Speaker 1Happy Friday out there, Team 42. It's your skipper here, Darius Dell, to present our Macro Minute for Friday, November 6, 2026. It's Jobs Report Friday, but how many people actually care about that? It was important, in my opinion. So as always, we'll start with the executive summary from today's lead-off warning note. So let's dive right in. What did we learn today that will likely have the greatest impact on your portfolio is the October jobs report supported the durability and severity of the current risk-off inflation market regime. Investors looking for a near-term Fed put will likely be disappointed, as we signaled they would be in early Q4 2018. What key macro data or policy signals supported our active themes or consensus expectations? The October jobs report supported the consensus forecast affirming growth. The October jobs report supported our resilient U.S. economy theme. The October private sector average hourly earnings data supported our sticky inflation and play-action pass to set up the run theme, play-action pass being the Fed's going to tighten on a transitory basis in order to create the conditions to ease on a structural basis. That's the run game. In Japan, the September real retail sales data supported the consensus forecast of accelerating growth. What key macro data or policy signals challenged our active themes or consensus expectations? The October jobs report challenged our jobless recovery and productivity boom themes. The October jobs report challenged the consensus forecast of slowing inflation. The October private sector average hourly earnings data challenged our cooling housing and labor theme. In the Eurozone, the September real retail sales data challenged the consensus forecast affirming growth. What other key macro data or policy signals did we analyze in today's lead-off warning note that may have a significant impact on asset markets? So number one, Texas governor-elect Gina Hinojosa aims to pair a pro-business stance with tougher rules, including on AI data centers. As the first Democrat to win Texas governorship since 1990, Hinojosa also signaled a reset with Iman Musk. Hinojosa told CNN that she seeks, quote, protections for the people of Texas, saying rural residents are, quote, being taken advantage of and, quote, we need to stop what we are doing with data centers until we have those protections. She went on to say, we have always been a pro-business state in Texas, but what changes now with me as governor is that it has to be a partnership that benefits Texas. Powerful words. All told, Hinojosa's election and commentary were highly supportive of our robustly researched view that Wall Street was woefully unprepared for a politically induced slowdown in data center construction. At a bare minimum, investors should expect a greater share of AI-related profits to get diverted towards redistribution. Hinojosa said, we have always been a pro-business state in Texas, redistributive policies in the coming months and years. Got to start writing down, haircutting your return expectations for all this CapEx, because the hand of redistribution is starting to claw at that pot of gold at the end of this rainbow. Number two, anthropic IPO investors face a weekend of uncertainty before marketing begins as the post-election AI sell-off forces a valuation reassessment. Investors had signaled a fair value of $1.4 to $1.5 trillion to IPO bankers. Some prospective bankers, or backers rather, now see $1.2 to $1.3 trillion as fair value. Recall that in early October, valuation estimates reached $2 trillion, so big haircut. The write-down in the street's valuation assumptions for anthropic comes amid the NASDAQ 100 plunging over 6% Thursday, 9% intraday, erasing $2.3 trillion in market capitalization, a single-day record. The concentration risk in the stock market is as historically elevated as we've been warning about in our recent macro scouting reports. Tech now makes up 44% of U.S. pension holdings and roughly 40% of hedge fund holdings. All told, we've been explicitly warning about a cascading sequence of degrossing across the global buy side for weeks as the carnage in October and November to date hedge fund returns proves it, or and the carnage rather. As we wrote in Wednesday's Around the Horn update, you can make a killing by being the first investor in a new trade. You can also get killed. You're most likely subscribed to 42 Macro because the math overwhelmingly supports avoiding the latter outcome, i.e. getting killed, as being far more important to your financial and physical well-being than achieving the former outcome. So recall that, or not recall, but for those who are not aware, if you're outside of our paywall, but KISS pivoted us from 80% cash heading into Wednesday morning, the pop in Wednesday morning, to 95% cash sold into the highs of Wednesday morning. And obviously the market just puked from there. So I'm feeling very good about that. Obviously, we don't make calls here at 42 Macro. Everything we do is based through the lens of our systematic KISS and Dr. Mo signals. And they've just been spot on in recent months in terms of keeping our clients on the right side of market risk into what could be a redo of Q4 2018. Number three, our revised outlook for the Bank of Japan is as follows. Japanese yen overnight index swaps are pricing in 2.5 rate hikes over the next 12 months. Despite hawkish fundamental signals, investors should take the under given the likelihood that the Takeichi administration continues to pack BOJ board with Doves. A politically induced slowdown in U.S. data center construction would likely also weigh on the pace of BOJ policy normalization. Recall that BOJ is shipping a tremendous amount of capital goods to the U.S. and around the world to support this massive AI CapEx bubble. So as always, a wrap up with a question from our community. Not quite a question, but that's a really quick comment. I thought it was worth sharing. It says, thank you, dear Darius. Going into the weekend, I would just like to thank you. By going to cash position this week, you have saved my entire year's pension contributions from going up in smoke with this current equities drawdown. So this is why we built our firm. We built our firm to compress the asymmetry between the results that our hedge fund clients have across the global buy side and our asset manager clients have across the global buy side with our Main Street investor clients, the folks that I care about, the folks that I technically left behind when I left the bottom of the K to go to Yale to join Global Wall Street. We started this company because I don't believe that there needs to be a difference in the quality of returns and the quality of life between the folks on Wall Street and the folks on Main Street. So if you also believe in that, then hop in here and join us. A lot of wonderful, great people here from all walks of life, real sophisticated investors in here who are committed to helping each other and committed to retiring on time and comfortably, which is the only thing, in my opinion, retail investors should be doing in global financial markets. So we'll wrap it up there. Darius here presenting our macro minute for Friday, November 6th, 2026. Best of luck out there today. Everyone have a wonderful weekend. We'll catch you back here on Monday. Cheers.
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