#1543 Darius Dale | Bitcoin & Stocks Will EXPLODE If This Happens

Darius Dale is the founder & CEO of 42Macro. In this conversation we discuss why the economy is more resilient than most think, stock market, gold, bitcoin, DOGE, government spending, tax cuts, and his future outlook.=======================Core is the leading Bitcoin scaling solution, enabling you to lock in yield by locking up your Bitcoin. Simply lock it on the Bitcoin blockchain to secure the Core network, and get rewards. No bridging. No lending. Just holding. Still your keys. Still your coins. Now your yield. Start at https://stake.coredao.org/pomp=======================The future is being built today and the future of currency isn’t dollars, euros, pounds, or yen, it’s crypto. And Gemini thinks that’s a great thing. Because a future where money is decentralized, inclusive, and globally accessible, that’s a future that we are anxious to be a part of. Go where dollars won’t. With Gemini. =======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on guys? Today we've got a great episode with Darius Dale. Darius is the founder of 42 Macro and he is one of the smartest people I know on Wall Street. His quantitative measurements of what's going on always inform me and this conversation's no different. We talk about why the economy is actually more resilient than you may have

• 0:45Anthony Pompliano?

  thought. We talk about whether the stock market is going to hit an all time high in 2025. He explains why he's bullish on gold and Bitcoin. And then we even talk about what the heck is going on with Doge, government spending, and tax cuts. I hope you enjoy my latest conversation with Darius Dale.

• 1:01Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:25Anthony Pompliano?

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• 2:10Anthony Pompliano?

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• 2:51Anthony Pompliano?

  Gemini teamed up with futurists, technologists and designers like award winning artist Matt Griffin, known for his illustrations for Dune, to craft a vision of the future with crypto at its core. The creative theme go where dollars won't emphasizes exploration, growth and the crypto market's limitless potential. Whether it's going on that Martian safari to capture an unforgettable photo of a herd of woolly mammoths grazing the red planet, or using Bitcoin to pay for your lift pass to go strata skiing down the mountain peak of a breathtaking comet. Whatever adventures we'll be living, one thing is for sure. In a future this fantastic, the limits of traditional currency simply cannot keep up. Financial innovation will usher in this new frontier and so go where dollars won't with Gemini.

• 3:34Anthony Pompliano?

  Go check them out at Gemini.com slash go where dollars won't. Again, go check it out at Gemini.com slash go where dollars won't. All right, Darius, you and I were just talking, I said, turn the camera, we gotta, we gotta record this, all right. Stock all time high before the end of 2025, I think yes, you seem maybe cautiously optimistic, like it's not a done deal. You go first, why do you think that the odds are not likely we get a stock all time high before the end of the year?

• 4:04Speaker 02

  Well, I don't know if it's, I'd say we're not likely, so let me be very clear about this. I think ever since April 9th, the bond market broke President Trump on April 9th. And instead of pivoting us to Paradigm B, which would have been multiple quarters of, you know, economic hardship in order to right-size the economy from being overly allocated towards Wall Street and corporate profits back towards Main Street. I think the bond market broke their resolve in terms of trying to get, push us through to this outcome. And so ultimately, where I think the probabilities, at least in the marketplace, have skewed to in recent weeks, is a move towards Paradigm C. And unfortunately for Main Street, Paradigm C is essentially Paradigm A, which is this sort of, you know, really egregiously top-heavy economy that really set up the benefit, folks

• 4:47Speaker 02

  on Wall Street, that on steroids with, you know, trillions of dollars of tax cuts and supply-side sweeteners that ultimately will catalyze new all-time highs. So if we're heading to Paradigm C instead of Paradigm B, not only are we going to get all-time highs, we're going to get a raging bull market.

• 5:05Anthony Pompliano?

