The Storm Is Coming - The Most Important Video I'm Making All Year

Welcome back everyone. In this video, I want to spend some time covering the most important report that I believe I have written all year. And the title of

the report and the focus of the report really brings to bear all of the macro changes that we've seen take place over

the last year and really last five years since the period of 2020 with COVID. And

so what I want to do in this session is break that down for you and explain a lot of the ideas. If you go to the Capital Flows research website, you can put your email in here and you'll get all of the updated research. And then as

a reminder, all the educational primers are right here. And the most recent report that I published is called a storm is coming because that really depicts the period of time that we're

beginning to approach right now. And so

what I want to do is begin to walk you through this. I would encourage you to

through this. I would encourage you to pull this up and read through it as we go through it because if you are trading in a certain portion of the market or

you're beginning to learn these ideas for the first time, I'm going to break down a lot of the educational aspects of it, how the different mechanics function, and then I'm also going to dig

deeper into the second and third order effect so that if you are a trader and you have a good grasp of how markets function, you can really begin to think about how it's going to impact the

different types of assets that you have exposure to. So, that's what I'm going

exposure to. So, that's what I'm going to do in this session. As a quick side note, if you are not a paid subscriber yet, or if you want to become a paid

subscriber, I am going to be doing a webinar next week that breaks down all of the different tools and models and approaches that I have in markets

specifically reserved for paid subscribers. And then I'm also going to

subscribers. And then I'm also going to go through all of the tangible trading implications for this specific thesis.

So on the one hand, all the frameworks, playbooks, models that I use to understand trade, interest rates, equities, every single major asset. And

then also on the other side, how can we use that framework and the second and third order effects that I'm going to walk through here to directly connect to markets as we move into this more

volatile period of time. So on this section I start with this question. What is what

important truths do very pe few people agree with you on? And this really gets to the core of why markets exist?

Because when you begin to think about the market, how it functions, the expectations of it, you know, the ideas

that you have and theformational edge you can develop is the differentiating factor for having success in markets. If

you don't answer this question, all you're going to be is a short-term momentum trader, which is fine if you want to do that, right? But that's going to have limitations because the amount

of people in that space is incredibly high because you have all of the quants and these new AI models that are coming around and really squeezing all the

alpha out of that. And so what important truths do very few people agree with you on? This is a question I ask myself

on? This is a question I ask myself every single day because anytime I put on a trade or I begin to formulate a worldview, I want to make sure that it's

differentiated. So, I have models on

differentiated. So, I have models on growth inflation liquidity positioning, price, and you can go through all of the macro primers on the main page of the website. You know,

right here, this whole section, there's an entire list of educational primers that I've written, and they're all free.

So, you know, go through all of those.

You can go through all of those become before you become a paid subscriber. I

always tell people, don't even become a paid subscriber. Just go through all of

paid subscriber. Just go through all of those and you're going to learn a ton.

And if you want to pull all those pieces together for the tangible impact of markets, you can kind of go through that paid subscriber section. But I have models on all of those mapping all of

those ideas. But as we have kind of come

those ideas. But as we have kind of come into this period of time where you have so much liquidity in the market, so much financialization, the final frontier of

macro is really the quality of ideas.

you know, a lot of the, you know, space around quantitative trading has really been able to thrive without knowing the mechanics of the system because as long as they're right 50% of the time and

they can have a very high frequency of trades, their expectancy or the way they make money over time will be positive.

But the thing is that is always going to be some type of race to zero. and the

new quant funds and AI tools are really stripping out every statistical inefficiency in markets and compressing the edge that used to exist. And so in my view and this is really a lot of

people have recognized this and are actually betting on this right now. If

you go to any funds like Blackstone or or excuse me, Black Rockck or also DEH, things like that, they're actually shifting away from quant funds and

hiring discretionary traders who have their own processes to be able to do things instead of this whole multistrat approach or you know quantitative

systematic macro approach. So the truth and the ideas that you have are going to begin to be the most differentiating factor about you because leverage has

become permissionless in today's world.

It's not just about if you have capital.

Everyone has capital. It's about the quality of your ideas. I shared this in a previous podcast where I talked about um Naval was doing a podcast on this this great podcast called Curate People.

You can go on his website see it. And

one of the things that he talked about is, you know, he doesn't really care if someone another VC firm could be on his board or give him capital. He doesn't

need capital. He needs someone who can offer more than just capital. Can offer

a really unique view of the world, analysis that can't be replicated, specialized knowledge that is differentiated.

Those are really the keys in today's world. You know, so many people are

world. You know, so many people are focused on some new, you know, model or indicator or something like that. But

very few people actually spend the hard work on their own education so that their own mind can come up with a base of knowledge that functions as an asset

that can be monetized. And so I I cannot emphasize that enough. I've structured a lot of my life research and trading around that specific idea. And so what

important truths do very pe few people agree with you on? And here is the truth that I believe that very few people agree with me on and this is really widespread across the entire industry

and how the even the industry has been structured. So very few people and I say

structured. So very few people and I say I believe we are going to see an increase in macro volatility in the next 12 months that will dwarf 2022 COVID and

potentially 2008. But the source of

potentially 2008. But the source of volatility will be from an orchestrated devaluation in the dollar against major currencies. Now immediately when you

currencies. Now immediately when you hear that you think oh dollar devaluation that's like everything else.

Everyone thinks the dollar is going to zero and we should just get long risk assets. Hold on. The implication is that

assets. Hold on. The implication is that most people think that a fall in the dollar devaluation will cause risk assets to rally. But this couldn't be further from the truth. I believe this

is the biggest risk in markets today.

Here is the thing. If you misunderstand how dollar devaluation functions or how changes in the currency function,

that is going to begin to impact the second and third order effects of how you're thinking about the impact on markets, right? And so there's a reason

markets, right? And so there's a reason why, for example, and again people say like, "Oh, this is arbitrary. This

doesn't really matter." Why is it that the Fed's liabilities have not been made legal tender? Right? That's a key

legal tender? Right? That's a key difference in how the Fed is shifting or manipulating the money supply versus things like the Weimar Republic, right?

No one wants to talk about that, right?

Or the divergence in it, right? And no

one wants to talk about the global balance of payments or the type of devaluation. So, for example, you could

devaluation. So, for example, you could have a quote unquote dollar devaluation or a fall in the dollar against another currency and that doesn't necessarily mean that asset prices are going to go

up or there's going to be inflation. And

so, most investors, you know, the same thing in my view is really happening. Most investors assumed

really happening. Most investors assumed that mortgages were too safe to trigger systemic panic, right? Right? And they

dismiss credit default swaps as too complex to matter, which I believe is the same thing that's happening with the entire crossber flow and global balance of payments. Right? When you talk about

of payments. Right? When you talk about global trade and the global balance of payments and the negative impacts of the dollar's reserve currency status, people will say, well, that just sounds too

complicated to understand the Euro dollar market. This that just sounds too

dollar market. This that just sounds too too much too hard to understand. I

always know the dollar devaluation happens. The dollar goes down over time.

happens. The dollar goes down over time.

