The Market Is Rotating Faster Than Policy Can Keep Up | Weekly Roundup

- I'm actually pretty cautious here. I was very aggressive to start the year on some of these themes and it's played out well, but I do think we're still yet to see that the economy really catch gear. So I'm a little nervous, this run at hot is maybe ahead of its skis a bit. - I think what's happening is the consumer was so beaten up. We were talking about the end of last year, like they're gonna have to do something. This K-shaped economy can't last or the social contracts unraveling, and I think the message was clearly got through. - Well, that's a thing too, is to keep it mine is when we stimulate mainstream, mainstream doesn't own financial assets. So, you know, you can stimulate the financial markets, you can stimulate real household consumption and mainstream and those are two different things. So it's almost like careful what you wish for. - This episode is brought to you by Grace Kill. Your trusted gateway to more than 30 different crypto investment products. You'll hear more about them later in the episode. Nothing said on four guidance is a recommendation to buy or sell any investments for products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice, or necessarily the views of block works. Our hosts, guests, and the block works team, may hold positions in the company's funds or projects discussed. (upbeat music) - Welcome back to another Forward Guidance Roundup Edition with your host, Quinn Thompson and Tyler Neville. - You sound like an AM radio host. - This is for radio. - Hey, it's me Felix. Welcome to Forward Guidance, another episode. Canadian, this is me. (laughing) - We are back without our preferred slideshare and host as they are on a block works offsite doing, talking business. So Tyler and I are taking over for the week. How's your week going, man? - Ah, not bad so far. It's a little colder here in Austin. It's like woke up was like 35 degrees outside. But it gets warm midday. It's like 70, so I can't really complain. - January's great though, 'cause you get this start to the year and then like three weeks in, it's a surprise Monday holiday to kind of like ease us back. - Oh yeah. - You got any big weekend plans? - Um, you know what, I don't think so. Yeah, we're just kind of late to low. We went to the beach for a new year. So traveling with three children is something else. - Yeah, yeah, and they got school. Well, we got a full slate, I think of things to talk about. We want to talk about bed every week. There's something about the fed to talk about. Pretty, a lot of action in the markets, Bitcoin woke up. We got crazy shit happening in Asia with Japan, Korea stock exchanges, a bunch of different rotation stocks, stocks bonds, commodities, metals. So it feels good time to be talking about the series of macro right now. I have to say that. Like there's crazy stuff going on. The world is changing so fast. We got metals in a crazy bull market. We got a Japan basically fiscal foot on the gas. All things are firing, which makes me a little concerned in the short term, but let's get into it. I think we were just chatting a little bit before, but I think both of our heads are starting to scratch about near-term caution. I know you had some slides on that and maybe we could walk through and then add where I can. - Yeah, why don't we start with 42? So this is just sentiment surveys. Just something to keep in the back of your mind. Bullish sentiment rose to the highest since November of 2024 while bearish and neutral sentiment fell. So obviously, everyone is seeing this. If you go to slide 43, this is a Goldman client poll which shows bullishness at levels seen only three other times in the past decade, which is also kind of concerning. In two of those instances, markets experience a correction within three months. It's hard to call these perfectly, but there's definitely some euphoria. A lot of great news has come through and it really feels impenetrable. We've had credit spreads basically collapse in financing costs have gotten really nice. And then here's another one from Goldman if you could go to slide 51. Their risk appetite indicator has accelerated to the 96%ile reading historically, the highest level since early 2025. At these level, small pullbacks tend to be more frequent and outside equity returns are rare. So you also have systematic investors when the VIX is low, they re-lever, they've gotten fully invested. So there's a lot of things that can go wrong here, especially in a buyback blackout period that just be aware that even a hint of bad news can cause an asymmetric leg down. And the interesting part is that certain sectors are not experiencing that. This is more from like an index S&P QQQ level, which is really fascinating. And I think we're seeing a lot of rotations in the market. - Yeah, and why that matters is because, you know, at these record all-time high concentration levels of Mag 7 big tech in the S&P, then you start getting these effects that are market-wide versus like you said, there's beneath the surface, sectors popping off left and right. And one of those, you know, it's evident in the correlations, one in three-month correlations of the indices, the stocks that comprise them are at like sort of record low levels, which also is a sign that it's sort of, you know, the money already flowed to the big names, and now it's kind of flowing out to the further out the curve and has in the past preceded pullbacks. I think one of the things I've been thinking about is how oddly similar but different the setup is, you know, just to one year ago in January. And what I mean by that is you have Mag 7 concentration back to the highs that it feels like deja vu because early 2025 I was pounding the drum from December 24 to early 2025 I was saying, this is a problem for the market. These names are kind of fully loaded, and you have headwinds. And so if those fail, the markets kind of not going to go up anymore, and that played out, and it's sort of happening again where we've been saying for a while that there's problems with how Mag 7 are trading and it's continued to lag while everything else is ripped. The difference is at the time last year, small caps and sort of real world economy stuff were still in the gutter. You also had, you didn't have breadth making new highs, you didn't have this broadening out, this main street recognition. And so a big tell last year was small caps fumbling since their peak in November through December through January and then kind of rolling over with the rest of the market. Here you have small caps and all these cyclical sectors breaking out while big tech is lagging. And so I think, you know, what that tells me is a bit of a changing of the guard and it's amusing how quickly the run it hot broadening out thesis is caught and these moves have been quite strong to start the year. So I look at it like, all right, you have the Russell up like eight days in a row or something like that. It's kind of vertical on a daily chart. And you have the big tech names petering out. And so where's the next leg up come from? 'Cause there's probably not much juice up in the Russell from here. It's super short term and it doesn't look like big tech wants to do anything. And so the next step might be down together. - You know what's interesting is like you said about last year is large cap tech, we thought was kind of topping out last year. And the big difference is they weren't doing crazy cap expand as crazy as it is now. And I think the financing costs of all that is probably going to hurt cash flow a little bit. And people are probably seeing the relative growth here. And if you look out as far as the eye can see is probably you need better in other sectors. So one of the that was dead all of last year was consumer and we've seen the XRT kind of rally here. I think what's happening is the consumer was so beaten up. We were talking about the end of last year like they're gonna have to do something this K shaped economy can't last or the social contracts unraveling. And I think the message was clearly got through. And so the liquidity is kind of pumping a little bit more for different sectors of the economy now. And two great charts to show you on that one. This is chart 52. This is the city stimulus basket which basically is a collection of names leveraged to low and middle and consumers in the consumer discretionary spend. You can say it's just up into the right. It looks like it's breaking out. And then if you go one further, this is from John Krensky at PTIG. But we got to break out in the restaurant index, which is obviously like you choose to leverage to the lower and middle income consumer. So those are two to put on your radar of like you know these things are rotational. If it was a really a credit crisis in the large cap tech, I think you would see credit spreads widened. And maybe we should show credit spreads here, which is kind of interesting. This is a slide 48 from JP Morgan. You can see the high yield credit spreads currently that's the top left corner are at 308 basis points, which is kind of wild. In a recession, you know those had 971 basis points on average in a non recession. It's at 493 basis points. So like, and then look at this post GFC low is 296 basis points. So it's within spitting distance on high yields of complete lows. So a lot of this stuff is rotational. It's not saying the fangs are gonna be out of business. There's not gonna be an implosion, et cetera. This is a rotation. And there could be a little VIX spike as you get a deleverging 'cause it's so concentrated. But I don't think these businesses are going away. It's not like the business models are screwed or anything. - No, I agree. I think it's actually setting up for probably continue to sort of like low-vall environment. We, I mean, like you said, there's gonna be bouts of volatility. I would actually maybe a little long volatility here, but overall from a structural perspective moving forward. Like you said, it's like, this is, I thought a good chart this week. There was a book from Apollo kind of breaking up out Mag 7 and S&P Big Tech. - Yeah. - In the earnings rise in large companies, the green S&P versus Russell is, you know, those jaws, that's like, that's the whole, like Trump winning the midterms basically. Those jaws have to close if they want to do well. And here's the other one. Sales growth and tech versus other S&P sectors. Similar, similar deal. - Yeah. - The sustainability of that outpacing. And so to your point, it's like everybody's been selling Main Street for two years 'cause it's been in a recession and all of a sudden, you know, headline after headline over the last two weeks has sort of been the opposite. And I think what this is is like a, oh shit, we need that, some of that exposure. And you've seen things, I've been cruise liners have done while Jets ETF is done while. Some of these more consumer length, you know, you think when everyone gets 2000 and stimulus, what are they gonna be spending on? - If you're thinking about crypto investing, but don't wanna open a new account or manage keys and wallets, check out Grayscale. Grayscale has been offering trusted crypto investment products for over a decade with 30 plus counting, including single asset funds, like Bitcoin and Ethereum, diversify portfolios and thematic exposure to the broader digital asset space. Many of the products are available directly through your brokerage or IRA, just like a stock or ETF. Investing involves risks, including possible loss of principle. For more information and important disclosures, visit Grayscale.com. As always, investments and blockchain technology involve risk, terms and conditions apply. Do your own research. - And tax breaks, you know what else is kind of just a, I guess, a moment is Trump actually putting the 10% interest rates on credit card issuers. There is definitely a moment to shift moving towards the consumer here. They're catching the message that you have to do something. And the other thing is large cap tech spend, the costs for the data centers are increasing electricity costs. And we got Microsoft essentially say, okay, we're gonna cover that increase costs for the consumer. So you can kind of see all these things collide when you centralize something so much that the large cap tech grows just like own everything and create dystopia. Now it's there, I think they're pound of flesh need to be taken for the good of the system overall system. As my guess is what's kind of going on here. And that's why we're seeing the rotations now. And hopefully in six months, things will be a little bit more balanced. - Yeah, I thought it was interesting how little response there was from anyone regarding those announcements on the data center stuff. Because I had actually, I don't know if I put it out yet, but I had written something about the direction of travel and political wins around AI. And if you go to Bernie Sanders, Sillis with Warren, AOC, go to their Twitter profiles. Top three, five most recent tweets. You're gonna find something about AI and data centers because electricity costs have been the hottest component of CPI for the better part of the last year. And so it is actually affecting people and that's not even close to being through the electrification of the data center pipeline. And so that's something that Trump has to balance between his stimulating and supporting the AI verse versus main street and figuring out a way to get bills down. 'Cause he's been attacking oil prices to some degree of success and a really big thing would be electricity costs. - Yeah, and so you get to a lot of these things where the amount of scale, this is a great chart to show for this is, go to slide 44. This is the performance of all the credit card issuers since Trump imposed that like, you know, he didn't impose anything. He's just kind of talking about it. And you have, the economy is so imbalanced that and it's so centralized that politically, he can just make a comment and have this effect on the marketplace, which is just wild and same with the data center electricity. We're at this point where you're kind of, I know the left talks about Trump being like a dictator, but like Biden would have this power too or whoever is president next is probably gonna have this power because things are so centralized that like, you have to even out the economy or it turns into like fourth turning just tearing, tearing itself apart. So we're at, until the nominal growth or GDP growth actually kicks up. And I think that's why space is really interesting like all the space stocks are ripping is because they need new economies of scale to have GDP growth and have the middle class grow again. And I think they're trying to stew that with a lot of like new frontier, you know, industries. So we need that to come to fruition so that we don't kill ourselves in the system, doesn't break. - Yeah, one more chart on this topic, I think I thought was interesting. This just shows sector positioning between cyclicals and tech and there's normally not this ridiculous of a jaws and dispersion showing, you know, how this big bounce over the last few weeks into cyclicals has come from a very, very low place. And I would say that this is coming without the economy really catching yet in terms of, you know, the run at hot narrative sounds really good, but the labor market data is still sort of meandering week. The wage data is still pretty bad and deteriorating. So you're not seeing like an extreme uptick in growth metrics yet. This was another interesting one I thought was the, from Goldman, their prime book semis and semis equipment percent of total exposure. We had records even above concentrations of the mid 2024 when Nvidia and all the AI sector popped off. So this is also an interesting diverges to me because you're seeing, you know, Meg 7 roll over the hyperscalers. But you're seeing the semis and semis and semis equipment continue to just blow off basically. Despite what I would consider, you know, their biggest customer is Meg 7. So that's not great. And aside from that is the data center bottlenecks. We're sort of getting into these this period of time where the CapEx is coming so hot and heavy that we're getting into the resource, the transformers, the, you know, the coppers is becoming more widely talked about bottlenecks for this buildout. And eventually that has to hit the backlog of how quickly you can order and deploy chips and everything else. - I mean, we saw this. This was interesting. On TSMC today, the earnings were so good. And I think the CFO said, where did I put that chart? Is this slide 50? The CFO said it sees 56% or higher sustainable margins over the long term. And you can kind of get a sense of this. This is pretty impressive for a company of that size to consistently have margins that large. And it just gives you a sense of the size of how big this CapEx buildout is for AI. And to your point, like if you're along this stuff, I don't know how you, you got to ride it until you get a data point that kind of says, it's rolling over. And right now it's not at all. And that's fascinating. And to your point, I think you said last week, you're like, you don't have to ride the ones that are doing the super leverage. You ride the supply and demand bottlenecks. And if you look at certain parts of the energy market, utilities, the chips, that's where the supply and demand bottlenecks are, and you have to open those up with huge amounts of CapEx. And I think that's the easy trade going forward with less downside. - The political angles, it's seeping into everything and people have a difficult time talking about nuance. But I think it's funny because many regards, Trump is, it's the horseshoe effect where a lot of these things, these are announced, particular are closer to the Warren and Sanders AOC camp. And like the banning institutions from the housing market, the credit card cap, and very sort of socialist or at least non-capitalist is taking government stakes in companies which we're seeing across the board, the 25% chip sales tariff to the government. And so it's sort of interesting because the extreme capitalism has led to this where they're basically approving the monopolies in the AI sphere because they've, China, everyone used to scream about China being not conforming to the West. And it's almost as if China has built such a threat, at least has perceived in the West to our industry that now we're actually mimicking them by just moving closer to state supported, 100 centralized stuff. So yeah, it's a weird world. - It's so weird, it's so weird, and you know, there is an argument, I have to say this, on the credit card issue or thing, I mean, it's very polarizing, right? Like on one side, you want free markets and whatever, but what is like, I forget who tweeted, they're like, well, if you take away all the interest at 30%, like then all the high end customers aren't gonna have access to their, you know, airlines and points and credit card lounges. And I was just like, do you know how pompous and ridiculous you sound, right now? - At the point of the policy. - It's like, it's literally just taking from one section of society to the other. I'd rather live in a society that's like, not egregiously fucking over the lowest end with like insane rates. I mean, this is just my personal preference. I feel like, if you're talking 30% to 40%, you're just making people bankrupt. Like that's insane. Like that's something, I guess you could say it's market rates or whatever, but like, take away my points. I'll gladly help someone else out, you know, who needs it, but like, I don't know. I just think when you get to that level of interest rates on credit cards, I think it should be rebranded as financial jail. Like, it's not a credit card. Yeah, it's not a suitable form of financing. No one, there's nothing anybody in the world can do to afford a 28% of cost to capital, let alone. And you have a wage. - How do you grow your way out of that when GDP's at 3%, like your wage is, you know, you don't. You're just, you're making everyone else, you're creating a more, I guess, divisive political environment. And so that's where my head always goes. But at the flip side, I gotta tell this story. It's time for this barber in San Francisco. And like, he couldn't survive 'cause it was San Francisco. And he's like, oh, you know what I do is I just, I just take out a credit card. And then I max it out. And then I just don't pay it. And then I was like, wait, you just don't pay your bills? And he goes, yeah, I don't pay it. And then they call me and they ask for all the money. And then I'm like, I didn't, you know, I can't, I can't pay it back. So I default. And they send me a credit card the next six months. So they just keep doing it. And I was like, this is how our system functions is. You just, you know, like they're both, you know, they're both criminals. And you're just like, true. Playing the game more than anything. And it's, well, in the end game is like, who has the most debt is the government? And this is why, you know, at the end game, I got to mention the Ponzi scheme in why America is, I hope everyone knows like the, have I been proven remotely right at this point where Japan can't stop. They have to take out the fiscal. They have to do the debt. They have to keep the liquidity, liquidity spigots going. It's, it's incredible. All of the things they've come up with and they keep coming up with because the debts are so huge. And I don't know, I think the drawdowns are going to be small here in, in the next year or so until, until you see that, the credit problem. But it's the, it's on the government balance sheet. I think that's the biggest point is that, you know, they're the ones bailing themselves out continuously. And, and then you just get, hopefully you get a boom in innovation and productivity in the meantime. I should bring that chart for next week, but it's the balance sheet leverage across households, corporates and are actually delivered to very, very low levels. But then you have the, the government sovereign balance sheet, which is at record sort of leverage levels. So that, that, that's total crowding out. I think one chart I wanted to show and, and just, is a topic for discussion is, is the forward outlook on rates. And I, I think this is really interesting because, so there's a fed meeting at the end of this month, two weeks, on the 28th. And then you have Skipfab, March April, Skipmay, and then June. And Powell's last meeting is, is, as we know it today, at least, unless a new chair doesn't get confirmed, would be in April and the new chair takes over at the June meeting. So the thing about, to me, about the run at hot narrative, in its obviously taken hold very quickly this year, is everything is ran, is a key component is monetary policy supporting this fiscal boom and access. And, you know, we all believe, I would say, most, it's, it's consensus, let's just say that, that when Trump's guy gets in there, you know, you're going to have pressure on, on them to ease. I mean, Moran wants to cut 150 bips, you know, and we'll see who the chair is. But, but when you look out at the, the horizon, we're actually, the market is not expecting another cut under Powell's tenor. And that opens up to me, what, what I think is still, you know, like I said, kind of weak labor market and potentially still weakening wages are not, adding any inflationary pressure, energies sort of just chopping around. And, and you have housing that's kind of negative for the CPI in the next number of months. So, inflation is unlikely to spike. So, you could get this situation where there's a bit of liquidity pocket, you know, to the point of some of the, you know, position is, is pretty, maybe stretch years. Well, where it's like, oh, shit, we're, we're going to run it hot, but the Fed isn't cooperating for four months. So, what do we do? So, I'm pretty intrigued to watch how this plays out, especially like you said, in a corporate blackout window these last two weeks, you know, you have some pretty big treasury auction. So, it's going to be, yeah, I'm actually pretty cautious here. I was very aggressive to start the year on some of these themes, and it's played out well. But I do think we're still yet to see that the economy really catch gear. So, I'm a little nervous, this run at hot is maybe ahead of its skis a bit. You had a great point about, on Twitter, he said, one of the reasons that Powell didn't ease was because the tariffs were inflationary. And so, if the tariffs go away, does that mean they're deflationary and that you can ease more? And so, we haven't seen that in that chart you're showing is, you know, if the tariffs do go away, what happens? Like, the Fed has caught between a rock and a hard place, because then do you raise rates? Because growth is better, like, or do you? Well, that's what I think it highlights a flaw in their, in them not incorporating everything into their outlook. Because this past year, the fiscal pressures on growth have been so substantial with cutting the deficit growth. It's, the deficit is not shrinking, but the growth of it is. And then the immigration, which is obviously a huge demand crush, and tariffs which have shown to be a demand crush. And so, they, they haven't really talked about that stuff too much, or at least given it as much credit as they have the inflationary scare. And so, now you're in the situation where a lot of these negative growth headwinds are, are subsiding into an election year that everyone expects to be riddled with stimulus and pro-growth measures, while this is a terrible thing. But, to me, I don't know, I'd be curious your thoughts on that if you have any, in particular, about the Supreme Court decision. But, I don't know if anyone really thinks there's a world where Trump, like, they just walk away and say, okay, they struck the tariffs down, we're done here. Like, I think tariffs are going to be in place to some degree, no matter what. He's going to use them as the carrot and the stick approach, no matter what. So, I kind of don't know how big of an event this, this ruling is. I don't expect them to put the U.S. into a disadvantage position of having to raise a bunch of capital repay. It seems just sort of like a nothing burger to me, but maybe it surprises. Yeah, I think if you get them striking it down and you get a near-term blow off top and consumer stocks and, but they'll come out and they'll say, they'll figure some executive back way of doing things, I'm guessing. You can do a lot of things with politics, I'll tell you that one. And we've learned that and I don't like he's just going to roll over. We know this guy is very aggressive in terms of policy. He generally gets what he wants. If you're thinking about buying crypto, but don't want the headache of setting up wallets or new accounts, Grayscale makes it simple. For over 10 years, Grayscale has helped investors gain secure, regulated exposure to crypto without the hassle of self-custody or opening new wallets. With over 30 investment products from Bitcoin and Ethereum to diversified and thematic crypto baskets, Grayscale makes it easy to build a crypto allocation that fits your portfolio. Whether you're using a regular brokerage account or investing through an IRA, many of Grayscale's products are available right where you already invest. Investing involves risk, including possible loss of principle. As always, investments in blockchain technology involve risk, terms and conditions apply. One interesting thing is this, go to side 47, it's like this isn't stopping the CAPX boom. We finally have, speaking of longer-term growth, it feels like there's now, you get better fine-sync costs on the debt side. It feels like there's actual things to start investing in, like data centers and space. There's real economies emerging here and in AI, there's a story around that you can potentially grow new parts of the economy. It's really reassuring to see this take off again. After 2021, we basically just saw the CAPX bust and we're slowly taking off again. That self-reinforcing growth hopefully just keeps going here and it's good for the American frontier. This is really interesting because it's hard to have phenomenal recessions when these numbers are doing this and you actually, you might expect to even see it increase with the, because there's the 100% permanent CAPX expensing in the OBB, which is a huge corporate incentive. I mean, that just goes to show with credit spreads where they are, nominal rates, hovering kind of lower areas. The credit markets are open completely and continue to be so. Which is just mind-blowing to me because in my mind, I'm like, why would I ever buy a bond personally? You have all these different business strategies, insurance and pensions and endowments. All these big institutions, you're almost like taking an L for the next generation in some way. I talk a lot of crap about these institutions, but at the same time, if they can finance our new industries going forward, I guess I'm kind of all for it. Maybe that's just the generational curve we're on is they keep doing the same things and it's finally not working in their favor. If you're Harvard and you've been buying bonds for God knows how long and now you have a negative real return and they just keep doing it, but they're financing some new industries. I'm fine with that. Boomers, boomers too. Maybe this is where the boomers and insurance companies get all screwed. I think it was on here where I was talking about how intertwines with what we were just saying about how corporate and household balance sheets are the most delivered they've been in decades. So the problems at the sovereign, so in a sense, like investing in high-yield credit where you're earning a spread, albeit the spread is relative to historical terms is not great. And I think a big part of that is because supply has been so low, you've had all this capital chasing it. So that's what one thing people might not appreciate is that we could have a boom year, but the supply of credit could overwhelm investor appetite for that credit because I would rather be invested in corporate. I mean, if if fiscal monetary policy is at the place to not allow recessions to occur, then I would much rather be. It means the corporate sector is always backstopped by the government versus versus. So again, it's all the problems show up at the sovereign level before they show up at any corporate private sector level. And so you're- If you keep the bond volume low, what's so interesting is I look at, first thing I would look at bond volatility, I look at FX volatility because those two things, it's just like a flat line. And that's what they're stifling, they're stifling like actual in the fiat currency system is stifling volatility so that you can kind of like Jimmy, the GDP to pay off all the debts. That's really the name of the game is just stifled bond and currency fall. So that things are somewhat copacetic. And I think if anything's going to derail it, it's going to be geopolitical. And I know we're going to get like a freak out at some point and maybe it's this Iran thing. I don't know. But those things are just so hard to predict, but it usually happens when everyone's fully invested. So that's where we got to be a little protective when at this particular point. But speaking of which, I do want to go to like, you know, one thing we have actually kind of nailed is the metals in Bitcoin, I think, is we're now seeing a little pep up in the corn. What's your read there? And at the end of the year, I was like, this is this is the time to take a stab. You had a lot of tax loss selling. You had a lot of weird divergences happening with like OGs, like it could have been a charitable trust thing that a lot of OGs are selling, but they've stopped selling. And now we've gotten this like little pop here. Do we catch up to the metals move or what's your read? I played it a couple of times. Actually, I sold like 94 and then re bought 90 and because I just, I don't think we're, we're in the conditions yet for a full on bull market and crypto again. I think, like if you still look at some of the higher beta stuff, like Robinhood and some of these, they still look pretty leaky. Momentum assets are still aren't, I think you need a fall event or something to sort of stimulate what the next leg of liquidity is going to be. But that said, I don't think it's, it's the laughing stock anymore either. I don't expect some sell off with the same velocity that we saw late last year to happen again. So maybe relative to like mag seven, it's bottomed, but I'm just given, you know, the dollars peaking out here in short term rates are as well, which I'm not particularly bullish on. I do think, you know, the front end still comes down again this year, but, but I don't love, you know, after this, I was long and I did risk the last two days because I think it's really hard for it to persist in a way that defies stocks for too long. That said, I'm not like shorting it or bearish because I do think, you know, there's, there's some positive news with the clarity stuff, which didn't, I don't think is going to get through and it's current form, but so I was bullish for a, for a bounce and now I'm going back to the sidelines to, to watch. You know what I think happened, this is, I mean, no one really has given me a great answer on this. So this is just me macro and into it, but you obviously had the K-shape economy. A lot of OGs were selling for, for God knows what reason could have been tax related, et cetera, but you had a lot of tax loss selling in the end of year. I also think the treasury companies were like the greatest short for the pod shops, you know, these things were issuing equity, they're arming and they had a premium to MNAV. I think all the pod shops got on it. You know, these dinners, you get all these guys that, they have the same idea and they just push it to such an extreme. So they, I think they were long software stocks, short Bitcoin. And then, you know, they obviously had a lot right, I mean, the premiums came down and now what we're seeing is like the treasury companies are kind of parking up here and they're not going down anymore and the volatility has all been reset. Like everyone that had the long, fall treasury company trade on in 2024 is now probably out. All the volatility has been reset. There's no one's issuing convertibles anymore to buy. There's not like a lot of capital markets activity until we get, you know, that false spike. And then you get that reinforcing false spike to the upside. And it's, it really is way more of a, but my point being is I think there was just, it was a massive trade in the fourth quarter to smush the premiums of these treasury companies. You had a lot of weird other incentives going on into your end. And now it's, you know, you get the squeeze in the beginning of the year as these things reversed. Like we saw softly apploven was a mo mo stock that they were all riding to the upside. That things now, you know, got smashed and you saw the corn run and you also saw the corn run and it's correlated to the lowering consumer too, which is kind of fascinating with the tax benefits coming. So there's a lot of interesting kind of dynamics happening here. I'd be really excited if it caught up with the metals because I think the metals trade is just, it's so secular. Like I agree, it's, we did invest in this stuff for 20 years. There's no metals, people on the street, there's hilarious conversations where, and everyone that was, they usually put like a young guy in a sector that's beaten up. It's like, you're the hedge one guy, okay, we're going to move you from software to metals. And I think we're just in the sage where it's like, oh, we need a metals guy. You know, we need to come out of these guys. We got to hire some of those people. And so now all the pensions are like, oh, well, this is outperformed enough where now we have to have an allocation to it. And so you have to, basically, you're moving these giant aircraft carriers slowly into these new sectors. And I don't know, I think it'll probably happen with, with crypto as well eventually. But maybe that's a, a futuristic story, but we'll see. Yeah, like I said, I just, I think it will, there will be a massive money printing event again, but we're not on the doorstep of it, my opinion, yet. I think we, I mean, let's see, when, let's see how the Fed stuff shakes out. There's a lot of bumps, bumps to be had on the short journey to April and the next, you know, next Fed share. So I think that's going to be interesting because the dollar appears to be in sort of at least a near-term bullish trend. Maybe it gets, seem to get smacked down every time it does this. But there will be a point where, you know, if you think of Trump as this elephant sitting on the Fed pressure to cut, like that sort of a ceiling on the dollar and that's, when you get that next big like lower in the dollars, when I think you would see Bitcoin really, take off again, but, but how that comes about and when is still uncertain to me. You really need for, for global investors to repatriate from the carry trade and the US, like all the foreign money here, you really need a really bad data point from the AI world to make it seem like it's not coming. And in fact, we got the opposite. That clawed thing was pretty, pretty cool. And I don't know, it's keeping up, I posted a chart about all the revenues open AI and philanthropics, et cetera, is like, they're actually still going. And I know it's circular in a lot of these things. But until you get the moment where it's like, oh shit, this isn't coming to fruition. I don't think those global foreign investors just, you know, pull their trillions of dollars of capital from US markets. Because where are you going to invest, like, are you going to invest in Chinese AI? Like, it may be, but like, I think we're, if you talk about why America has one historically, it's because it's a little bit more free market. So that's kind of my read of what causes the bust. Yeah, speaking of, well, I think an interesting point on, on all of this and we mentioned earlier was just Japan. So I posted a pull up a chart here, I posted earlier this week, pretty ridiculous in Korea, where the stock market is up the same mountain the last year is basically the last, like, 15, 16 years and it's all that's behind it, right? Well, it's a lot of AI related stuff. And Japan, I don't have a chart here, but Japan's equity market's been on fire. And, you know, there's a number of things going on there with a very stimulative new leader and calling snap elections to try and really cement that agenda. But the yen, and people are talking about it, is back to it's sort of this range high around 160. And you would think that, you know, they already have inflation in Japan. You'd think they would defend this again. The interesting part, I think, is that every time the yen has been, you know, at that week 160 level, you've had the DX way, the dollar index sort of at local highs too. And here, it's just going to show, you know, the DX wise sort of a, it's basically, it's a weird index. It's basically just developed markets. So that's going to be interesting. I guess, I guess all eyes on the BOJ meeting this month, because if they, if they don't do anything this time, they're sort of giving the green light for the end to just implode. And, and that's probably a pretty, pretty risk on thing. Yeah. But if they do something, capital flow strength, thinks that is probably happening and where you get, you know, in a lot of it is, it's a generational change. Like, you had, you need the stock market to go up to reinvest in new businesses instead of just, when you have a bond market bubble, it's really like monopolistic. And you're, you're bailing out old people instead of young people in a lot of senses. It's like playing not to lose. So now that that money is coming out of the Japanese bond market, it's going into more risk-forward things. It's probably what's going to happen here eventually too. And maybe that's what the markets are front running on the equity side of things is just, we figured out, oh, they're going to keep the bond vol and, and FX vol low. So that, we'll just ride the equity market because it makes no sense to own debt. And what is debt? What is debt? I don't know. The dollar's been weak in lost value, but, but it's a different, the, the yen isn't at the league of its own. So when you plot some of these metals and things, it's secular inflation protection assets priced in yen. It's absolutely crazy. Yeah, so that's where a lot of the demand is coming from, right? So you're, you're, I don't, I don't, and the bonds there that has to go, like, why haven't we had a big pullback in metals? It is because everyone, all the old people in Japan have owned bonds for 30 years. That's got to go somewhere eventually. We know the end game is, the end game is the deterioration of the value of the currency. I guess it's something that didn't get so reported. I think that was interesting to me was. Bessent sort of made some noise that he was not too, too fond of, of the perceived dovishness out of, out of Japan policy makers, because the problem that, that you risk if they don't, they don't hike is their bond market starts selling off. They're one of the largest holders of US assets. They, they have to sell, sell US treasuries to defend their currency. You start getting the contagion of higher yields. So I, I do think that's interesting, because on the one hand, you're like, Oh, okay. If they're sorry, I said it's going to be managed, because if it goes too far too soon, the vol controllers have to come in and stamp the ball out. Yeah. And on one hand, you say, well, you know, if they, if they just stayed dovish, their, their currency implodes and everything price anomaly goes, goes up. But if, I guess the bond markets, you know, just doing what it's been doing, but that, that's where you risk like an event like that. But it seems there's enough eyeballs on it for now that it's, it's no, it's not going to provide any crazy surprises, but I'm, I'm, I think it's something to watch, because to me, you know, that, that's, they need to do something. And so the other alternative is global central banks to pivot dovish, and they all just continue debasing together, and that, that would presumably stop the, you know, decline as well. So, we'll see. Yeah. It's the end. This is the macro end game. It's so exciting to watch, but you got to, you got to expect anything going to happen. Yeah. It's, it's a long year till November. And it feels like it feels like there's, there's more agreement than I recall in recent recent years around the path and, and accepted narrative, I would say, around the run-at-hot Trump stimulus and like, sort of, re-excelling growth, which almost makes me nervous in a way. Because Q4, when, when, if you, you know, November, December, like around, when yields were bottoming and, you know, these things hadn't ripped yet, like, it was, it felt comfy to say, like, oh, I think midterm year, I think, you know, small caps, when, you know, we were saying small caps over megs, I think that pair is 15%. You know, metals, you know, cyclicals, energy stocks. And now, yeah, it's just, it's, it's, we need, we need some more data points, and I'm afraid the, the politicians are going to start pushing against a lot of this stuff. And because they, they can't have people making money too easy. Yes. So that's a thing, too, is to keep in mind is when we stimulate Main Street, Main Street doesn't own financial assets. So, you know, you can stimulate the financial markets, you can stimulate real household consumption and Main Street. And those are two different things. So, it's almost like careful what you wish for, cut type of deal because, you know, in 2022, Main Street had one of their best years ever. Yeah. I don't want to get into that. It's a Stimme basket. The city's Stimme baskets. Yeah. We'll have to keep, keep eyes on it. Yeah. Remind me of that. But, dude, what do you, what do you got going, we're in the world as Quintamps of right now. Not much, man. Just moving to a new place in, in Florida in Miami, and so I'll be doing that over long weekend. I used to go down the Biltmore Hotel had this giant pool, and I would go have brunch by the pool on like a Sunday and then go hit golf balls at the driving range. It was like, that was like the most calming thing ever in the winter time. Oh my God. The weather here's, I was explaining to someone that it's like, I'm from the Midwest, and so I was like, this is like the best September day in the Midwest, where it's like 50, 60s. The winters here, just like, beautiful. And we actually got, I'm not a, a U fan, necessarily, a cheer for them, I guess, living there, but big national championship game on Monday. So that'll be a really good environment, yeah. That's right. Yeah. The U. Miami too. When I was down there, they had a rough couple of years, that was 2008, 2009, that's probably changed massively. That's all. Yeah. I mean, they're in the, they're in the ship, so we'll see you. Yep. All right. Let's go. Let's go. You. All right. Good. All right. We'll look back here next week. Sounds good, brother. Take care. Yeah. [BLANK_AUDIO]