  So Paradigm A is where we were. That's how the world used to work. Paradigm B was this whole idea of Main Street, not Wall Street. Paradigm C, which I agree is where we're headed. Actually, in my mind, I look at that as we will still have a more aggressive economic policy around tariffs or, you know, quote-unquote, "the America-first" strategy. It's just not going to be the most aggressive version, which is where they started at. Right? And so the tariffs maybe are 5% to 10%. They're not 30% to 145%. All these different kind of economic policies. And so like, in a weird world, they're going to have taken steps towards their agenda, but also we're going to get the all-time high. And now, I'm only willing to say we're going to get an all-time high by the end of 2025.

• 5:47Anthony Pompliano?

  But I do think that if we get two rate cuts, three trade deals, 2021, baby.

• 5:59Anthony Pompliano?

  I'm just saying, two rate cuts, three trade deals.

• 6:04Anthony Pompliano?

  Your boys better be long.

• 6:06Speaker 02

  Look, man, I, look, I, so I don't, I don't disagree with you. The one thing I would, I would disagree with is if trade policy ultimately turns out to be worse than what markets are currently expecting, that, in my opinion, would be a signal that they are comfortable. You know, accepting the amount of pain required to get us to paradigm B. And ultimately, I don't know that markets are going to do particularly well in that scenario. Given that markets are essentially pricing in essentially a one quarter slowdown that's concentrated at the second quarter of this year. When you look ahead into the second half of this year and even into the first part of 2026, you have a significant acceleration in sales and earnings growth expected still. You have a meaningful pickup in GDP starting in the first half of next year.

• 6:48Speaker 02

  So in my opinion, I think if we, if they've, if they send any signal that they're, that they're okay with the amount of pain required to get us to paradigm B, I think that will cause markets to reverse and ultimately we're probably gonna maybe even reach us the lows. But again, I don't think that's the model outcome anymore because in our opinion, our North Star from a research perspective, and it has been this way since April 9th, is that the bond market broke President Trump.

• 7:12Anthony Pompliano?

  Now, you've got a chart here. The US economy is far more resilient than headline real GDP growth of negative 0.3%. Explain what's happening.

• 7:20Speaker 02

  Yeah, so even before we unpack this chart, the whole collection of charts today that we'll walk through is trying to help investors understand where are we coming from and how the bridge from paradigm A to paradigm C is a lot more linear and a lot less fraught with market volatility. You can go from paradigm A to paradigm C pretty easily and have it, you know, sustainable run throughout this process. Paradigm B was the real jump condition to a different paradigm, in my opinion, and ultimately that risk is lower. So getting back into this chart, you know, this, this, this, you know, the US economy has been rocking and rolling and obviously a lot of it's based on Biden's kind of, you know, overly fiscally stimulated economy, but until they turn that off, it's going to continue.

• 8:03Speaker 02

  And so that's what we show here in this, the bottom panel of this chart. We show real GDP, ex-government and ex exports. So if you take out government and net exports and then sort of recalculate the growth rates on that residual time series, we actually saw growth accelerate to 6.2% in Q1. That's the highest we've seen since the fourth quarter of 2021. And obviously, you know, significantly above trend relative to the pre-COVID trend. So this is an economy that is even into, in Q1 was rocking and rolling from the perspective of, you know, kind of the core fundamental, the core underlying strength of the business cycle.

• 8:37Anthony Pompliano?

  Now, the private sector seems to still be doing very well. The public sector actually saw cuts and there was like this like pull forward from all the tariff worries. Talk a little bit about what you're seeing in the private market here with the second chart.

• 8:49Speaker 02

  Yeah, absolutely. So this is nine consecutive quarters of real final sales, 3% or more real final sales growth at a modest acceleration in Q1. That's pretty noteworthy, right? I mean, it's the economy where I think if you just walked up and asked the average person, are we a 2% economy or 3% economy? I think the average best would probably stay closer to 2%, 2.5%. But this is nine consecutive quarters of 3% or more type growth. So it's indicative of private real final sales growth. So this is indicative of an economy that's doing really well from a private sector standpoint. Now, part of the reason the private sector's been doing really well is because we've had a lot of fiscal monetary largesse in recent years. And so that largesse continues to find its way, and from a velocity

• 9:30Speaker 02

  of money standpoint, into the private sector. And you can see the pullback in the public sector here down at the bottom panel, where we're down 1.6% on a financialized basis. You know, first pullback we've seen in the public sector since 2Q 2022. So that's noteworthy. And if it continues, we're going to start to see a little bit more of a slowdown in growth. But again, if we're going to paradigm see, it's not going to.