And so I'm just going to do XYZ. Here's

the thing. All of us know, and this goes back to what what important truths do very few people agree with you on.

Everyone know that currencies lose value over time. That's supposed to take

over time. That's supposed to take place. Everyone knows that stocks go up

place. Everyone knows that stocks go up over time, right? In 50 years from now, stocks are probably going to be way higher. Everyone knows that. That's not

higher. Everyone knows that. That's not

a differentiated view. That's not an edge, right? And what we are seeing

edge, right? And what we are seeing today is a lot of sensationalism around headlines that are not actually differentiated. And what people say is

differentiated. And what people say is like, oh, there's this thing, but over the long term, we know it goes up. Okay.

Well, I can go talk to a financial advisor and pay them that to get that opinion. What view is actually

opinion. What view is actually differentiated enough that is actually in alignment with the causal mechanics of the system? And that is my view of

what is taking place right now. So the

same complacency exists and almost no one is examining the specific mechanism of devaluation. This is really key right

of devaluation. This is really key right here that could shift from being a tailwind to a genuine risk for asset prices. And you can see this blind spot

prices. And you can see this blind spot when you ask people about it. They

insist that dollar weakness is always bullish for risk assets and assume that the Fed would intervene if anything serious occurred. That mindset is

serious occurred. That mindset is precisely why a deliberate engineered devaluation would likely drive risk assets lower rather than higher. Now

this is not just saying oh let's take the popular opinion of people and begin to you here here's here's the entire problem in my view with the industry

that is taking place of financial media directly connected to markets and things like that. Most people because they see

like that. Most people because they see what Michael Bur or other people did during the great financial crisis, they know that they have to say that they're a contrarian because they know that, you know, they want to align themselves with people that made the biggest money in

history, right? Like, oh, be a

history, right? Like, oh, be a contrarian, right? The problem is that

contrarian, right? The problem is that if you just go into the market and say, "Oh, what are these views that people have? Let me just take the opposite

have? Let me just take the opposite view." That is so foolish in my view,

view." That is so foolish in my view, right? It's it's the same thing that

right? It's it's the same thing that people talk about like, oh, if you have a losing strategy that always, you know, buys a dip or shorts the rip or something like that. Just flip it and do the opposite thing and you'll make

money, right? It's like saying, "Oh, I

money, right? It's like saying, "Oh, I keep losing when I put this money on the roulette table. Let me just switch the

roulette table. Let me just switch the number and maybe I'll stop losing." No.

You know, you have the same probability of getting screwed. And you actually have to go to the causal mechanics of the system to develop a view. And if you

begin to develop a view, and if the popular consensus is the direct opposite of the view, and if you can quantify that, and if you can directly connect it

to predictability and asset prices, then you can actually have a monetizable end.

That's a lot of ifs, which means there's a lot of work that needs to be done. And

so that's what I'm going to cover in this section. So, and again, you can

this section. So, and again, you can throw your email in here, go get through all the the re research that's getting sent out.

So what I'm going to do in this article is lay out the full details of how this functions, how to understand the signals for when the risk materializes, what assets will be impacted the most

positively and negatively. All of this comes down to three major ideas and all of these ideas have converged and are escalating as we speak and we move into

2026. Number one, the global liquidity

2026. Number one, the global liquidity imbalance from crossber flows is creating fragility.

Number two is the Trump administration's stance on the currency, geopolitics, and trade. And number three, and this is

trade. And number three, and this is really key, the transition of a new Federal Reserve chair who aligns monetary policy with Trump's negotiating leverage.

When you have these three things, you begin to dramatically change the probability of outcomes as we move into next year. And that is really the key

next year. And that is really the key thing that exists. So let's start with the imbalance. A structural liquidity

the imbalance. A structural liquidity imbalance has formed through years of uneven crossber flows. The issue is not the size of global debt, but the way

these flows have shaped balance sheets into something inherently fragile. It

mirrors the dynamic behind adjustable rate mortgages before the GFC in that there is a large imbalance that exists.

The unwind once an unwind starts the structure itself accelerates the correction. Liquidity evaporates and the

correction. Liquidity evaporates and the process becomes difficult to stop. It is

a mechanical vulnerability embedded in the system. The way I like to think

the system. The way I like to think about this is very much like a construction project, right? If you have a very shaky foundation, right? Or if

you have a very poor structure then anytime you have energy transmitted through that whether that is an element of let's say water or wind or some other

dynamic transmitted through that that can be amplified and crush the entire structure right and so you can have inherent

fragility in it just because of the structure itself. That's what's taking

structure itself. That's what's taking place with the global imbalance in trade right now. All of this starts with how

right now. All of this starts with how the US is the single place in the world where everyone buys, you know, where the US buys everyone else's stuff. And it's

because the dollar is the reserve currency status. It's so strong that it

currency status. It's so strong that it allows us to import everything as a fraction of what we can make it for here. Every time the US buys stuff from

here. Every time the US buys stuff from the rest of the world, we give the them dollars in return. So just think about this on two sides. Number one is if you import something from another country,

you're doing that with the expectation that it's going to be cheaper to do that than hire people in the US. And a lot of times that's true, right? Like over the last,

you know, 40 years, especially since China joined the World Trade Organization, everyone in the US has just said, "Let's import from China or other countries because it's so much

cheaper." And as a result, prices have

cheaper." And as a result, prices have been incredibly low despite some of the changes in inflation that we have seen.

But overall, it's much cheaper to have it in the US. And so the majority of the time, what begins to take place is the

US for cheap be is able to buy ass or buy imports or buy goods and services and import them from other countries.

And then what happens? We give those people dollars. Now those people can

people dollars. Now those people can take those dollars and go and buy goods and services from the United States. But

if they begin to do that, that shifts their currency in the short term. And in

real terms for their currency, it begins to change if the US will continue to buy more stuff from them, right? And so what the other countries want is to be able

to continue to export their goods. And

so you know you have a surplus of dollars in the system in the hands of foreigners and then they then take those and put them in US assets. So in order

to maintain its trade relationship you know it is the only game in town and that is overlapping with where else are you going to bet on the AI revolution

robotics and people like Elon Musk. It's

all in the United States. There's no one else. There's nowhere else. Now that in

else. There's nowhere else. Now that in itself is a return on investment kind of profile in the United States, but that's

matched with global liquidity. That's

the reason why if you have a massive change in global liquidity, it doesn't matter how well MAG7 is doing, if people sell the stock, it's going to go down.

And it doesn't matter how much capex or how much, you know, things are actually taking place in the system. If people

are selling and there's more sellers than buyers, then the stock is going to go down. And so this cycle takes place

go down. And so this cycle takes place over and over. The US buys stuff, gives foreigners dollars, foreigners buy US assets. US gets to buy more cheap stuff

assets. US gets to buy more cheap stuff because foreigners keep holding US dollars and assets. This cycle has created a massive imbalance where the US current account is at an extreme. The

flip side of this coin is investment by foreigners. So as a net result, the US

foreigners. So as a net result, the US in this white line is importing more than it's exporting. massive. And by the way, this is the same exact thing that happened into the 2008 financial crisis,

except we don't have the underlying fragility in the mortgage market in the same way we did back then. But but you have this current account collapsing into the great financial crisis or

excuse me before the great financial crisis as just think about it like this.

