Longtime Bull Warns "High" Risk Of Market Correction Soon | Darius Dale

And we still think the risk of a 1998 style correction in markets is is still pretty high over the next one to two quarters.

Welcome to thoughtful money. I'm thoughtful money founder and your host Adam Tagert. And I'm very excited for today's discussion. Uh it's with the great Darius Dale who is now coming on the program with a greater cadence which I think is fantastic both for me personally but also for this whole audience here. Darius, thanks so much for joining us.

Folks, Adam, it's so great to be here. Last time I was on the program, I was complimenting on your cheekbones, man. They look even more radiating, man. You look great, man. You look like awesome weight. And and I'm really proud of you.

Well, you're very kind. And we spent a little bit of time before we turned the um the camera on talking about it. And look, I mean, you're you're an athlete. I mean, geez, you were a college football uh star some people would say.

Yeah. Remind me. Were you offensive line, defense?

Offensive left tackle.

Left tackle. Okay. I mean, you're just a beast. Uh, and I've met you in person. Uh, you're clearly, uh, a great athlete. Um, and, uh, it's really fun to be able to share that side of this. And folks, you know, there is a commonality that I find here in the macro world is that the people who I think are, you know, the sharpest minds on investing in finances tend to also be folks who are very focused on the important things in life to invest in, whether it's your health, whether it's your family, uh, whether it's just living with purpose. Um, and Darius, you embody all of those, my friend. Um, all right. Look, so we got a lot to get into and and you've got your slides. We'll pull those up when it makes sense. Um, if you don't mind, um, there's a lot we can talk about, but I'd like to start on a topic that we talked about last time you were on, where you said that if the Kevin Walsh Fed decides to look through the inflationary impulse from the high oil prices caused by the Iran war, then you thought things were going to get really bullish for the markets. And we did have the Fed meet the other week and um Worsh did beat his chest and kind of deliver his Mario Draghggy I'm going to do whatever it takes speech. Uh but in this case it wasn't around stimulating the economy. It was around doing hiking as high as he's going to need to to tame inflation. But he didn't actually hike. Um and I think a big reason for that was because oil had started coming down. Um but then a few days before the Fed meeting, uh theou between the US and Iran was announced and I think that gave him the ability to say, "Okay, even though I'm talking tough, I don't need to hike right now." Um what what is your interpretation of all that? Are is that to you signaling that the Fed may actually indeed look through uh the inflation here and not end up hiking eventually?

Yeah, excellent question again. Always great to be here, man. Thanks uh thanks for having me. Uh so the first thing I will say is uh I think that Kevin Warsh and his colleagues on the FOMC made the appropriate choice to withhold you know hold off on hiking a couple of weeks ago. And the reason why is because they want to buy themselves time to actually discern how much inflation is being driven by let's say the uh energy supply shock and and the resulting price increase that we saw from that which has obviously reversed materially in recent weeks versus how much of this sort of inflation pressure is being driven by let's call it non energy related dynamics you know more core dynamics that the kind of the core drivers of inflation. Uh we've been making the case since you know a couple of months ago that the economy was we well let me take a step back. We authored our paradigm C theme uh which which is back in April of 2025 when we first run it hot. Exactly. That's the run it hot theme and thank you for for for bringing that up. uh the red hot theme. We introduced that theme back in April of last year uh with the expectation that the combination of monetary easing, procyclical fiscal stimulus, and a nationwide deregulatory push would ultimately create the condition for a nominally hot economy here in 2026 and 2027. So, we're now in 2026, halfway done with the year. Uh and we are living in a nominally hot economy. And so from our perspective, a lot of those drivers from a policy and monetary inflation side of things and also with respect to how tight the labor market is and is is continuing to get, those things are still there. They're true and they have not gone anywhere. So they are contributing to upside in inflation right now from a core and underlying inflation perspective. There's also this sort of orthogonal vector called, you know, energy supply shock that caused, you know, some headline inflation. We're currently annualizing at 8% on headline CPI on a three-month annualized basis. That's going to come back down and and we're going to be off, you know, we're, you know, the markets have appropriately priced that that's going to come back down and have responded uh very favorably to that. From my perspective, that's the peaking inflation trade. You know, the fact that we're still in a risk-on market regime as a function of that dynamic. To me, in answering your question, to me, the next trade, at least something the market's going to have to debate is, you know, where do we settle out from a sticky inflation perspective? Because if the rate of disinflation is not acceptable to the policy makers on the FOMC which are obviously moving in a direction based on the latest dot plot and summary of economic projections. If the rate of disinflation uh is not acceptable to them then we're going to have a totally different conversation in about inflation in tminus you know let's call it 2 to 3 months time uh once we kind of get through uh the disinflation that we're going to see from the energy price uh uh deceleration. And so ultimately from our perspective, we think there is still material risk of the Fed uh tightening monetary policy over the medium-term. Let's call it in the first in the next one to two quarters. Uh and and in our opinion, we don't think the policy rate is the appropriate tool. Uh and obviously, well, we can unpack any of this with charts, but you know, let me just wrap up on this. Uh we think there's still material risk of the Feds uh uh tightening monetary policy over the next one to two quarters. uh we think they more if they do that if they elect to do that then they're more likely to use the balance sheet uh to tighten monetary policy because a lot of the e let's call it excess demand that we're seeing in in the US economy is coming from the K top of the K and we know that there are elements of if you look at consumer durable goods consumption uh a non-residential structures investment or or or residential uh investment fixed investment uh those those sectors of the economy continue to be in recession uh so we know that you know low you know tightening the policy rates probably not going be particularly effective at combating this style of inflation, this current, you know, these these current inflation pressures. So ultimately, they're going to have to find a way to exclusively target, you know, uh, you know, the excess demand at the top of the case. So ultimately, we think what the Fed is going to do is they they may tighten now to regain some credibility on inflation fighting ultimately so they can create the scope to ease policy much more than what's currently priced in later. So that's our that's our current take on it. Uh and if we're going to be wrong on that, where we're most likely to be wrong is the Fed does not tighten now. Uh and they do come out with a pretty dovish bias uh towards the end of this year when they get the results of the five task forces uh and and ultimately we'll be off to the races in that in that scenario.

Okay. Um, let me ask a couple of questions around that then. So you you if I heard you correctly, you think that rather than actually monkey around with the rates as much that they may actually use the balance sheet here. Um, that's the thing that Worsh leading up to all this seemed to say that he wasn't going to use. So, I'm just curious. Do you think he'll he'll kind of U-turn on that?

Well, uh, so I I I think I'll take a slightly different track. You know, we know Kevin Worsh's views on the balance sheet or or that it's way too big.

Right?

So, uh, I think he would take any opportunity uh uh to reduce the balance sheet. Uh, uh, you know, I think if the if the committee's on board with ending reserve management purchases.

Oh, I'm sorry. Wait a minute. I'm looking at this the wrong way. Yeah, of course. Tightening the balance sheet would be a total Kevin Wars thing to do. I'm sorry. I was thinking of it in reverse. So, no, you're right. You You were actually very polite and disagreeing with me. I would have said, "Adam, you idiot."

No, no worries. It's all good.

Yeah. So, no, no, that that makes total sense. Okay, great. Um, yeah, actually, I think that that's that makes a lot of sense to me because Wars can definitely do that and still look extremely consistent and yet not have to necessarily um hike rates. Although if I heard you right, sounds like you think they they they might still as part of that tightening process just so they can loosen things up, you know, eventually down the road.

Yeah. Well, this is all this is a game, you know, I've been I've been calling it in our research reports in recent weeks, you know, the Fed's got a play action pass to set up the run, right? If you think about a football game, you know, particularly.

A great analogy.

Yeah, exactly. You try to go into an NFL football game, you know, and and just try to run straight, you know, you're probably going to get stuffed more often than not, right? you know, it's hard to move big angry 350lb men out of the way when they in places they don't want to go. And so I think about like the the linebackers and the safeties uh uh uh you know, in this in this scenario representing this inflation pressure. We have to back off this inflation pressure to allow the AI capex bubble to continue in a way that doesn't, you know, cause significant problems in the uh in the economy and asset markets from a from an inflation standpoint. So, they ultimately have to, you know, back the linebackers and the safeties off from the perspective of play action passing. But ultimately, from our perspective, we think the the task forces that they outlined uh um you know, uh at the June 17th FOMC, we think those task forces on a net basis are going to result in much more doubbish policy than is currently priced in. So from our perspective, we don't think it's appropriate for the Fed to just kind of start the game, if you will, going back to this analogy of just like running down the middle, running down the middle with easy monetary policy and then they're going to run keep running down the middle all game. Eventually that's going to result in a situation much like what we saw in 2021 and 2022. We think it makes a lot more sense from a sequencing perspective for them to play action pass, i.e. tight monetary policy or or threaten uh uh tight monetary policy and threaten a tight monetary policy some more to give them scope to tell us what we think they're going to tell us at the end of the year which is the net result of these five task forces are are are doubbish.

Okay and can I make another analogy um so my my brother who's a doctor um one of his first jobs out of school he was a teacher um and uh you know teacher at a middle school or high school or whatever and my brother's a pretty nice guy and and I think he knows that and so he didn't want to be seen as a pushover from day one. So what he always made sure to do in his first week of classes was to get one of those, you know, yard sticks the teachers use and and find some reason to get angry and break it. And so the kids would just be like, "Oh my gosh, we can't like mess around with this guy."

Uh but of course he'd be a nice guy the rest of the year. Uh but kids were always they remember that, right? And and this might be just Kevin Worsh again just trying to maintain some credibility as as a hawk here, like I'm not going to get pushed around. I'm going to start being as hawkish as I can given this the circumstances, but then that might actually let me be much more dovish down the road.

