MacroVoices #546 Darius Dale: Darius Dale for POTUS 2028

every four turnings since the 15th century is ended in total war. We'd be remiss to forecast that outcome, but we'd also be remiss to not understand that the distribution of probable economic policy and market outcomes is ultimately as wide as anyone not named Warren Buffett, a trading risk has ever seen. That was 42 macro founder, Darius Dale. I'm Eric Townsend, and this is macro voices. The free weekly podcast targeting professional finance and sophisticated private investors. Episode 546 was produced on August 20th, 2026. Darius and I will discuss drivers in growth and inflation and what they mean for markets and the global economy. This will be our final regular format show before our annual summer break. So for the next two weeks, we have some special timeless pre-recorded content prepared for you. Next week, August 27th, Tresses Chief Economist Daniel Lecaier returns to discuss the US dollars role as the global reserve currency. What would it take to lose that title and what would markets look like if the dollar is eventually displaced from that role? Then on September 3rd, I'll be introducing you to a special guest whose name you might not have heard before. Dr. Carly Anderson is a venture capitalist specializing in early stage energy-related technology companies. She's one of the smartest people I know, and I think you're really going to enjoy this interview going into the Labor Day holiday weekend. But we'll talk about everything from nuclear reactors to super-critical carbon dioxide turbines to what they have in common with one another. Then we'll be back with our regular show format on September 10th and I'm Patrick Suresna and Steve Street into this interview. As always, Darius has prepared a terrific slide deck to accompany this week's interview. You'll find the download link in your research roundup email. If you don't have a research roundup email, just go to our homepage macrovoices.com, click the red button above Darius's picture. It says looking for the downloads and just a reminder because Darius's business is all about this huge slide deck that he produces for his paying clients, he does redact the slides that we don't talk about. So don't be surprised if some of the slides are not visible in the deck. The ones that we don't discuss in the interview won't be visible, but there is a full deck available for 42 macro subscribers. Darius, it's great to get you back on the show. It's been so long. I don't know how long it's been. It's been so long that last time we spoke, it was not the policy of the United States of America to, oh, I don't know, do something crazy. Like take all of its structured long-term debt and see if we can buy it back and accelerate that by selling a whole bunch of bills and moving long-term debt into short-term debt. What could possibly go wrong there? Let's make the teaser rate. America, I love you, man. What a way to get stuff up anymore. I mean, really, this is slow. We don't know what to do about the back end of the curve backing up. Let's just borrow from the short end of the curve and see if we can short it up. My experience at Financial Markets, which immediately is only a couple decades, but it's packed full of knowledge from studying. Basically, every finance book that's relevant to read and interacting with hundreds of the world's top Biciders across the world for many years and building models for them, having model stress tests, getting laughed out of rooms, getting invited to very important rooms. I've had quite the career and go to Wall Street for somebody my age. And I'll tell you right now, my experience tells me that Financial Markets manipulation tends not to be durable in terms of its intended impact, but I think we're early in the process. I've been not being durable. So let me walk you through the process of how we can arrive at that conclusion. Ultimately, it's implications and, you know, kind of as it relates to, you know, what investors should be doing about it in their portfolios because at the end of the day, that's what matters, right? It's how you manage risk. Before we even get started, I just want to remind everyone, you normally do this for me. But the last time I was on MacroVoices was the beat. I think it was the first episode of 2026, continuing a long line of fantastic MacroVoices discussions with you Eric. I think we said buckle up, expect some volatility, but 2026 is going to be a great year for risk assets, stocks in particular. And obviously, I think that, you know, here we are in late August, I think that that conclusion is largely intact. Getting into this, this front page news of our acting treasurer secretary, not acting he's our strategic secretary and a former client of mine and someone I've known for quite a long time and someone I have a tremendous amount of respect and admiration for. Scott Bessent, I think he's doing a fantastic job as our treasurer secretary. And quite frankly, if anybody with less skills than him, we're sitting in that seat, we being a far worse place from an economic standpoint and financial market standpoint. So everybody listen to me talk right now, give a golf clap to our friends, Scott Bessent, 'cause he's doing a bang up job in terms of, in terms of the hand he's dealt, which is not a great hand. So if we can start this presentation, Eric, on slide 11, you know, we published our initial investing doing a fourth turning regime analysis to 42 macro members in the summer of 2023. And, you know, there were several key takeaways from that presentation, some of which we'll walk you through over the next few minutes or so. But I would say the biggest key takeaway when you put together all of the different economic risks, you know, policy risks, financial market risks and geopolitical risks from that presentation of which we don't have time to get into all of them. It was like a hundred-side presentation. But when you put together all those risks from those different, you know, categories, the very glaringly obvious key takeaway from my perspective at the time, was that there is a geopolitically-driven, supply-demand imbalance in the Treasury bond market. And that, and more importantly, that because of these forces, the structural macro forces, that geopolitically-driven, supply-demand imbalance in the Treasury bond market, is going to widen over time. That disequilibrium is going to widen over time and force policy responses. Force changes to Federal Reserve policy. Force, an erosion of Fed independence force, the Treasury to make concessions on net-benancing policy. Force to Treasury to change, you know, it's into its strategy. Force to Treasury has changed. It's on the run strategy. Force to Treasury has changed its currency intervention strategies. And so ultimately, I think we're here, you know, here in 2026, you know, over three years later, I think everything we predicted is coming true. And not only is it coming true, it's coming true in an accelerating rate. So if you're not aware of these forces, or what I'm about to explain to you in the next 10 minutes, you must be aware of them if you want to stay on the right side of market risk over the next few years. So getting back to slide 11, we'll fly through these slides and I'll pause for some questioning. Number one, you know, again, we're not hitting on everything, but just kind of showing you some of the highlights from our investing to the 420 regime analysis. Number one, the sovereign fiscal balance tends to deteriorate sharply during four turnings. Number two, on slide 12, sovereign debt tends to increase sharply during four turnings. Number on slide 13, we show the public interest burden tends to increase sharply during four turnings. And really quickly, for those of you who have not seen this analysis, which I assume is most people, the chart on the left shows the longitudinal analysis of the time series with data going back to 1800, or as least as far as we could have the data going as far back as we possibly can. The chart on the right shows the summary statistics, via Max Min, you know, median and anticortile rate. And so ultimately when we're talking about these risks, these economic and geopolitical and political and ultimately financial market risks, you know, when we use verbs, we're talking about the movement, a general direction of travel from a longitudinal perspective in four turnings, we're talking about if something's high or low on a relative basis, that's more about the statistics of what the distribution looks like when you're in a fourth turning versus a first, second or third turnings, which are much more calm, periods economically and geopolitically. So getting back to this slide 13, again, the public interest burden tends to increase sharply during four turnings on slide 14. The 12-month nominal T bill yield tends to be relatively weak during four turnings that the policy tends to be on a financial oppression. Slide 15, the dollar tends to be debased substantially during four turnings, particularly against a more a base form of money, which is gold. It tends to be debased substantially versus scarce assets like stocks, like Bitcoin as well. So stocks go Bitcoin and exactly the three core ingredients to our case, monoportfolio. You look at slide 16. The money supply growth as a function of all that financial oppression and dollar debatement tends to accelerate sharply during four turnings. The 10-year real treasury yield tends to decline substantially during four turnings as the elevated nominal growth environment, the elevated inflation pushes down long-term real interest rates. And we think that's probably the next trade when we look forward out in time. But maybe not starting today. Nominal GDP growth tends to accelerate sharply during four turnings on slide 18. On slide 19, we show S&P 500 earnings growth tends to be relatively strong during four turnings with more volatility. On slide 20, S&P 500 returns tend to be relatively strong during four turnings with more volatility. We can tell there's more volatility by a wider maximum range or wider into quartile range. You know, on slide 21, we show that basically when you summarize everything that we think we've learned from that big study, which is risk assets tend to go up faster in four turnings with more volatility. And there's a lot of good reasons why, from a nominal GDP perspective, from an earnings perspective. That you tend as a function of that partially, you tend to have declining treasury bond prices. But ultimately, the slope of the decline in treasury bonds tends to get curtailed by policy intervention. And so ultimately, we must know that that policy intervention is gonna come. We've already seen some forms of policy intervention on slide 22 with trade tending to decline sharply during four turnings, the sharp elbows tend to get up. Because don't forget Eric, you know this as well as anyone. You know, a great difference to my former colleague and one of my mentors knew how, who's the author, one of the co-authors of this little concept with like colleague Bill Strauss, one of the core features. of a for turning the core, you