• 9:53Anthony Pompliano?

  Consumers at the top part of the K still have plenty of money to spend. Now, K, you know, the shaped K, you got it written right there. At the top, they're rich people. And you're saying they still got cash. Explain.

• 10:03Speaker 02

  Yeah, so households currently have $9.5 trillion on their balance sheets. When you add now made checkable deposits in currency plus money market fund exposure, that $9.5 trillion is up from $3.5 trillion prior to the pandemic. So almost a tripling of the amount of cash that's on the household sector balance sheets. And again, when you're running $2.6 trillion budget deficits, you know, that's what we're annualizing right now. Like, this is, you know, that money winds up on the private sector balance sheet. So, and unfortunately, a lot of that money is going to rich people. You know, you think government spending, naturally, it's easy to think about things like Medicaid, or welfare, or food stamps, or things of that nature. But most of what the government spends on winds up,

• 10:44Speaker 02

  you know, in the form of, it goes to businesses and wealthy business owners, you know, folks like ourselves. So. That money is, you know, continues to be concentrated at the top part of the K. And as a function of that, even amid all of these sort of, you know, the market decline that we saw throughout the month of March, we actually saw real services consumption growth accelerate on both the three or three month annualized and a year of year basis. We accelerated 2.3% through the annualized and it was slightly above trend. We accelerated 2.8% on a year of year basis that numbers meaningfully above trend. So as long as, you know, I guess the key takeaway, which is probably on the next chart, you know, as long as the rich people feel confident that, you know, the government

• 11:26Speaker 02

  machine that keeps pumping out two to two to three trillion dollars a year in the form of budget deficits is going to keep hitting their, keep hitting their top line and ultimately their bottom line, then the economy can remain resilient. And that's what we show here on chart four, where we show the share of nominal GDP for the manufacturing sector and share of non-for payrolls for the manufacturing sector. That's down at 10% and 14% respectively. So what that means is 90% of the economy is the services sector from a GDP perspective and 86% of employment is the services sector from an employment standpoint. So as long as the services sector is doing well, the economy is going to do well irrespective of what's happening in the good sector from tariffs to trade.

• 12:07Anthony Pompliano?

  The macro weather model assesses the probability of regime change over a short to medium term time horizon. What's it telling us right now?

• 12:15Speaker 02

  Yeah, great question then. So I, you know, one of the things we do for our clients, the number one thing we do for our clients in 42 macro is now cast the market regime and then we filter those signals through our KISS portfolio construction process for retail investors and our discretionary risk management overlay for institutional investors to help them kind of stand on the right side of market risk by, you know, giving them specific allocations for their, for their portfolio and what to be long and short at any given time. We use our other tools in our toolkit to essentially help them understand what the full distribution of probable economic and policy outcomes is so that when our systematic signals via KISS and OTMO tell them to do something different in their portfolio, they feel confident enough because they've been hearing me talk about it for long enough

• 12:57Speaker 02

  to just, you know, accept the fact that markets are now pricing this side of the distribution. As opposed to the distribution that we're coming from. And so that's why we refresh models like this one on daily basis is to, again, help paint that distribution of probable outcomes so that they can feel confident enough to make changes in their portfolio when Keston Dr. Mo tells them to make changes. And right now, the macro weather model, when you look at the principal components of macro across growth, inflation, employment, corporate profits, fiscal policy, liquidity, credit, interest rates, and then positioning across the various asset classes. You know, the current momentum across all those different features is essentially aligned in a way that suggests, you know, you should have positive outplums for the stock market, bond market, commodity markets, and Bitcoin over the next three months, and a negative outlook for the dollar.