100%. That is the best analogy I can possibly think of. That's even better than play action.

I don't know. I thought your football set up a.

Well, don't forget half of our clients are in Europe or rest of the Europe and Asia. So, I don't think they understand what I'm saying this. When I say football to them, they're thinking World Cup. Uh and so, uh that's neither or there. But that is a great that's an excellent analogy. is exactly what I'm saying is that you know the Federal Reserve will have a serious inflation problem in 2027 if they go from today to tomorrow which is where we think they're going tomorrow which is more easy and so we ultimately think that the the the again I think it's I think you have to have a differentiated view on what the outcome the net outcome is on the task forces to create the to get the policy sequencing and ultimately the market sequencing right.

In our opinion uh and I think we do have a differentiated view if only because we haven't seen many views um you know percolate across Global Wall Street. I don't know if folks are summertime siesta or not, but you know we have you know we we you know we take you know we take risks in terms of trying to help keep our clients on the right side of market risk. And so uh if you don't mind I can kind of walk you through what we're thinking in terms of those task forces and why we think the Fed has to be you know more tight now more more hawkish now so that it can ultimately create the scope for that that.

Let's absolutely do that right now. Let let me just pull part of the punch line up here. we'll get the high level part of the punchline then you can give the details later on. Um, but your your earlier statement from last time which is you know if and when the Fed looks through inflation um and starts being more doubbish you think that's going to be really bullish for risk assets and and you know you're going to be a super bull in the market. Does that mean right now given you think that his proclivity in the near term is more towards hawkishness that you think the markets are going to have uh a rougher less impressive you know quarter or so from here?

Yeah, we still think the risk of a 1998 style correction markets is is still pretty high over the next one and two quarters. Uh does that mean it's a guaranteed outcome? Of course not. You know I mean we're we're in the business of probability and risk management and what we're essentially arguing right now is that the probability of a riskoff market regime is is in fact rising um in our opinion. uh and it's supported by the fundamental the fundamental themes. And so ultimately, you know, if you kind of answering your question in reverse, if the Fed does not, you know, kind of back the safeties and linebackers off in a way that allows them to just, you know, run them all right down the middle with easy monetary policy, which is where we think this is ultimately headed, then we're going to have an inflation problem and ultimately that the run's going to get stuffed by the bond market, right? So that you you can't have that outcome either. And so in our opinion, we think the the the outcome that creates the best the the the path that creates the best outcome from the perspective of monetary policy, from the perspective of the economy and from the perspective of of of the you know the Federal Reserve price stabilities target and ultimately their dual mandate uh is is the the sequence of events in our opinion requires you know some regaining some credibility on inflation fighting because if they don't regain credibility on inflation fighting like I said the bond market's going to stuff the run on inflation and so that's I think that would be a horrible outcome from the of a brand new Fed chair who will be in it within his first year of the job. And so, uh, in our opinion, you we ultimately think that, you know, if the Fed does not back the bond market off, what you're doing is you're eliminating left tail risk from the distribution of probable economic policy market outcomes for now, but you're going to eventually pack that left tail risk back on at some point 6 n 12 months from now when the market starts to realize that inflation is a much bigger problem than they re than they than than what's currently priced in uh today. So you're ultimately you're basically just swapping left tailor from you're you're transferring left tailor from today i.e. they back the safeties off to tomorrow by not doing that. So if you remove left tails from the distribution of probable economic policy and market outcomes that you're going to have a median median shift to the right and ultimately the market's going to have to price that in in a positive manner. So that's answering your question. If they aren't hawkish then we're going to bubble. We're going to continue to bubble uh in our opinion. uh and but ultimately we don't think that's the highest probability outcome from this starting point because we I think we have a differentiated view on inflation dynamics right now which we can unpack but I think we also have a differentiated view on the net result of the five task forces which is is you know pretty doubbish.

Okay great so let's get to five task forces and anything else task forces anything else you want to say let me just ask this one last question which is um you talked about the dual mandate kind of the impression I got from from Worsh was I only really care about one of those right now or I'm only going to focus on one of those right now. It's all about price stability, price stability, price stability, price stability. I kind of get the sense that he doesn't think the Fed should necessarily be a two mandate uh enterprise. And from what I've heard from the Fed watchers that I talk to, the people who know the Fed much better than I, they they think that he is of a mindset which is shared by a number of of people that if you take care of price stability, then you will set the conditions for maximum employment. So you don't you don't need to be focusing on two at the same time. And and and when you do, there are moments in time where sometimes they have opposite needs. And that's always been kind of a stying thing for Feds in the past. And so their expectation is that Warers is basically going to say, "Look, I'm I'm I'm really not going to worry that much about trying to monkey around with things with the economy. If I get price stability right, everything else should take care of himself." Do you have a similar opinion or a different?

Yeah, I think what you're essentially arguing is that the jump balls when it when there's a data point that comes out that is, you know, causing stress, causing tension in the mandate from a price stability and maximum employment standpoint, the POW Fed, the Yellen Fed, the Bernaki Fed always, you know, fell on the side of airing towards on the side of protecting the labor market uh and maximum employment. What you're essentially arguing, which we agree with, is the POW Fed, the POW or the Kevin Worsh Fed and Kevin Walsh himself is trying to shift that that that jump ball dynamic to if there's a data point that creates tension in the mandate, they're going to react to the price stability side of the mandate with the expectation that if we get this right, the labor market will follow. I I that's something I agree with personally as someone who, as you know, my background as someone who grew up, you know, eating, you know, government cheese and food bank food and then moldy moldy bread from the food bank. Uh I would much prefer the Fed get price stability, right? Uh you know, there's, you know, the inflation impacts everybody >> all at once. You know, the labor market going the unemployment rate going from 4% to 6% only impacts, you know, how many people? You know, obviously, you know, there's a negative hit to the economy recessionwide, but like people would much prefer, you know, price stability brought by and large than a the unemployment rate that rises 100 to 200 basis point. Now,

Big issue like the global financial crisis, that's totally different.

Yeah, I think that's been true forever. And for some reason, as you said, those past regimes, the Fed, for whatever reason, still picked labor and and you know, labor is cyclical. So people kind of realize, look, it's a crappy job market now, but it's going to pick up in the future. With inflation, you never go back. Prices never come back down, right? So they're like, look, just keep prices stable. We can ride out a bad jobs market. It's so much worse for me if my cost of living just keep marches marching higher uh year after year in a way that that I can't keep up with. Right. So anyways, all right. So that that's very useful validation on your end of that theory and obviously we'll see if if wars delivers on that but I hope he does.

Exactly. I hope he does too as as a proud American citizen. Uh what I will say is he's got a lot of work to do in terms of convincing his colleagues to agree with that. Right. There's 18 other members on the FOMC that >> are used to every jump ball going to support the labor market. And by the way, we know why they support the labor market. That's the mandate that gets them to pay the bankers the most amount of money. Yeah.

Right. That's the that's the one that if we don't do this, it will lead to financial stability concerns, >> right? Pressure from from the politicians, too, because in the short term, bad job market politicians get all the angry phone calls, right? So, let's do something now, right? Yeah.

Yeah. I I agree with you, but I think the Fed is much more in cahoots with with the folks who went down to Jacko Island and their descendants.

I I I I can't disagree with that, my friend. And so to your point there about the fact that he inherited these people who are, you know, conditioned to the way things have been getting done there, uh, this is now getting to the task forces. Is part of the task forces, do you think? Like Wars kind of has a sense of what he wants to do, but he needs the validation of the the the six-month period with the task force to kind of try to bring everybody along with him and say that I'm not just cramming this down your throats. We all talked about this for six months and we came up with this this conclusion at the end.

You're you're ab spot on, man. Thank you. I'm going to borrow this as as a as a CEO and hopefully future governor of New York or Florida, president of the United States. That's something I'm definitely going it's a great leadership tool. Like there's three elements of of of power, right? There's there's there's there's coercion. Do what I tell you to do or something bad will happen. There's influence. You know, I I I display things that you would like, so therefore it might influence you to to behave in the way I want. The most powerful element of power that no one talks about is framing. I will tell you what to think about. You're gonna arrive at the conclusion, but if I can restrict your discussion to this narrow, you know, sliver of outcomes, then you're eventually going to pick something that you think is your idea that is ultimately my desire. And that is exactly what I think uh Kevin Worsh is doing from a from a from a from a leadership standpoint. So, I applaud him on that. Obviously, it's brilliant. Um, you know, this guy's been surrounded by, you know, a lot of really really smart investors, a lot of really smart business people for the past two decades, you know, two plus decades. And so I think he's, you know, I think he's taken that those lessons into uh into a very big task of reforming the Federal Reserve.

All right. Um, Okay. So, anything else on the Fed before we kind of get to just the general market regime and everything like that?