know, drivers of the for turning is all the inequality. And so the inequality tends to create catalyzed policy response as one of those policy responses tends to be perspet protectionism. So, you know, we've been on the right side of expecting protectionism across multiple different administrations and configurations of Congress. And then lastly, and I'll shut up after this. Lastly, on slide 23, we see that wars tend to accelerate globally during fourth turnings. And so if in fact, if you look at nails work, before turning since the 15th century isn't it in total war, we'd be remiss to forecast that outcome, but we'd also be remiss to not, you know, understand that the distribution of probable economic policy and market outcomes is ultimately as wide as anyone not named Warren Buffett trading risk has ever seen. In fact, Warren Buffett is the only person I'm aware of that was actually trading risk during the last four turnings. So, you know, hopefully he lives forever, but if to the extent that he does not live forever when he, you know, when he bleeds the parts of us, there'll be nobody living with experience trading through such a wide distribution of probable economic policy and market outcomes. And so ultimately, we think Wall Street's going to continue to be confused by a lot of these dynamics. They're going to continue to be confused by why our Treasury Secretary is, you know, I don't want to say panicking. That's a disrespectful word to such a great man and an American patriot, but it's starting to look panicking in terms of their responses. And so ultimately investors need to start anticipating more of this in greater quantities for a much longer time period that investors realize. There is some fascinated by your last statement there that it's appears panicky. I agree with you that it appears panicky, but I don't think it really is panicky. I think it's aggressiveness. And I think that Trump and Besson have been very aggressive on policy since the beginning of this administration. We're just seeing more of that. Would you agree with that? And I guess what I really want to get to is, yeah, I think the reason that it seems panicky is because they're dealing with some challenges that are pretty darn challenging. Yeah, yeah, I mean, so yes, I completely agree. I think even I think a better word besides panicky or aggressiveness would be decisiveness. And the reason he's acting so decisively in my opinion, just on someone who's met with them for many years, and you know, is added value to his portfolio of key square and his clients that they serve there. My interpretation is, Besson understands everything that you and I are talking about probably better than we do. And so he's acting decisively because he already has the playbook. He understands the rules of the road. He understands the binding constraints. He understands the incentives for the different players in the system. And so ultimately, ultimately understands the levers that he can pull and what levers have them about what amount of leverage. And so we're seeing the level of decisiveness in response to what I would consider to be crisis like conditions, like if you go to slide 24, people talk about debt to GDP and deficits to GDP and debt and deficits in general, general, but just a complete wrong way. Sovereign can have as much debt and as wide as a budget deficit as it wants to as long as there are creditors around to finance it. The only time it's a problem is when there are creditors who are moving away from that market, who are demanding, you know, higher X anti-units of return for the to capitalize the debt or they have other sources and uses for their capital, cough, AI, cap expo. And so right now, you know, US is back at 100% debt to GDP. We're running this, you know, record non-war non-recession budget deficit on top of that. And the last time we saw such a high level debt to GDP here in this US economy, you got to go back to World War II, the last four turning. And so part of the reason we think that administration has been acting so decisive on the policy front, if you go back to last spring with Doge and the tariffs, that was paradigm B. That's one of the three acceptable treatment options to deal with what we've been calling the debt disease, which is, you know, paradigm A, paradigm A is, you know, this debt disease, which causes which is the core contributor to this geopolitical German spot of man imbalance. Obviously that's the supplies out of the equation. You know, you go back to last spring, we accurately forecast it that they would kitchen sink the economy back in the fall of 2024 with paradigm B. Doge was an attempt at that. The tariffs were an attempt at that. But where we were differentiated is being able to pivot quickly off that back last April, you know, going from being bearish to bullish last April, because we recognized the best since pivot to paradigm C, which is the growth phase of the quote, quote print, a menu of acceptable treatment options for this debt disease. Ultimately, and I would argue based on some of the actions that the Fed has taken, I reserve management purchases starting in December of last year, ramping up and create issue a treasury buybacks, the advent of severely dovish net financing policy in recent, in recent years, inclusive of the sharp acceleration in dovish net financing policy that's projected for a second half of this year. You know, I think we're already starting to tip to our way into paradigm D. And this is why I said last fall that the stock market's going to bubble. I said, you do paradigm C, which is boom the economy and control P print, the demand for these marketable treasury securities, you're going to wind up with a bubble. You know, gold is going to go way back past its all time high in January. Bitcoin is going to store past its all time high last August. It's a matter of when, not if. Let's stay focused on that because I think a lot of our listeners are very interested in those markets. Until March 2nd, we had pretty expected behavior from the gold market. The bombs drop then gold goes up because that's the way the markets always worked is it's a geopolitical hedge. Then we got into I think it was about an expectation around inflation that led to a reversal of usual correlations. So for a while as the bombs drop, it was gold down as the bombs drop. I think it's back to normal again just in the last couple of weeks. Is that true? And if so, what actually caused it to change? Yeah, well, I think a couple of things are causing it to change. So you, I think you nailed it in terms of the liquidity dollar recycling dynamics that cause go to drop. Oh, you know, if we just do an anatomy of the drawdown and gold, you know, starting in leg January, the advent of the domination of Kevin War for Fed Chair was a severe wrench in this whole thesis, this whole narrative, you know, I'm not the only person who's arrived at these conclusions. I think we do probably more research to arrive at the conclusions because I have to present my conclusions to folks who wind up being the Treasury Secretary. I have to present my conclusions to folks who wind up being one of the two finalists for Fed Chair. The burden of proof is a little bit higher in those rooms than it is on YouTube, no offense to anybody. And so in terms of, you know, getting into the drawdown that we saw in gold, in my opinion, we think the nomination of Kevin War for Fed Chair was a clear signal to the Boolean market and to draw to finance markets that, hey, we intend to support the US dollar. And the reason why they have to support the US dollar and not allow it to run away is because if you have a currency that is declining, getting to base or declining in value to such a substantial degree, obviously that creates inflation in the real economy. But what it ultimately does is it undermines, you know, and undermines investor confidence in long term dollar denominated securities. You're just, you're just going to rapidly inflate term premium. You're going to rapidly inflate the inflation pricing. And ultimately, you're going to rapidly inflate nominal GDP in ways that are unsavory to bond prices. So we think that nomination was designed specifically to signal to financial markets that, hey, look, we're not just going to put a Patsy at the helm of the world's most important center bank, IE, you know, Kevin Hassett or somebody like that, that's just going to do the president's bidding because if they did, they're going to lose along into the bottom line. And so the second part of the gold drawdown, if you go to slide 39, was really primarily predicated on the dollar recycling in the lack of dollar recycling flows that we got from the closure of the straight of our moves. In fact, we saw central banks like Turkey and other central banks in the region, in and around the world, really, starting to sell gold as to prevent balance of payments crises in their own economies. And this is a whole point of FFX reserves, right? When you get in trouble as an economy, the whole point of having FFX reserves that are not denominated in your own currency is to maintain your purchasing power for the goods and services that you need must acquire that come from foreign sources. And so, you know, in our opinion, we think the closures are straight of our moves represented a big wrench in that global dollar recycling flow. You think about the international investment surplus economies in Asia, Japan, and China, and Hong Kong, Singapore, Taiwan. You know, these are some of the world's largest and international investment surplus economies. And they source the line share of their crude oil from the Middle East. Obviously, the Europe sources of decent chunk of its crude oil from the Middle East, you know, Germany being the world's largest and international investment surplus economy, the eurozone, and aggregate. I want to say is the world's fifth largest investment investment in international investment surplus economy. And so, by preventing those barrels of crude oil from flowing out of the street, you are basically preventing those economies from growing fast enough to generate the same level of household savings, to generate the same level of corporate profits, and ultimately to generate the same level of FFX reserve accumulation that they had been generating in ways that were supported for a gold and brought up in ancient markets. And so, ultimately gold became a store. They started using gold for what is designed to do, which is maintain its value in a crisis by and large and provide liquidity for these central banks. And that's exactly what they did. But ultimately, you think about the most recent move hiring gold and getting kind of get back to your question there. The most recent move hiring gold in our opinion, it's really just, I think the market is starting to sniff out where this is all headed. And I think the market is really smart. The market has always been really smart. In fact, you know, if we run quantitative investment strategies to help our clients stand the right side of market risk, you know, I can talk to the cows home, come on about this stuff, but not of this stuff impacts