MacroVoices #514 Darius Dale: 2026, Fasten Your Seat belts For Take-off

This is MacroVoices, the free weekly financial podcast targeting professional finance, high net worth individuals, family offices, and other sophisticated investors. MacroVoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is, bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Ceresna. MacroVoices Episode 514 was produced on January 8th, 2026. I'm Eric Townsend, happy new years everyone. 42 MacroFounder Derrius Dale returns as this week's feature interview guest. Derrius thinks that one year from now, in January 2027, we'll probably look back on 2026 as an up year for most financial markets. But Derrius says, put your seat belt on for the first few months of the year, which he thinks could be quite turbulent. Then be sure to stay tuned for our post game segment after the feature interview, when we'll have Patrick's trade of the week plus our perspective on all the major markets. And particularly, we got quite a bit to say about crude oil, gold, and uranium this week. And I'm Patrick Ceresna with the Macro scoreboard week over week as of the close of Wednesday, 27th, 2026, the S&P 500 index up 110 basis points trading at 6920. The market continues to press all time highs, we'll take a closer look at that chart and the key technical levels to watch in the post game segment. The US Dollar Index up 46 basis points trading at 9873. The February WTI Crude Oil contract down 249 basis points to 5599 while responsive, relatively modest volatility on the Venezuelan news. The February R Bob Gasoline down 117 basis points trading at 169. The February Gold contract up 279 basis points, training at 4462, attempting another rally back to December highs. The March copper up 317 basis points to 586 trading near all time highs. The January uranium contract up 43 basis points trading at 8195 and the US 10-year treasure yield down 1 basis point trading at 415. The key news to watch this week is the Friday's jobs numbers and next week we have the CPI and PPI inflation numbers and the retail sales. This week's feature interview guest is 42 macro founder, Darius Dale, Eric and Darius discuss the bullish investor positioning, the AI CapEx boom, the shift in monetary, fiscal and liquidity cycles and more. And now with this week's special guest, here's your host, Eric Townsend. Joining me now is 42 macro founder, Darius Dale. Darius prepared as always a slide deck to accompany this week's interview. For our regular listeners, you already know this but for everyone else, the way this works is Darius has a huge slide deck which he shares with his paying subscribers. He's kind enough to share the entire deck with us with the condition out of respect for those paying subscribers that we have to redact the slides that we don't actually use. So please forgive any blank slides that you find in the download link, you can certainly get all of it by subscribing to 42 macro. We only provide you with the slides that are discussed in this week's interview. Darius, I wanted to get you on the show, very first guest of the year because boy, back in 2022, I think we had you as the first or maybe it was the second guest of the year. Everybody was bullish. Boy, sounds exactly like today where everybody's all in running it hot. And you actually were bold enough to use the words crash year and say, guys, I think there's a lot to be worried about. You nailed that call in 2022. It turned out not to be the very positive year everybody thought. So let's start with the real high level. Is this going to be a crash year or is everybody right to be all in? Oh, that's a great question way to start a soft hot air. So thanks again for having me. It's always a pleasure to be with you in 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 catch and sink the economy from a policy sequence. He's then point 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 go to the team of 42 macro for getting that right. Getting into answering your question, I'll jump right into slasers hop right into it. We'll go to site one 15 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 crowd at both position, which makes me very uncomfortable as an investor because typically what happens when you get to this extremes, incredible as positioning, you tend to have bad outcomes at financial markets. That is necessarily guarantee a bad outcome at 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 rise in 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's 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 of three months. If you look at the indicators on the far right of that table on the on the right of slide one 15, where we show the AI stock allocation survey, the AI bond allocation survey, the cash allocation survey, we use that to proxy investment advisor positioning. If you look at the S&P 100 through month relies volatility to proxy systematic fund exposure positioning, we look at apply volatility correlations to proxy the gross exposure of our market neutral hedge fund clients. And then finally, we look at the S&P 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 by side, and they're quite a positioning whether be bulls or bearish. Right now, the the company of administrators are enough of those indicators are breaching their respective bull market peak thresholds that suggest that there's 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 116, if you go back and look at all those indicators and just look at them in terms of the percentile of implied credit blows positioning based on the latest values, this is about the third highest credit blows 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 from markets to power through this dynamic. It seems to me that there's a lot of parallels here going into the 2000 trading year point 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, you know, a couple of years later get a recovery. And of course, 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. How do you see, and I guess the, you know, 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 115 resolving? Yeah, that's an excellent question. I'm so glad you brought up the early 2000s of 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, where