I think we got to go really quickly through uh why we have this view that the policy the net result of the polic task forces are are going to be dubbed. Like if you to me that that's I think that has to be central to any investment case right now. What is the most important institution in the world in the global economy in the financial markets going to do from a regime change perspective? Right now we're at peak uncertainty or maybe not peak uncertainty but somewhere near peak uncertainty because most investors don't really have a sense of who's on the task forces, what their background is obviously people with policy. So you know we'll start to learn more in the coming months and ultimately investors Wall Street will start to formulate more views on this. But in my opinion, I think it starts with the data and you have to go to where the data are. Ultimately, the data will tell you what the the task forces are going to conclude. And so, let me uh let me kind of quickly walk you through uh each of those five task forces. Uh kind of our summary thoughts in each five task force. We can slow down and speed up as much as you want, but let me just quickly walk you through what we're thinking on this so that investors can kind of arrive at the same conclusion that we've arrived at, which is this is going to be dovish. And if it's going to be dovish, they got to create some scope in the bond market. They got to create some credibility with the bond market that they are serious about inflation fighting before they, you know, tell the world they're going to be more dovish than what's currently priced in because ultimately that's going to cause some some financial stability concerns from an inflation pricing perspective. So, let me get into this. So, uh on on task force number one uh you know there's academic research from uh the uh Brazil central bank from last fall that essentially said, okay, the Fed's been talking eight producing 80,000 on on words every FOMC event. this is too much talking. Uh basically, so we know that's true. Uh uh and we all I think we all kind of know that's true. But like they actually did a big they created a very big uh complicated and and sophisticated model to determine that hey beyond the Fed chair talking this is all you know negative net present value uh uh communication. So that's one. So we know they're eventually going to get to less communications over time which should in theory inflate term premium. And why would that inflate term premium? The less the markets know about the expected path of the policy rate, the more you have to price in a real term premium. And more importantly, the less the markets know about the expected path of the policy rate, the more you have to price in an inflation risk premium as well because you don't really know that the Fed's going to be serious about containing inflation. So ultimately, we think term premier are going to go up. Right now we're at uh somewhere this was uh from my a couple weeks ago, but right now we are uh on term premier, we're somewhere around, you know, let's call it 40 50 basis points. That's, you know, that compares to a long run mean of about 190 basis points. And so ultimately, you're talking about a a 10-year nominal Treasury yield that is a a fair value of about, you know, five and a quarter, somewhere about 5.9 somewhere between five and five and 3/4 to 5.9%. Not four, five, normal level of term premium, which we take as the mean prior to the GFC, you're talking about a a bond market that could easily repric to somewhere well north of 5%. So that's a risk. Uh so ultimately that that's a negative outcome. That's the only in our opinion explicitly, you know, very bad outcome from the perspective of the the task forces. If you look about the think about the other task forces, we know that the Fed Kevin War thinks the balance sheet is trillions larger than it needs to be. So the balance sheet's going to come down. The Fed owns currently about 33,000 basis points of the marketable Treasury bond market. Uh which is obviously, you know, he wants this thing to be zero. So, we know the bond market's going to come down, but we in our opinion, we don't think they're going to to to cut the bond market in any material way. Um, from the perspective of uh uh they're not, in our opinion, we don't think they're going to to reduce the balance sheet, pardon me, uh in in any material way without some offsetting regulatory uh uh uh uh you know, easing that will create uh uh much more um positive dynamic from that perspective on a net basis. And so the reason we can kind of arrive at this conclusion is when you go back and you study these episodes of QE uh in this chart here, we got the Fed balance sheet uh somewhere close to $7 trillion and the 10-year nominal Treasury yield. We can see that historically uh the market the 10-year nominal Treasury yield typically rallied during these uh during these episodes of of of quantitative uh easing. Uh you know, we have COVID QE here, reserve management purchases here, and then QE one, two, and three here. So on a on a median basis, the 10-year nominal Treasury yield rallied about 59 basis points in uh during these QE episodes, but on a on a start to peak basis because obviously the market starts to discount the end of the program. On a start to peak basis, the median increase in the 10-year nominal treasury yield was 117 basis points. So keep that thought in the back of your head as I go into the next uh slide. If the if the if if doing QE makes the market price in a higher nominal growth dynamic and this is partially a function of the uh what we call the reverse the portfolio substitution effect whereby the Fed is essentially performing an asset swap of the banking sector. They're taking securities treasury securities which have duration greater than zero or you know uh uh uh onto their onto their balance sheet and replacing that in the private sector balance sheet with with uh securities that or not security bank reserves that have a duration of zero. So you're essentially swapping low power money with high power money and pushing that high powered money into the private sector and ultimately that high power money gets levered up and and and and and spread around and rehypothecated around the global financial system and forces investors to take risk and ultimately forces nominal growth expectations higher. So that's how QE works. It's a it's a portfolio substitution effect. In our opinion, we think they're going to deregulate uh uh the banks materially in a way that allows the Fed to reduce his balance sheet by trillions of dollars in the coming years uh but ultimately offsets that that that that reduction in um a reduction in the Fed uh balance sheet with but by increase in in commercial bank uh balance sheet. So right now commercial banks, Treasury and agency securities are currently annualizing at 0.0% on a three-month annualized basis. They're growing below trend at 4.1%. And so ultimately we got to get this number higher, but it's got to go it's got to go higher in a way that doesn't crowd out, you know, loans and leases and just total bank assets. You don't want this to crowd out the banks. You just want to create you want to deregulate the banks in a way that allows uh the you know the the reduction the Fed's balance sheet and the and the reduction in base money to not kind of cause a broad reduction in broad money and narrow money in broad money. So ultimately we think that's the that's the most likely outcome is a I wouldn't say a wash. is probably going to be net negative at the margins but not really as negative as investors fear particularly when you look at the Bitcoin market or you look at the gold market.

So did you have any questions?

Are the banks hungry for this? Are they excited for this?

Uh probably not. No, but again this is we're playing hot potato. I've been telling you how many times you talked about this for years. You know our core research thesis since the summer of 2023 is that there is a gigantic game of hot potato being played in the US Treasury market. Specifically, there is a geopolitically driven supply demand imbalance in the Treasury bond market. On the demand on the supply side, we know we have supply issues from a demographic standpoint and just from a just from a policy signaling standpoint, the the Democrats can't stop spending money. The Republicans can't stop cutting taxes to, you know, support the incomes of their respective constituents. And so ultimately, you have demographics and just terrible policy choices equals more deficits. That's pretty easy to solve. I think, you know, you need you don't need call out to figure that out. Uh but what you do need uh uh you know sophisticated investors to understand is that the US government the treasury market is currently owned uh right about you know 30% foreign investors uh you know the US has a 90% international investment deficit the GDP uh you know about you know twothirds of that is stocks uh you know so about only about a quarter of that is about um uh treasury exposure but it's a significant portion especially you consider the size of the treasury market relative to of the global bond market and global asset markets. And so ultimately this geopolitical dynamic whereby the world is shifting to a multipolar world. You know Europe's remilitarizing they need their own money. Japan is lighting its own money on fire with reflation uh policy. Uh and then obviously the end's at like a 40 50 year low versus the dollar. Uh which will ultimately you know reduce the demand for for for for it makes it harder for for Japanese investors to um to to hedge a dollar uh a dollar exposure. Uh you have China obviously strategically decoupling with the US. um you know the UK is lighting its own money on fire with terrible policy as well. So you have all these dynamics globally from our largest foreign creditors of which again the foreigners own about a third of the treasury market. All of our foreign creditors are changing policy in a way that reduces their demand their marginal demand for these securities while at the same time we are accelerating the supply of the securities. And so that in our opinion is is is is a core feature of global financial markets. is why both Treasury Secretary Yellen and and our former client Treasury Secretary Scott Besson have rubber stamped this doubish net financing policy. It's why we've had an asymmetrically doubbish reaction function by the Federal Reserve since the summer of 2023 whereby they're cutting interest rates uh with you know sticky well above target inflation in the labor market that is you know well below uh nou and well below the long run mean uh uh um you know so the Fed has just had this really dobish reaction function so is the treasury and ultimately we think that's going to accelerate in the coming years and one of the ways in which they can do that is by financially repressing the commercial banks.

Okay. Um, God, I'm just curious away from the chart for a second. Just in the long term, Darius, where does this end up? You know, those trends you were talking about that basically lead to rampant, you know, continuous deficit spending here in the US and and every country is doing it, but you know, where where does it end up? And like I is there anything to do but to just try to keep passing that hot potato? Uh, and does it just blow up in our face at some point in time in a great global sovereign debt crisis like Luke Roman warns about or is there any way out of it?

I don't know. I love Luca. I love his analysis. He's brilliant. But uh I that's that's that's I I can't I can't say those things to to our clients. Uh just because it just it's to me risk management is all about sequencing. It's all about you how we go from one market regime to the next market regime, what the factor rotations are that lead you from one market regime to the next market regime and so on and so forth. My job is to help investors stay on the right side of market risk from now all the way through the blowing up of the sovereign debt market. So I I could care less about the destination. To me, it's about what is the sequence of market regimes that we have to take to get there and ultimately how should we be positioned uh how should we position building positions and and and reducing positions to to stay on the right side of market risk throughout to.

To say it another way wherever it ends the key is to not get killed on the way to that destination.

Bingo.

Yeah. Bingo. Absolutely. that that's what that's what that's what skilled risk managers get do is we we prevent our clients from getting blown up uh regardless of outcome. Uh and so in our view we think the the the where this all ends up is you know we're just all frogs being boiled alive in a pot of monetary debasement of financial repression and so you know kiss we built Kiss and Dr. mode to stay on the right side of market risk, you know, throughout. But it's not all linear. It's not always going to be, you know, full full burning stove, you know, on high. Sometimes they'll go to low, sometimes they'll go to medium, sometimes they go back to low, sometimes they'll go from low to high. It's all depend. It's all it's all path dependent based on what's happening in the real economy. But ultimately, we think this is uh the outcome. So going back to to this financial repression dynamic, if you go back and I think you and I have talked about this uh over the years, you go back to 2021, the private non-bank sector, the folks in the treasury market who want Xanti units of return for the risk that they take in their portfolios, their share, our share was 36% of the marketable treasury market. It's now 58% of the marketable treasury market. And obviously the market's grown by trillions of dollars uh since then. And so this is an issue from the perspective of ever really truly seeing a a structural decline in bond yields and truly seeing a structural uh uh uh you know kind of um you know decline in mortgage rates and all the kinds of things that'll get the bottom of the K-shaped economy uh more active. And so ultimately the Fed uh if they're going to take their balance sheet down which is what Kevin Walsh wants from a price stability standpoint you ultimately have to pass this hot potato to another actor. Well, the, you know, the the foreign uh commercial banks or foreign, I'm sorry, foreign central banks, their shares now down at 13% from a peak of 40% back in '08. They're not we can't force them to buy. You know, they they launched the Genius Act, but obviously it didn't work. Uh and it's not working because, you know, it it there's a lot of reasons why it's not working, but uh it isn't working. They can't force, you know, the foreign central banks to to to accumulate treasuries like they have been doing. And so ultimately the only other place to go if the Fed isn't going to buy them and we have financial stability concerns associated with the private non-bank sector having such a high share then it has to come from commercial banks. Their share at 15% is down from a high of about 33 34% back in 2003. They can they can take this line way higher.