our clients' portfolios. You know, we use Kiss to help retail investors stand the right side of market risk. We use Dr. Moe to help institutional investors and insubiscated retail traders stand the right side of factor risk across 80 different factors. And so, those quantitative investment strategies will tell me what to do with my portfolio and tell our clients what they're doing, their portfolio but. My fund of a research is telling it, I think I know where this is going, it's on slide 32. Slide 32, the chart on the right just shows the dollar value of 100 basis points of rate cuts, you know, if you push through in terms of the impact on the federal budget deficit. And so we ultimately think this is all headed, it's twofold. One, we're already living in reserve, yield curve control. When we look back 50 years from now, and they're writing books about this moment in time, they will be calling what's happening right now, yield curve control. Treasury Secretary Besson is issuing bills to retire duration from financial markets to remove duration risks from national markets. That's there's essentially an operation twist there. And then guess who's buying the bills with printed money, the treasury. And so the fed treasury record that everybody keeps prospectively talking about is already here, they're already doing yield curve control, it's going to get bigger, the quantities are going to get bigger, they're going to do it more forcefully, they're going to be doing it more explicitly, but only after the bond market continues to march higher and higher and higher in yield. Darius, we hit 5.2% on the 10 year last week. Do you think that trend is set to continue? And if so, do you have any targets in mind for where yields are headed? Do I have targets in mind? Yes, I got to get that slide in here. I'll insert the slide in here as the last slide of the presentation, but we have a model that tries to ascertain what the fair value for the 10 year is here in the treasury market. And based on our most recent update, we're about 5.75 each summer in the range of 575, 580 for fair value on the 10 year. Probably somewhere close to 650 on the 30 year. Again, this is not 2021. The duration risk in the bond market is much lower than it had been. You're not coming from 0.5 on the 10 year to 5. That's a 50% drawdown. You're going from today starting point to 5.5 or 6 on the 10 year, which is probably where it's going to wind up, you know, before this all said it done, unless they'd start doing yield curve control well before that, which they may, by the way, it depends on the speed of the move. If the 10 year looks like it wants to materially break out above 5%, which is well within its right to do if you look at global bond yields on slide 41, you know, we got a 15 year high in the 10 year nominal, your zone government bond yield of 20 year high in the 10 year nominal, okay, guilt yield of 30 year high in the 10 year nominal GGB yield. In my opinion, these are tail tail signs at the supply of global savings continues to deteriorate the margins. And so as long as we're competing, not we, but the Treasury is competing with AI, which is a massive demand for capital that had, that did not exist a few years ago, the yield to have to go higher, the X and to unit of return has to go higher across all markets. That's why you're seeing IG credit spreads widen. That's why you're seeing the equity risk premium widen. That's, you know, in terms of market multiples going down, you know, that's why you're seeing bond yields back up. And that reason, I'll tell you why this is all happening here. Well, there's a lot of reasons why it's happening, but I'll tell you one of the core reasons why it's happening is on slide 40, the previous slide. This chart shows global savings, you know, the flow of global savings. And then the bottom panel, the panel, the panel, the bottom shows the trailing 10 year percentage change of global savings. We're growing at about 31% on a trailing, oh, sorry, not 31% we're growing at about 55% on a trailing 10 year basis. That 55% compares to a long run mean of around 90% and oh, by the way, we've been growing at about 55% on a trailing 10 year growth rate basis for the past 10 years. So we've been troughing along the bottom of this, this time series for almost a decade now in terms of the growth rate of global savings. And so part of that, obviously, we have so much wider fiscal deficits across many of the world's major economies. And that's not, and I opinion that's not a condition that's going to ameliorate itself at the margin. We know obvious blowing holes in the budget deficit right now. We know we have a problem with entitlement spending not here in the United States. The Republicans don't tax enough. The Democrats spend too much. Then you got Japan pursuing inflation as fiscal policy. You have Europe remilitarizing NATO's going to take its budget, the defense spending targets from 2% of GDP to 3.5% of GDP for defense and another 1.5% of GDP for infrastructure related to defense. So 5% of GDP from two. And then obviously China strategically decoupling in terms of in terms of its lack of desire to trade with the US in recycle. It's current account flows back into US dollar denominated assets. And so boy, this is a big, this is a big complicated problem. Like I said, when I started this presentation on slide, I go back to slide 24, there's not a lot of the menu of acceptable treatment options for this big, complicated problem. It's not long. You can either cut your way out of it, Elon tried that and got booted off the stage and went back to Tesla and doing some great things there at Tesla and SpaceX. And I wish them all the best. Congrats on that GROC release. They're now competing at the Pareto Frontier. So that's amazing for them. I wish we had more of that insight and intellect trying to fix this problem. But obviously he decided that it was too big of a problem to fix. And so, you know, we're only, this just, if they, if paradigm B, the cut face is not going to be the most likely outcome, then all we're going to do is boom the economy and print money. That's it. Like, I mean, this is hundreds of societies across thousands of millennia or thousands of years, you know, several millennia. This is the only menu of acceptable treatment options. The other alternatives, there's only two other alternatives when you get to this problem. You default on the debt, which we're not going to do because we can print our own currency, or you go to total war and you just try to take over stuff and find money elsewhere. And that may be the ultimate outcome. Again, every four turnings as the 15th century is ended in total war. Darius, let's stay on this policy point. We've just come under the three-month mark time from now till the midterm elections. Usually, it's those last three months where suddenly policy starts to really get influenced by the elections. What policy influences do you think might be on deck that are election related? And what do you see in terms of policy moves that we should be on the eye, you know, on the lookout for between now and November? That's a good question. So on the fiscal policy side of things, we'll go to slide 25 and we show our our fiscal policy monitor. You know, this is this helps us keep track of, you know, all the moving parts within the federal budget statement. And ultimately, you know, what's what what what what the key drivers of the deficit are doing, either good or bad in ways that may, you know, catalyze more or less policy intervention like the kind of policy intervention we saw today with Besson and his buyback announcement. You know, so when you look at the budget deficit, the federal budget balance, if you go to, I guess, one, two, three, four rows from the bottom in this chart, you know, we're widening on a federal budget balance basis on a calendar. This is calendar year to date, about 400 billion dollars. So we're basically widening about a hundred basis points to 6.3% in terms of our deficit, the GDP year over a year. What's driving that widening? We have corporate income taxes down 13% in 2025. They're down another 15% here in 2026. Customs duties down 58% in in in in in 20 in 2020, 2026 as well. So that's that's contributed to that. But obviously, you know, you and I both friends with Luke Gromen, who had respect, the utmost respect for as an analyst, you know, he's is metric is true. It's six minutes metric. That's a runaway freight train that just has no breaks. It has no breaks. You know, true interest expense for those are maybe unfamiliar with Luke's framework. That's Medicare, plus national defense, plus net interest, plus social security. So basically interest and interest like features of the budget deficit, you know, things that there's very little or no political will to materially address, at least until there's a real fiscal crisis on our hands, which by the way, maybe coming seems like it's on its way in the next, you know, few years, particularly if AI keeps begging for money. If you add on Medicaid and veterans benefits, which, you know, I and Luke have argued for years that those are very much like interest like categories as well, because if you try to kick too many people off Medicaid and too many people off the veterans benefits, you're going to wind up with riots in the streets and people in this country. They don't have pitchforks. We have 400 million guns in this country. Again, 400 million guns in this country, there won't be pitchforks. There will be very loud gunshots going off. We saw what happened on Jan 6th. That was a preview. Anyway, getting back into this. Troint's expense, plus Medicaid and veterans benefits, 80% of federal expenditures, which we know are already 6% of GDPs worth too big relative to Refederal revenues. 