Foreigners are getting net long, right?

And as you know, if all positioning is net long and then you have a small change, all those longs can get washed out, right? And positioning always you

out, right? And positioning always you always want to take the other side of positioning typically if you're in alignment with the macro regime. And so

you got everyone net long, especially foreigners. And that took place into the

foreigners. And that took place into the great financial crisis, which began to unwind that, and that's why the current account began to move back up. And you

had to unwind during that entire period of time after that as you had deleveraging. Now we are seeing a very

deleveraging. Now we are seeing a very similar thing with the mechanism of liquidity where the US is importing a lot and what happens crossber flows rise and foreigners get that long. When

foreigners continue to buy US assets indiscriminately so that they can continue exporting their goods and services to the US. This is why we are seeing the S&P 500 valuations at

all-time highs and you know this is the primary driver in my view of the higher valuations right everyone says oh stock market to GDP is at an all-time high we

have all these changes and traditional equity valuation frameworks like value investing you have Warren Buffett Graham and Dodd you know these approach were developed saying oh let's buy you know

low valuation stocks uh when you had a lot less liquidity in the system, right?

And so what people overlook is that global trade itself expands liquidity.

The current account is on one side and the capital account is on the other side. So when you have global trade

side. So when you have global trade increase, just remember that the flip side is crossber flows increasing as well. And so when you have two countries

well. And so when you have two countries that have trade, their balance sheets become crosscolateralized and crossber flows exert powerful influence on asset prices. So just think about it. You have

prices. So just think about it. You have

the underlying supply chains crosscolateralized across borders. On

the flip side of that, you have markets crosscolateralized. And that's why you

crosscolateralized. And that's why you actually have such high correlations in markets. There's a reason why we see

markets. There's a reason why we see stocks and bonds and different currencies correlated together in a much more concentrated way than we did in the

past. And so for the US as the largest

past. And so for the US as the largest importer of good capital flows to the US which is why the market cap to GDP is significantly higher than the 1980s when

all the value investing frameworks were formed by Graham and Dodd in security analysis. This is not to say that

analysis. This is not to say that valuations don't matter but the total market cap basis it is due to changes in macro liquidity instead of the market acting irrationally. I believe that this

acting irrationally. I believe that this idea right here is probably one of the most underappreciated in markets because there is still a predominant expectation

by value investors or people that value investing is the way to invest because you you know you have all of those frameworks formed during a totally different time in the market. And it's

not that you say that oh well I want to buy something that's cheap and sell it for more. Everyone wants to do that. We

for more. Everyone wants to do that. We

get that. But we need to ask questions because when you have the stock market cap to GDP at an all-time high instead of saying oh this is just the market acting irrationally and I can't buy here

you should begin to say why is that taking place what is the mechanism how do I think about predictability of price over different time horizons because you know value investing all it's saying is

that value is a signal for future returns and that if the valuation multiple is lower and the underlying expectations that cash flow remain

constant that you want to be able to buy and that that has predictability over the future right it's a framework for managing uncertainty with a margin of

safety and I think there's a lot of validity to that in understanding that I mean all of us if we've run any type of real estate deal or whatever it might be we run a DCF and we look at the

different changes and risks for cash flows and the discount rate but the key thing is that what drives that discount rate, right? Because you can run a DCF,

rate, right? Because you can run a DCF, you can run a real estate portfolio, whatever it might be, but you always put in your expected DCF. And if you look that DCF, if you look at your, you know,

cap rate for real estate or your your your discount rate for any other private equity deal, and you say, okay, well, what's my cap rate on exit? What's my

discount rate on exit that I'm discounting these cash flows by? And if

you change that a little bit, that will determine one of the major outcomes for your net asset value on the other side.

And if that's kind of new and you don't really understand that, that's fine.

Just take all of that or these ideas, throw them in chat, JBT, ask it to help you with that and it'll give you just a basic breakdown. It's not that

basic breakdown. It's not that complicated, especially if you understand it with real estate because it's a very intuitive asset to understand it with. So, one of the primary sources that fueled the fragile capital structure in the mortgage market

during the run-up to the GFC was foreign investors buying US private debt. Just

notice, and this is something I'm just shocked that more people don't talk about, into the great financial crisis, one of the largest

mechanisms where capital moved into the mortgage industry or private debt was from foreigners, right? That was one of the major things. And you'll notice massive inflows during this time. What

did that overlap with? It over

overlapped perfectly with the current account falling because we were importing more than we were exporting, right? And so the the key thing to note

right? And so the the key thing to note here is that the entire focus of a movie like The Big Short, it was on mortgage back securities and adjustable rate

mortgages and the whole, you know, CDX uh uh CDS and you know, credit default swaps and things like that. But no one asked the question, wait a second, where did the people get money to buy those?

Well, we have a fragile capital structure through all these financial engineered products, but where is the money coming from? Because you can have

garbage financial products, right? But

where is the money going to come in and come out to have a surplus liquidity for those? And that's my entire point in

those? And that's my entire point in this presentation is to say okay we know that there's not the same amount of fragile structures in this manner like

we had in the GFC but the mechanisms for liquidity are the same and those are beginning to shift and so that's actually why I find Michael Bur's recent

substacks and analysis interesting because Michael Bur's big short in the GFC was on the fragile capital structure and liquidity was the repricing that changed as domestic and crossber

flows shifted. So if we didn't actually

flows shifted. So if we didn't actually see a change in crossber flows, you probably wouldn't have had the extreme payout and extreme draw down in the GFC that

you had Michael Bur take advantage of.

And so this is why I find this analysis very interesting right now in connection with crossber analysis that I'm doing because you know I always try to align myself with liquidity and the changes in

crossber liquidity in rates and FX and how those function on a global basis and then from there I try to refine down even further and so you know he's talking about MAG7 and some of the

bearishness around that. I'm totally

happy to short Mag 7, but I better have liquidity at my back for the downside.

And if that's not taking place, there's no way I'm shorting Mag 7. And so,

foreign investors are sending an increasing amount of capital into the United States. And both both foreign

United States. And both both foreign flows and passive flows are becoming a even more concentrated in the top seven stocks. And so, the the important thing

stocks. And so, the the important thing to note here is the type of imbalance taking place. And so this all this is

taking place. And so this all this is all coming to okay we know that there's this imbalance. How does that really

this imbalance. How does that really connect to the function of the dollar and liquidity and things like that? I would just say Brad sets is probably one of the most

underappreciated well thoughtout guys in finit right now and also just I mean I think all the smart people are on kind of finit right now posting their views and things like that. Um and he has just

all this kind of like background as well explaining global trade. So, I would encourage you to go check out his articles. He has a great report talking

articles. He has a great report talking about these dynamics and he models them really well. I would say that well, let me walk

well. I would say that well, let me walk you through this and I'll I'll I'll share some thoughts about how I kind of build on some of the analysis he does.