They they can absorb a lot of that potato. Yeah.

They will they will be absorbing a lot of the potato in our opinion. We think this is the highest probability outcome. Overwhelming high probability outcome. And so there's a lot of different regulations we can see that they can they can do to to change this. You know, they can they can, you know, allow treasuries to substitute for reserves in the in the in the in the liquidity coverage ratio and and liquidity stress test calculations. They can exempt treasuries from the ESLR, GIP search charge calculations. There's a lot of stuff they can do to create balance sheet capacity among the commercial banks that will allow them to take down these treasuries from the Fed's balance sheet in a way that does not destroy narrow and broad money and cause a significant downturn in the in the in the real economy. So ultimately, we think this is where they're headed. And if this is where we're headed, then ultimately the biggest boogeyman as it relates to peak fit policy uncertainty is actually not really a boogeyman is what I'm arguing. And so ultimately the markets are going to come to a realization at some point in the next, let's call it, two to three quarters that oh my god, Kevin Walsh is not as hawkish on the balance sheet as we thought. Bitcoin and under, you know, 60,000 is is a stupid price. Gold under 5,000 is a stupid price. we got to buy these assets. We got to, you know, we got to, you know, get back involved on on some of these um more financial repression, monetary debasement style uh trades. But ultimately, we think those trades have appropriately paused because again, as we we said earlier, the Fed is likely to play action pass before it sets up the run. And this is part of that running game.

Got it. And I just want to underscore this. You say this all the time, but that back to your frog there in the pot. Um in the long term, we know this is a game of financial repression and monetary debasement, right? But in the near term, there are all sorts of different plays that can be called. Going back to your football analogy, right? And sometimes you want your offense on this on the field. Sometimes you want your defense, sometimes you want your special teams. So like you think, you know, people think of financial oppression, monetary debasement, oh well, I'll just own gold, right? And that'll get me there. And and maybe in the long run, you know, if you had to have a one single buy and hold strategy, maybe that's one of the better ones to choose. But there's going to be it's going to be a wild ride, right? um and you might get killed before you you safely get to the destination. What you're doing is you're trying to tell people what plays to call. All right, gold is great for this regime that we're in, but now we're entering this new one and this is one where stocks are going to do well or whatever, right? Um and that I think is kind of is a lot of value that you guys bring at 42 macro. But I to me I see that as the key one, which is knowing when to be in what when.

100%. That's that's the number one thing we do for our customers is is help them stay on the right side of market risk through the lens of our markers regime now casting process and then we filter those signals to retail investors via KISS. You and I have talked about KISS at Nauseium on this program. And then we filter.