80% of federal expenditures are compounding it about 9 to 10% per annum. Do you know how the kind of normal GDP growth you need to just stop the budget deficit to keep it flat? We couldn't even keep it flat. With doge, you know, doing a little bit that it did, with tariffs doing a little bit that it did, with booming the economy doing a lot of work, we're still unable, we're still unable to keep the budget deficit from widening. So ultimately, where this is headed is budget deficits and record non-war non-recession budget deficits that, you know, if you look at side on 28, we'll wind up with something that or 27 or 28. We're going to wind up with something that looks very precarious from the perspective of our sovereign crediters. And so, you know, answer your question. Whereas policy heading, I think they'd be fools. If you're in DC right now, listening to me talking, you're trying to add on more fiscal largest, you're going to blow up the system. You guys need to sit down and stop doing stuff. Just sit down and stop doing stuff. It's Congress. You guys got to send to this mess, you know, you're pandering to your billionaire donors and blowing holes in the budget with taxes, blowing holes in the budget with spending, and just go sit down. It goes sit down and let us figure this out in the financial markets, and unfortunately, it might not be pretty, but ultimately, I think the people in the financial markets have a better solution to all this than the folks in Congress, but I've asked my case. So, anyway, there's not going to be any more fiscal largest, at least in front of the midterm elections. In terms of, as it relates to the Federal Reserve, I mentioned on slide 32, Federal Reserve, monetary policy is going to get very dovish in the next 18 months, very dovish, substantially more dovish than what is currently priced in. Right now, what the Fed is dealing with right now, in terms of pivoting, modestly hawkish is on slide 44. Slide 44 shows our market applied Fed R-star model, where we try to ascertain what the market is pricing R-star is on a time series basis. It's been pretty accurate, relative to the Lubach Williams model over time. And so, what R-star models, essentially pricing, is that the Fed is now below our R-star range. On the minimum, we have it about 1.43% on the maximum, we have it about one. 1.82%. If you wanted to deflate the effective funds rate by five year five year inflation swap rates, that's about 1.2%. And so the Fed is now modestly easy, modestly accommodative relative to the lower bound of the markets pricing of our start. Again, this is not, this is 42 macro trying to back its way into our start based on market pricing. You know, we're essentially, you know, extracting value and signal from the, from the OIS curve and, and inflation swap rate curve to back into this. And so ultimately, what that means is the Fed is now has modestly accommodative monetary policy in our opinion. This is one of the core drivers. If not the core driver, why buy yields continue to back up because when the Federal Reserve has modestly accommodative monetary policy, you're putting up a pressure on aggregate demand, putting up a pressure on inflation, putting up a pressure on employment and ultimately upper pressure on nominal GDP. And why in the heck would you want to own a 30 year treasury bond where you can lend to one of the hyperscalers at plus 200 basis points or you can go by stocks which are up annualizing it and 23% on a total return basis since the start of 2023 when we turn bullish. And so just the Federal Reserve is going to be forced probably to type monetary policy modestly. And that's only to bend the need of the bond market in our opinion because ultimately where this is all headed is a policy rate that is significantly lower than the lowest estimates on the OIS curve currently by the end of next year. They have to. They're going to. And here's why Chairman Worsh who has been getting dragged by the media for his failure to communicate the way they want him to communicate, which I take great offense to as an American patriot. This man has strained with some of the great monetary minds of all time, John Taylor, Stan Druckemiller, arguably the best fundamental investor of all time. You know, like, like, I don't, he doesn't give a damn, sorry, excuse my language, but he doesn't give a damn what these media people think. He's doing exactly what he wants to do and what he should be doing, which is shrinking the distribution of probable economic outcomes by pushing some of the monetary action function back to the markets. The more the markets can price in fluctuations in our start going back to the chart on slide 44, the more the markets are allowed to price in those fluctuations, the less the work the Fed has to do. And ultimately, the less volatile, the economy will be. The less volatile markets will be because the economy won't deviate too far from our star and the supply demand of capital based on faulty forward guidance. That's a valiant goal that he should be pursuing. And they're making the, they're for, they make force him not to pursue it with all the ridicule and the criticism. But that's, I digress. I apologize for that. Getting back into what policy said it. I really appreciate what he's doing with the task forces. And here's why as a leader, as someone who's a CEO, we all have almost 10 employees now. It can be the bigger your organization grows the harder it gets to make people do what you want them to do to have them execute your vision, you know, becomes more of an active inspiration rather than a, you got to use more care at the stick. The bigger your organization goes, something I'm learning with, you know, running my team. I love the, the task force because the task force are going to essentially allow the Federal Reserve to skate to where the puck is going where the puck must go in the context of the supply demand and balance, which is, you know, paradigm D control print. It's going to allow the members of the FOMC to get there without him telling them to go there. If he tells him to go there, they're not going to want to go there. But if you think about the task forces, the way he organized the task forces is very clever. You know, you, you send him that a rabbit hole to talk about communications. Well, okay, fine, that's going to increase term premiere and make the, the make short rates more volatile in a way that makes the economy less volatile. I think that's a win, but it might be painful in the interim. But the other task forces, balance sheet task force, we know they're going to wind up deregulating the banks in a material way. Banks only own about 15% of the marketable treasury debt market. That's down from a high F 34% in 2003. The Fed, more, it doesn't want a big Fed balance sheet. So ultimately, the Fed's going to take the hot potato that, that, that is the incremental supply of treasury debt because the private non-bank sector, us, we're about 60% up from 36% in the end of 2021. We can't take any more of it. Foreign central banks don't want any more of it. They're shares down to, I think, 12% from high 40% in 2008. So if you think about the only other cohort, if you think about these big four cohorts of buyers, commercial banks, US commercial banks are the only cohort of buyers that are materially lower than their all-time high ratio in terms of share. And so we know they're going to deregulate the bank's SLR is going to get relaxed again. The treasury is going to be included in that, in terms of high quality liquid assets for stress tests and liquidity coverage ratios. They're going to, they're going to pull a lot of bells and whistles in front of the fans of deregulation standpoint to allow any material shrinking on the Fed's balance sheet, which may not occur, by the way, it still may not occur in context of our reverse management purchases. But I don't know if they, that's the path that they choose to take on a nominal basis. It'll be a dovish on a net basis when you factor in the bank regulation and the time it'll take to regulate the banks to such a meaningful degree that could take years. And then the other three task forces, you know, you think about the data task force, they're going to get real better data for the labor market. We know that the labor market is basically losing about 500,000 to a million jobs every year once we get the QCW revisions. So any data that's better than the current data we have in the labor market is going to tell the Fed that the labor market's more sucky than they realize, which ultimately should push up their neuro-time estimates of productivity growth. If the real-time estimates of productivity growth go higher, our back testing shows that, you know, when you cross over to two beyond two percent productivity growth, which we think it's going to be, you know, persistently above three over the medium term. If you cross over to two percent or above productivity growth, you tend to have a declining short rates, which is a signal to the Fed that they should be lowering the policy rate because productivity growth is the key to disinflationary growth, to noninflationary growth. And then last on the inflation task force. So that's the productivity task force. And last on the inflation task force, you're going to wind up any, any more real-time data on inflation is going to be a more double-read on inflation than what current PC and CPI variables are signaling. So when you net it all out, they're going to get five reports. Three of them are going to say very, very, very dovish things, which are not currently priced in. One of them is going to say a neutral thing to a modestly dovish thing relative to current expectations in terms of the balance sheet. And one of them is going to say a hawkish thing. So on a net basis, the Fed policy is going to get substantially more dovish next year than what's currently priced in the markets. And so maybe that's a gold sniffing out. Maybe that's the bond market sniffing out because ultimately a bond market that is not going to like substantially more dovish monetary policy. It's going to force the Treasury Secretary to continue doing more creative things. It's going to force the Fed to eventually pivot to your curve control. There was one specific scenario I had in mind I wanted to ask you about, which is it seems to me that President Trump's greatest weakness or one of his greatest vulnerabilities is gasoline prices between now and the election. For that reason, I think it's quite likely that the president will announce another US strategic petroleum reserve drawdown between now and the election. Frankly, not very smart policy, but probably very smart campaigning from the standpoint. We'll do anything to actually to help diesel and gasoline prices. But if you can get oil prices down and say he's done something and blame the oil companies and tell his constituents that he's asked the Justice Department to look into why the prices haven't come down and it's not his fault, maybe he gets some relief there. So I'm just thinking SPR release lower oil prices because the president has so much vulnerability there is almost a certainty. What do you think? You know this better than me, Eric, but crude oil is not the issue. It's the fact that we don't have any refining capacity. If you look at the three to one crack spread, it's telling you that we don't have any refining capacity. So you can release every barrel on the SPR, but that's not going to create converted into gasoline and diesel and jet fuel. Period. Obviously Ukraine is doing a bang up job in Russia and taking out a lot of capacity there. Iran is doing a bang up job on us in the middle east and taking a lot of refining capacity there. So the issue is it's not what the price of crude oil is. We can just eyeball what the price of gasoline is. The price of jet fuel is with price of diesel isn't and back into oh boy, this has nothing to do with the barrels not flowing out of the straight or moves. This has everything to do with even if we got the barrels we can't process them fast enough. And that in my opinion is a structural issue that's going to make the president very unsuccessful in any sort of tactical strategy that he may pursue to score some points ahead of the midterms. I mean, I just, it reminds me a lot, especially, and I will say you know, obviously been a big fan of Scott and and and and uplifting him into his interview. But one thing I will say negative of Scott Scott, if you're listening, that comment you made about the