And again, not a lot of people are talking about this, right? I'm really

surprised because especially for Brad and a lot of the reports he puts out, I think they're really exceptional, right?

not really a ton of people take them seriously because you have all these major risks and if those begin to unwind then all of the charts that Brad's putting out people are going to begin to

say oh wait it's not just you know this smart guy putting up a lot of really cool charts that map all these changes but it's an actual systemic event that could happen right and so why does all

this matter well uh in you know this is these are Brad's words because of a lot of financial models now assume incorrectly I think that the dollar will rally in the event of financial

instability. That is a fundamental

instability. That is a fundamental presupposition that I believe is flawed in the world right now. And Brad

believes the same thing. Say a sell off in US equities or credit. That makes it easier for investors to continue to hold uh dollar assets unhedged. So think

about foreigners. If a foreigner buys the S&P 500, they're not only buying the S&P 500, but they're also being long dollars. So if the dollar rallies and

dollars. So if the dollar rallies and the S&P sells off, then that actually helps them because the dollar is rallied against their own currency, right? In in

in one side of the equation, for one side of the balance sheet, the logic of this argument goes, sure, my fund is very overweight US financial assets, but because of dominance of the US in the

global equity indices right now, that risk is probably offset by a natural head provided by the dollar as the dollar often rallies into bad news. The

dollar thus will likely rally in the event of a significant equity market correction as it did in 2008 for reasons uh and for reasons different 2020. And

hedging dollar risk eventually becomes undoing a natural hedge. What does all that mean? Here's what I would say. In

that mean? Here's what I would say. In

2020, the interesting thing that took place is that you had a lot of changes that took place where positioning was massively off sides and

you actually had stocks and bonds for a very short moment, you know, go down a little bit at the same time. You know,

these rebalances and all these other things and then 2022 came around and everyone said, "Oh, well, don't worry.

If we move into a recession, bonds will help me offset that." Right? And you'll

remember that 2022 while the equity market was only down I think it was 20% or something like that not a massive deal not 2008 where it was down 50 plus

percent. It felt and the total market

percent. It felt and the total market cap was greater in losses. Why? Because

stocks and bonds went down. So in many ways the 2022 market correction in stocks and bonds what actually erased a very similar amount of wealth

in you know compared to 2008 actually probably really comparable to 2008 but it did it in stocks and bonds right and so the the key thing is that both things

went down at the same time which creates a effect where people actually have to sell more.

I would say that this setup is very similar because it's not just that US assets are going down, but also the dollar could sell off at the same time

and amplify that entire effect. That is

the key. And so conveniently, this is going back to Brad's words, the expectation that the dollar serves as an equity or credit market hedge based on past correlation also increases current

returns because it provides an reason not to hedge US market exposure in a time when hedging is expensive. This is

literally how so much of crossber flows are structured right now. It's it is insane how much positioning is based on this simple idea where if this was

challenged that's why you can have tariffs actually like we did earlier this year caused such massive selling pressure. So there is a risk that h past

pressure. So there is a risk that h past correlations will not hold if the dollar rallied in 2008 not thanks to its reserve currency status but rather because funding currencies in a carry

trade tend to rally in a carry on wine and that destinations of currencies in a carrying trade tend to sell off.

Investors should not assume that the dollar will rally in future instability.

One thing is clear the US is currently on the receiving side of most carry trades. What does that mean? It means

trades. What does that mean? It means

that a lot of foreigners are net-long US equities. And if you have a carry trade

equities. And if you have a carry trade on wine, that is a bigger in my view that carry trade on wine is a much bigger risk to US equity markets than internal delinquencies from like the

housing market or something like that.

I'd encourage you to go through this report by Brad. Now, let me kind of just pull this together and these ideas together and simplify them a little bit.

for this type of dynamic. I believe that you have a situation similar to 2022 actually where it's not just about oh the equity

market could go down but it's about the equity market could go down but if bonds go down as well that will amplify all of these changes in positioning instead of

bonds you know we'll talk about bonds a little bit later and the impact on them but if you have US equities going down and the dollar selling off at the same time that amplifies it because

everyone's betting on the opposite or have structured their portfolios around the opposite very similar to how everyone thought that 6040 portfolios

would do fine moving into 2022 and so that is the main idea where everyone is net long US assets the critical thing so let's connect this to markets right let's take okay we have

that idea we have that risk that imbalance that is occurring we understand that that's a problem let's directly connect that to the S&P 500 The foreigner's return if someone is, you

know, in another country and their foreigners return of the S&P 500 is determined by the return in the index and in the currency, right? And so if the S&P rallies 10% in a year, that

doesn't imply a positive return for a foreign holder if the dollar drops commensurate around against their local currency. So just think about it like

currency. So just think about it like this is if I take my dollars that I received from the US. I I sold a bunch of car parts to the United States. I got

dollars in return and I now buy take those dollars and I buy the S&P 500.

I have a choice. I, you know, let's say I'm buying them in pesos. I can take those dollars and hedge them against my

peso risk. But if I do that, I have to

peso risk. But if I do that, I have to pay hedging costs. If I don't, then my return in the S&P 500 is determined by

the S&P 500 and the currency. So now I'm not just taking S&P 500 risk. I'm also

taking currency risk. And that's really where the carry trade begins to take place. Here's a chart of the S&P 500

place. Here's a chart of the S&P 500 hedged and unhedged just using the euro.

And you can see that the returns especially over the last two years have been you know there's been a lot more of a spread right like back in you know

this period of time not as much and the reason why or I would say one of the main reasons why there's this large spread has to do with such a large increase in crossber flows and now you

have the dollar beginning to make these more large moves especially this year and so that is the structure of what is

beginning to take place. And now we're seeing the acceleration of that as we move into this year. And this brings us to the second idea of Trump FX and economic warfare. So we know that

economic warfare. So we know that there's global imbalance takes place.

Now we're going to connect that to Trump, the currency regime, and geopolitics. When we entered this year,

geopolitics. When we entered this year, two specific macro changes took place that accelerated how much risk exists in the global balance of payments system.

So all that imbalance already exists. it

amplified a little bit more but this year it began to shock the system and that shocking is accelerating now we saw the dollar sell off at the same time US

equity sold off because it was driven by tariffs and crossber flows as opposed to domestic delinquencies you'll notice that if you go back in the research I was doing at that time you basically had

the equity market down a ton but there was you know the labor market prints were still coming out fine and there was no risk of recession at the time that was the entire reason why I began to buy

equities aggressively in April and May because the whole idea was okay this is driven purely by tariffs which means that it's connected to this crossber

liquidity thing and this large imbalance and it's not from an internal recession.

Think about it. We had a massive draw down earlier this year that had nothing to do with a recession. Just think about that for a second. What could cause another massive draw down without actually causing a recession?