I will 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 sell the dot compass lead us to the job with recovery and then ultimately the housing bubble which also gave way to the global financial crisis. So I think if you take a bulkier time rise in perspective, things aren't great, I'll just leave it at that. But from a medium term, time rise perspective, which is set of three to 12 plus months, 3312 months in our risk management overclature, we do see this historic degree of chronicles positioning resolving itself positively. But this will probably the last gasp higher in that from that perspective. If we get turned to slide 24, where we show the latest refresh or our macro weather model, which we again, alongside our position model, we refresh six days a week for our clients here 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 cross asset markets over a short to medium term, time rise in which is again, one to three months in our risk management overclature. And so that suggests that right now, we're probably due for a correction and or some violent shop to kind of burn off some of this crowd of those positioning before we can kind of set the stage to meaningful move higher. And so, you know, looking at what's currently a tailwind growth and inflation, they're both currently tailwinds determined by 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, you know, make new highs on an unadorable 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-capic cycle is done. We certainly still see a tremendous amount of fundamental support for the market aside from this crowd of those positioning dynamics. So let's kind of unpack the monetary policy, fiscal policy and liquidity cycles independently because those are headwinds that we ultimately expect, which will transition to becoming tailwinds over the medium term, which will support a positive resolution to this current crowd of those positioning, which is likely to remain 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 that funds rate spread. We have a strong tightening impulse in the Fed's treasury holdings to marketable treasury yield 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 sofa 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 purchases and ultimately we expect the structural forms that we've been forecasting at the Fed for years now. We expect the advent of those structural forms will ultimately push the Fed funds rate lower, make the market more right over the guard's service policy by so ultimately the monetary policy cycle, which is currently a headwind for risk assets and bar of financial market risk taking, ultimately transition to becoming a tailwind at some point over the next three to six months. So that's why that's a one dynamic that could change, that could help this credible positioning resolved positively. On the fiscal policy side of things, we 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 the trial and total amount of federal revenue. We have a strong tightening impulse in the trial and total amount of federal expenditures. We have a strong tightening impulse in the church of general account balance, the bank reserves ratio at 30% essentially at all time high. The bill's the market for treasury debt ratio is a weak easing impulse but not enough to offset the current headwind that is the fiscal policy cycle to brought a risk taking of financial markets. Ultimately, particularly as we get past the kind of late Q1, Q2 of this year, early Q2 of this year, we're going to start to see these, these, these indicators transition, larger 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, you know, three to five hundred billion dollars this year, perhaps doing that again in 2027 as well. So we're in this kind of you 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. 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 another 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, you know, awkward position that we're currently in as a function of the position cycle. If you look at our global liquidity proxy, that's a strong positive impulse, our 42 macro and other liquidity, that's our U.S. liquidity model, that balance sheet, TJRP. That is a strong negative impulse now. We have a strong easy impulse in the move index, which is a biomarker volatility. We have a strong tightening impulse in the tenure 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 it'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. Derrius, so many things I want to dive a little bit deeper on 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 in 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. You know, he continued cutting of policy rates. And as Jim Bianco has warned, you know, 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. What does that thesis fit into your model and how does that jive with what you're thinking? Yeah. I think that's one of the key risk and 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 one year, two year, five year, and ten 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 policy error that reignites inflation. If you look at slide 55 where we show various market-based estimates of neutral and then our star, you know, if you look at the second panel on this chart here, where we show the full effect funds rate at three, uh, about 11 percent, 3.11 percent, 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 five years, given that we're in a, given that we're in an easing cycle, we'll be using the terminal rate if we're in a hiking cycle. And if you look at that value relative to the effect of that funds rate, we're still about 64 basis points north of that and in effect of that 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 of two to two and a half rate cuts, if you will, uh, between the current effect of that funds rate and neutral. So it's very likely that the, that is still actually applying down pressure, not upon the economy in labor markets and ultimately, uh, upon inflation. And you know, if you've got one final thing I'll say on this is the field at the bond market, uh, on slide 57, the bond market is not overly concerned about seeking inflation either. Uh, so right now the 10-year treasury yield is currently about 