those signals to, you know, sophisticated retail investors, family offices, investment advisors, and primarily institutions, uh, via Dr. Mo. Uh, Dr. Mo is essentially KISS but for 70 different, uh, 70 different assets across, uh, equity sectors, factors, global equities, fixed income sectors, and macro exposures being currencies, commodities, and crypto. So, you know, kind of, you know, answering, you know, just piggybacking on your comment, which is, yeah, like at the end of the day, what we're talking about with respect to the the five task forces and the and the ultimate result of that being dovish, like that is a that is in our opinion, we think that is a reasonably high probability outcome. Therefore, we will have to price in right tail risk at some point in the future. When that becomes true or becomes increasingly true to the median market participant, when that becomes increasingly true, there was right tail risk to price in. And so that means we're either going to be in a risk on reflation market regime or a risk on Goldilocks market regime. But we know both, you know, those are the regimes where you're going to get paid to go out further on the risk spectrum to to to capitalize assets. So we think that is coming. But to answer your to getting back to your comment on on gold, it's like you don't you you don't want to position for tomorrow's trade today. You want to position for today's trade today, right? >> And at some point when today's trade stops making money, then you start positioning for tomorrow's trade. But today's trade could last for one month, two months, three months, four months, five months. I've seen market regimes trend for six, seven, eight, nine, 10 months. You will be out of a job on the global buy side if you're on the wrong side of market risk for more than a couple of months. Period. Period. I mean, you can try this at home, but if you know, let's say you're short semiconductors in Q2, that's only three months. >> Semiconductors are up like 80% 90% in Q2, right? Like that's that's the point. That's the that's the risk I'm talking about. But of course, none of our clients would be short semiconductors. They'd be long semiconductors in a risk on reflation market regime. You know, our market signal this Dr. Mo pivoted to long tech I want to say in the the first week of April maybe. Yeah, I think maybe in the first week of April, second week of April and, you know, tech's probably up 30% since then. Uh, you know what I? So that that's the whole point of this risk management process is to be agnostic about the sequence of market regimes, to be agnostic about the path that markets are taking to price in these structural risks because, you know, one thing I see when, you know, we have a large and growing community of retail investors, you know, I cut my teeth, you know, traveling around the world servicing institutional investors and building models and and risk management systems for for for byiders, but, you know, now that we have this large and growing contingent of retail investors around the world, one of the most important things that I have to coach them on is you have to separate your research views from the risk management of the markets. >> Yep. >> Because the markets don't give a damn about your research views. They don't. They never will. And so, you know, like and so your job is to c compound returns, you know, across market cycles. That has nothing to do with your research views. Your research views can help you, you know, inform you on on on how the markets may or may not evolve, but that doesn't mean you're going to be right about that. The only thing that's going to be right is what the price and the volatility put on the tape. That's that's the truth. Well, and that's what I'm trying to underscore for folks here, which is, I mean, the the logic of your approach I think most people get, but there are people out there, there's I'm sure you've talked to them, who are just like, "I just want to play it safe, right?" And, you know, gold's safe and if the big trend is, you know, monetary debasement, I'm just going to own gold. I'm just going to hold it for the long run. And and you may come out with a positive return at the end of that. I think you probably will, but your return is going to totally it'll be a small fraction likely of what the compounding returns would be if you were to trade the right market regime at the right time. Right? So, there's a big difference between kind of surviving until the end and thriving through the whole process. And that that's the light bulb I'm just trying to get turned on in people's heads here. >> 100%. I mean, you I think we might have talked about this last time we were on, which is the sequence of returns is way more important than the the the the average return or the cumulative return, right? >> Like your your your your goal is to at the end of the day, your goal is to have more money, right? That's why we're investing. >> If someone raises their hand and say their goal is to have more money, then then god help them, we can't help them. But for 99% of investors, the vast majority of investors, the whole point of investing is to have more money in the future. And so if you want to have more money in the future, one of the dirty little secrets that we've all figured out as institutional investors that I'm not entirely sure is understood by the median retail investor based on decades of of of hogwash, you know, poppycock marketing. You know, "time in the market" is is time uh was that was that that phrase? Uh "time in the market is better than timing in the market," which by the way, I agree with. I don't think anybody should be time in the market. We don't market time at 42 macro. Market timing is a prediction-oriented thing. We're a reaction-oriented business where we observe changes in the markets faster than other investors so that we can put our buy orders ahead of their buy orders, you know, the things that need to be bought for the next market regime. That way that their buy orders can make us rich as opposed to our buy orders making them rich. And or conversely, if we're heading into a risk-off market regime, which would be inflation or deflation in our uh risk managed nomenclature, we want our sale orders to go in before their sale orders so that their sell orders aren't making us poor. We want our sell orders to make them poor because we sold first. If you can just do that what I just said for the last 30 seconds over and over and over again for decades, not only you going to retire on time and comfortably, you're going to be so darn rich that you're going to be giving away money to any charitable cause you can think of because you just made so much money in capital markets. And that's that's if I have a legacy to leave, that is it is to have as many people in the world uh you know retiring on time and comfortably, achieving financial freedom to such a degree that they are so charitable and we're all fixing the world together. >> That is so great. I just want to underscore one thing you said to make sure people get it. >> 42 macro is not a market prediction service. >> It is what I'm going to call a a super fast follower, >> right? Correct. >> Super fast market follower. So, you're not trying to guess what the market's going to do. Your goal is just to see what it is doing faster than everybody else. >> 100%. Yeah. If I can kind of draw this, it's like, you know, there's a distribution of probable economic and market and policy outcomes. Right now, we're in reflation. So, the market is pricing in right tail risk. But as a research analyst, you know, obviously this we're on slide 183 of 184 slide presentation. I understand that there is a left side of the distribution, you know, so at some point in the future, the market may decide to price in the left side of the distribution in a risk-off market regime. >> And so it's my job to understand how the shape of this distribution is evolving. Right now, I would argue based on our fundamental research summary, uh the distribution is pretty uh normally shaped uh from this, you know, it's pretty normally shaped distribution. The green words on this page, uh you know which we update, um you know we don't update it every day, but we feature it in all of our uh research reports, you know, the green words on the page correspond to the uh right tail risk dynamics in the economy and policy; the red words correspond to the left tail risk dynamics in the economy and policy; uh and then obviously the orange words are neutral. You know, right now I'd say we have a pretty normally shaped distribution. I would say about a year ago we were talking, I think in June of last year, when we were saying, "Hey, I think this the first week investors are starting to get on board with paradigm C," when I was on your program in June last year, we had a very positively skewed, you know, distribution then — it's terrible drawing — but very positively skewed distribution then. Um, you know, at some point in the future, maybe the distribution's uh negatively skewed once the markets start to get on board with the fact that there is core inflationary pressure that is separate and apart from what's happening in the Middle East, but ultimately we still think we wind up in a in a better place. But, you know, just kind of h landing the plate on all this, it's not our it's not this right here; this arrow here, the one I'm kind of redrawing. >> Yep. >> This like that's not your job as an investor. Like you're never going to be able to consistently predict exactly when the market stops pricing in right tail risk to starting to price in left tail risk. Conversely, you're never going to be able to predict exactly when, on a consistent basis across multiple market cycles of which there are about two market cycles every year, you're never going to be able to predict when you go from right left side of the distribution to pricing in the right side of the distribution. So all you can do, and what we figured out on Global Wall Street, is all you can really do is understand how the shape of the distribution is evolving over time and understand, "Okay, we're starting to get to a place where hey, we're still pricing in right tail risk even though the distribution has gone very negatively skewed." So ultimately we can start to anticipate these net left tail events, and then that's when we layer on our, you know, our quantitative versus management overlays, KISS and Dr. MO, to actually pinpoint with precision that moment in time where the market switches from on a net basis pricing in right tail risk to left tail risk. And that that's that that that that's the fast following element of what we what we produced. >> Great. And again, just to fully drive this home. Um, you have a whole bunch of indicators you look at that might let you might convince you that a regime shift is coming, >> but you're not positioning ahead of that. You're just sitting there on the starting line like, "Wait, let's wait till we see it, let's wait till we see it," and then the moment you see that that regime has shifted, then you move. Correct? >> 100%, my friend. >> You just nailed it. Uh, we use our global macros matrix. I'm an outcast the market regime, and you got to understand that, bas going back to what I just said, if you are a if you're if you're not positioning for the market regime, that means you're taking the other side of the market regime; that means you're exposing your portfolio to to type two errors. Type two errors are false negatives. That means in a bull market, you didn't buy because you think it's going to go down. Or in a bare market, you didn't sell because you think it's going to go up. Those create the biggest negative outcomes in investor portfolios. If you have a bunch, if you have more than a couple type two errors in your investing career, you're probably going to be out of money. You certainly won't be on the buy side. You can't work on the buy side committing type two errors. And so obviously the whole buy side, primarily with the exception of ball funds and stuff like that, most of the buy side has figured out that they need to optimize their risk management process for only committing type one errors, which are false positives, which are, "Hey, we just went to a new market regime. It didn't trend, so we got to go back to the old market regime." You know, kind of a false alarm type dynamic. That's that's a more acceptable negative outcome than, you know, "The markets pivoted to a risk-off market regime and I stayed long because I'm still bullish." >> Mhm. >> Like that. And so that it's about it's about understanding, you know, going back to drawing this distribution of outcomes, if you sort of drew it into broke it up into four different quantiles — you know, let's say this is be one two three or four — type one errors, false positives, sort of live in this quantile. You know, if this is you know anything beyond this is z negative, this is negative, and this is positive, you want to stay keep your errors kind of contained in this quantile. You don't want to be in this quantile because that's when you start to open up the downside in your portfolio. You know, so that that's that's what I mean by type one versus this is type two versus type one errors. You want to stay keep your errors contained. And the best way to keep your errors contained is to always be positioning with the market regime. When we use this system called our global macro matrix, 42 different markets, uh uh studying the volatility adjusted momentum signals of each of these 42 markets in a way that can sort of, you know, kind of signal what they're trying to price in. Like, for example, right now the S&P 500 is bullish. The markets don't know if S&P 500 in isolation doesn't know if we're in Goldilocks and reflation, the two bullish regimes. So, it's just going to get a give a point to each that bullish signal; today's bullish signal is going to give one point to each Goldilocks and reflation. You know, conversely, if you look at let's say uh 10-year uh break evens and tips break evens, they're currently bearish. So, the market is giving a point to Goldilocks and deflation and so uh today. And so, we run this process on a daily basis. And so ultimately at some point the model will say, "Hey, you know, inflation or deflation, which are the risk-off regimes, have more confirming markets right now on a trend basis from the set of their own independent 42 independent volatility adjustable momentum signals — you know, this one of these risk-off regimes has more, you know, essentially getting shown more love, so therefore we got to pivot KISS and Dr. Mo to, you know, being positioned for those dynamics." And so this is this is the fast following element of our process. You know, this is very much optimized to be, you know, kind of the the first in the first investor in a confirmed trade as opposed to being the first investor in an unconfirmed trade, which is a type two error. >> Yeah. Okay. Great. Well folks, hopefully that really helps you understand better the process that a great technician and and and risk manager looks at here. And >> definitely not a technician. I don't know anything about technical analysis. >> Well, I'm sorry. I I I I should have said analyst analyst because because what you do was a ton of analysis there. Um, so uh uh you know again, the whole thing is designed to basically help give you the greatest probability of being in the right place at the right time and then that have that compound over time. And this is a huge reason, you know, Darius, one of the reasons why I was happy to spend so much time going through all that is because 42 macro is the endorsed DIY, you know, solution for DIY investors by thoughtful money. And if you are a DIY investor and you don't have a structured process, period, behind your investing, gosh, I think you're flying blind then. Um, but obviously I wanted you to see what a what I consider to be an exceptionally good structured process looks like. Um, all right. So Darius, this was good seg kind of um context for my next question for you, which is um, again, if I've followed you correctly, you think that um, the likelihood of of a worse Fed in the near term is to be more hawkish. Um, probably relying on the balance sheet, reducing the balance sheet more than than hiking, but TBD. Um and so therefore the risk of a uh uh can't remember what type of market correction you gave it some... >> 1998 style market action. >> There you go. 1988 style market action um is is elevated in in the next quarter or two. Um so you think that would translate from an investing standpoint to to a d-risking process, but obviously you're not going to necessarily derisk until your model tells you. So to do so, so where are we in that right now? >> Yeah. So, uh, we're we're, you know, uh, you know, with full deference and respect to our our paying clients, you know, I don't want to say too much about exactly where we are today and where we might be in in the coming weeks and months. Uh, you know, I'll kind of leave that, you know, leave that for you guys. >> Just talk about your process of how you plan to. >> Yeah. Yeah. Exactly. So I'll leave I'll leave the actual details for for for for our members, but the just in terms of what we're you know highlighting and focusing on in our fundamental research, which is the left side of the distribution. You know, we've been in a risk on market regime every day since at least according to our process since April 11th. Recall that you know the markets bottomed I think at the very tail end of March and really had the first big up move on on on April 8th I want to say. And so you know a couple days after that, our markets our market regime casting process confirmed that we're in a risk on market regime. Go out on the risk spectrum, take more risk. Got you in early on in that face ripping. I mean, historic face ripping rally. So, you guys rode that whole thing, right? Which again is is the whole purpose of why you do what you do is to catch those waves early, right? >> Of course. Of course. We're never going to catch the exact bottom. We're never going to sell the exact top. But that's not the whole point. Again, in order to buy the exact bottom of a market cycle or sell the exact top of a market cycle, you have to be willing to commit a type two error, >> right? >> We are unwilling to commit type two errors. You know, we have thousands of of of folks, you know, you know, 50 plus, 60 plus years old around the world, you know, uh, you know, subscribe to our our service. You I'm not going to commit a type two error and cause these guys to lose, you know, 10 20% of their lifetime earnings, right? >> That's a ridiculous outcome. Yeah, because just let you know, Dar, I know from talking to people who watch these videos, the vast majority of folks that are watching right now are the type of people who would much rather catch 75 to 80% of a confirmed trend than catch a 100% of a type two error. >> 100. Amen. >> Yeah. >> Adam, you just said that better than I. I use way too many words when I talk. You just nailed that, brother. Thank you for saying that. And and I'm I you know, as someone who's first generation rich, first generation wealthy, I I I'm right there with you. I'm not going back to sleeping in vans and homeless shelters. >> I'm not letting my family go back to sleeping in vans and homeless shelters. So, uh I you know, I might be young, you know, relatively young. I have some gray hairs, but you know, I'm not I I certainly am aligned with my clients and wanting to avoid, you know, significant uh left tail events in my portfolio. Uh and so, you know, this is to me is why you got to keep the you got to keep your research and your risk management separate. So going back to answering your question, we've been focusing well not because I'm doing it on a purpose. It's just the data are evolving in a way that that I think is underappreciated by financial markets. If you look at the the drivers of core inflation, in our opinion, we think that's very underappreciated by financial markets. And if that's true, then the risk of the Fed tightening monetary policy with its balance sheet in a way that is very hazardous to the S&P 500 is also very true. And so we've been focusing on that a lot in our research in the last couple of months. But that doesn't mean we've, you know, I'm manually overriding a a quantitative systematic system, an emotionless system like KISS or Dr. Mo. I'm just, you know, my my portfolio is always KISS at 100%. You know, my 100% of my liquid net worth is always mirroring the KISS model portfolio at any given time. And so I haven't made any changes in my portfolio. I assume our clients haven't really made material changes in their portfolios as well to the extent that they're following KISS and Dr. Mo. But when they do get those KISS and Dr. Mo, if we're right on this fundamental research theme, then we are going to have a risk-off market regime at some point in the next one to two quarters. Then when that when that when you get that first signal, you got to be a fast reactor to that first signal so that again you can put your sell orders ahead in ahead of the buy side sell orders. You don't want the buy side selling before you. You know the the the buysiders who are willing to commit a type two error will sell before you. >> But