This is the main risk. So this is the exact type of risk that stems from the imbalance that I've been noting above and walking you through. The real

problem is that if the dollar is selling off at the same time equities, any intervention by the Fed will push the dollar down even more, which will almost certainly further amplify the downside

in equities. The opposite of

in equities. The opposite of conventional wisdom around the Fed put.

So when the source of selling is external and based on the currency, the Fed is in a much more difficult position. This shows that we already

position. This shows that we already entered the macro endgame that I've been talking about where the currency is becoming the asymmetrical lynch pin of everything. This right here is if you

everything. This right here is if you are trading markets actively or you are managing capital on any time frame is the most important idea to understand

right now because there will be a moment in the future where equities are down and if the dollar is selling off at the same time if the Fed steps in and tries

to do some type of emergency rate cut or some type of emergency intervention that could actually cause equities to sell off even more. Why? Because that

would push down the dollar, which would cause foreigners to say, "Oh, I need to pull back exposure even more." That is the direct opposite where everyone thinks as soon as the Fed intervenes,

you know, everyone's been conditioned to say, "As soon as the Fed intervenes, you buy the dip, right?" And that's even taking place right now, right? Where you

see this kind of question mark around the December meeting and do I buy the dip? How fast do I buy it? And then you

dip? How fast do I buy it? And then you begin to see that realize and you see equities rip and people are trying to frontr run that, right? and they get chopped up in the process a little bit.

So this underlying presupposition is really key because if you have the Fed intervention actually causing an issue and more downside in equities because

the driver is the currency as opposed to, you know, the a domestic backs stop that they can do, right? that can cause even more downside in equities because

everyone says, "Oh, I'm going to buy, you know, the dip once the Fed intervenes or something like that. And

as soon as they buy it, it fades immediately because foreigners use that as exit liquidity to get off even more.

And equities just make new lows again.

And that's the risk that exists right now. And so, you know, again, this this

now. And so, you know, again, this this comes down to understanding the mechanics and the currency really well, right? Because this broad statement of

right? Because this broad statement of dollar devaluation is not anformational edge, right? No one wants to talk about,

edge, right? No one wants to talk about, oh, the dollar going down, okay, is that inflation? Is that the dollar going down

inflation? Is that the dollar going down against another currency? Is that

dollar, you know, is that valuation expansion? Right? Like what are the

expansion? Right? Like what are the exact mechanisms of that? And how is that an actual view as opposed to just benefiting from having a long time horizon and being in the market long

enough, right? Because a lot of people

enough, right? Because a lot of people will say dollar valuation this you know what whatever the reasons are and they're not right because they actually understand the mechanics of the system well enough. They're just right for the

well enough. They're just right for the same reason your financial adviser is right which is well just stay in the market long enough and you'll make money which is true. It just depends on when you enter the market and when you exit,

right? And when you're kind of retiring

right? And when you're kind of retiring and things like that because a lot of that is based off of demographics. So I

I just cannot emphasize this enough, right? These subtle details are the

right? These subtle details are the differentiating factors for in my view success or failure in markets over the next decade because getting these turns

right will determine any type of you know success over the next decade. And

so how does this link to what we're seeing right now? Trump and Messen are openly pursuing a weaker dollar policy and using tariffs as the leverage to gain the upper hand in the economic conflict with China. If you have not

followed the research I've published on China, you should check out this video right here. This is one of the most

right here. This is one of the most important videos. You know, one of the

important videos. You know, one of the things I cover in the video is that China is trying to hollow out industrial bases. Everyone um in the US, even you

bases. Everyone um in the US, even you know conservatives Republic whatever it might be, uh conservatives, Democrats, Republicans, all everyone, right? Everyone kind of has this

right? Everyone kind of has this underlying presupposition that like, oh, we shouldn't the US should not be intervening internationally or this kind of like growing idea. Whether you

believe that or not, we're not going to talk about that. But just know that China is intentionally trying to hollow

out industrial bases of other countries.

That's why it's trying to export so many uh auto um if you just look at their auto export data, China's exporting a ton of cars. They're exporting a ton of stuff that's hollowing out the German

industrial base, right? They're trying

to develop different geopolitical footholds in places like the Middle East and they are actively trying to subvert and implement an economic war playbook

so that eventually it can come to the US and say hey you need to do X Y or Z or else you're not getting rare earth or this or that whatever it might be that they have gained in the supply chain leverage that they're trying to obtain

right now. And so th this is just one of

right now. And so th this is just one of the most important things in the geopolitical sense because and I actually think there's just so much

alpha to develop around it because everyone loves to you know like all of the figures that are in politics now people just love them or hate them right and no one likes to think clearly about

politics. There's kind of this virtue

politics. There's kind of this virtue signaling in the financial industry of like, you know, you have some people on one side that are just extremely political and just cooked and you have other people on the other side that virtue signal about being apolitical and

I'm in markets and I'm not political or something like that, right? Like I think if you don't have a view of the geopolitical situation, then you are cooked because these flows that are

changing are directly linked to the geopolitical situation, right? and the

carry trade and the global balance of payments. Like those are all linked

payments. Like those are all linked right now. And so I think those are some

right now. And so I think those are some of the most important things to have a view on. And so you know that those are

view on. And so you know that those are the views I lay out in this video. And

so the moment that Trump took office, which is the red arrow right here, pretty wild how it top ticks it. The DXY

begins to fall. And this is the only the beginning in my view. You have this entire move down. And remember, one of these moves was during the equity selloff when you had the S&P 500 selling

off. So you have the dollar going down

off. So you have the dollar going down and equities moving down as foreigners sell. That really marked in my view a

sell. That really marked in my view a regime shift that we are going to see over the next five years where one of the major risks is dollar selling off as

equity selloff as well because the downside of that is much larger. Notice

that short end real rates have been the primary driver of the DXY which means monetary policy is the key input into this along with tariffs by Trump. So my

view is that what you're going to have next year is Trump trying to cut deals on the tariff side to shift flows and then him trying to put pressure on the

Fed to push down the dollar more and devalue the dollar a little bit more against these other currencies. And

again, when I say dollar devaluation in this context, we're talking about pushing the dollar down against other currencies, not necessarily, oh, this is going to push up asset prices. Just know there's a world where the dollar can devalue

against other currencies and your Bitcoin, gold, or whatever else it might be go down, right? That is a falsifying piece of evidence for the idea that dollar devaluation always pushes risk

assets up, right? And so short end real rates, especially the Fed pushing down short-end real rates, has been one of the major drivers behind the dollar and even the most recent rise that we've had

in the dollar right here over the last month or so. So Trump needs the Fed to be more accommodative in monetary policy because it helps weaken the dollar, not just because he wants to pump the economy. I actually think all this stuff

economy. I actually think all this stuff that we're seeing around tariffs and and and Trump and doing all these different things, you know, my view is that um he's not just kind of shooting from the

hip and hoping for the best, but that he has a little bit of a plan around it and he's using tariffs as a negotiating stick to be able to accomplish those things because it's very challenging to

accomplish a lot and pull back all of these global imbalances simply from the executive branch. And so