• 13:42Speaker 02

  And so if that occurred, if this became true, this is really, you know, rosy scenario for stock markets, for risk assets. In our opinion, you started working way backwards from there. Okay, if this came true three months from now, what would have to have happened from a policy signaling standpoint to get us there? And in our opinion, you know, when I first, when we first started a lot of green in this, in this model going back a few weeks ago, my initial assumption was that things are going to get so bad in the bond market that the Fed is going to have to come out and do QE and yield curve control and stop and remove financial stability risk from there. Now that we've moved forward in time and we've gotten more signal from the administration in terms of backtracking away from Paradigm B, to me, what would have to happen if this just becomes true over the next three months is

• 14:27Speaker 02

  a move towards Paradigm C, which, as we talked about earlier, is a lot like what we came from, which was obviously very bullish for markets and very bullish for the economy, but with even more fiscal large assets in the form of tax cuts and some, some change from the side of reshoring manufacturing. It's a, it's basically a lot like what we saw from Biden, but with some supply side economic sweeteners on top of that.

• 14:47Anthony Pompliano?

  Now, the spending is up, the deficit is up, it feels like, um, maybe it's not up as much as it would have been in the past, uh, economy, but it's still up. How do you reckon, you know, kind of, uh, hey, we're going to take our belt, we're going to kind of go after this stuff, but the spending's still up?

• 15:04Speaker 02

  Yeah, well, I'll say the punchline for the last slide, but let's just grind through this data because I think it's really important. You know, I thought I'd talk to this to our client, I think either on Saturday or Fridays, my birthday, but you know, so many people spend so much time thinking about the future when they're forecasting and not nearly enough time understanding what the base rate is so that you can make, you know, moderated adjustments from the base rate with respect to your forecast, which improve your forecast accuracy. So, so anybody, young forecasters out there, write down what I just said because I don't think you're a lot better forecaster. But anyway, getting to the data, I think it's really important just to understand exactly where we are today. And this is fiscal year to date data through March, six months of the fiscal year. It's telling you that we haven't really changed much from the set of a fiscal policy.

• 15:47Speaker 02

  And then, of course, of course, we have a change in terms of policy, they haven't legislated anything. And so if you look at net outlays, we're up 10% on a year-over-year basis. We're up 23% year-over-year basis in terms of the budget deficit. Like, if you look at the budget deficit, some of the, like, some of the scariest stuff I see in from my perspective, especially in the context of what happened on April 9th and April 11th, is the fact that the elements of the budget deficit, the elements of federal expenditures that really are politically protected and/or won't, we can't really do anything about, like net interest, those elements which comprise roughly about 70% of the budget

• 16:25Speaker 02

  across Medicare, Medicaid, Social Security, net interest, and national defense, those five, those five categories account for 70% of total expenditures, right around 5% of total expenditures, and they've been compounding at plus 9% on a trailing three-year basis. It's almost double-digit growth in the things we know are politically protected and won't cut and will continue to grow for a variety of reasons. One, they want to keep taking up defense, they've already, you know, sort of signaled that they want, you know, the initial $150 billion of defense spending. Two, the interest is going to go up another $100 billion just from refinancing from a lower interest rate regime to a higher interest rate regime. And then, number three, we know we have, you know, the demographic situation in our country in terms of the, you know, the share, the rising share of folks over 65.

• 17:08Speaker 02

  We know Social Security and Medicare are going to continue to rise, you know, this sort of... High single digits, low double digits, compound growth in these categories, in my opinion, is a feature, not a bug. It's going to continue. And so what you ultimately need to see the deficit stop growing, not go down, the deficit for the deficit stop growing, the other 30% of federal expenditures has to compound down 20% to offset that. And obviously, we're not even close to on track to to to to to to legislating down 20% for the other 30% of the budget that's not really being protected. And so that leads me with the final slide here, which you may take some offense to, and I'm fine to to to offend, you know, for the for the sake of discussion.