K shaped economy being over. Somebody from the very bottom, 0.001 percent of the K who doesn't get to tell a cute story about how his parents, you know, lost money and got it all back. My cute stories are about sleeping in vans and homeless shelters. And you know, watching my friends get murdered by gang violence and watching my brother get shot and have a bullet in his chest. Those are my cute stories. The folks like us who have real scars and experience and are living that experience in the bottom of the K don't appreciate being lied to by a Republican administration anymore. Did they appreciate it being lied to by a Democrat administration, Biden was out the launch on the K shaped economy. And it sounds like this administration is increasing out the launch on the K shaped economy. And so all these little things that they say and do that are, you know, really for, you know, I would say window dressing, you know, maybe score some points on Fox News or, you know, maybe score some points at a rally in the middle and in some, you know, Midwestern town that we never heard of. Yeah, maybe that works with the base, but there, no independence are dumb enough to buy that stuff. Independence can feel their grocery bill. They can feel their gas prices. They can feel their rent. They can feel their mortgage. They can feel college tuition. They can feel health care. People aren't dumb. If your politician listen to me talk, start with the assumption that people aren't dumb. Stop talking Now to us, stop assuming that your word is gospel and we're too dumb to figure out what gospel is because I'll tell you right now, as long as people like me exist, we will expose the truth with data. And so getting back into this K-shaped economy thing on slide 30, we show various categories. We sort of sum up the various categories of fiscal spending across different categories, kind of bump into the big categories, the share of federal government budget outlays on means tested programs, those are programs where you qualify if you're poor. The annualized outlays thus far in 2026 is about $1.3 trillion. And then there's annualized outlays for Social Security Medicare. So that's if you're elderly retirement and care for the elderly, that's about $3.7 trillion. And then there's everything else of which net interest and national defense are about 80 plus percent of that. And that's about $2.7 trillion. And so the first thing you should hear is, oh my God. And if you're paying attention is, oh my God. The government only spends 17%, 17 cents of every dollar it spends goes to poor people. Oh, that's a problem. 'Cause that means 83% of every dollar the US federal government spends winds up in the bank accounts of the elderly and the wealthy. These are the two most politically active cohorts to be a voter turnout in campaign finance. And so you think about this shown the perspective of the cantaline effect. Go to slide 49. On slide 49, we show the cantaline effect to kind of exposing the money illusion. This chart shows the blue pill, which is the blue line going across the screen that's Bloomberg's spot price for the US dollar and US dollar, not the dollar index. But if you just type in US dollar currency on your Bloomberg, Bloomberg tells you the dollar's value is one every single day and has been one every single day since Nixon abandoned the gold standard on a Sunday afternoon. Utilatorally, with no act, with no legislation in Congress on a Sunday afternoon in 1971, August 15, 1971. The red line shows the US dollar priced in stocks. A scarce capital asset that will seek to retain its value, you know, relative to a currency that's being debased. And so as you can see, the red line shows the dollars being this down about 99% since August 15, 1971 versus the S&P 500. That's a geometric mean of minus 8%. So the dollar is getting debased by 8% a year, you know, and creating in stock terms for people who own the stocks, the 60% of us who own stocks. And we know like, I don't know the actual numbers, but we know that's incredibly concentrated at the top. You know, we know 40% of people don't own stocks and 40% of people can't scrape together a thousand dollars in the end of an emergency. I assume that's the same 40% of people in this country. But the 60% of us who own stocks, it's still pretty concentrated at the top. So the key take while I'm saying, why I started at on slide 30 and why pivoted here at slide 49 is to say that the cantalon effect, which by God, it's insane that nobody talks about this. I know you talk about it, Eric. And thank you for your public service. The people on the bottom of the K appreciate you, Eric. The cantalon effect is arguably the key driver of the K-shaped economy crisis. We have a federal government that spends 83 cents of every dollar on not poor people. Period, and we know two trillion of that is going directly to rich people in the form of net interest and national defense. For people who don't own the shares of Raytheon, they're not the people who work at those companies or are Boeing or SpaceX or Andrew or Palantir. For people who aren't involved in that, that money is going directly to rich people. The net interest is going directly to capital holders. For people who don't own treasury bonds, they don't own stocks, they don't own gold. They are scraping together nickels to get on the bus, to go slave away for a wage that doesn't even cover their living expenses. That's what poor people are doing, Amazon. We can just kind of quickly go through this on slide 50. The dollar's lost 99% of its value relative to gold with the same geometric mean of 8% per annum throughout this 50 year experiment of fiat money. Dollars lost 88% of its value relative to food on 51. The dollar's lost 97% of its value relative to energy on 52. And the dollar's lost 94% of its value relative to shelter on 53. On 54, we kind of just show this just since COVID, just since the end of March of 2020, you look at the top panel, or so the top half of the chart, we see that money supplies up 44% since the end of March of 2020 when the US sovereign decided to basically issue about $6 trillion in debt to give to rich people, give PPP, forgivable PPP loans to rich people. And they dressed it up just like they dressed up the op with one big ugly bill with no tax on tips, no tax on, no tax on tips or whatever, whatever the stupid saying was, they gave the poor people $600 in the extra benefits on the unemployment claims. Meanwhile, we're signing trillions of dollars of free, forgivable loans away to rich people, via PPP and small business loans and also other largest that we saw. You know, the $6 trillion of fiscal largest we saw from the start of 2020 through the end of 2021. Well, guess what the Fed monetized about 60% of that. And so as a function of that, we're still dealing with an inflation problem just both in asset price terms and also in CPI terms. We see that the financial assets are about 63% since then. But if you look at the bottom panel, we see that the dollar has lost 37% of its purchasing power versus in shelter terms. That's a cater of minus 7%, versus the long run mean cater of minus 5%, dollars lost 25% of its purchasing power in food terms. You get 25% less food when you go to the grocery store just by being an American citizen. Yay. That cater is about 4%, minus 4%, relative to the long run mean of the same value. Dollos lost 64% of its purchasing power in gold terms since then. Cater's minus 15%, almost a double of its long run mean. And then the dollars lost 76% of its purchasing power in energy terms. Cater of minus 20%. You know, basically more than triple its long run mean. And so when rich people get money either directly from the federal government or indirectly from the federal government because the federal reserve is maintaining asymmetrically dovish monetary policy and ways that make the stock market go up. 23% per annum since January of 2023. When we turn bullish versus a long run cater of 10%. The stock market has gone up 2.3 times faster than it has historically gone up. You can see that on slide 55. 2.3 times faster since the start of 2023. Then it has historically gone up. 23% versus 10%. And so all that money, all that income, all that wealth that we on the top of the K are getting, this is the cantalant effect. This one I'm trying to, this one I'm so angry about. When we get all that money, we go to the grocery store, we buy food, we go to Amazon, we buy goods, we go to a car dealership, we buy cars, we go to the real estate market and buy property. But guess what? The price goes up after we buy. And you know who's in line to buy after us? It's the people who did not get the money from the government directly or indirectly via asset price appreciation or directly via net interest or directly via trillion dollars on defense and all the other shenanigans that the government spends money on. And this is a bipartisan thing. This is nothing to do with publicated Democrat. And so this cantalant effect, the fact that we are us in the capital class, us in the K1 class, we are pushing up prices for the goods and services that we consume with reckless abandon. And by the time somebody on the bottom of the K decides they can finally afford to buy it, by the time they show up, the price has gone up because we pushed the price up. And so they are the only ones in the economy feeling the inflation. So I hope we don't get any more fiscal monetary largest, Eric. We might, because they're addicted to it. And eventually we know where this is all headed. Darius cantalant effect, you've covered in some gory detail. You're on fire this week. Any other effects or drivers that we need to understand. If you go to slide 43, where we show our approximate next 12 month marketable treasury debt supply statistic as a percent of global savings, the statistic itself is on slide 42, where we show what we're essentially showing is the government needs to basically capitalize the treasury market to a tune of about $12 trillion plus dollars over the next 12 months. That's the function of the annualized debt that the debt that's maturing over the next 12 months that needs to be rolled over. That's about 10.4 trillion. The annualized fiscal year today budget deficit is about 2.2 trillion. And then the feds reserve management purchases is attracting about 400 billion from that. So dropping the bucket. And then obviously if you got the rolling over into a higher industry regime is going to cause the treasury to spend about another 120 billion on incremental interest expense, again, 120 billion of money, that's just going to go into the pockets of rich people like us to contribute to the cantalant effect. On slide 43, we show why this kind of lurching in a paradigm A, this debt disease is so insidious, particularly from the perspective of the K-shaped economy, but ultimately from the perspective of asset markets too. Again, that 12.16 trillion, that $12.2 trillion sum on slide 42 in the chart on the left on slide 42, that's about 39% almost 40% of global savings. That 40% compares to a long run mean since the early 80s of 23%. So the key takeaway is that the US government needs about twice as much money from capital markets as it used to on a rolling basis. And so the treasury being at the top of the world's capital structure is going to get its money. Now, I might have to get its money at a higher yield fine. So what, but it's going to get capitalized. The dealers will take it down the print money to do it. And so ultimately that spread between the 23 and the 39 on the chart on the left and this on slide 43, that spread is trillions of dollars that is not going to the housing market. It's trillions of dollars that are not going to non-residential fixed investment, business investment that is not related to AI. It's trillions of dollars that's not going to small business USA. It's trillions of dollars that's not going to the low to median income consumer in the form of consumer debt or anything they may need to start a business or could finance consumption. But if you're here with us in the K1 class on the top of the K, you can pledge any amount of equity and get as much tax deductible loans to finance your consumption or investment as you can take and call up your bank. They'll give you as much money as you want if you're on the K1 class. But the reality is, is we've drained resources from the bottom of the K. And this is why the housing market will not recover. The lock-in effect is not, there is no lock stop calling it a lock-in effect. It's a different regime. So we're not going back to the different regime and to the blue line touches the red line or gets close to the red line in this chart. And the only way the blue line is going to get close to the red line in this chart are one of two things, which are two sides of the same coin. Global savings needs to grow rapidly, which seems very unlikely in the context of a massive AI build out and move to a multiple world, and all the fiscal expenditures on that entails for defense and infrastructure standpoint. That seems unlikely. And then obviously we have just runaway freight train called Trude's Explants Punts plus Medicaid and betters benefits here in the US. Oh, and by the way, we have a party that's addicted to blowing holes in the budget deficit with tax cuts. By the way, if you look at the history of Republican taxes, I think I'm not a Democrat. I'm not a Republican. I'm a data-driven data scientist. And I'm telling the data science view on whether Abba is going to be successful is poor. If you look at the history of Republican tax cuts, one out of five, if you go back since the Reagan one, Reagan two, Bush one, Bush two, and Trump one, you just study the impact on GDP, the impact on the budget deficit, the impact on debt. It's a terrible track worker. Only one in the five actually had a structural uptrend in GDP growth from the time of the tax cut. That was Reagan one. Four out of five had a structural widening of the budget deficit and five out of five had a structural widening of the debt to GDP ratio. And so we know we're going to wind up in a worse place fiscally because of Abba, just like we wind up in a worse place fiscally because of the inflation reduction act and the economic recovery act and the American recovery act and all these acts that they keep doing, Democrats and Republicans, they keep taking turns blowing holes in the budget deficit and they're the reason why the blue line and the chart on the right is where it is. I mean, they're not the only part of the reason that we told you the full global savings is slow tremendously. You know China's not saving to the same degree. There's a lot of dissaving going on right now in the world's sovereign bounce, fiscal balances. And so this is a just an intractable problem, man. And so going back to where we started all this, and before we wrap up, you need superstars running government right now. You can't have people falling asleep in the Oval Office. That's a potchided both the last two presidents, by the way. You can't have, you know, you need people like Scott Besson. You need people like Kevin Worsh. Eventually someday they're going to need people like Darius Dale, in my opinion. 'Cause this is, these are big problems. You go to slide 56 and we'll end on this. Part of the reason the U.S. has to, again, panic is, be decisive with all this policy intervention at increasing quantities and increasing frequencies is because they're trying to keep the wealth pump on. They're trying to keep what Dr. Peter Turchin and his colleagues at the Complexity Science Hub and Vienna have termed the wealth pump. I call it the reverse Robinhood Effect. I think that's better marketing. They're trying to keep the wealth pump on. Heaven forbid the S&P 500 goes down 10% in a seasonally weak period of time, Scott. Heaven forbid. Heaven forbid we go back to where Bonyos have been in this country for most of the time. Heaven forbid that they're so sensitive to not constantly making large sums of money that put the ruling class, the elites in this society. They can't even stomach not having bubble-like conditions in asset markets. Like just markets going up at a normal pace is frightening to them, right? Like that's the signal that I'm getting from the lurching in a dovish and financing policy just in the second half of this year from the Q3 QRA. The following that up two weeks late. I mean, we're like a percent off of all time high in the S&P 500 and they're panicking with more dovish policy. We know they're going to be, the Fed's going to be ridiculously dovish if we're right on the task forces next year, which call for Wall Street. You guys need to wake up and start doing some analysis. I haven't heard enough from Wall Street on this yet. Everybody's waiting on the task forces. A gold and Bitcoin will beat you to the task forces. Stocks will beat you to the task force. The bond market started to beat you to the task forces, guys. The bond market wouldn't be selling off if they didn't think the Fed was lacking credibility. This is not a temporary phenomenon. The bond market understands where this all has to go, which is paradigm D, which is where we started and where we're going to end. And I'm telling you right now, if we go to paradigm D because they can't shut off the wealth pump because they are so addicted to the reverse Robinhood effect whereby we take money from the bottom part of the K, if you go to slide 47 real quick. We were by us on the K1 class. We keep siphoning money from the bottom of the K. More and more money comes out of their pocket and into hours in the form of profits, in the form of financial, price of financial asset, price appreciation, and/or checks directly from the sovereign in the form of $2.5 trillion of defense and net interest to rich folks like us. So we can sit around and have joke about it on the all land podcasts like a bunch of A-holes. Again, where this is all headed is on slide 56. These historical track record of societies that share the US's wealth pump slash reverse Robinhood effect dynamics is extremely poor. Again, this is data from 100 societies that they studied the Complexity Science Institute across millennia, multiple millennia. Societies that have our reverse Robinhood wealth pump dynamics, they don't, it doesn't in well. There's 17% of them had systemic violence against elites. Again, we have foreign million guns in this country. We saw what happened, we saw a preview of that on Jan 6th. We have a standing militia now that is only operates to the, to the, the drum of one man. 20% of these societies end in recurrent civil wars lasting for 100 plus years. 40% of these societies wind up with assassination of rulers. 50% of these societies see substantial population decline. 60% of these societies see state collapse via conquest or disintegration into multiple states. 67% of these societies see systemic downward mobility of elites, which I would argue is like the least, the most peaceful path here, that's the, that's the new deal path, that's, you know, if you think about what this one represents, that's the new deal, that's the elites coming together to realize that this system is going to now function if we don't stop this reverse Robinhood effect. But what I fear based on the, the panic policy response, the decisive, aggressive panic, whatever you wanna call it, policy responses that we're seeing out of the White House that we're going to see out of the Fed in increasing quantities, by the way, they cut interest rates by, or the policy rate by 175 basis points with an inflation problem over the last few years. Light bulb, they're doing QE and calling it something different with an inflation problem, light bulb. Again, the Fed and Treasury are telling you with their policy choices, with their policy interventions where this is all headed, which is we have to go to paradigm D because heaven forbid asset prices go down for an extended period of time because that will be so catastrophic to us at the top of the K who don't even know how to deal with economic hardship like our compatriots on the bottom of the K. And so where I think this is headed is the last bar on the right, revolution, civil war, or both 75% of this end of 100 of those societies had featured revolution, civil war, or both. We are two of them, by the way. We had this thing called the American Revolution in the 18th century. I'm not sure if folks have heard of that. We had this thing called the Civil War in the 19th century. I'm not sure if folks heard of that. Do you know what caused both of those wars? They'll tell you freedom. They'll tell you slavery emancipating slaves. And I'll tell you, what caused both of those wars was white men fearing economic malaise, not just having their income confiscated by the crown or not being able to establish a real working livelihood for themselves out west and fearing competition from the slave ruling class. When white men feel like they can't put food on their table and take care of their family in this country, they go to war and they have every right to go to war based on this reverse, rob this perverse, perverse, reverse rob a hood effect that I think everybody should go back and study slide 47 and think about what that ultimately means long term for. So I've gone on long enough. I know this is quite the conversation Eric, not our typical GDP is going to do this. Inflation is going to do that conversation, but this moment is bigger than that. This moment is bigger than that, Darius. I'm going to leave it to our listeners to decide whether or not you just announced publicly your intentions to run for office. Sounds like you did. We got to tell us next time how it's going, but in meanwhile, for those listeners who are more interested in your work at 42 macro, tell us a little bit more about what you do there, what services are on offer and how people can find out more about it. Yeah, no, again, thank you, Eric. I guess, you know, I got to put my, you know, if you need a campaign manager, let me know. No, I will chat, I will, I will chat. No, but again, I have put aspirations, but not for a couple decades. I have young kids. I don't want to put them through that process. But ultimately, I think we just need more people who are being equipped with the data and the