this is why he put Stephen Moran into the, you know, board of Fed, uh, uh, Fed governors. And you'll notice that he has

governors. And you'll notice that he has Stephen Moran or my whatever you want to call him. Um,

he has a great paper that goes over the entire restructuring of the global trading system. So just think about

trading system. So just think about this. Trump says, "Okay, I need this guy

this. Trump says, "Okay, I need this guy in the Fed governor so that he's voting on interest rate cuts and this is a guy who understands the global trading system and has a view that's directly

aligned with basically all the stuff that I'm laying out right now." And so what is the first thing that he does? He

takes his, you know, dot plot decision and projection and puts it, you know, almost 100 basis points below every other FOMC member, which is a massive

signal. He's setting a precedent that

signal. He's setting a precedent that says, "Hey, we are going way lower because monetary policy can't just be about inflation. It can't just be about

about inflation. It can't just be about domestic side. We need to restructure

domestic side. We need to restructure the global side or else we are going to lose the war with China and we are going to change the they need to change the valuation of the currency as well as cut

deals on the tariff side and trade side." And so here's the main idea. The

side." And so here's the main idea. The

core dilemma is that the United States is in a real economic conflict with China. Uh this idea that oh well just,

China. Uh this idea that oh well just, you know, let let free markets settle things out, right? Like if the US just lets free markets continue with everything, right? This idea that oh

everything, right? This idea that oh they'll let them do whatever you'll have, you know, look what happens with the monopolies right now. You just allow free markets to take place. Wealth

always concentrates. monopolies come in and they start exerting power, right?

And so this idea that well, we just don't want intervention markets, we want this kind of libertarian type of thing, that doesn't work in a global trade

system just doesn't work, right? Because

not everyone is a good actor. And so

there is a real economic conflict with China. It must be actively engaged in or

China. It must be actively engaged in or risk losing strategic dominance. Yet a

weaker dollar policy achieved through significantly looser monetary policy and aggressive trade negotiations cuts both ways. It can boost domestic liquidity in

ways. It can boost domestic liquidity in the short term. Right? So there is a little bit of a factor there, but it also suppresses crossber flows. A weaker

dollar can trigger foreign investors to reduce exposure in US equities at the very moment the currency weakens as they adjust to new trade terms. A shifting FX regime, it places the United States on a

cliff. And this is the most important

cliff. And this is the most important implication that you can take away from this idea here.

One path requires confronting China's economic aggression while the other risks a broad repricing in US equities driven by a weaker dollar against major currencies. So the US is on a cliff

currencies. So the US is on a cliff where one side they need to push back against China, but the other side is them doing that can cause US equities to go down and pull up credit spreads which

could risk pushing the US into a recession. And so this brings us to okay

recession. And so this brings us to okay how are these moving parts of this cliff right here beginning to be catalyzed and realized as we move into the beginning

of 2026 we're watching a global imbalance develop that is directly tied with crossber flows and the currency this has accelerated since Trump took

office and so these dynamics are not theoretical and I kind of go over that the final two years you know they're already reshaping markets and global trade You know, we're building toward

these catalysts when the Fed share steps in during the midterms, right? Next

year, Trump is going to enter the final two years of his term. And just think about it. This this is the last two

about it. This this is the last two years that Trump is going to be president. He is going to want to go out

president. He is going to want to go out with the bank. He is going to want to have his defining mark on American history, right? All right. So, he needs

history, right? All right. So, he needs to hedge his bets a little bit into midterm so he can get his votes, you know, they can get their votes and kind of swing a little bit for the next election and be able to establish a

little bit of dominance there. But this

is Trump's final big play and I believe that Trump is going to push most aggressively dovish monetary policy

u have that stance and it is likely to drive a weaker dollar policy until inflation risk re uh reverses and we begin to see more

inflation risk. Most investors assume a

inflation risk. Most investors assume a dovish Fed is always bullish for equities, but that only holds in a resilient economy. It breaks down when a

resilient economy. It breaks down when a dovish policy trigger and an unwinding crossber flows positioning. So, let me explain what that means. Basically, what

we have seen over the last two months is inflation swaps go off a cliff and decrease inflation risk. So, this allows the Fed to be even more doubbish than

they are right now. I mean, I think more cuts are going to get priced on the 2026 for uh uh um forward curve and what we're seeing in Fed funds and so forth right now. I think there's going to be

right now. I think there's going to be more cuts priced because the fact that inflation risk has dropped over the last couple months begins to set the stage

for allowing Trump and the new Fed chair to put a lot more dovish action in their rhetoric and forward guidance and

everything else. And so that is allowing

everything else. And so that is allowing and setting the stage as we move to these other catalysts where the longer they can be aggressively dovish without inflation risk rising, the more they can

push down the dollar and try to cut these other trade deals that can begin to push back on kind of these large massive imbalances, right? And so when

the Fed cuts too aggressively, long end yields rise and the curve bears steepens counter mistake. The Fed's advantage

counter mistake. The Fed's advantage right now is that inflation expectations have been collapsing for a month. So,

you know, remember one of the things that I always say is that, you know, long end rates always price central bank policy air. So, if the Fed cuts when

policy air. So, if the Fed cuts when they shouldn't be cutting, the long end's going to price that. Long rates

can blow through the roof. When you have inflation risk falling, that begins to allow them to cut more and be able to put more pressure on their strategic

purposes of this global trade side. And

so with inflation expectations falling, we're getting news about the new Fed chair. So that's the next step that is

chair. So that's the next step that is going to be, you know, and we all know that, you know, whether it's Hassan or whoever else it is. That individual is

going to be more aligned with the views of Moran and the rather than the other governors who are a little bit more hawkish. And you know, a couple of the

hawkish. And you know, a couple of the governors will likely be, you know, flipped or turn more doubbish or marginally more doubbish. and they're

going to have this push in the Fed to just cut more and begin to shift the balance sheet more. Now, again, people say, "Oh, well, that's going to be bullish. I need to start buying, you

bullish. I need to start buying, you know, my alts and my crypto names and all that stuff." Here's the thing, though. You have to map how much of that

though. You have to map how much of that is a positive liquidity injection that is going to push assets higher and how much of that is going to be negative on the dollar that will cause crossber flows to sell. Those two forces are

going to be the two forces I kind of cover in the video next week for paid subscribers that break down those functions. Because if you know those two

functions. Because if you know those two drivers, you can manage all these risks really well. If you don't, then you're

really well. If you don't, then you're always going to kind of get chopped up by these news things about the Fed being doubbish or not as doubbish and then these changes in trade, but not as much as everyone expects. And it's not going

to be clear how those are actually transmitting to asset prices. So the Fed brings the terminal rate lower. So the

terminal rate currently sitting at the the eighth sofa contract. All that means is where does the forward curve have the most aggressive amount of cuts before it

begins to price hikes. Um you know we can have the eighth contract move down a ton given how much inflation risk has fallen. So the Fed can price a lot more

fallen. So the Fed can price a lot more cuts which would then result in what?

