Darius Dale & Sebastian Purcell: The Secret to Decoding the Macro Puzzle

24:43So, you know, both from the perspective of every major economy in the world, we also tally that up in terms of our global liquidity proxy. And our global liquidity proxy, which is the aggregated sum of the central bank balance sheets from all the world's major economies, their broad money supply from all their economies, and then all their FX reserves minus gold. And then we layer on a bond market volatility overlay to simulate the impact of the contraction and expansion of the repo market cycle. And so one of the things we found is through this analysis is that, OK, asset markets are co-integrated with global liquidity.

25:18You know, liquidity is high and rising. You tend to see high and rising asset prices and vice versa. And so, you know, we understand, you know, based on having created this empirical analysis, we can then figure out what leads global liquidity over the medium term. It's things like the global equity market cap, global crypto market cap, the dollar, FX volatility, its interest rates, its fixed income volatility, its global growth, its global inflation, and global employment. It's really just those metrics from all the major economies of the world, but obviously aggregated on a global basis. And when you kind of get to the punchline on all that, when we look at where we are today, the model is currently suggesting that we should have a modest increase in global liquidity over the medium term.

25:59When you look at the current spread between where these indicators are on a weighted basis relative to where the growth rate of liquidity is, it's suggesting that the growth rate of liquidity needs to catch up a little bit over the medium term. So to answer your question, I know this is a long way to answer your question. Going back to your question, it's really just a function of, okay, where are we in the liquidity cycle? Where are we likely to be in the liquidity cycle? Where are we in the growth cycle? Where are we likely to be in the growth cycle? That's the question I heard as opposed to the way you characterized it, which is right now, from a US perspective, we're kind of at the top of the growth sign curve looking down, but not looking down as significantly sharp deceleration unless we get significant acceleration in tariffs, etc., which is obviously not something you can predict.

26:43You just have to respond to it as an investor. And then from the perspective of liquidity, things are good and should be getting slightly better over the medium term. But there are obviously some headwinds on the horizon that can change that. Yeah. So, yeah, the National Financial Conditions Index quasi measure, it's sort of that's a backwards looking view. Probably the FOMC minutes on December 18th concludes on the 18th will maybe tell us whether or not, you know, we're going to the Fed is going to stop QT in a certain way, which would certainly help for liquidity factors. So yeah, that's a good point.

27:19I didn't know that about the manufacturing sector. And that does explain why the LEI is sort of doing its own strange thing. It does bring me to this question. You partly broached it, but I wanted to see what you thought about this. I have a slide here, which I'm going to move forward really quickly. It's another little puzzle. I like these. Those are super informative. So here's our second puzzle, which I think the viewers will love. It's a fun way to do an interview. People are like, okay, here's this puzzle. Let's unpack the puzzle. Let's unpack the puzzle. So horseshoe politics. The idea behind horseshoe politics is that if you go – like you're holding two edges of a horseshoe, you go – eventually they connect at some point, right?

27:59So if you go far enough left or far enough right, you get political figures who seem to overlap on strange topics. So Bernie Sanders, well-known progressive liberal, stated in 2019 that, quote, since the China trade deal I voted against, America has lost over 3 million manufacturing jobs. It's wrong to pretend that China isn't one of our major economic competitors, so he would like to reshore more manufacturing jobs. Trump has said very similar things. In addition to proposing tariffs in a campaign speech, Trump proposed, quote, a 15 % corporate tax rate, reduced regulations and access to federal land and port infrastructure if companies hire American workers.

28:43So again, he's trying to reassure specifically the manufacturing sector. And this goes right to this question that we just had about the LA, the lead economic indicator and whether or not That's useful. What do you make of this strange agreement between Bernie Sanders and Donald Trump? Obviously, on the Dakar, more tariffs as a way to incentivize reshoring. So those are two things. I guess one question there is the goal. Do we even want to re-incentivize that? And what's the likely outcome for that? But we'll start with the first question. What do you make that strange overlap? And then what does that mean for sort of the macroeconomic landscape?