you don't want the the rest of the buy side selling before you. The ones who are unwilling to commit — the most of the buy side is unwilling to commit these type two errors. You don't want them selling before you. And so you need to have a process that spots these critical inflections in asset markets in real time so that you can actually make these changes in your portfolio to stay on the right side of market risk. And you want to know why we do this? You want to know why we do this, Adam? I think I finally found a just, you know, saying this out loud. I think I found a very succinct way to describe this. Actually, no. Let me go back to that slide 183. Actually, no, it's I'll go to the end of this this presentation because we can go back to you can see it better if it's not um drawn on. Here we go. This is why we do this. Let's say you want x amount of money here. You want to retire with — oh sorry, not x amount of money — you want to retire with y amount of money. So you need to get to this level of money over time. And then so this is just, you know, your your investing lifetime. >> Y. >> What what this slide does — and I think I've explained this the last time — but what this slide explains is that if you do this, it takes you longer to get to Y amount of money than if you just did this. >> Absolutely. >> Right. Like this is what our 42 macro is designed to produce — this outcome. >> Yeah, I love that analogy just because you could use it with real strings. If you if you did it with real strings, you could see that the >> highly volatile string is just two or three times longer than the nonvolatile one. >> Bingo. Bingo. This is a geometry problem. This is a calculus problem. You know, this is this is this is math. And so ultimately if you manage risk and and and and and sacrifice that incremental that that that you know incremental upside you would get by take being willing to take a type two error and being right on that uh being right on that trade, you know, to to to chop off the left side of the left tail of the distribution of portfolio outcomes, then ultimately you have a shorter distance between the amount of money you have today to the amount of money you want to have tomorrow. That is what this slide confirms, um you know in terms of um in terms of you know both of these strategies, the blue bars and the red bars have identical 50% average annual returns, yet after year three, the blue bar has way more money than year two. >> Yeah. >> And I just said they have identical 50% average annual returns, but so why does one have, you know, 40 50% more money or not 50%, 40% more money? And the reason is because the blue ones manage risk. They don't have big draw downs. They don't have big wild upswings, you know, like like you would see in in an investor portfolio. That's more like this. The red bars is this. The blue bars is what we've optimized our entire risk management process for at 42 macro. And you know, we have thousands of investors across institutions, family offices, pension funds, insurance funds, and obviously retail and investment advisors all, you know, bought in on what we're trying to build here, which is, you know, because it creates fantastic results. >> Okay, so I think people watching are like, "Yes, I want that." Um, so I got to start landing the plane here just timewise, Darius, but uh a couple questions as we do. >> Um, first one is just what kind of year is the 42 macro portfolio having versus uh what kind of year is it having? >> Oh, pretty good. Uh, KISS is up mid single digits right now. So obviously trailing uh S&P, but don't forget 40% of KISS is uh gold, 30% and and sorry 30% of KISS is uh gold and 10% of Kiss's Bitcoin. So the fact and I think gold's probably down about 25% from its highs. Bitcoin's down about 60% from its high. So >> they have had hard years — especially Bitcoin. Yeah. >> So that is that is the risk management. Um that is the risk management. So you know we're actually participating uh in the equity upside. You know KI has been maxed out in equities for for for a few months now or at least since since early April. Uh and uh you know not participating in the in the downside in um in in gold and Bitcoin. And so ultimately you know this you know this is this is coming off a phenomenal year. Last year I think we were demonstly outperformed the the equity market last year in KISS. So you know the key takeaway is that you know there's no — right now we don't have the financial impression and monetary debasement enough of it to create positive outcomes in gold and Bitcoin. Therefore if you only have a 60% allocation to a stock market that is a 100% allocation to itself, you're naturally going to lag uh uh the stock market. But ultimately we think we're going to catch back up for two reasons in the coming year. One, if we have a draw down in equity market, we're obviously not — our downside capture on that draw down is going to be uh much much much less than much much less than 0% of that full max draw down. So, we'll catch up uh there. And then secondarily, if we're right on the outcomes of these five uh task forces, then we're going to get more monetary debasement and financial repression at some point starting in two to three quarters based on our current expectations, get moreish >> higher beta assets than the S&P will start to go up again. And so, you think about where KISS would be a year from now. Uh it's going to be in our opinion, we think it'll be demos to be outperforming the S&P again. >> Okay. >> Like it did last year. >> Yeah. And I'm just curious, um, you know Dr. Mo is kind of KISS's, you know um, bigger, blingier brother just because it takes a whole bunch more um well it produces a whole bunch more factors where people can in invest in different things off of the results. Um, do the performance of the two portfolios typically tend to be pretty tightly correlated? Do they differ much at times? >> No, no, no. They they never differed. What Dr. Mo is, it expands, you know, KISS into uh 70 different factors. So, let me uh let me pull that chart up here. Sorry. Here we go. Yep. There we go. Yeah. What's so think about what KISS is right now. Kiss is, you know, look, so we use Dr. Mo as an example. And so, what Dr. Mo is designed to do is create proper trade signals across 70 different factors for people who are sophisticated enough to not need to follow KISS, right? Or if you want to follow a customized version of Kiss, say you don't want 30% of your portfolio in gold or 10% of your portfolio in Bitcoin, you can maybe do 70% stocks, 30% fixed income, or you know, there's all there's obviously an infinite number of machinations you can you can um produce. And so what we use what Dr. Mo allows our our our clients who don't want to be in that standard KISS portfolio to mix and match, change their target allocations, you know, and get exposure to different asset classes, particularly from the perspective of our regime discipline. And so what KISS is is basically the the oh sorry it's not we don't use spy we use VT global equities. It's the global equity signal. It's the Bitcoin signal and it's the gold signal from Dr. Mo. >> That's what KISS is. So again just underscore that for folks, if you're this is your first time listening to Darius, >> Kiss — Keep It Simple and Systematic — not stupid but keep it systematic. Um, it's designed to be kind of like the easiest portfolio that you can manage and still capture, you know, the upside that they're trying to capture here. So, it it it it's harder to think of a different of a portfolio that could be any simpler than this. >> 100%. Yeah. Well, it's designed to compete with 6040, which we think is a terrible idea based on a variety of uh economic and policy dynamics. Uh you and I have talked about this at Nauseium, and recall that we pivoted a KISS to out-of-core fixed income aggregate in in October of 2024 uh into gold. We replaced the 30% target allocation to core fixed income with the 30% target allocation to gold. So you know I think we booked like a 65% gain in gold earlier this year from the time when we add that you know added gold replace gold fixed income with gold to the time where we booked the gain that gain in gold earlier this year. So that was a 65% gain in gold, and gold is just comfortably at 0% of it maximum exposure of 30%. It's going to be at 0% of it maximum exposure of 30% until we either, you know, pivot to to gold starts to perform better from the set of its volatility. Just a momentum signal. Bitcoin has been at 0% of its maximum exposure of 10% uh since since late uh May. I think we you know we had a cup of coffee being long Bitcoin um uh in late uh in late May. That wasn't it was a type it was a false positive. It was a it was a type one error. I think it was down by we lost probably 3% on that Bitcoin trade. But the reality is >> you were in and then out very quickly. >> In and out very quickly. Type one error. It's a false positive. So, Bitcoin's down 20% since we sold in late May. It's down 42% since we sold uh in I want to say uh late October or early November of last year. >> And so, you know, basically we have half not half, 40% of the portfolio is just clipping the coupon Treasury curve, >> sitting there in your your cash. >> Exactly. So, if investors wanted to take more risk, which we coached them to do via Dr. O if they want to take more risk and sort of keep up, quote unquote, with the S&P 500, then they can just expand this — you know, 100% of his max exposure to stocks to 100% of their portfolio; that's if they're willing if they want to do that, that's totally fine. And you know, obviously that's what Dr. Mo is — it's if you want to take that risk, take that risk; you don't have to be confined uh in this kind of you know 60 30 10 stocks gold Bitcoin portfolio. >> So let me just interject because I think I I asked my question the wrong way — it's not two competing models; it is Dr. Mo is is sort of your your customization kit for KISS, and Dr. Mo is telling you at any particular time, "Hey, these factors are doing well. You know, the the model is liking them or the model's not liking these." And so you can use those to customize and trick out your your KISS portfolio if you want to, if you're sophisticated enough to do that. But I think for the average investor, KISS gets you a lot of the the way there with an incredible amount of simplicity. >> 100%. And I mean this is exactly why we why we built it. It's incredible amount of simplicity. Again, you're 6 here, 3 here, and 0.1 there. But again, we have thousands of clients around the world who may think that this that's not appropriate for them. So they might do, I don't know, let me erase that. Maybe they do 7 here. You know, none of this, none of that, and point, you know, three, where's that? You know, 3A, you know, you know that we're essentially giving them the risk-management tools. These are institutional grade, in my opinion, very high quality institutional grade risk management tools, because I know for a fact because I designed the systems that several of the large market neutral player hedge funds use — systems like this — um to to manage risk uh in terms of com combining vault targeting and position sizing in a regime oriented manner. And so, you know, if you based on how you want your portfolio to to to to perform and the kinds of risk you're willing to take and your investment preferences and ultimately your strategic investment objectives, you can mix and match any of these 70 factors to create a portfolio. You know, you don't have to be 6 VT 3 gold .1 bitcoin. You can be point anything here. And that's the whole point. We're telling you exactly what to do at every factor level. >> Right? The Dr. a spreadsheet at any given moment is telling you which of those factors are worthy of considering and which aren't. Right. Yeah. Like in this case, "Hey, energy right now, not a great time to add to your portfolio. Financials? Yeah." >> Exactly. So, let's say you wanted your entire equity exposure in your own portfolio in your own customized version of KISS to be energy. Well, you would have 0% of your maximum exposure of whatever that, you know, target exposure is because Dr. Mo's telling you to have no position right now. >> Got it. Yep. Okay. All right. Awesome. Um, so I hate to start landing the plane even faster, but that's just the nature of timing here. So, um, I've got one last big question I want to ask you as we wrap up, but before I do, what's sort of your parting advice to the viewers here in terms of what what type of mindset they should be adopting for this regime you think we're going to have for the next couple quarters? Parting advice was just to be nimble, understand that the distribution of probable economic and policy and ultimately market outcomes is evolving in a negative manner and has been for a couple of months now. Um, this is on the heel, you know, this is while the markets are still pricing in right tail risk broadly speaking. So that is that's creating, you know, that's creating risk from the perspective of of the positioning cycle, right? We have a, you know, pretty um you know pretty uh pretty pretty extended positioning cycle. You know, I think we're in the 83rd percentile of implied crowds positioning according to our positioning model. Markets, the you know major secular bull markets tend to peak you know lower than that. You know, they on a median basis they peak at around I want to say 78 percentile. And so we're we're modestly above the level we tend to peak at from an implied card positioning standpoint while we're building up left tail risk from the objective of the distribution of probable economic policy and market outcomes. That doesn't mean a correction or crash has to happen. It just means that the risk of that continues to rise in a way that might — if you get one data point and we're saying the Fed tightening its balance sheet could be the data point. >> If you get one data point, you're going to start a rush for the exits. Uh, and and this is exactly, you know, I've seen this million times in my career and it works in both directions. You know, you get a buildup of of of right tail risk from the distribution of probable economic market and policy outcomes, and then you have this implied, you know, really low level of implied credibility positioning, and you get one data point — i.e., quantitative easing or or or or you know fiscal policy dynasty, you know, some big data point that says we got to rush for the exit or rush into the building rather — you know, so ultimately we just we're flagging that risk. Uh, the risk may not materialize, and if the risk doesn't materialize, then we're going to stay in a risk on reflation market regime and continue to, you know, compound returns on the long side of the equity market, and maybe gold and bitcoin will start to recover. If they don't recover in the next, you know, one or two quarters, that, you know, that that that's totally fine. We don't have to lose sleep over that. But where we would lose sleep is if, you know, this thing really just started to bubble and left gold and Bitcoin behind because that would be very very concerning from the longer term outlook for financial markets because it ultimately means we are, you know, in fact getting deeper and deeper into the AI uh bubble and ultimately the second bare market is the highest probability outcome on the other side of that. So hopefully we don't pull that forward. I don't think we're going to pull that forward. I think the Fed can uh definitely land this plane by backing the linebackers and safeties off with the quote-unquote play action pass game ultimately so they can start hammering the run game, which is again more monetary debasement, more financial repression in a way that will benefit gold and bitcoin uh durably over the long term. >> Okay. Um, so obviously whatever happens, you and your system will be tracking it uh daily in great detail. Um, again, kind of high level takeaway, correct me if I'm wrong on this, but is sort of there's a note of caution in in your outlook in the next quarter or two, but then the expectation is that it's going to be a really bright green light uh for assets after that if it plays out the way that you think it's going to. >> Yeah, I think 27 will be a very positive year for financial markets. That'll probably be the end of the bull market. Uh, and then we're probably going to be heading for a secular bare market heading into 28. That's kind of our core that's our current thesis based on all the dynamics we can we can observe today in the data. >> I'm going to ask you an unknowable at this time. So, you know, we'll revisit this along the way. Let's say that happens. Let's say there's a bare market in 2028. Most bare markets that we've had in people's lived memory have been pretty darn short. Um, you know, there there have been, you know, lost decades in in a fair amount of them in the 20th century. Um and and you know a lot of people forget we we kind of started with a lost decade. Um here in this this decade this new decade or sorry new century. Um, do you have any gut feel? Total I'm just asking you to totally just guesstimate here. Do you gut feel that this will be another kind of "yeah, it'll be painful, but it'll be over relatively quickly because of the reaction function of the central planners and blah blah blah blah blah"? Or do you think we might have a more garden variety bear market that investors in the 20th century were used to having? >> Oh, no. We have very strong views on this. >> All right. >> Uh I I'll be quick because I know we were going long on time here. We can talk about this next month. Obviously, I'll see you in a few weeks. But uh no, we we we strongly — history shows that capex bubbles always end in secular bare markets. Uh, there's usually a couple of reasons why uh capex bubbles tend to be transformative for the economy, and so typically you have a real acceleration in wealth uh concentration that ultimately requires uh you know wealth redistribution and trust busting uh etc to to to kind of offset that. So we think that's a high probability outcome, especially in the context of everything we've been coaching our global investor community to understand from the perspective of Neil House fourth turning framework, Ray Dalio's big cycle framework, and Peter Turin's elite overproduction framework. You put those three frameworks together, >> I would argue the the probability wealth uh you know wealth taxes and trust busting is high to begin with, but on top of an AI capex bubble that's going to accelerate all the need for that for for those offsetting policies, in our opinion we think that's a real high probability outcome. Um, and and and then secondarily, company. It's the the investors are going to want their money back. They're giving — they're basically allowing companies to burn cash by selling AI at a discount to customers to acquire customers >> eventually. The they're going to have to the AI companies are going to have to change the pricing in a way that allows them to pay back uh the investors. And when they change the pricing in a way that allows them to pay back the investors, that may or may not come at a time where we're seeing significant ROI across the real economy, that may or may not come at a time because again, there's a timing mismatch. I think we can all agree the AI is going to be transformational from a productivity standpoint. But if they have to raise the prices in a way that slows down customer acquisition or in a way that, you know, perpetuates inflation throughout the real economy and/or causes significant job loss because corporations will have to choose between more AI and more employment, then you're going to have a significant mismatch between return, you know, expectations relative to the the lenders of this capital needing their their money back. >> Okay. So, um, let's earmark to talk about this again in more depth in one of your future appearances. Doesn't necessarily have to be the next one, but as we get closer to this, and you maybe have even stronger opinions as we get closer, it'd be great to to really dig into that. But um but the key takeaway is right now, given what you know, best guesstimate is that um when the next bare market occurs uh and right now your your your best guess is 2028, um it's likely to be pretty prolonged. >> Yeah. >> Took six years to recover the highest in the GSE. Took 16 years to recover the highest from the do bubble. I think we're going to be somewhere in the middle of that. >> Somewhere in the middle of that. Okay. So, um, one of the reasons just why I underscore this is, as I'm sure is is true with most of your subscribers at 42 macro, most people watching this video are 50 or over, right? And they're either retired or they're hoping to retire relatively soon. And if there is a prolonged period like that, somewhere in the middle of what you just said is kind of 8 to 10 years, you know, they just need to have that on their radar that that's a possibility and they should be factoring that into their forecasts, right? You know, what what what what would happen to me in my wealth if that were to materialize, right? >> It's not a possibility. It's the highest probability outcome. Doesn't mean it's a 99% probability. It's just in our opinion based on all our research. And again, we're