lower real rates and likely a lower dollar, which is the exact thing that we're seeing right now. We've seen a recent rise in real rates and that's

caused the dollar to push up. And the

larger imbalance is that we're setting the stage for more cuts, likely a weaker dollar. And that's one of the reasons

dollar. And that's one of the reasons why um well, I'll go I'll go into the implications, but there's one of the reasons why, especially as we move into next year, there's more imbalances and offsiz things as we move into these

catalysts. So if Trump wants to reverse

catalysts. So if Trump wants to reverse global trade imbalances and confront China in the economic conflict and AI race, he needs a material weaker a materially weaker dollar. Tariffs give

him the negotiating leverage to secure trade deals that align with weaker dollar strategy and preserve US dominance. Here's the problem. Trump and

dominance. Here's the problem. Trump and

Bessant have to thread the needle, avoid politically damaging outcomes into the midterms, manage a Fed with several governors who are far less doubbish, and hope that the weaker dollar strategy

does not trigger an equity selloff by foreigners that widen credit spreads into a vulnerable labor market that could uh that could that combination could easily tip the economy into a

recession. Let me break this down a

recession. Let me break this down a little bit more. The

stance of Trump and Bessant is that they are trying to manage these two trade-offs. You know, whoever's in in

trade-offs. You know, whoever's in in power is always trying to manage tradeoffs, right? And they are going to

tradeoffs, right? And they are going to try to manage their risk into midterms so that they don't have anything crazy happen with the market or the economy and you know things are fine until those midterms. They're also going to try to

push the Fed around so that things are more doubbish, right? And the other thing that they're going to try to do is figure out how much the weaker dollar

strategy has selling pressure or buying pressure on US equities. Because if

foreigners begin to sell and push the equity market down and push credit spreads up, higher credit spreads, especially with where we're at in the labor market right now, they could

easily push the US into a recession if they blow out and stay long stay high long enough. And then if they come in

long enough. And then if they come in and say, "Oh, no. We're not, you know, if you have credit spreads expand and the the Fed comes in and provides liquidity to push them down and, you

know, that begins to be an impulse, that can cause inflation risk to rematerialize next year. And again, it depends on real rates and where those are at, but that could cause the dollar to sell off depending on, you know, what

we're seeing. So, the biggest risk is

we're seeing. So, the biggest risk is that valuations are at historic extremes, which makes equities more sensitive to liquidity shifts. So it's

not that oh liquidity or you know equities are at high valuations so don't buy them. No that's not I'm long

buy them. No that's not I'm long equities right now. I've shared those trades with paid subscribers.

This is why I believe we are approaching a major inflection point over the next 12 months because we have richness in equities not just on an outright basis but the driver of those valuations are

beginning to hit these catalysts where we're going to see more tests that could trigger an equity selloff. Those are not here yet. But like I've said, the storm

here yet. But like I've said, the storm is on the horizon. So coming back to what important truths do very few people agree with you on. The market is sleepwalking into a structural risk that

almost no one is pricing. An engineered

dollar devaluation that turns what investors assume is a tailwind. Oh, the

dollar is going down into the primary source of volatility over the next couple years. The complacency around a

couple years. The complacency around a weaker dollar is the same complacency that surrounds the mortgages uh mortgage industry before 2008. It is precisely why a deliberate devaluation would hit

risk assets far harder than investors expect. I believe that this is the most

expect. I believe that this is the most overlooked and misunderstood risk in global markets right now. And my whole belief is, you know, and this has been

for a while now is that I've been building models and strategies around this single tail event so that I can short the market with size when the real capitulation occurs on a structural

basis. You know, I've had this view for,

basis. You know, I've had this view for, you know, especially the imbalances that are beginning to take place. I've always

kind of had an understanding of how global trade works for crossber liquidity. But as these things are

liquidity. But as these things are escalating, I've built a lot more models and strategies around them, right? And now

I'm beginning to share those more because we're beginning to see the storm on the horizon. So timing the macro inflection point, how do we connect these together? And I want to tie these

these together? And I want to tie these these different ideas directly to asset prices. So the position unwind happens

prices. So the position unwind happens often in US equities, but understanding the drivers behind them is key. So the

chart below shows when crossber liquidity is exerting negative pressure and a lot of that has happened right earlier this year and then also earlier

um you know about a month ago now in US equities right here right and now you're seeing Euro USD rally

on rising call skew and that took place at the same time this is earlier this year in March when equities were selling So watching EuroUSD rally and Col rise

is a key positioning signal for crossber flows.

So how does this connect to US equities?

The the key thing that I would say about crossber flows is you know you want to model that really well but you also want to connect it to liquidity changes in equities and you want to understand where foreigners are putting up and

taking down US exposure risk right and this is going to be key to understand because when you have liquidity change in markets it directly connects to factors and the outperformance and

underperformance of factors and so you know uh friend of mine uh Jared Jared Cuban I've had a lot of really good conversations with him. He's helped me

understand a lot more because he he is like the expert in factor rotation. Like

his resume, the hedge fun he has, like everything is insane. He's, you know, one of the best in the world at explaining these changes. And the

website that he just launched, I mean, I'm I'm really glad he launched it in the last week, I believe, is called liquidationnation.

And it breaks down all of the factor models that you would want to watch in connection to the crossber liquidity stuff that I'm laying out right now because when liquidity expands or contracts, yes, it pushes equities up

and down, but it also moves these factor flows really, really intricately. And

so, you can go to this website. Right

now, all this stuff is free, which is awesome. Um, and I think, um, I don't

awesome. Um, and I think, um, I don't know if he's, you know, going to do a pay wall or anything like that. Whatever

it is, I would pay for it. I I think everything he's doing is absolutely amazing. and I would support him in in

amazing. and I would support him in in any product he launches. Uh that's just me. Um I don't get any kickbacks or

me. Um I don't get any kickbacks or anything like that from what we're doing. I just I just love what he's

doing. I just I just love what he's doing. And so the thing I would do is go

doing. And so the thing I would do is go to the website, start going through these different things and watch these different factor flows because it'll be important for the AI theme because when

liquidity contracts, the highest beta names are what? the AI names which means that a lot of capital has gotten concentrated disproportionately in those names and those are going to probably be

the ones that lead to the downside when the selling begins to take place. So in

order to kind of pull these different moving parts together, it's like okay, we had the crossber selling, we want to understand that, but we also want to connect it to factor flows and some other sector things. I'm going to do a

interview next week or first week of December, whenever that is with Jared and we're going to break down some of these flows a bit more so that you can have an understanding of them and that will be sent out to everyone 100% free

so that you can get that and it'll break down all of these different changes and I think that'll be a really helpful conversation because you know Jared will really break those down and I'll be able to ask him a lot of informed questions

about it. But I'd encourage you to go

about it. But I'd encourage you to go you know click this link right here. Go

follow him on Twitter. He's a he's a great guy. Uh s one of the reasons we

great guy. Uh s one of the reasons we connect I really like a lot of you know he's super strong Christian and he just has such a positive message in focusing