29:31Yeah, excellent question, Sebastian. So I'll start by saying we're in a fourth turning. For those who may not be familiar, the fourth turning is a sort of generational frame. It's a geopolitical framework that essentially argues that there four-generational archetypes, when they align in a certain way, you typically have a significant amount of sort of change, institutional change, if you will, you know, with respect to political alignments, with respect to, you know, breaking down and building up of new, old and new institutions, you typically have total war on these four turning instances. My former colleague, Neil Howell, my former colleague and one of my mentors, Neil Howell, created this framework with his late colleague, Bill Strauss, back in the late 90s.

30:09And quite frankly, I mean, you could say, outside of like the Bible that I've never seen read a book that became more true as time went on. Right. And so, you know, this is this is a framework that we have a lot of confidence in, both, again, as someone who's been trained by Neil Howell, but also someone who has done a tremendous amount of empirical research on this particular topic ourselves here for two macro to determine to, you know, one codify Neil's work and two to kind of expand on it from the perspective of an investor. I don't think Neil focuses too much on that as an investor. And so, you know, One of the things that we found and one of the things Neil found in his research of these sort of angle American foreturnings, of which there have been, I want to say, five or six going back to the nineteen or fourteen hundreds, typically have significant political realignment in these in these, you know, these these generational periods.

30:58And, you know, we know what certainly argued has argued that the first regeneracy of this for attorney kind of came when the Donald Trump sort of realigned the Republican Party with kind of the populist, you know, formerly populist wing of the Democrat Party. And you kind of see this when you look at some of the policy proposals that he's proposed on the campaign trail and implemented one in his first administration, but certainly proposed on the campaign trail on the second administration. You know, we throw a slide 99 up here, Brian, where we show President Trump's, you know, the Committee for Responsible Federal Budget sort of looked at, you know, the sort of the policy proposals that Vice President Harris was banding about on the campaign trail, as well as the policy proposals that President Trump was banding about.

31:45And what we saw is that there was a tremendous amount of overlap between the two of them. Right. You know, the the Republican Party under Trump is a lot more left economically than the old Republican Party that we're used to with Mitch McConnell and Paul Ryan and Mitt Romney. That Republican Party is essentially dead for lack of a doubt. And so I'm not at all surprised to see Donald Trump and other pockets of the Republican Party coalesce around the sort of idea of reassuring and populism as kind of core features of the party. Because, again, we are in a foreturning. This is when you typically see political realignment in American angle, American history.

32:25And, you know, kind of throwing a bow on this, a couple of points I make. The first point is, you know, President Trump is, I would argue, is arguably the most populous president since FDR. Right. If you just look at what he's what he's promising people, he's not going to get everything he promised to people, but we're going to get some version of that. And it's a lot of stuff. You know, the Committee for Responsible Federal Budget essentially said in their conservative estimates, he's essentially threatening to add about$7.5 trillion to the U.S. public debt on top of a baseline that has the U.S.

32:54public debt accelerating to 125 percent of GDP by 2035. You know, if you add everything up that he promised on the campaign trail, according to conservative estimates, it'd be somewhere close to 142 percent by the end of this decade projection period. So starting point one is, OK, we're now dealing with a populist president under the guise of the Republican Party. But again, the Republican Party is a it's a it's a it's a it's clothing. It's a flag. It's not a it's not a ideology set. The ideology set is morphing in real time, according to the demands of the population, which brings me to my second point.

33:29The demands of the population are demanding populism. You know, we said this in August. We said no matter who, it doesn't matter. Whichever candidate promises the most free stuff to people is going to win the election. We said this in August, and that's exactly what happened. And the reason we said that is because the conditions are ripe for populism here in the United States of America. If you look at this chart here on slide 94, Brian, we show labor's share of national income versus corporate profits, capital's share of national income vis-a-vis corporate profits. So if you look at nominal employee compensation divided by gross domestic income, we're down at 52 % currently versus a mean of 56 % from 1960 all the way through 2000.

34:09And if you look at U.S. corporate profits as a percent of gross domestic income, we're at 13 % currently, essentially an all-time high there versus an all-time low in labor share. And that 13 % compares to a mean of only 9 % from 1960 to 2000. And so that 400 basis point swing in income that used to go to the household sector that now goes to the corporate sector doesn't seem like a lot. 400 basis points, whatever you do. But the reality is, if you look at it relative to the latest data, you're talking about a one point two trillion dollar per annum swing in income that is going from the household sector to the corporate sector.

