WEBVTT

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Welcome to the deep dive. You know, if you felt

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recently like the world's major news stories

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just aren't making sense on their own. Yeah,

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things like central banks hoarding gold on one

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hand. And then the actual cost of a Thanksgiving

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turkey on the other. It feels disconnected. It

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does. Well, today we're taking a whole stack

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of sources, global finance, domestic politics,

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the stock market, and we're going to connect

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those dots. Our mission is really just to give

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you that shortcut to understanding the big structural

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cracks that are forming. And we are starting

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at, I mean, the highest possible level of risk.

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It's a genuinely dramatic thesis from our sources.

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Okay. Economist Daniel LaCalle argues that we

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are witnessing the structural decline of of developed

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nations fiat currencies in real time. And he

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says, you know, the story isn't new. It's actually

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depressingly predictable. History just shows

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that whenever governments exceed their credit

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limits and ignore the warnings, confidence is

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lost and the currency eventually collapses. That

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is a staggering claim to start with. The idea

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that we're leading a declining empire of fiat

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power. All from self -inflicted wounds. OK, so

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let's unpack that. In our first segment, let's

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get into this global debt sinkhole. When we talk

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about global public debt hitting, what, $102

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trillion, what's the fundamental problem there?

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It's a crisis of credibility. I mean, that's

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the core of the argument. Credibility. Yeah.

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Public debt, especially for a country that can

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print its own money, is basically just currency

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issuance. So when the debt gets reckless, the

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credibility of the issuer, the country itself,

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it just fades fast. Then $102 trillion is, that's

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a new record. Yeah, and the historical record,

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yeah. And the sources, they're not shy about

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pointing fingers, are they? They highlight bitonomics

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in the US as a case study. A very clear one.

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The administration has run record deficits, increased

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spending by over $2 trillion. And this was during

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a strong recovery. Exactly. That's the core frustration.

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Instead of, you know, tightening the belt during

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a good time, the spending just accelerated. And

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that kind of imprudent spending means developed

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economies have now breached three crucial limits.

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OK, this is where it gets really interesting.

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Tell us about these three economic thresholds.

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Absolutely. So the first is what they call the

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economic limit. The economic limit. It's a functional

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limit. Once government debt passes a certain

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point, piling on more of it just, it stops fueling

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real productive growth. You get diminishing returns.

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So the GDP numbers might look OK. They might

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look fine on paper, yeah. But underneath, productivity

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stalls, real wages stagnate. And people just

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don't feel any more prosperous. You're just trading

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future stability for accounting tricks today.

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So we're paying a higher price for less and less

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real growth. What's the second limit? That's

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the fiscal limit. As the debt gets bigger, the

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cost to finance it, the interest payments just

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explodes. Right. That plus mandatory spending

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on entitlements starts to crowd out everything

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else, productive investment, infrastructure.

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So even if inflation disappeared tomorrow, we'd

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still be in a bind just paying the interest on

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the debt. Precisely. And that brings us to the

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final limit, which is the one we all feel right

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now. The inflationary limit. Exactly. This is

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when all that money printing to finance government

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spending just completely erodes public confidence.

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Cumulative inflation starts to outpace wage growth.

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And, well, you get the affordability crisis we're

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living through. The sources even call it a de

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facto gradual default, don't they? They do. It's

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a subtle tax on... anyone who saves money. So

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if these major nations are crossing these red

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lines how are the world's central banks reacting?

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They are acting decisively. We're seeing what

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the sources are calling an unprecedented wave

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of gold purchases. They're running for cover.

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They're running for an asset that is nobody else's

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liability. The data is clear. According to the

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IMF, the U .S. dollar share of global reserves

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is drifting deans toward the high 50s. So gold

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is actually overtaking currencies. For the first

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time in 40 years, yeah. Gold has overtaken both

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the U .S. dollar and the euro as the main reserve

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asset for some central banks. The numbers are

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huge. How huge? Net buying was over 1 ,100 tons

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in 2022, and it stayed above 1 ,000 tons in 23

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and 24. That is more than double the average

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from the previous decade. Astonishing. But wait,

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the dollar still accounts for what? 89 % of global

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transactions. It does. So is this gold buying

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just a hedge? Or is it a real immediate threat?

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It's an important question. It's not an imminent

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collapse, but it is a major structural shift.