• 17:51Speaker 02

  But I think when you start to look at the lack of progress that Doge is making, and especially in the context of Elon leaving Doge early to go back to Tesla, and that's a smart choice, right? You know, this is your baby, you've got to go fix it. But you're talking about only getting $165 billion of estimated savings through three months, you know, with a seven plus trillion dollar budget, the budget peaked at $7.4 trillion annualized in February. I mean, we're talking about raindrops in the ocean right now. And so I have to be, I think you have to be concerned as a as an investor, and really, as a US citizen, if about Doge, you know, what was the ultimate intent of Doge? Is Doge really here to come cut a trillion dollars of federal expenditures, which, by the way, if they cut a trillion dollars from the all time high in federal expenditures

• 18:36Speaker 02

  back in February, and flow that all the way down the budget statement, without any negative impact on the economy revenues, you'd still wind up with a 6% budget deficit to GDP, right? So like, even if they accomplish their goal, which is $1 trillion, at least as recently as late March, they would still wind up with a 6% budget deficit to GDP. And that's before they legislate five plus trillion dollars of debt finance tax cuts onto the book. And so I got to wonder, like, was this whole Doge process just like Kabuki Theater, just to create a narrative about belt tightening and fiscal retrenchment, but behind the scenes, you know, they're just, they're just doing exactly what the Biden administration did, with the exception of, instead of trillions of dollars of spending that blows up our public sector

• 19:18Speaker 02

  balance sheet, there are trillions of dollars of tax cuts that incrementally blow up our budget, our public sector balance sheet, and we wind up in the same place, which is a deficit that continues to grow unfettered, and ultimately will become a big problem for us as we get deeper and deeper in this fourth turning.

• 19:32Anthony Pompliano?

  I got a couple of thoughts. Uh, one, something I didn't know that I recently learned. I took my little behind down to Washington DC and I interviewed the Deputy Director of the CIA, Second in Command. Yeah, fascinating, fascinating conversation. China, cartels, you know, whole town. I'm in there learning. Uh, Bill Pulte, who is the, uh, I know Bill. Uh, F H F A, I think it is. Um, he's, uh, the director there. He's the chairman of Fanny and Freddie. And while I was down there, I ran into a friend who I don't want to say whose name it is, uh, but my friend is a special government employee. Now, when I hear that term, I don't know what that means. I was told, why are people as the special government employee?

• 20:14Anthony Pompliano?

  You can only stay in that status for like 120 or 130 days. The reason why so many of these people are trying to be special government employees is they don't have to divest of their assets.

• 20:26Anthony Pompliano?

  So if you become a full-time employee, you gotta divest. That's Howard Lutnick, many others. They're, they're selling their assets. They're going into the government. But these special government employees, they don't have to divest and then they can only stay for, call it 120, 130 days and then they gotta go back. So Elon actually is going back because the special government employee timer is up and he's got it. He's got to step back. So I didn't know that. I learned that. I thought that was interesting. Doesn't change anything about what they've done or haven't done or whatever, but I think that that was, uh, an interesting data point. Cause I'd never heard of special government employee until this administration, right? That's one. Two is if you take the 165 billion that they have saved so far in, let's call it four months or so. They actually are on track to cut a trillion over four years, but I think you and I probably look at this and say, hey,

• 21:12Anthony Pompliano?

  you lose steam over time. Like the low hanging fruit goes away and it becomes harder and harder and harder, right? So you can't just like extrapolate out and say, oh, if you do this in four months, like oh, you get four years, whatever. But technically over the four-year time period, like they are on track. I just think that you and I think the percentage is going to degrade over time. And so that begs the question, like, what number would we be happy with? If they ended up cutting 500 billion, would we be like, hey, the goal was a trillion, but they cut 500 billion, like kudos, good job, guys. You know, you get a trophy? Or are we all? All gonna be like, hey, you guys said a trillion into a trillion, you failed. I don't have a good answer, but I do think it's kind of interesting on like, because they put a milestone out there. It really rallied people and it was aspirational and attracted really quality talent.