34:46It's essentially an aggressive tax of the U.S. public policy that has shipped all of our jobs to China, VSV, John E. VTO in 2001, to Mexico, to NAFTA in 1993. We've shipped a lot of our jobs to these economies. And ultimately, that policy has caused a significant income redistribution and ultimately wealth redistribution here in the United States of America. That$1.2 trillion, Sebastian, that's essentially roughly just$9 ,000 of lost annualized income per private sector employee. It's roughly 11 % of the median household income. So you're talking about losing double-digit share of your income annually as a person in the United States of America relative to where you were kind of at the turn of this century, 24 years ago.

35:34So this, in my opinion, is one of the most important charts of macro has been for years now. And ultimately, the only way out of this situation where there are multiple ways out of the situation, but the game three way out, the route that probably requires the least amount of pain soonest, you know, is the route that required that populism is the answer to that equation up until the point where we reach the point of no return from a fiscal crisis perspective. That's a separate conversation. Completely separate conversation. Yes, the sword of Damocles is hanging, right? But that is a different conversation for sure.

36:09I find that very interesting. And you're right. It does make sense why we would get, obviously Bernie Sanders and Trump are both populist sorts of politicians. If you want to win an election here, you got to promise people stuff. That's it. It just is what it is. That's what this chart requires. This chart requires an income and wealth redistribution. and the only way you can redistribute income and wealth is by changing fiscal policy. You know, you have to change fiscal policy. You probably have to change monetary policy too as well. But again, this is going to be a multi-year, you know, kind of decade-long process to getting these lines back in appropriate order.

36:43It's going to require a lot of hardship, a lot of sacrifice, and potentially a total war, which is, you know, pretty consistent in these four turnings as well. Right. So, and the prospect then, to your mind, of reshoring manufacturing jobs, I guess there's that buried question there. It has provided us with a certain amount of, I don't know, immunity from market cycle forces. But we have this idea of returning them. Does that even seem like a viable idea for you? The thing that these politicians are campaigning on. What, reshoring manufacturing jobs? Yeah, reshoring them. Yeah, especially as incentivized through tariffs.

37:23Well, I mean, what it ultimately means is that we're going to knock the red line down in the most recent chart. So in 94, again, the corporate profits, the GDP are started to gross domestic income plot. That number is going to be forced down. You know what it ought to be. You know, the Republican dogma will be the dogma that it tells you we're going to grow our way out of everything and everything will be fine. So don't worry about the line going down or don't worry about going up. We're going to grow our way out of everything. But, you know, we're smart enough to know that that's that's that's misguided dogma.

37:50And before I get attacked on Twitter for saying that, you know, the reason I can say these types of things without, you know, any concern about, you know, how I'm going to be labeled as a macro risk manager. It's, you know, I wear red and blue tie, wear purple. You know, I'm not part of any, you know, politically compromised political party. I'm not a Republican. I'm not a Democrat. That's your guys' problem. Our problem is trying to figure out what the data tells us. And, you know, going back and doing, you know, deep dive econometric studies on everything we do and say here at 42 Macro. What we found is that, look, there's really no difference between a Republican, administration and a Democrat administration from the perspective of saddling and burdening the country with tons and tons of debt.

38:31You go back and you look at the cumulative growth of U.S. public debt here on slide 96, Brian, of U.S. public debt during presidential administrations. When you look at the median in the post-war era, so kind of excluding World War II and World War I, starting with the post-war era with our friend Harry Truman and sorry, Eisenhower, or Harry Truman II. So if you look at the median growth rate of U.S. public debt after year one, Democrat median is about 7 percent. The Republican president administration meeting is about plus 2 percent. Democrat median after two years is plus 8 percent. The Republican median after two years is 8.

39:06Sorry. Democrat median is 12 percent after two years. Republican median is 8 percent after two years. The Democrat median after three years is plus 22 percent. The Republican median, I'm sorry, I'm looking at the wrong statistics. My apologies. Let me, let me, let me start that over by post-war. So the Democrat median post-war after year one is plus 6%. The Republican median at post-war for Republican meeting is 5%. The Democrat median post-war after year two is 10 % versus 12 % for Republicans. The Democrat median after year three in post-war US economy is plus 22 % versus 21 % for Republican presidents, administrations.