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Right. The buying is driven by worries over inflation,

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financial stability and saliency. That's the

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key word. They are just not comfortable holding

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their peers debt anymore. So we're moving toward

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a hybrid system system. Yeah. The dollar is still

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king for transactions, but it's going to coexist

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with a much bigger allocation to gold and probably

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decentralized crypto, too. The empire is still

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there, but it's changing. OK, when we talk about

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one hundred and two trillion in debt, it can

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feel abstract, but the impact isn't abstract

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at all, is it? Which brings us to our second

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segment, inflation, politics, and the very charged

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topic of Thanksgiving dinner. This is where the

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macro instability lands right on the kitchen

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table, and it created this really weird contradiction

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in the data this holiday season. Right, you had

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big retailers with these aggressive promotions,

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dinner bundles for 20 bucks, 50 bucks. And the

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American Farm Bureau Federation claimed the average

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dinner was cheaper for the third straight year,

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around $55. Which sounds great. Like inflation

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is totally under control. But that was masking

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a huge price problem with the main event, the

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turkey. Absolutely. The fine print is everything.

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Avian Flu has just... decimated the U .S. turkey

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flock. It's at its smallest size in 40 years.

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Wow. So wholesale turkey prices shot up roughly

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75 percent year over year. The retail price for

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a typical bird jumped over 25 percent. About

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31 bucks. So the promotions were basically a

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loss leader to hide the fact that the core ingredient

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was way more expensive. Exactly. And this contradiction

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became a huge political football. Kevin Hassett,

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a prominent economic policy chief, he went out

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and defended the claim that a big retailer's

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meal package was cheaper. But it wasn't the same

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package, was it? Not even close. Critics jumped

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on it immediately. The lower price was because

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it had fewer products, smaller sizes and 15 percent

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generic brands. It wasn't an apples to apples

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comparison. So why would he defend something

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so obviously flawed? Does that just show how

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desperate the political need is to to declare

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victory over inflation? It speaks volumes, doesn't

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it? Hassett tried to deflect. He called the criticism

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elitist, said his critics acted. as if having

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a generic something is a crime for ordinary folks.

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Trying to frame it as being out of touch. Right.

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But the pushback, a lot of it from just regular

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people on social media, wasn't elitist at all.

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It was just... Factual. Yeah, you can't claim

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prices are down if you're not comparing the same

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things. A $10 savings in a smaller bundle doesn't

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solve a two -year cost of living crisis. That

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is the crux of it. The whole conversation is

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just so polarized now. Even something like the

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traditional turkey pardoning ceremony. The sources

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remind us. President Trump used that moment,

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pardoning Goblin Waddle, to suggest a Ukraine

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-Russia peace deal was very close. And to criticize

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his predecessor, every single moment is a political

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platform. That's a powerful segue. Let's move

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from that political capital to capital markets

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in segment three, because they also show this.

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Illusion of strength. hiding deep fragility.

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Total illusion. I mean, the indices have had

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a massive rally since April. S &P 500 up 33 percent,

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Nasdaq up 46 percent. It sounds like euphoria.

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It looks like euphoria, but it's so concentrated.

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It's almost entirely AI and the mega cap tech

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stocks. If you just look at the headline index,

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the drawdowns have been tiny. But that is not

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the real story. OK, so what's the risk hiding

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under the surface? The devastating drawdown for

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the average stock. While the index was flying,

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the average member maximum drawdown was Well,

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it was huge. For the S &P 500, the average stock

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fell 18 percent at some point. And for the Nasdaq,

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it was a punishing 41 percent. Wow, 41 percent

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for the average Nasdaq stock. That's a bear market

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for most of the economy that nobody even noticed.

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Exactly. The source is called this lack of breath

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helitosis. It looks healthy on the outside, but

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it's rotten underneath. Only 17 percent of S

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&P 500 stocks actually outperformed the index

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over the last six months. A very narrow, very

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fragile advance. And that fragility has triggered

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a really stark rotation recently. The leadership

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that drove the market all year just... vanished

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in November. A huge reversal. A huge reversal.

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Information technology, the runaway winner for

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most of the year, suddenly became the worst performer.

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It dropped almost 9 % month to date. And what

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took its place? Health care. It was a major laggard

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all year. Then suddenly it jumped to the top

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spot in November, up over 6%. So investors are

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rotating out of that narrow AI trade and into

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more defensive sectors. Health care, utilities,

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energy. Correct. Utilities and energy now have

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the strongest breadth. It suggests the market

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is getting wary. The tactical advice from this

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is to focus on factors, fundamentals, over just

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pure momentum. Which is funny, because you recommend

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fading taking profits in unprofitable small caps.

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Yet the unprofitable 40 % of the Russell 2000

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is up nearly 46 % since April. It just shows

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that these speculative pockets still exist. But

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they're vulnerable. