Speaker 1Happy Friday out there, Team 42. It's your skipper here, Darius Daldal, to present our Macro Minute for Friday, October 23rd, 2026. Hope everyone's having a great week. So, as always, we'll start with the executive summary from today's lead-off morning note, so let's dive right in. What did we learn today that will likely have the greatest impact on your portfolio? Japan's September CPI data supported the durability and severity of the current risk-off inflation market regime. Our latest Japan growth forecast and the likelihood the Takahichi administration continues to pack the BOJ board with doves suggest investors should fade this signal by anticipating fewer rate hikes than what's currently priced in, which are three rate hikes over the next 12 months. This is bearish for both the Japanese yen and the U.S. Treasury securities Japan's Ministry of Finance must sell to defend it. What key macro data or policy signals supported our active themes or consensus expectations? In Japan, the September CPI data… In Japan, the September CPI data supported the consensus forecast of accelerating inflation. In the U.K., the preliminary October composite PMI data supported the consensus forecast affirming growth. What key macro data or policy signals challenged our active themes or consensus expectations? In the U.S., the preliminary October composite PMI data challenged the consensus forecast affirming growth. In the Eurozone, the preliminary October composite PMI and October consumer confidence survey data challenged the consensus forecast affirming growth. In Japan, the preliminary October composite PMI data… In Japan, the preliminary October composite PMI and October consumer confidence survey data challenged the consensus forecast affirming growth. What other key macro data or policy signals did we analyze in today's Lidl Morning Note? Number two, Jane Street and Hudson River Trading are aggressively competing for AI compute. The AI CapEx bubble is no longer just a tech story. The implication here is that any politically induced slowing of AI infrastructure development in the U.S. will likely cause GDP to underperform sanguine consensus expectations over the medium term. Number three, the open AI valuation cut, which raises the cost of capital via lower multiple, is noteworthy in the context of the AI CapEx bubble requiring ungodly sums of capital to continue financing the infrastructure buildup. Number four, new U.K. government guidance urges households to keep three days of supplies for national emergencies. We, and luminaries such as Ray Dalio in the field of global macro, Neil Howe in the field of demography, and Dr. Peter Turchin in the field of Clio Dynamics, continue to warn about the rising probability of the U.S. descending into Paradigm E, a.k.a. major political realignment and total war. If you do not have a plan for your family and your wealth, please make one. And number four. Global hedge funds posted one of their sharpest and broadest drawdowns since the COVID crash after Thursday's equity sell-off per Goldman Sachs prime brokerage data. Yesterday's carnage across the global buy side represented clear evidence of cross-fund contagion and increased the risk of Q4 2018-style market dynamics. When one dog barks, they all start barking sometimes, so be ready. Anyway, as always, a wrap-up with a question from our community. This was titled, Long-Time Listener to DD and 42 Macro. Just subscribe to full access. It says, hello, glad to join the 42 Macro community. Subscribe to all the research. Thank you. Appreciate you joining us. Welcome to have you. We're happy to have you, and welcome to this wonderful, incredible community of thoughtful, sophisticated, like-minded investors who are all committed to achieving on-time and comfortable retirements for themselves, their families, and their communities. Getting back into the question. I have followed DD and 42 Macro for nearly two years and can tell the models have been solid in helping communities sell and buy before the crowd. That is also true. It says, I have always. I have one major concern, though. It is with Bitcoin. I used to own Bitcoin. However, with all the revelations in the Epstein files and seeing that the scum of the earth had their hands in Bitcoin since the early days, and now that gives me pause and I feel the sales pitch of owning Bitcoin has been diminished. Has anyone else shared this thought? For me, I'm using USFRBT and GLDM signals and KISS when it comes to FBTC, just spreading this risk across the basket of crypto and AI assets instead. Looking forward to reading the comment board on all topics. So, excellent. Excellent question. You know, we say this all the time and we act, we have a lot of materials here and not just materials, but thousands of investors around the world who can also help with this, which is if you don't like the standard version of KISS when it's fully invested at 60% global stocks, the whole entire global equity market, 30% gold and 10% Bitcoin, if that doesn't match your investment preferences or strategic investment objectives or risk tolerance or product availability, you can swap those exposures out, change the relative weights of the exposures to create a customized version of KISS. That is more suitable for your risk tolerance, your strategic investment objectives, your product availability. And so you can use our discretionary risk management overlay signals to guide the incremental exposures that you feature in your customized version of KISS, which again, is more suited to what you're trying to achieve as an investor based on where you are in your investment journey and wealth accumulation or distribution cycle. And so I want everyone to be aware that you don't just have to blindly follow the standard KISS model portfolio. I do. My entire liquid net worth has been blindly following the KISS model portfolio since we introduced it in January of 2023, and I'm a whole lot richer because of that. But that's me. That's my personal experience. If you need a different version of KISS that is more suitable for you, we make it extremely easy by publishing daily all the signals and all the materials you need to do to manage that gross exposure pie chart in terms of how much exposure you have in any given asset and how much exposure to cash you have at any given time. So if you're on the. If you're on the fence about KISS or 42Macro, if you're in our community and you're on the fence about KISS, just know that all the tools are there for you to create the DIY appropriate investment outcomes and results that you crave as an investor. So we'll wrap it up there. Derry is still here presenting our Macro Minute for Friday, October 23rd, 2026. Everyone have a wonderful weekend. We'll catch you back here on Monday.
Speaker 2Cheers. If you enjoyed this content, please remember to like and subscribe. Thank you. This content is for informational purposes only. And does not constitute an offer or a solicitation. Reliance upon the information in this material is at the sole discretion of the viewer or listener. Investing involves risks. Any reference to a company, issuer, or investment strategy is for instructive purposes only and does not constitute investment advice. For full disclosures, visit 42Macro.com/disclaimer.
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