4.15 percent historically with data going back to the early 70s. The 10-year treasury yield tends to be about 120 basis points above the, uh, fed funds rate. And so that's essentially saying the bond market thinks the fed funds rate should already be somewhere close to three, uh, three and a quarter, uh, 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 is always suggested that tariffs were a, you know, regressive, uh, 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, uh, confirming what we had already, um, you know, signaled to our customers back in April when we were telling them to, to get long. The, you know, if you look at on slide 58, the middle panel on slide 58, where we show Zillover Index, a strong negative, uh, impulse in the Zillover Index, you know, with, uh, through the math and you realize we had a change of 1.8 percent, you know, that's going to continue to drag down shelter inflation and housing housing PC inflation to the levels that are below, uh, trend. They're already modestly below trend currently. And we ultimately think the trend of disinflation, uh, in shelter and housing inflation is likely to remain 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, uh, and in labor market where the unemployment rate is gradually increasing and you have on slide 60, you know, uh, super depressed labor market turnover as evidenced by the, uh, structurally depressed private sector higher rate of 3.5 percent, well below the pre-COVID trend, the structurally depressed, uh, private sector crits weight at 2.2 percent below the pre-COVID trend. And then the, uh, structurally depressed private sector layoffs and discharges rate at 1.2 percent that's below the pre-COVID trend. We know that this is a labor market that has a very limited turnover is a labor market that also has a gradual increase on employment rate. So ultimately to 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 impair experience slower wage growth. So we're essentially replacing workers who were changing jobs with workers who were staying put and or being fired and put into the, um, ranks of unemployed. That's ultimately we think they're the wage growth dynamic is, it's disinflationary, the housing inflation dynamic, uh, is disinflationary and obviously we continue to see a disinflationary impulse across the energy complex, which is disinflationary as well. 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. Uh, 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, uh, I don't have any reason to, to dispute what you say in terms of short term cycles, but it seems to me something like, uh, commodities, a lot of notable people who I respect feel that in the bigger picture, we're kind of at the, 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 and off a 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, you know, 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 it's unserviceable and you've got a serious concern about the long term viability of the US Treasury market. Well, I don't think that argument's going away either. So how do these short term signals jibes with your longer term views? Yeah, great question. I would invert them from a long term perspective. I mean, not even necessarily long term, so just from a spectrum of the median term, which again, in our risk management, I'm like, let's do it at 12 months. 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, you know, make us meaningful move higher over a short to medium-term time horizon. However, if we're right that the monetary policy cycle will reflect from a headwind to a tailwind, if we're right that the fiscal policy cycle will reflect from a headwind to a tailwind and ultimately both the confidence of those two things with the ongoing tailwinds and the growth and inflation cycle persisting, then it's likely that the liquidity cycle will reflect from a headwind currently to a tailwind. So ultimately, if all that, it becomes true, where you have five of the other six key macro cycles, X to position cycle, all being tailwinds for asset markets, then you're obviously going to see an inversion of the traffic lights in the middle of the page there. You're going to 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 is what our fundamental research summary is currently anticipating if you go to slide six in this presentation, when I've time to unpack 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 for risk assets being red. So from a fundamental research perspective, and this slide on slide six 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 seed theme in late April of last year, most of the things that have been bullish are likely to become increasingly bullish over the medium term. And so that's why we have so much conviction that the 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 it's kind of a guiding principle for our research, you know, it has been for a few years now, which is this geopolitical 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 percent of global savings in terms of how much percentage of the flow of global savings that the US government is capitalizing itself at some of their sector of rolling over, ensuring debt, the annualized deficit, fiscal year-to-date budget deficit, as well as the annualized divestment for the feds portfolio, which obviously is since is now actually a tailwind from that perspective of a very modest tailwind in terms of 40 billion a month of armor. It's about 223 percent of US, the flow of US savings. And so obviously both of those are about a double relative to their long run mean. 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 kind of created that feature, the conditions that created the dual prop performance of the, let's say 6040 portfolio. If you go to slide 95, where we show some of the foreign dynamics in the treasury market, we've been losing foreign ownership for an over a decade now. Foreigners peaked out at 56 percent of the total marketable treasury debt market back in June of '08, we're now at 31 percent currently, my apologies slide 102, where we show these various cohorts of the marketable treasury debt market. We see the Fed, the blue line of 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 percent from peaking at around 25 percent in mid 2022. We see commercial banks share of the marketable treasury debt market. It's been pretty stable over the past couple of years, but it's still at a very structurally depressed level of 15 percent, which is down from a high in the early 2000s of around in the low 30s. And then obviously the black line would just form official sector treasury holding so foreign central banks, their reserve management. That's declined from about 40 percent to 13 percent since peaking out in '08. And so the residual of all that declining flow from these price insensitive buyers, because central banks manage by treasuries for reserve management purposes. They buy treasuries to implement monetary policy, be a QE or some other form of a large gas purchase. And then the commercial banks, they buy treasuries because of regulation. Thank you, Rayleigh. You're 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 percent of the total marketable treasury debt market up from 36 percent in late 2021. 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 of 2 percent, if we had a normal level of term premia in the bond market, the tenure treasury will be 5 and a quarter as opposed to 4.15 percent. 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 review, this geopolitically driven supply demanded balance in the treasury bond market as part of our investing during a four turning regime framework. And ultimately, this is why you saw my fellow Yellie Janet Yellen. She pivoted to double schnaff announcing policy in the summer or in the shortly after this presentation was printed. And then you had our fellow Yellie, Turner Secretary of Scott Besson get on the job after 18 months of lambasting the double schnaff announcing policy, actually rubber stamp it in and promised 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 demanded balance. And as a function, as a sub-out of demanded balance, 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. 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 as 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? That is an absolute fair summary that the relative frequency of green words on the page in slide six 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 give forecast today with any reasonable degree of precision, suggests that we have an incredibly positively skewed return distribution with regards to the median to longer term time horizon. Does it 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 you know, frequency of red and green words on that page, it's highly likely that this current credible is 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 six to 12 months. 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? Excellent question, Eric. I think the outlook for bold fiscal policy is one that requires a river mayor. 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 one to two percentage point positive fiscal impulse in both the years. That's a meaningful, meaningful delta relative to consensus expectations. I'm transitioning from slide 91, but to slide 26 here, if you look at slide 26, our consensus short-run potential real GDP growth estimate, that's the blend of 26 and 27. Right now it's only at 2 percent and I'll tell you, we're going to go to slightly, maybe slightly above to here and back in 2025, with a $300 to $400 billion tariff shock with the highest average annual level of economic policy uncertainty as measured by the makeup limit Davis index with time series back to the mid '80s, ever in the time series and oh, by the way, get stopped tweeting, changing policy every five descendants. I don't know how we don't grow at least three, perhaps even four percent in 2026 and 2027. Five percent 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 at least three percent 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 the tariff really largely the tariff policy has had in terms of reflating the federal tax revenue, tax revenue is up 9% on a calendar year-to-date basis through November in 2025 and whereas expenditures only up 1%, so you've had this significant fiscal retrenchment that kind of led us to minus 5.4% budget deficit versus in 2025 on account of the year-to-date basis versus 6.8% for 2024. So we've had a 130-ish 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 meaningful 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. You see at the bottom there that one of the bottom rows there are 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 say at 9%, it's going to go down from 9% to something that's probably closer to 7%, or maybe even 7.5%, 8%, but this is a meaningful fiscal expansion that's taking place as a function, partial as a function of the one big ugly bill, but also as a function of what our mutual friend Luke Roman over force for the trees cause the true interest expense. The runaway freight train that is true interest expense, and that's for those who maybe knew 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, two thirds 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 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 to have a low probability of ever being legislated down, let alone, 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 altered that investing to an affordable turning regime presentation back in the summer of 2023, which featured that geopolitically-driven supply-demanded balance in the treasury market analysis. 