the type two errors. The type two errors are the ones that you, that you do not survive. You do not come back from. You wind up being divorced because you lost half of your money. You lose your business. You lose your home. You lose your, your lifestyle just totally gets degraded when you have type two errors. And so, we completely eliminated type two errors, but the price that we have to pay to completely eliminate type two errors in the context of the systematic process are false positives, type one errors, false, you know, false alarms, whipsaws, et cetera. We'll eat those all day in the context of eliminating the type two errors. So, if you're someone who understands the value of keeping your portfolio towards a high, near high net asset value at all times and understanding the power of compounding that produces, then we're very clearly the risk management partner for you. And if, And if you don't understand that, then I highly recommend you check out the educational materials that I tweeted and posted on LinkedIn yesterday. So we'll wrap it up there. Terry Stowe here presenting our Macro Minute for Wednesday, November 11th, 2026. Best of luck out there today. We'll catch you back here tomorrow.
Speaker 2Cheers. If you enjoyed this content, please remember to like and subscribe. Thank you. This content is for informational purposes only and does not constitute an offer or a solicitation. Reliance upon the information in this material is at the sole discretion of the viewer or listener. Investing involves risks. Any reference to a company, issuer, or investment strategy is for instructive purposes only and does not constitute investment advice. For full disclosures, visit 42macro.com. Backslash disclaimer.
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