• 21:55Anthony Pompliano?

  But now I kind of turned into the yardstick and so they're being judged on whether they hit the number that they publicly put out there.

• 22:02Speaker 02

  Yeah, that's a great question, man, because I think it's all incremental, right? We're moving as long as you're cutting, it's better than nothing. But the problem, here's my problem and, and you know, I think it's deeper than just what number do they hit? It's what is our relationship with the rest of the world as it relates to our capital account? And this is why, in our opinion, the bottom market broke President Trump on April 9th, because I think they realized that they were trying to facilitate these very heavy-handed current account outcomes via current account. And they forgot that, hey, every year, the US runs a current account deficit worth 4% of our GDP, which means we consume 4% of our GDP more than we produce. We invest 4% of our GDP more than we save. And a part of that, you know, current account deficit is a function of our gross fiscal largess.

• 22:45Speaker 02

  You know, we have a non-war, non-recession budget deficit of 7%. That's quite frankly, on its way to 8.5% if we legislate the reconciliation process that, uh, program that the congressional Republicans are currently, um, uh, debating and deliberating. And so, you know, by the end of the administration, let's ignore Doge and we'll all layer on Doge towards the end. But if we just have what we currently have, which is Biden's fiscal largess, plus the Republican tax cuts, you're talking about a, like a just a standard, you know, static budget deficit, a structural budget deficit of about 8 to 9% of GDP. So going from 7 to about 8 to 9% of GDP. Then you layer on Doge, let's say Doge got to the full trillion dollars. That would just take you back from 8 to 9 to 7, 7.5, right?

• 23:31Speaker 02

  I don't think they're gonna get to the full trillion dollars. And by the way, if they got to a full trillion dollars over the whole course of four years, that's 28 plus trillion dollars of federal expenditures accumulated, which means you're only cutting $1 trillion out of that throughout the course of your four years. It's a joke. It's a real joke. And so this is why, um, you know, I don't want to be like cynical. I don't, I'm trying not to be cynical about this, but I'm also, you know, well aware that, look, you know, this wouldn't be the first time that the American public has gotten, you know, lied to by people in office. And so, you know, I'll call it out whenever I see it, which is, this whole process could very well have been Kuboki Theater, right? Like, you know, when you're on stage talking about cutting $2 trillion and then you walk that back to $1 trillion and then you leave and it's only $165 billion, it's just not, it's not,

• 24:14Speaker 02

  it doesn't strike me as a very serious process, right? It doesn't, it doesn't feel serious, especially in the context of 70% of the budget, which is $5 trillion, growing, compounding it darn near a double-digit growth rate because of demographic factors and other factors that the budget they can't control. So it's as if they don't even, they're not aware of how big the problem is, and they're just highlighting this to create a narrative outside of DC about fiscal restraint and getting inflation down, because this is what's politically popular to talk about. But at the end of the day, I think you have to just watch the numbers and crunch the numbers like we do. And we are on track to a structural 8% to 9% budget deficit by the end of this administration, irrespective of what Doge accumulates. And I'm hoping, as an American citizen,

• 24:57Speaker 02

  that they get to a trillion, but right now it doesn't look like they're going to get there.

• 25:01Anthony Pompliano?

  Are you bullish or bearish over the next, yeah, through the summer?