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 of 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? Yeah, I mean, look, in our view, it's highly unlikely that we get a revolt. First, as a function of our job as 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 multi- or taking a multi- or time rise, and 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 think consistent and persistent threat to its maximum employment mandate in a way that essentially forces it to do with the president wants. If you do slide 79, Fedger Powell already started kind of eluding to this at the December FOMC press conference, where he kind of highlighted some of the structural changes in the economy. He didn't say what I just said, but I'm not even sure if Fedger or anybody that Fed is allowed to say what I just said, but the reality is what I just said is in my opinion, and I'm being 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 thesis here over the next couple of slides. So the slide, slide 80 shows the blue line and slide 80 shows labors share of national income or show nominal play compasses compensation divided by gross domestic income. That's down at an all time low of 51.3% to 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% in all time high. We've had a secular downtrend in labors 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 in 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 cause of this as well. We've had a secular bear market and labors 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, it's already replacing labor. If you look at slide 41, bottom panel slide 41, where we show the long term unemployed as a percent of total, 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 every 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 expense in most businesses is labor, to see how much of that expense they can take down 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, the top panel shows the, you know, the time series of, of non-form productivity and, and they're about to annualize, six month annualize, and year to year to change terms. And then in this kind of the third to fourth panel show, the third panel shows the time series the same dynamics of, of unit labor cost inflation, the light blue horizontal lines show the pre-COVID trends of each and you were somewhere around 2% for both. The promise of AI is that we go from a trend, 2% productivity economy to a trend, well, 2% 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 is 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 higher, low fire environment, where the unemployment rate continues to gradually rise, particularly as more and more companies have throughout the economy, adopt AI and find creative ways to use AI to hold back labor their biggest expense. You know, we think this dynamic is going to be ongoing, it's a secular dynamic that will ultimately require the Fed to implement double monetary policy, regardless of how politicized they may appear to be in the context of what the singling that's coming out of the White House. 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. We're talking about really a very bullish longer term outlook with some serious cautions about the next three to six months. So how do we position for that? Yeah, that's a great way to put it. I may be not even the next three to six months, I think, but certainly by six months and probably by three months, you know, we were, it's likely that we could be resolving our way through this uncomfortable setup from a crowd of those 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 extreme in terms of incredible bullish positioning terms, you know, it doesn't take much, a squirrel could 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 and the fundamental research somewhere on side six is so 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, 42 macro. As you know, from our previous discussions there, you know, we're systematic investors. We rely exclusively on our institutional great risk management overlays to help our clients and myself, you know, as someone who uses our kiss monoporfolio to manage his entire liquid network. We rely exclusively on that as 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, you know, there's trying to three core elements of our kiss monoporfolio, 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 outrun financial oppression and monetary debatement via allocations to gold and Bitcoin. And where kiss really shines is in its risk management. We use our market routine now casting process to incorporate volatility targeting into the strategy. And then we use our volatile just a minimum signal to incorporate dynamic position sizing into the strategy. And so the anybody on the by side understands that, you know, ball targeting and at that position sizing, you know, these are the two of the core hallmarks of institutional risk management that kiss uses to create a positive or skewed 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 in this on this back test is rolling out a sample back test. If you look at kiss relative to 60 40, 60% stock, 30% gold, kiss as 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 is effectively. If you want 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 would only about half of the downside, which obviously creates an incredibly positive skewed return distribution from the set 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, it's like 13, it's at 10% cash. It's at 100% of its maximum exposure of 60% stocks, both the top down and bottom up percentage 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 and bottom up percentage overlay are 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% and Bitcoin. The top down percentage overlay is giving Bitcoin the green light of the bottom up percentage overlay, which again, we used 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 end or correct, that's not going to feel so great. But ultimately, we think the kiss is what markets, what the risk management systems that feed into kiss are likely looking ahead at the head to is where we started this conversation on slide 24, which is four of the key six key macro cycles that influenced it at the momentum and dispersion within and across asset classes are currently headwinds. And ultimately, we think based on our fund them in a research, which again, is summarized on slide six, based on our fund them a 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 rise, a perspective, which is again, it's three to 12 months in our risk management domain culture. 