Speaker 1Happy Monday out there, Team 42. It's your skipper here, Darius Dell, to present our Macro Minute for Monday, October 26, 2026. Hope everyone had a great weekend. I certainly did. The Hawks are looking just like the Hawks. So let's get into the executive summary here. As always, we'll start with what we learned today that will likely have the greatest impact on your portfolio. So we learned that Meta's $95 billion share sales, SpaceX's $40 billion semiconductor equipment lease, and Anthropix IPO filing challenged the durability and the severity of the current risk-off inflation market regime. All told, investor appetite to finance the large, well-capitalized AI firms remains robust amid flagging appetite to finance poorly capitalized startups and smaller AI firms. This is a healthy degree of discernment that reduces the risk of the likely pending secular bear market having already commenced. What key macro data or policy signals supported our active themes or consensus expectations? Republicans are poised to spend $1 billion on Senate battleground ads, nearly double Democratic outlays. As detailed in Saturday's Around the Horn, we believe the risk of the Senate flipping to Democratic control is much less than the two-thirds chance that prediction markets are currently signaling. Congressional gridlock would support our resilient U.S. economy and paradigm C, a.k.a. run-it-hot themes, by potentially avoiding a politically induced slowdown in data center construction. And finally, no key macro data or policy signals challenged our active themes or consensus expectations. What other key leading. Key macro data or policy signals that we analyzed in today's lead-up morning note. So we talked about the recovery in French sovereign debt and how it signals investors may be early in the process of holding their noses and rotating into long-term sovereign debt, which is a trade that would likely gain steam if the current risk-off inflation market regime devolves into a full-blown growth scare and pivots to a risk-off deflation market regime. A politically induced slowdown in data center construction would catalyze this outcome. Obviously, we have a very salient catalyst next week. In terms of potentially signaling that. So, as always, to wrap up with a question from our community, this was titled, Current Fundamental Setup. It says, DD, with the macro weather model showing a low probability of sustaining a risk-on-market regime and the positioning model showing a low probability of a correction in the short term and an updated change in lower probability of a crash over the medium to long term, have there been other periods where markets crashed when the indicators were this positive? Or is this a situation where we stay in a risk-off market regime long enough that we grind higher before capitulating lower? So, just quickly. So, we've seen plenty of times, plenty of market crashes in recent decades from a lower starting point of implied credit bulls positioning. So, if you look at our model right now, in terms of credit bulls positioning, we're in the 69th percentile on a mean basis, 78th percentile on a median basis when you look at the 10 indicators that we've back-tested that are very good at signaling broad market risk, credit bulls positioning, and ultimately market outcomes on a prospective basis. And so, you look at, you go back, we see that the, the 87 crash had a lower degree of implied credit bulls positioning when you focus on the median. The 1990 crash had a lower degree of implied credit bulls positioning. The March 2000 crash, obviously, the dot-com bust, which saw an 83 percent decline in the NASDAQ 100, had a much lower level of implied credit bulls positioning at that high, as did the GFC, which that market cycle peaked in October 2007, significantly lower degree of implied credit bulls positioning than what we currently have at the current juncture. And then we had a lower degree of implied credit bulls positioning at the, ahead of the April 2011 debt ceiling and European sovereign debt crash. And so, on a median, a mean and median basis, 72nd percentile, 74th percentile, again, we're in the 69th and 78th percentile. So, we're basically right on, right in line where we typically are at these major bull market peaks in terms of implied credit bulls positioning. So, we're already at a level that suggests that if something goes wrong from the perspective of the data center build out, you know, this big infrastructure boom, this CapEx boom, then you, you, you, you could very well be in any one. This risk off inflation market regime could very well be any one of the likely pending secular bear market. Again, we don't think this is any one. We think this is more of a kind of Q4 2018 style wash out of positioning ahead of what is probably going to be, in our view, based on our current active fundamental themes, a liquidity-induced rally throughout 2027. But ultimately, where that liquidity-induced rally, if it manifests, if it comes true, wherever that liquidity-induced rally peaks out is probably going to be the peak of the secular bull market, at least according to everything that we know today, basically. Yeah. Right. Based on our fundamental research, which we publish in our macro scouting reports on a monthly basis, and obviously daily in our lead-off morning notes. So, we'll wrap it up there. Darius Dell here, presenting our macro minute for Monday, October 26, 2026. Everyone have a wonderful day out there. Catch you back here tomorrow.
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