39:41And then finally, if you want to look at it on a cumulative basis, year four, the Democrat median growth of public sector debt is 26 percent after year four and 39 percent for the Republican presidents on a median basis after year four. And so you want to exclude President Trump's experience with covid in 2020. The Republican median is still 36 percent. In fact, if you look at slide 97 here, seven of the top nine U.S. presidential administrations in the post-war U.S. economy that in terms of growing the public sector debt have been Republican administrations. Number one is Ronald Reagan's first term and plus 79 percent growth.

40:19He grew the public sector debt by 79 percent in his first administration. Number two is Ronald Reagan, his second administration. He grew public sector debt by 56 percent in his second administration, then followed by George Bush. George H.W. Bush at 56 percent. Barack Obama at 54 percent. Jimmy Carter at 42 percent. George W. Bush at 41 percent. Gerald Ford at 39 percent. Donald Trump at 39 percent. And George W. Bush at 32 percent. Again, seven of the top nine growth rates of public sector debt in U.S. presidential administrations in the post-war U.S. economy have come from Republican administrations.

40:57So unfortunately for some folks who are listening to this, we at 42 Macro, our clients who've been outperforming for the better part of three and a half years now since we launched the firm, we don't buy into the Democrat dogma. We don't buy into the Republican dogma that tells you we're going to grow away out of all this debt with tax cuts and deregulation. All that's nonsense that's designed to get money in the hands of the elites, more money in the hands of the elites at the expense of Main Street, and I'm here to try to do my best to stop it. Yeah, all right. No, and that's illuminating and very clear data.

41:28People hate data like this, Sebastian. It challenges their core belief system. They hate it. They hate it. I've had clients yell at me because of publishing this information. Well, you don't get it. You don't get it. The data's a lie. All the data's a lie. My dog must correct. My Fox News dog must correct. My MSNBC dog must correct. You know, that's these people, if that's you, take that and do something else with it. But for the rest of us who are here trying to solve society's problems and make money and save money in financial markets so that we can retire on time and comfortably or help our clients retire on time and comfortably, you know, 42 Macro is a research provider for you because we're always going to be truthful, you know, in terms of shedding light on these types of issues.

42:08Yeah, so that makes a lot of sense. I think that you're right. As a, on our own side, I think you have to. as an investor sort of take a editorial neutrality and just assess the data as it is. It's better to understand what's coming at you in any case and then to not understand it and hope blindly. But it shows that there is a sort of strange policy alignment that's been in the work for quite a few decades. It does bring us to another feature of perhaps the changing world order, which is maybe the background theme for a lot of our discussion right now. And I just kind of wanted to ask you quickly about, because this has shown up, I did a quick review this morning.

42:55What is showing up in the news channels, et cetera? And the war in Ukraine with Russia is still top of mind. Myself, whenever I go to this, I sort of think the impacts to the United States market are not immediate. but I did want to highlight a few points and get your take on it at least because it I don't know potentially suggests a further realignment of what we consider Europe and the West etc. So on my slides here and just to kind of focus us I have one slide that I think would be of interest to you. What we have is Ukraine and Russia potential impact here is on commodity pricing ukraine of course had a lot of wheat right and wheat is something that in a sort of warming global world is we've pushed it it's sort of a weed and we grow it in weird places because we can but we're eventually going to have to grow it in better places than we are right now so there is that's sort of a long-term effect uh there's supply chain shocks especially in europe and geopolitical stability right now is changing i think that's the safe thing to say is that it's changing.

44:09Russia did not actually use intercontinental ballistic missiles against Ukraine. That was a false report. Apparently, they just used an intermediate term missile, which really is more impactful for the European era for signaling effectively, as I'm reading it, that the detente that Europe had about not shooting each other is sort of up for grabs, is something negotiable right now with Russia. So my view of this, since a lot of my own focus is on the U.S. market, is how impactful that is for us. I tend to center on the U.S. market not simply because I'm an American, but also because we tend to have a pretty resilient economy.