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 at falling. All these major technological revolutions that that feature cat X bubbles. Darius, I can't thank you enough for a terrific interview as we close. Tell us a little more. You know, this is a slide deck that our listeners have seen a snippet of. It'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? Yeah. Thank you for this brief opportunity to kind of embellish what we do. Yeah, one of the things I'm most proud of in my entire life is the breath and depth of our customer base. When we started 42 macro, I have a decade ago. It was designed with the express intent that just, we don't believe that the gate keeping exercise that is institutional insight and institutional risk management process that is either kept via prime brokerage gates or, you know, two and 20 or three and 30 accredited investor gates. We just don't think those gates are appropriate in a K-shape society of which, you know, I come from the very bottom of that K-shape 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 could we easily could charge if we wanted to, you know, get this thing up and turn it into a hedge fund. And so, you know, we're very proud to say that many of the world's top financial institutions across the asset manager, pension fund, insurance fund, a special wealth fund, space or customers of ours. In so much that, you know, your barber could be a customer of ours. Your Uber driver could be a customer of ours. And 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, not most novice investors in the world. They're all kind of here benefiting from built and 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 charismatic incentives. 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 Suresna and I will be back as MacRevoices continues right here at MacRevoices.com. Now back to your hosts, Eric Townsend and Patrick Suresna. Eric, it was great to have Darius back on the show. And listeners, you're going to find the download link for the post game chart deck in your research roundup email. You don't have a research roundup email. That means you have not yet registered at MacRevoices.com. Go to our homepage MacRevoices.com and click on the red button over Darius' picture saying looking for the downloads. Patrick Darius had quite a few interesting market takes. What's on deck for this week's Trade of the Week? Eric, what really stood out for me in Darius' 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 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 hedge the near term positioning risk. To express that, I'm structuring a 95 by 85 puts spread on the S&P 500 index. With the index around 69.20, that means buying the April 16th 6600 put about 98 days to 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. Naturally, 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 1 to 3 month correction, dearest is worried about, while only costing about 1% in carry to have this insurance on. 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 at bigpicturetrading.com. Now let's dive into the post game chart tick. All right, Eric, let's get to these equity markets. What are you thinking here? Patrick, my view has similarities to Derrius' take, but I look at this from a slightly different angle. The Trump administration is getting bolder and bolder in their policy initiatives. 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, you know, Greenland, Columbia, Mexico, Cuba. That's almost anybody's guess is to wear the next active 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 Derrius' 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 Derrius does in the sense of we'll get through the turbulence in the first few months. I think that that turbulence could potentially last through the midterm elections in November. So most of the year, we'll see what happens. Well, Eric, I want to take a look under the hood and better understand what's happening in these markets. Now Derrius 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 Mag 7 ETF showing the 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 these stocks that represent one third of the S&P 500 index from a market cap waiting are simply not participating in this and is 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 over-bought 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 waiting 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 defense contractors have been ripping and the financials have been incredibly strong. So you're seeing this one component in the market driving what the technology and mag sevens are a huge drag. So there's a sector rotation going on. The question is, is this a sector rotation, the theme of the next couple weeks, or is the lack of participation of the mag seven, an indication that the market is exhausting itself and we're going to see Darious's scenario develop at this moment. There's no technical evidence of that and it's probably going to need some sort of a trigger will something like the jobs numbers be that trigger we're going to find out. Or 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. I'm still in the dollar down camp in terms of overall direction, but with the big caveat that there's plenty of room for a big repire if certain policy initiatives on the table play out and it seems like the president is getting less and less bashful 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 Darious that volatility is going to be the name of the game, especially for the first few months of the year. 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 has 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 throat, 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 is, where is the next surprise move? Well, to me, I'm keeping it super simple. This one point of range between 98 to 99 has been a consolidation area and a neutral zone that I, the way I put it 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 a dollar that may drive a short-term trend. Will we get that breakout? Or will the U.S. dollars stay in its primary downtrend is pretty much going to be decided right here as we are testing this 50 day moving average right near that 99 levels. So let's see how this plays out. All right, Eric, we got to talk about oil. 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 jive 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. It is happening right now. Now the idea is that Venezuelan oil is going to flood the crude oil market and crash prices starting next week is just plain silly. The first thing that 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. Anasal Haji 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. Anasal Haji. That's linked in your research round-up email, but what he said is to bring just one 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 9 a.m. 