• 25:06Speaker 02

  Uh, I, to be honest with you, I don't know. I don't, I don't think I need to have an answer to that right now. Like, you know, we're completely systematic investors. So if our, if our systems take up risk, I have a really credible, you know, framework for thinking of why that is likely to occur in terms of Paradigm C, because Paradigm C is bullish for markets. But I'm also smart enough to know that the administration could easily look at the markets doing well and have it give them a false sense of confidence in order to try to start facilitating outcomes towards Paradigm B again, right? And so this is a lot more, you know, this isn't like forecasting an economic outcome or forecasting Fed policy and, and having it be some static outcome where, you know, you can have a lot of confidence in that as an investor. If you have a tremendous amount of confidence right now as an investor,

• 25:48Speaker 02

  it's because you don't know what you don't know, quite frankly. Not you, but any investor that has a tremendous amount of confidence based on this process doesn't know what they don't know because they don't realize the, the dimensionality associated with, hey, they could easily

• 26:02Speaker 02

  Try to negotiate in a very aggressive manner if markets are up over the coming, you know, if markets are doing well over the next, you know, let's call it two months in this 98 day window, they might try to negotiate heavy handed again. And negotiating heavy handed again is going to cause markets to have a lot more pain because then markets are going to go from expecting paradigm C to expecting paradigm B again. And more importantly, you're introducing a whole host of risk in the bond market. I think it's very important to talk about what the Japanese finance minister said last week. This is Scott Best in some counterpart in Japan. He was asked on Bloomberg, you guys are America's single largest holder, foreign holder of treasuries. He said, they asked him, will you use this as a car, a chip in the negotiating negotiations? He said, well, yeah, it's a chip we can use.

• 26:47Speaker 02

  Whether or not we use it is up to the Trump administration. Right? And so like to me, I'm like, this is what I've been trying to say for years now, which is our twin deficit situation is a problem and it's an extremely big problem and very timely problem if the Trump administration wants to bully the world into an outcome that they don't want. Right? And so that's my fear is that as investors, that as soon as you position for paradigm C or get very convicted on paradigm C, reflexively, the positive reaction of the market could cause these guys to, you know, double down on paradigm B again. So I don't know the answer. I'd be remiss to pretend like I have the answer, but I'll tell you exactly what I'm doing in my portfolio, which is the same thing I've been doing the whole time, which is dispassionately execute our systematic kiss things.

• 27:29Speaker 02

  Kiss, the kiss will get incrementally bullish over the course of the year if what we're right, if we're talking about paradigm C becomes true. However, it will maintain a relatively, you know, a defensive position if paradigm C becomes less true. And one final thing I'll say on kiss is that there's been a real divergence between our signals for the crypto market and our signals for the stock market. And I think you and I might've talked about this last time I was on, but Bitcoin has developed defensive properties in this most recent market cycle in a way that it has not, I've not seen it yet. The beta to the S and P is like one now as opposed to two to three. And it also, you could see it trade a lot better than stocks did. And so my opinion, I think the reason, you know, I feel really confident in, you know,

• 28:09Speaker 02

  having a portfolio exposed to stocks, gold and Bitcoin is going to do really well in a variety of scenarios. And obviously that portfolio will get incrementally bullish if the scenario winds up, if paradigm C becomes the highest probability outcome in the minds of other market participants.

• 28:25Anthony Pompliano?

  Where can we send people to find out more about 42 Macro?

• 28:28Speaker 02

  I know that was a lot, but I appreciate you, man.

• 28:30Anthony Pompliano?

  Listen, they gotta go get the signals.

• 28:31Speaker 02

  Yeah, well, no, it's the, it's the, you and I could sit here and talk for 10 hours about, you know, all the different, you know, shapes of the economic and policy distribution. But at the end of the day, what I'm doing in my portfolio is KISS. Because ultimately, KISS knows more than me and KISS will, more importantly, KISS will get to the right answer. We understand that the market is smarter than us and it's better to use quantitative market signaling to guide your portfolio than stuff about Doge or Paradigm C or B or A. That stuff just helps us understand how those signals may evolve in the future. So that when they do evolve, we feel confident enough to just make the changes in our portfolio. So 42macro.com if you want to check out those signals and get access to them.

• 29:11Anthony Pompliano?

  I learn something every single time we talk, my friend. Today is no different. Thank you very much. We'll do it again in the future.

• 29:16Speaker 02

  Always a pleasure, brother. Thank you so much, man. Have a good one.