analysis. You know, we so many people just turn on Fox News or turn on CNN or turn on MSNBC or turn on Newsmax, turn on Tucker Carlson, turn on whatever the, you know, liberal version, Ezra Klein, they just get their news pipe to them from people who aren't doing analysis, who aren't seeing where the puck is going from a macro risk management standpoint, from an economic standpoint, from a policy intervention standpoint. You know, that's my job as a fundamental research analyst. And, you know, we have some very important clients across the global buy side who rely on this kind of information to make changes in their portfolio. But the clients at 42 macro, our members at 42 macro, they don't, they don't, they don't, nothing in diswirling around Dariousdale's brain about for turning or policy intervention or where's growth, where's inflation, where's the quittity, who even talked about the quittity today, we can do that next time. Those thoughts don't impact my portfolio. They generally don't impact our retail members portfolios because by and large, some of them are, most of them are either managing their portfolios with KISS. That's our stock goal, big coins, you know, quantitative investment strategy. You know, that tries to manage risk and create a, it does create a positive, skewed return distribution allows wealth to compound faster over time. That's like four. Now, you can see the KISS back test there. And then our social clients and our sophisticated retail investor clients who don't want to be in the standard version of KISS, they want to take a little bit more risk or maybe a little bit less risk. We use Dr. Mo, which we show our back test for Dr. Mo on slides five through 10, you know, slide, you know, slides five through 10. So I want everyone to feel very calm, peaceful, and de-stressed. Listen to me talk. I know I'm talking about some very big, scary things, but you don't have to rely on me, Dariousdale. You don't have to rely on any of our, of these talking heads. And I have a lot of respect for, you know, guys like Lou Grohm and guys like Bob Elliott, guys like Jim Bianco, guys like Lynn Aud and folks you featuring your program Eric, but you don't have to rely on any of us to help you guide your portfolio through all these risks. I'll tell you right now, none of us is good enough to trade successfully through or for turning. You know, there's too many drawdowns. There's too much volatility. There's, you know, you're going to need institutional grade risk management overlays. And so that's what KISS is for retail investors on slide four. That's what Dr. Mo is for sophisticated retail investors and his social investors on slides five through 10. So check those back tests out. If you want to learn more about 42 macro go to 42 macro.com. We would love to have you join our global investor community where we're talking about all this kind of stuff, talking about markets, talking about where the future of the economy is, talking about, you know, trying to solve problems. You know, it's a great community. I'm that's my probably my most thing I'm most important, most proud of in life. And it doesn't really go things. So thank you Eric. Appreciate it. See you next time. And now it's time for Patrick and Michelle to take over with our macro voices trading desk. Patrick, where's the trade? Thanks Eric. For this week's trade of the week, I want to focus on Darius's thesis that fiscal dominance and financial repression are here and scarce assets benefit from it. And Bitcoin sits directly inside that framework. So I wanted to focus on IBIT, which is the eye shares Bitcoin ETF. And it's a clean vehicle for getting Bitcoin exposure, which is currently trading around $39 at the time of this recording. Now you could simply buy the shares, but I wanted to actually focus on a tactical position using options. And in this circumstance, what I wanted to do was look at a deep in the money call option as an alternative to actually owning the stock. To me, it's a much more capital efficient way than a Delta 1 stock. We have a defined risk premium and positive convexity. So I was focusing on that January 15th, 2027 expiration out to the start of next year. And I was looking at buying the $32 call option. Now again, the stock is trading around $39. So we're talking about $7 of intrinsic value, the options trading at $8.75, which means that we're paying about $1.75 premium to express this position from a time value perspective. I like to think of this as a high Delta stock replacement. It's a much smaller capital outlay, only $8.75 versus paying $39 per share. Now if the IBIT rallies, the option moves deeper in the money, the Delta rises toward one. And increasingly, it behaves like the underlying stock. Now if IBIT falls, the Delta compresses losses slow relative to owning the shares. And the max risk is the premium paid. So that $1.75 is the cost of defined risk, lower capital commitment and downside convexity. So if you agree with Darius's bullish Bitcoin exposure, this high Delta participation with less capital is a great way of putting on the trade. And that's where's the trade. Patrick analyzes and trades the markets every day over at Big Picture Trading. MetroVoices listeners can sign up for a free two week trial at bigpicturetrading.com. Now back to Patrick and Missile. I love the synthetic on that trade pad down. Before we jump into inquiries, we have to talk bonds because this is where all the hype has been the last few days. Now big funds positioning, and we've been talking about this the last few weeks here on the podcast, whether you look at the 10 year or the 30 year bonds, we're at the bottom desial on the multi year look back for its positioning. So that just means that most big funds you were positioned bearishly and it was at an extreme. Now just yesterday, the US Treasury decided to double their debt buying program, which of course has caused rising bond prices. Now because of all this, all the big money who was heavily leaning short would be forced to buy back their positions, which can strengthen the rebound further. I know we always say that we shouldn't fight the Fed, but does that also mean we shouldn't fight the Treasury Secretary? What do you think, Pat? So when this all happened on Wednesday, the first thing that came to mind is the words from Jim Bianca, one of our favorite guests on the show, is that bond traders can stop panicking when the Fed starts panicking. And while the Treasury Department is not the Fed, the interesting part is can we just now paraphrase that as the bond traders can stop panicking when percent starts panicking. And this is the interesting part. You know, some people are saying this is yield curve control or quantity of easing. It's not because this is not coming from the Fed. We just had the FOMC meeting minutes. The Fed is still concerned about inflation. Three of the members were voting for a rate hike. And so the Fed is actually staying the course. Now we know that Bessent and Worsh have breakfast every single week. This conversation was clearly had between them. And they chose that this is probably the best course of action for the Treasury to make this move. So what we're seeing is a form of an operation twist by them simply buying longer dated bonds back and issuing short term bonds in their place in order to manage the excess supply of those bonds up at the top end. Now this certainly was a message to the markets. This is not about the size in my opinion. This is all about the fact that we now know that Bessent and Worsh are concerned about the yields at these levels and are clearly attempting to intervene in some way. The interesting part is the response of the market. Clearly, we saw a substantial reversal in bonds, but it also impacted a whole array of asset classes. We're going to be talking about them here, like the dollar and gold and so on, which are all responding considerably to that. So what we know now is bonds reversed off of yields that were near around 530 on the 30-year Treasury yield. And now we're going to find out whether or not that becomes the ceiling on yields and whether or not this intervention is in fact successful at stabilizing these markets. Now listeners, this is one of those charts that is worth seeing for yourself. So if you want to look at the data along with us, just go to cotsignal.com and you'll see how unusual this positioning is. So look at the top right corner of the net positioning over open interest and you'll see that this is the lowest positioning score we've seen in the last five years. But the weird thing is that on the price chart, the Nasdaq is still trending up. So we're seeing that the Nasdaq is climbing, but the big money, the CTA, the trend following funds are putting on their seat belts. So it seems to me like the big money does not fully trust this rally. How are you sizing up this market and the positioning in here? Well, look, we had a burst on the S&P 500 higher throughout the month of August and we're now just seeing the S&P taking a breather. It is very typical for there to be even up to a 50% retrace. We are far from seeing significant technical damage on this S&P 500. In fact, what were previous highs can act as support and retracement lines and moving averages all lie about 7,600. So there is even room for another 50 points on the downside here and still be in line with what would be a generally bullish trend. And so we'll buy on dip traders, buy the dip and maintain this upper trend is something that we're going to continue to watch. But the positioning that you're talking about on the NASDAQ is super interesting. I often try to speculate as to why that positioning is that way. To me, we're seeing that the big divergence is in the tech space. In the second quarter of the year, we saw one of the most extraordinary AI bubble burst higher. The Cospi was ripping on the upside, the semiconductors almost doubled in that second quarter of the year. But since then, that entire sector has been lagging. We saw a substantial crash in the the cost. be the semiconductors at a 25% correction, and they failed to participate on the upside during this entire move. It is very likely that a lot of this short contract positioning are hedges as they're trying to rebalance their portfolios and reduce generally portfolio volatility based upon their exposures. So the big story then to me is really about NVIDIA's earnings next week. At this stage, the semiconductors as laggards are going to now hinge on what NVIDIA has to say. Now on balance of probabilities, they're probably going to beat and have solid guidance, but it's going to be the way traders respond to NVIDIA's earnings that will be the big tell. And if it's will NVIDIA spark a match under the semiconductor space and have them act as a bullish tailwind for these markets, or will NVIDIA act as a wet blanket and keep the semiconductor basket under pressure. If that's the case, it's going to be very hard for the markets to generally push to higher highs. We need to see that leadership, and where although hyper scalers and big market cap weightings are doing most of the lifting in these markets, and that would have