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 we're not going to flood the market next week or next month with Venezuela and 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, one 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. And 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 going to crash prices. And that led to more investor sentiment driven selling, the dumb money started selling handover fist, taking WTI crude back down to a 55 handle by Tuesdays closed. Just one little detail nobody bothered to ask about is, do they actually have that oil? No, they don't say both Dr. Anas Alhaji and also our other good friend in the oil business, Rory Johnston. I reached out to both of them on Twitter and they responded very quickly, saying basically, no way. Dr. Anas Alhaji 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 going to happen. But 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 going to take three years or more, Dr. Anas Alhaji, in order to bring another million barrels a day of Venezuelan production online, and it's going to take lots of investment in order for that to happen. 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, perhaps supplying as much as five 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, a five 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 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 Johnson and Dr. Anasal Haji back on the show in coming weeks. We'll get you more perspective on this oil market as this story develops. Well, Eric, first off, we have to highlight that crude oil technically remains in a very clear downturn. It's a 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 it is established. It's 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 so far away and so there's going to need to be some real momentum shift for the bulls to even have a shot here. Alright, Eric, let's talk about these precious metals. What's going on here in gold? The sharp correction in the last few days of the year was easy to see coming and hey, 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 lungs 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 he 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 is performed so well that's creating forced selling for the various funds that track the become 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 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 undercut low and especially if he gets down as low as 4200 I'll be adding even more to my longs closer to the 15th of 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 4900 and 5100 over the next several months. But again that risk between now and January 15th is for potentially some turbulence in the market. There's a very clean bull trend in gold still very well underway all dips keeping being bought even that one big down day that we had was very quickly bought on dip and gold push 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 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 4900 even 5,000 on the upside and so if we can get that break out to a 52 week high then there's no reason why we can't tack on $300 more announced in the first quarter of the year. All right Eric let's touch on uranium and uranium stocks here. Well Patrick the uranium miners mostly closed up and near their intraday highs on Wednesday even as the S&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 from 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 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 years a few names like next Jan energy have already broken out well above their October 15th highs when this technical correction started others like Denison mines are almost there the ETFs are lagging behind particularly the you are a ETF which has quite a few small modular reactor names like oak low and new scale 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 you are a is kind of the laggard there but it has already broken out of its symmetrical triangle pattern to the upside that ETF is particularly important because a lot of the institutional money follows that one it's where 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 you are a 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 much higher so all signs are bullish the one big risk still on the table is the unwind of the a i trade that would cover all things including uranium stocks are all things nuclear including uranium stocks the both 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 a i trading baskets and it will be a big by the dip opportunity if it should happen well I agree with your views there Eric we certainly saw a technical turn up in uranium and so 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 ur a a tf continues to drag a little bit but when we're looking at uranium itself this kind of 80 to 85 dollar has been a substantial resistance point for the entire fourth quarter of the 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 six dollar handle finally hit we're in a very clear bull market on copper but the question is is that is that this move already a little bit overextended certainly some of the upside targets for a bull continuation could see six forty six fifty hit on the upside let's see whether the copper bulls can keep this going Patrick before we wrap up this week's show let's hit that 10 year treasury note chart 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 how it 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 four twenty level or whether we're back under the fifty day moving averages it could be decided early next week folks 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 big picture trading dot com Patrick tell them what they can expect to find and this week's research roundup well in this week's research roundup you're going to find a 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 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 for those of our listeners that write or blog about the markets and would like to share that content with our listeners send us 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