on God and also building amazing products and just I love the entire aura and light that he has that he's posting on Twitter um mainly around markets but just love everything that he's doing. So

go follow him on Twitter. All right,

let's pull these together to primary signals and we're going to wrap up. Here

are the signals you want to watch for crossber cell flows selling the dollar selling off against major currency pairs as cross currency or cross asset ball rises. So go to the sea ball tool, watch

rises. So go to the sea ball tool, watch that equity selling off as the dollar falls and then factor rotations confirming that especially low quality and high beta cross asset and

crossborder correlations are likely to go to one when that happens. Right? So

it's going to be a very challenging time and then the ultimate signal will be if the Fed tries to make some type of liquidity injection that actually causes the dollar to sell off further and that that amplifies selling pressure in US

equities. If that happens, it's game

equities. If that happens, it's game over. And it could actually cause a

over. And it could actually cause a bigger risk of stagflation if you have some trade deals or anything else occurring at the same time as credit spreads are rising and putting pressure

on the labor market. And that could that could that's why the se setup for bonds is very challenging here because could they bid? Yes. Depends how much

they bid? Yes. Depends how much disinflation versus stagflation occurs as a result of these changes.

So that's the signals that you want to watch. All right, let's connect this to

watch. All right, let's connect this to asset prices. Even though gold and

asset prices. Even though gold and silver rallied marginally during the crossber selling earlier this year, they still sold off when true capitulation took place. So I like holding gold and

took place. So I like holding gold and silver. I mean, I've been long gold and

silver. I mean, I've been long gold and silver uh for I think a week now or something like that or over that. And I

laid that out for paid subscribers. I

also got long equities again because my strategy continues to run longs and not be incredibly bearish. turned neutral

for a moment to avoid some of the draw down. Now back to bullish. That's my

down. Now back to bullish. That's my

view. Well, holding, you know, I think gold and silver holding them right now is a great setup. But just expect that when true liquidation occurs, those are getting sold, right? That's just

important to understand. So here's the biggest problem. We're in a period of

biggest problem. We're in a period of cycle where holding cash has a lower and lower rate of return. This is

systematically forcing out capital. I

mean, just imagine, you can get this intuitively. holding cash over the last

intuitively. holding cash over the last two years has just been crushing, right?

Because you see the equity market just rally and rally and rally, right? That's

sure you're making a 4% return or 3% return on your cash, but when equities are rallying during that period of time, that's putting even more downward pressure and real rates have only been

dropping. So, the real return of cash is

dropping. So, the real return of cash is even dropping as well. This is causing people to systematically move out the risk curve and get everyone net long right before liquidity shifts. So,

timing this shift will be the most important things because you do not want to be long equities during that shift in the credit cycle. So, I already laid out some of those ideas um in some of the

recent trade writeups that I've put out for paid subscribers and why I'm long equities at the moment. That's probably

going to shift sometime. Not sure when.

depends when my strategy begins to shift and show those incremental probabilities. But, you know, I I've

probabilities. But, you know, I I've laid out um I've been long gold, silver, equities, especially on the, you know, which which was nice because we just had a large pump last week, pushing those

higher and beginning to put them on side, so you have more of a margin of safety and things like that. All right,

let's pull all these moving parts together. The core message is

together. The core message is straightforward. Global markets are

straightforward. Global markets are overlooking the single most important risk of this cycle. A deliberate

weakening in the dollar colliding with extreme crossber imbalances and stretch valuations is setting up a macro volatility event that echoes the same

complacency we saw before 2008. You

cannot know the future with certainty, but you can analyze the present correctly. And the present is already

correctly. And the present is already signaling pressure that's building under the surface. We have all this set up

the surface. We have all this set up with Trump and the selling pressure in the dollar earlier this year. We have

seen a lot more shifts as we're moving into next year with the Fed likely to price, you know, some more cuts or the forward curve pricing more cuts, a shift at the Fed, and then a lot of these things being catalyzed as we move into

the last two years of Trump's administration. Understanding the

administration. Understanding the mechanics is essential because it tells you exactly the signals which you want to monitor as this risk move closer. You

know, I don't know exactly when these shifts are going to take place, whether it's in the first half of next year or maybe the second half or maybe if it doesn't take place next year, right?

Because you can have these shifts and you can have a meltup even further, right? As you have, you know, because

right? As you have, you know, because think about Trump and the Fed and all these different factors and drivers. If

you have changes in trade or crossber flows or geopolitical risk that are pushed the negative consequences are pushed into the future and the positive benefits are pulled into the present

just with somehow they structure a trade that can cause equity markets to rally another 20%. Very possible, right? It

another 20%. Very possible, right? It

can also if they pull and frontload those it can cause it to go down first before we they actually have you know some type of liquidity in their back pocket, right? And remember, you know,

pocket, right? And remember, you know, no one is really talking about this and Trump is intentionally actually putting people in place who understand the global trade system, right? Like that's

why he has Bessent at the Treasury.

That's why he put, you know, the Fed governor uh Stephen uh Moran in there to have a specific view, right? Like he

understands a lot of these trade mechanics and everyone's going to throw shade or whatever else it might be. I

don't really care, you know? Just look

at what's taking place.

Awareness of these things is an edge.

That's key. And understanding the signals is is very important because all these things are path dependent. Could

we have a draw down in H1 and next year?

Yes. Or it could be an H2 or it might not be next year, right? But we know the risks when they begin to build the types of signals we want to look for. So most

investors still assume the dollar weakness is bullish. That assumption is dangerously misplaced today as a belief that mortgages were too safe in 2007.

This is the quiet beginning of the macro endgame in my view where the structure of global liquidity and currency dynamics becomes the decisive driver of every major asset. For now, I'm bullish

equity is gold and silver, but the storm is forming. And when my models begin to

is forming. And when my models begin to show that shift and incremental increase in risk, I'm going to begin to shift bearish equities and publish that shift for paid subscribers. So if 2008 taught us anything, it is that the warning

signs are always visible if you know where to look. Monitoring the right signals, understand the dynamics, and you will be prepared when the tide turns. Those are the main ideas that I

turns. Those are the main ideas that I wanted to cover in this session. I hope

that was helpful for you. I would

encourage you go through this report, spend some time because this is, you know, I would just say one of the most important reports I've ever written and I would take it all, put it into CHBT, ask it questions, figure out how it

impacts your portfolio, figure out how your trading style would align with these types of things. Put together a playbook, put together redundancy plans, figure out your exposure, go through all

of those things and have preparation.

That preparation is going to set the stage for you to have success. And so

that is what I would encourage you to do. There will be another breakdown and

do. There will be another breakdown and webinar next week for paid subscribers that covers this even further and a lot more of the playbooks that I'm running.

But you know if you have this report which this is 100% free and I've laid it out for everyone. This is the baseline for how you want to think about things, right? So, I'd encourage you go through

right? So, I'd encourage you go through it, spend some time in it, keep digging so that you understand all the moving parts and that will set you up for

success. With that, I will see you guys

success. With that, I will see you guys soon.