44:55So how impactful do you think any of this will be for us? Or is it something that is further down the road and is really just a European? because there's an isolationist tendency right now in the United States. Is that more of a European focus and it'll be left over there at least for a few years or not? Like what exactly do we do with this? Because we get news about it effectively every day. Yeah, 100%. So like I said, all news is not signal. Most news is noise. And so you must as an investor understand that no more at any given day than 10 % of the information you consume is going to be signal.

45:29I would say 10 % is probably very high. Generous. Incredibly generous. It's probably close to 1 % on most days. Even as someone who publishes research daily, most days, there's not much to talk about. So I digress. So to answer this question, I think it really goes back to understanding where you are in those six cycles, growth, inflation, policy, profits, liquidity, and positioning. If you can tie wars and the underpinnings of war, the changes in commodity demand or geopolitical friction, trade tensions, et cetera, If you can tie those things back to causing a significant reversal in momentum or change in inflection where you are in one of those six cycles, then it will have an impact on asset markets.

46:12Most of the time, war, headlines of war do not. Some of the most raging bull markets of all time have come during wars. And so investors need to be quite aware of that, acutely aware of that. So Brian, if you throw slide 40 up, you know, so we're showing a little bit of the analysis that we, you know, showed our clients on a regular basis here at Point to Macro. We are investing during our fourth turning regime, you know, presentation. We have that as an appendix to our monthly macro scouting report presentation. And it's about, you know, 50, 60 slides of, you know, deep dive empirical research on some of these big topics like war, et cetera, you know, fiscal crisis, et cetera, that may eventually have a significant influence over asset markets.

46:54and the economy and policymakers' responses to those things over the long term. And one of the things we show is that wars tend to accelerate globally during fourth turnings. You know, you go back, you look at the last few four turnings, you know, with the Civil War, we had the World War II, and obviously we have Russia, Ukraine, Israel, Hamas. And ultimately, you know, one of the things that Neil found in his research, you know, in his fourth turning research is that, you know, when you're in these four turnings, they always sort of coincide with total war, right? There's enough demand for institutional change in the system in these fraternities that almost kind of requires a war in order for that change to go about.

47:35People don't give up rights and land willingly to the people who knock on the door politely and ask for them. They give up things like civil rights and freedom from slavery and things like that. You've got to pry that stuff out of their cold, dead hands, typically. Yeah. And so and so when you think about this from a fraternity perspective, you know, you go backwards in time. You know, the previous fraternity was the Great Depression and World War Two. The prior fraternity was the Civil War. The prior fraternity was the American Revolution. The prior fraternity was the Glorious Revolution. The prior fraternity was Armada Crisis.

48:06And the fraternity before that was the War of Roses. And that's kind of where the research stops going backwards. But I'm sure Neil can keep going backwards if he had time and probably will at some point in the future, if it becomes very clear that the U.S. is on a marching path towards a global war, total war. So the key takeaway is that eventually we're probably going to have a total war in this foreturning. I hope we don't. There's no guarantee we will, but there may very well be a total war here in this foreturning. And obviously that will require a complete mobilization of public sector resources.

48:35And if we have a complete mobilization of public sector resources, going back to what we talked about earlier on slide 99, where we showed the U.S. is at the GDP ratio was already going to be, you know, 125 % under current law, you know, without any of the, you know, Trump's tax cuts and all the other, you know, free stuff that Trump promised on the campaign trail this summer and this fall, you know, we're talking about potentially being at 125 to 142 % of GDP of poverty debt before we have to completely mobilize public sector resources and add another, let's call it 5 ,000, you know, or sorry, you know, you know, 50 ,000 basis points of potential, sorry, 5 ,000 basis points of up-to-date GDP to the U.S.'s fiscal coffers.

49:18So that's a long-winded way of answering your question. But again, this stuff can and eventually will matter. If it even is not a total war, the fourth turning regime that we're currently in does necessitate a complete mobilization of public sector resources towards the end of this process in order to actually have the, imagine if you went from a very complicated Rubik's Cube where all the colors all over the place. Eventually, what a fourth turning is, is somebody comes along, breaks the darn Rubik's Cube, and then picks it back together and puts all the pieces appropriately together, right? Instead of trying to spin it around for the next six weeks.

49:51So that's sort of what a fourth turning is. And eventually, if you believe that is the highest probability outcome, the breaking of the Rubik's Cube and putting it back together, that will require the breaking of the Rubik's Cube. That is the mobilization of public sector resources. So whether it's a war, whether it's a pop fist, There's a comet coming between the Earth and the moon in 2029. It may actually hit the Earth. Who knows? I don't know what they tell us and don't tell us. It could be a global climate crisis that causes a huge net migration internationally. I don't know what the answer is, but we do know that the U.S.

50:23public sector debt is going to accelerate significantly relative to current law, relative to any aggressive projections for the growth rate of U.S. public sector debt. And it's going to require some difficult sacrifices at the end of that rainbow. But at the beginning of that rainbow, which is why we're so bullish structurally, is the Fed's probably going to be called upon to finance a lot of it at the beginning of the process. Right. Yeah. So and that's so near term, interesting, like liquidity inflow. How we pay the bill at the end is the question. With monetary debasement, financial repression and inflation.

50:57There are only so many tools and historically we kind of know what those look like. Not exactly a pretty item in the long term. That did bring me to sort of wrap up in a way. I kind of wanted to ask you about just directly actionable items that people can think about in this sort of environment. Because there are many things that are happening. And just as an example of what I had in mind. um well okay so if you worry about the outbreak of war there are some stocks that tend to do well because they produce the materials needed for that war and it's increasing their top line is definitely going to go up if nothing else does even if they're terrible at operations so uh which you know northrop grumman or lucky martin would be sort of examples of that perhaps but i i don't know so that's like one example of okay if you're if you're betting on that if you're if you're betting on, I don't know, public sector debt increase.

51:55Is there an obvious sort of way in which things tend to go? I don't know if you can. So that's what I'm looking at. By way of wrapping it up for just our viewers, is there some sense about where things could go concretely? Yeah, 100%. So yeah, very much so. It's sort of weaved into our systematic KISMA-FOL construction process, which is again, that 60-30-10 trend following strategy that we use to help retail investors run their portfolios towards retiring on time and comfort. and already as a core feature of that 60-30-10 strategy is an admission that the bond market is ultimately the ultimate source of risk over the next over the long term um you know out of view we don't believe that you know treasury bonds are going to be a good you know capital appreciation asset over the long term um you know on a nominal basis and most likely on a real basis will probably cause you to lose money over the long term and so uh one of the ways in which one of the ways around that you know in terms of how we solve the problem for our clients at 42 macro is an understanding that we don't want to have 40 % of our portfolio sitting around in treasury bond market.

52:54That sounds crazy to me. So, you know, in terms of our 60-30-10 trend following approach, you know, we sold slide 11. We show our current KISP portfolio construction right now, Brian. We are currently at, you know, so SPY is the vehicle we use to manage equity exposure. IAU is the vehicle we use to manage our gold exposure. That's a maximum of 30 % of the exposure. And then FBTC is the ATF that we use to manage the Bitcoin exposure. that's at a maximum of 10%. And so right now, KISS is fully invested. Again, it's a completely systematic process. It's a trend following process that uses our market regime now casting process to incorporate ball targeting on the strategy.

53:28And it uses our volatility just on minimum signal to incorporate dynamic position sizing on each of these positions. And right now, those two top-down and bottom-up risk management overlays have us fully invested. So we're at 100 % of our maximum exposure of 60 % on SPY. We're at 100 % of our maximum exposure of 30 % in IAU. and we're 100 % on maximum exposure of 10 % in FBTC and Bitcoin. And so the allocations will change over time as we get different signals to our systematic process. But the core exposures of stocks, gold, and Bitcoin, in our opinion, that is set up to help you survive what is likely to be a extended period of time of above-trend public sector debt growth that ultimately forces the Federal Reserve to incrementally acknowledge the financial, or sorry, the fiscal dominance regime that we're in by accelerating monetary debasement, by accelerating financial oppression.

54:19And if we're right on that core fundamental belief, then a 60-30-10 stocks gold Bitcoin portfolio will be among the best risk adjusted ways in which you can participate in financial markets under the guise of trying to retire on time and comfortably. And obviously answering this question is very different for institutional investors, but I have that institutional investors have different asset classes and different things that they can trade in, which we use our discretionary risk management overlay to help them do that. Yeah. No. So that is super helpful in a way, because I think that that does address the concern about inflation in a real way.