to persist. And so to me, all eyes are going to be on that earnings to see whether or not this lagging semiconductor index can catch up. Overall, when just talking technical levels to me, pull back again to 7600 on the S&P, it's par for the course, the real technical damage and where all the problems become as if something triggered an S&P sell off down to 75 or 7400, we would then have serious technical damage. And more importantly, a lot of the quantitative and trend following funds are going to start getting systematic sell triggers, and that could create a negative flow. Right now, I don't see that as an immediate risk. I'm going to give the bulls the benefit of the debt that they're going to buy the dips here. Let's see how things settle in, and especially how things are after that earnings announcement. All right, let's turn on the dollar here because we've seen some big moves in the last couple weeks. But let's actually take a step back because over the last six months, we saw large speculators, big money crowded into the dollar theme, and we're still seeing that on a one year look back as we sit at the top desial of positioning, which meant that across major, across currencies, they were broadly under owned. Then again, the US came out and proved that they'll be intervening in the markets, not once, twice, with the end just a couple weeks ago, and now with bonds just yesterday. Now, the big money surely doesn't want to fight the US government, so they may need to unwind their long position, and you're starting to see that across the board. Now, if that's just the beginning of this trend, then there's a lot of room for further moves against the dollar. But what do you think? Is this just a short term reaction or longer term trend in a potential reversal in the dollar and its cost currencies? Well, going into even last week, there was a pullback in the dollar over the last month, but we were holding key support lines, key trend lines, key moving averages that were all still giving the bulls the benefit doubt that this could have just been a pullback, a retracement, and even the dollar could have rallied from there. But we just had an event trigger, and Bessent and this entire attempt to manage the interest rate yields on the long bond, have triggered US dollars selling, and the selling has now blown through key support lines, and done some genuine technical damage. To me, this has neutralized the prior bull market. Now, does that make me an outright bear on the dollar? Probably not. But with that bullish upside neutralized, the question now is, are we going back into the trade range of 2025 and the first half of 2026, where we're bouncing around between 96 and 100 on the Dixie. This is entirely plausible, but the currency I really want to watch is this US dollar yen. The first intervention by Bessent was not in the bond markets, but in the Japanese yen. With a substantial reversal, will we see a resumption in US dollar weakness and yen strength marking a meaningful new trend move? This is certainly the thing to watch, because if the US dollar is rallying, that's going to alleviate pressure on all sorts of different markets and continue to drive a new intermarket cycle. Whether we see a weakening or strengthening dollar, it'll definitely affect gold, and gold is an interesting one, because large holders really never abandon this trade, and that's been the story really for the past couple of years almost. Even during the recent 25% decline in gold prices that we saw in the first half of this year, we can see that large speculator positioning remains at 54% of total gold futures open interest. I'm looking at that net position over open interest chart, and that's been at the upper end of the chart really for the last five years. We've only seen happen this twice before at the beginning of 2025 and at the beginning of 2020. Now, we know that that shows real conviction, but if we're going to see another major like building, we'll need fresh marginal buyers in this market. So, really, the key thing to know is that gold fell sharply, but the large ones never gave up their positions. What does it all mean to the price back? I feel really what the most important thing first to do is to really reflect on what's happened over the last few years. We went through an extraordinary two-year bull market in gold that ended in the early part of 2026 with a blow-off peak. We've been in a six-month correction that was given back 25% of the gains off of gold's highs, and we've seen a legitimate attempt to bull break out out of this six-month correction. There are a lot of bullish signs here, and the fact that the US dollar is broken down and the fact that there's interest rate intervention are all things that are bullish tailwinds, something that gold simply did not have for the first half of the year. So, to me, it's very healthy. What we're going to continue to watch is whether or not gold continues to be bought on dip and whether this trend can actually continue to follow through, but I'm giving the bulls the benefit out here that this is the real deal. I'm going to be looking at any retracement of $150 on any short-term tactical volatility. I'm going to be using to buy dipson and seeing whether or not we can have legitimate progress back to those April highs near 4,800 over the next few months. So, moving on, we got a touch on crude oil, and at the time we're recording this up $3 today, almost at $88 a barrel. We continue to see the last few weeks substantial strength as the geopolitical circumstances continue to deteriorate as the probability now that the trade or her moves is going to be open anytime soon has massively diminished. Now, obviously, the administration is concerned about oil prices and wants to see stable oil going into the elections, but we clearly have a global marketplace that is incredibly tight. So, the question here is, what is really the fair value of oil? What's interesting is that June crashed down in oil was very much washing out long positioning in the crude oil markets, but now we're clearly seeing a scenario where oil is strengthening, and many traders have not or given up on positioning on the long side here. Now, that in itself is not a reason to be bullish, but overall, I think the backdrop on balance of probabilities is that oil can stay at these elevated levels and even have a chance to take a shot up into the mid-90s. So, we'll be watching what kind of bullish follow-through can happen here in the week to come. Now, oil is an interesting one because it's definitely recovered, but the speculative crowd did not follow. Right now, when you look at the WTI's three-year positioning score, we're sitting at the 19th percentile. That means large funds, CTA's, trend following strategies, are currently holding less bullish exposure than they have been during roughly four-fifths of the last few years. Yet, we saw crude recover from the June wash out and returned to now $90, $100 or we're close to it, but the price recovery has happened without large funds progressively chasing it. It does support a possible range bound story, but it also means there's so many on the sideline if oil continues to break higher. Now, moving on, I wanted to touch on uranium. Overall, we've seen a substantial pivot in flows in the entire mining space, whether it's industrial metals or precious metals. Everything has got bid and we now have the URA and uranium names starting to participate. What was particularly interesting is over the last couple of days, we had a quick little dip in uranium and it was quickly bought. Overall, these markets are generally showing signs of new accumulation. We're very interesting to see that after a very challenging three-month correction in the uranium space, whether or not we've turned the corner and are starting the new bull trend. Let's move on to the positioning pulse. When you were looking through all of these commemorative reports, was there anything else that stood out for you? For sure, Patrick. I want to talk about the sugar market here because the next sugar bull market may have started due to the gas tank, getting more expensive around the world, but let me explain. Brazil right now supplies roughly 40% of all sugar-trigger internationally. What happens in Brazil definitely doesn't stay there, because it can change the amount of sugar available in the entire world pretty much. Let's take a step back here, I'm just explaining here on the mechanics of the sugar market, but one copper sugar cane has two competing destinations. With one, we can turn into sugar for all the food that we consume every day, but two, we can also turn into ethanol. an offer fuel and the energy shock changed that decision. So energy higher prices made ethanol more valuable. So Brazilian bills now have a stronger reason to send cane towards fuel instead of sugar. To put this into simple terms, gas prices are directly competing with availability of sugar around the world. And at the same time, India, who is the second largest sugar producer and the biggest consumer in the world, may need to import sugar to protect its own domestic supply. So that really creates a real tension. The world's largest exporter may export less. The second largest producer and biggest consumer may become a net buyer, which means you know the sugar market is getting a double whammy to its supply demand curve. And both of these factors can push towards higher prices. Now looking at the commitment of traders' data, large speculators have only just crossed into the bullish side as net positioning has turned positive for the first time this year. So the big money has changed direction, but they haven't committed heavily to the long side yet. So the recent 20% move we saw in sugar prices these last 30 days was driven largely from smart money unwitting their bearish bets. But if Brazil sends more of the sugar cane towards ethanol production or India becomes a net importer, then the market will be forced to price a much larger supply and demand problem. And that could attract the second wave of buyers to carry sugar prices even higher and higher. It was interesting that you bring up sugar because when you look at that weekly heat map on the soft commodities, it's the one that blatantly stands out in its positioning scores, but it's so interesting. It's been such a huge bear market in sugar, and the fact things are turning, it's certainly one of the markets to watch. All right, that does it for this week's episode. I'm Patrick Suresna. And I'm Misselle Big 9. See you next week. And a reminder, as a macro voices listener, you're entitled to a two week free trial of big picture trading where you can watch Patrick analyze and trade the markets live every single day at bigpicturetrading.com. No credit card is required to sign up and there's nothing to cancel. We'll see you next week. Macro voices is presented for informational and entertainment purposes only. The information presented on macro voices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on macro voices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. 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