on slide 134 of 184 slide monthly presentation, it's the highest probability outcome. And so ultimately, you have to be respectful of of any risk management system that tells you to take down risk because I could be wrong on the timing. I think we're going to, you know, correct and and and recover sharply and have a great year next year. What if I'm wrong on that? What if we start correcting and the markets get very concerned about hyperscala capex in a way that forces them to cut their capex in a way that causes earnings estimates to go down materially and the bare market is already starting what if that happens that is a legit that that is not the highest probability outcome but it's certainly a a reason I wouldn't say reasonable it's a moderate probability according to our risk management no clature so if that moderate probability turns out to be the outcome then you got to respect any risk management signals you know between now and the next 18 months that tell you to take down risk because at some point we're heading for a secular bare market and that's the highest probability outcome, >> right? And if you if you share that outcome and and folks who watch this channel know, you know, I talk about that as as what I consider to be the the biggest risk factor out there, right? Is something that compromises the AI capex forecasts which then has to bring down the earnings uh forecast which brings down the price of those stocks which brings down all the indices and everything like that. Right.

>> Bingo. Um, if you believe I if if you share that concern about that risk and you you realize, as Darius is saying, that could not just be like a, you know, a quick market correction and then we're off to the next high. It could be the start of a real bare market, a prolonging bare market. Then risk management becomes incredibly important. And that's the thing I just want to deliver to folks here, which is if you are not prioritizing risk management right now in your portfolio, you should really take heed of what we're saying here. And if you don't know how to inject more risk management in your portfolio, get yourself to an expert who can guide you on that. And thoughtful money has a bunch of financial adviserss that come on this channel all the time. And if you would prefer to outsource all this to, you know, a financial quarterback that understands all the stuff that Darius and I are talking about, just go fill out the very short form at thoughtfulmoney.com and talk to one of those adviserss. These consultations are totally free. There's no commitments involved or anything like that. It's just a service they're offering to be as helpful to as many investors like you as possible. If you are going to do this yourself and be a D a DIY investor, which surveys show me like 80 plus percent of you watching right now are are currently managing all this on your own. Again, if this is something you don't have a lot of experience and confidence in already, get yourself to an expert. And Darius's 42 macro system, I think, is a great one. And that's why I've officially endorsed it from thoughtful money. If you think you found a better one, great. But just don't go naked. Don't go it alone. That's really important right now to focus on risk management for all the reasons we talked about. So anyways, if you want to go uh subscribe to Darius's service and learn more about it, just go to thoughtfulmoney.com/diydr. Um and uh and that's a a fantastic solution to at least seriously consider folks. Darius, you've been nodding through all this, so I'm guess I'm singing from the same song sheet as you, but anything you want to add to this? like, hey, if that's what the if you think that's the most probable development in the future, you got to start prioritizing risk management now. Correct.