54:57Yeah. Bonds are, especially US treasury bonds, longer term look to be on the, I don't know, to mention something that came up in our pre-discussion. At sixes and sevens, the British expression, sorry, this is my background from my father. They're not in a good place. They're not in a good place over the longer term, given the sort of broader term focus of the market. And whether or not we get tariffs, which would, I guess, cause inflation sooner rather than later, the expectation is there for difficulty. So that's actually quite helpful for people. And I've really enjoyed this discussion. We've gone from everything about noise and what tends to matter in the marketplace to, you know, potential for war, their effects on things, the need to avoid partisanship in order to be a level-headed investor.

55:55and sort of a sense about why the traditional, I don't know, the traditional 60-40 portfolio, that is just the standard advice, is likely, I think this is a real takeaway for people, is likely to not perform as it has in the past and will really underserve people who just walk forward with the conventional wisdom. In a changing environment, we've spoken a lot about the fourth turning in a changing environment, the traditional wisdom of the past tends not to be helpful and you have to adapt. So this has all been extremely useful, I think, for our viewers. I learned a lot. So thank you, Darius. Yeah, Sebastian, I appreciate you, man.

56:36You said something I think is very important to end on, which is, you know, we're in a period of great change. And we haven't even talked about AI, which is technological change, right? We haven't talked about AI, which, you know, in fact, in some future discussion, but we're already going to be in a period of great change from an institutional standpoint, something as simple and innocuous as, OK, the independence of the Federal Reserve is an institution that may change in this fourth turning. Investors need to be aware of that. So those are the kinds of things you would expect to see change over the course of a fourth turning.

57:05And the real key takeaway is that as an investor, when there's a lot of change, particularly big change, you have to accept the fact that yesterday's regimes and yesterday's data points and yesterday's analysis may not equip you with the best possible information as it relates to surviving all that change appropriately and profiting from that change as an investor. And so to me, I think the most important thing you can do as an investor to make sure that you as a retail investor are retiring on time and comfortably, or that you as an institutional investor are helping your clients retire on time and comfortably is acknowledging that you are never going to have all the answers in a period of great change.

57:49What's more appropriate is to figure out, in our view, in our humble view, and again, I think it requires an incredible amount of humility to accept the fact that the market is smarter than us. The market knows more than us. The market will always be smarter and always know more. And so this goes back to where we started the conversation, which is all of our asset allocation and portfolio construction recommendations that we make to our clients here at 42Macro come through the lens of our trend following the elements of our process, whether it be trend following 42 different markets on a daily basis to identify what the current market regime is, or there be trend following each of the individual exposures that we feature in our kids' profile construction process or discretionary risk management overlay process to determine what their appropriate weights should be at any given time.

58:34To me, that is going to set you up to have a more defensible, more higher risk-adjusted path to success than what I think most investors are doing, which is trying to predict all this stuff. I mean, good Lord, I work 75, 80 hours a week trying to predict all this stuff and have reasonable amount of success. If you're haircutting that by 175th or 180th as a retail investor, God help you. You're doing this very well. And so investors need to have, if I can leave everybody with one comment, is to force more humility into your investment process if you want to survive the next 10 plus years of this fourth turning.

59:13well. If you want to invest well and have good outcomes in your portfolio, you're going to have to force yourself to participate more in what the market is trying to price in, as opposed to positioning for whatever narrative or story you've constructed in your head that must come true for your positions to work. To me, I think that's just an objectively worse way to invest, particularly in a time of great institutional change in the U.S. and global economy. Yeah, that makes it. It's a good note to end on humility because things are changing so quickly. So yeah, being aware of that and being willing to, I don't know, do unconventional things.

59:4910 % to Bitcoin. I'm sure that's going to get some viewers. But I get chirped that it's not high enough from a lot of folks, but it is what it is. Yeah, I know. Still, it's a new thing. So it's a new thing, interesting new portfolio construction. And I just want to say thank you, Darius. Thank you to all the viewers for sticking with us on this one. I hope you learned a lot. I did. And so to everyone out there watching, thanks. And we will see you in the next one of these.

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