>> Hey, man. Absolutely. I have very little things to add, especially I have gray hair. I mean, I'm, you know, almost 40 years old and I have a decent amount of gray hair and I'm very concerned about this outcome because the problem is

>> you get a lot more when you turn 50, my friend.

>> Yeah, that's good to know. Uh most um the the people my age in financial markets have never seen a secular bare market. I mean, I graduated during the financial crisis and so like I I personally have never, you know, risk managed the secular labor market. I've helped investors stay on the right side of market risk. None of my clients has ever been on the wrong side of a 10% correction in the near two decades I've been on a global Wall Street. So, uh that's something I'm proud of. Um um and and so obviously, you know, we built systems that help the global buy side. Obviously, they help the same systems help uh retail investors around the world. But the one thing I'll say just on the DIY side of things, you know, if if you're a DIY investor, you know, maybe you lack trust in financial advisors or something, maybe, you know, there's usually an element of that for most people, especially people your age, Gen X, you know, you guys lack trust in pretty much every institution. So, if you're one of those,

>> we don't trust anybody. Yeah,

>> exactly. If you're one of those folks, uh we can we're certainly going to make it easy for you to participate in KISS uh this fall when we launch our KISS ETF. So, stay tuned for more announcements on that.

>> H can't wait for for that. And just a reminder, when that does when it's getting close to launch in your appearance near then, let's have you tell everybody all about it and how to go get their hands on it. Um, all right. So, last question, Darius. Um, and this one doesn't include any slides. Uh, so, uh, we've got the July 4th coming up and it's the nation's 250th anniversary. And I've been talking a fair amount recently on this channel that yes, America has problems and yes, as as good patriots, we should be vocal about what those problems are and do our part to try to address them. But there is an awful lot that is good in this country. Um, there's an awful lot to celebrate. We spend, I think, way too much time complaining about the problems than we do feeling gratitude for the the phenomenal freedoms and benefits and protections that this country offers. And it's been wonderful to have the World Cup here and get to see our country through the eyes of all these foreign tourists who are traveling around saying, "Oh my god, America is so much better than I had been told." Um, so that that's been wonderful. But um you're somebody who I think um does appreciate a lot of the benefits that this this country offers and in many ways your life is the American story. It is it is the literal rags to riches story. The opportunity that this country allows somebody to change their station. I don't think there's another person my personal opinion but I think a lot share it. I don't think there's another country in the world that that gives people the optionality to change their station. They got to do the work for it, right? Um but uh we offer way more potential to do that than I think really anywhere else. Um and you my friend have done it. So uh you know great kudos to you. I I just wanted I'm going to mix this in with some other comments you made which is you're a guy who's very missiondriven. So not only do you want to take care of yourself, you want to take care of your family, but you also want to take care as many people around the world in helping them improve their lives and change their station. And so financially you're doing that through 42 macro. I think you've shared that you have some political aspirations at some point in the future. And if you do, you totally got my vote for that. But just talk for a minute about, you know, how you sort of see the role you want to play in helping people appreciate what we have here in this country and make the most of it for themselves.

>> H that's uh thank you for thank you for this opportunity and I'll be quick because I know we've been going long. Uh so one I wholeheartedly concur with you that this is the only country in the world where you can be Darius Dale. Someone who's lived in many homeless shelters for a decent percentage of his life who slept in vans. Who's two drug addict crackhead parents. One died of of drug and alcohol abuse. You know my stepdad died of drug and alcohol abuse. My abuse sorry let me say that again. My abusive, very abusive stepdad uh died of drug and alcohol abuse after my also very abusive stepdad who was also a drug and alcohol abuser uh was murdered. Uh my brother has a bullet in his spine. I've seen many friends get murdered by gang violence. Um you know this is the only country in the world where you can be you know the at the epicenter of thousands of institutional and retail investors around the world keeping them on the right side of market risk. It's the only country in the world where this can actually happen. And so, you know, I think about the legacy of Jackie Robinson, who our company is named after. And, you know, I want my legacy to be similar. Not because I'm a, you know, egodriven, self- angrizing person, but because I feel that God has put me here, right here to to change lives. Like why in the hell would I why would he have me accumulate that that that such a long list laundry list of horrible outcomes, you know, having no food, no lights, trying to do homework at with no lights on, didn't have the internet the whole time I was in in elementary to middle school and high school. had to go to the library to use the internet, you know, like like why would he have me experience and accumulate accumulate all those experiences and take me out of that mess and put me here in front of so many thought leaders and so many important people capital allocators around the world. And in my opinion, my the only thing I can surmise in my daily, you know, studies in the Bible and my, you know, my weekly church attendance and my philanthropy around the community in the world, the only thing I can surmise is he wants me to help other people change other people's lives in the way that I'm committed to it, you know, and that that's the only way I can do it. And so, you know, I don't have any strong desire to be a politician. It seems like a terrible job, but to me, you know, this is the the the to me, you know, it's a bigger it's a bigger megaphone than just sitting in this box doodling on charts. And so ultimately, my my core goal in life is to to help change as many people's financial situations as possible and change as many hearts and minds as possible in a way that fixes the problems of this this this country. And so the final thing I'll say is, you know, there's a there's a belief out there uh amongst people my age that the solution to our problems and we have a lot of problems from a from an inequality and and really it's not the inequality that's the problem. It's the it's the K-shaped nature of the economy. That that's the problem. It's it's the fact that we have people like us getting better while people, you know, more than half the economy population is getting worse. That is the issue.

>> The solution to that issue is not socialism. It's better capitalism. Exactly. And I've been saying that just so you know, I've been saying that a lot in recent days. So, couldn't agree more.

>> So, my policy platform will be to unite the country, all rungs of the country into an E-shaped society, not a K-shaped society, an E-shaped society with better capitalism, and that's going to take that's a big ass, the big lift, but I have the the you have Jesus Christ on my side, and I believe in what I'm doing here.

>> I I actually love that E-shaped economy. I'm assuming the the middle leg is the middle class. Like, it's not a Okay, great. There's always going to be rich, there's always going to be poor, but we got to make sure we we fight and defend uh, you know, the kind of the middle income part portion of society. But ultimately, we want to make sure that we're we're the policy, the regulatory policy of the country, no, which no one talks about, which is incredibly K-shaped. The monetary policy of the country, which since Greenspan, I would argue, has been incredibly K-shaped. The fiscal policy of this economy since since the Bush, since the um the Clinton administration has been incredibly K-shaped. We have all three levels of the government which impact the society. There's only four ways the government in touches the the population. It's fiscal policy. It's monetary policy. It's regulatory policy. It's criminal justice system. I would argue all four of them are are set the dials to produce K-shaped outcomes. And so my job with our research and my political platform in the future, decades into the future, will be to turn those dials as much back towards an e-shaped economy as possible.

>> All right. Um, well, God, f first off, Darius, um, you you're you're such a good guy. I think that just is blatantly uh obvious to everybody. Um, and the world needs a lot more Darius Dales, but but kudos and thank you for the role that you're playing here. And I and I got to say um uh I know you give a lot to sort of uh divine guidance here and there's probably a ton of that going on here, but you had to do it all on your own. Uh, and I it what amazes me about your story. Um, it's not just that it's an amazing story, but that as I understand it, you know, you you didn't have any models, right? You didn't have any good models showing you the way. You had to figure out, and I'm sure you found mentors and stuff like that, but that all had to come from you. That's a very hard thing uh to to do on your own. So, um, all right. This is This is why sports is so important. Get your kids in sports changes lives.

>> Wow. Um you know what? Let's make that a topic one of the next times you're on. I'll let you go deep into that one because I I I actually think that can be really helpful to people, especially parents of children. Um and and giving them some details on on how their kids could maybe benefit the way that you do. Um okay, but anyways, uh I couldn't agree more with you. Um, and I guess I'll just wrap up by saying uh I amen to everything you said and I I wish you the best of force in your family. I hope you have a great time. Uh, as do I for everybody watching this. Um, like as Darius said, um, we got got tons of issues. Um, but they are fixable and let's focus on fixing them because it's a system that we know works and in many cases worked better than any other system in economic history beforehand,

>> human history.

>> And on the other side, you know, the folks that are saying, "No, we should really go the socialist route." That is the one system we know has a 0% success track record. Right.

>> Insides of zero on success.

>> Yeah. Exactly. So, when it comes to risk management, just there's no reason why you would you would want to go down that other route. Um, all right. Well, look, Daryus, um, such a good guy. I I'm so uh happy and proud to call you both a partner and a friend. Um, look forward to having you back on again the program soon. Folks, as a reminder, if you want to follow Darius and uh follow his kiss and Dr. Mo models, just go to thoughtfulmoney.com/diy. Um, please let Darius know how much you appreciate. We went real long today, Darius, but you gave us a ton of great material. Please thank Darius for that folks by hitting the like button and then clicking on the subscribe button below. Um, all right buddy. That's it. I'm talked out. Have a great fourth.

>> Have a great fourth and then happy Independence Day everybody out there. Uh, America is an amazing country if we can all just put down the partisan BS. Stop voting Democrat. Stop voting Republican. stop, you know, putting yourselves in these silly tribes that the media wants you to be in so that they can continue to siphon power and keep that K-shaped wealth pump on. If you can just take a step back from this and just think about little Darius sleeping in that van and about the things we need to do from a regulatory standpoint, from a monetary policy standpoint, from a fiscal policy standpoint, and maybe even a criminal justice reform standpoint to get little more little Dariuses out of that van and into right here where, you know, where we are today. So, thank you, Adam, for for allowing me to embellish and all that. And thank you for inviting me on your program, brother. I really appreciate you.

>> It is a privilege and honor, my friend. Take care, everybody. Everybody else, thanks so much for watching.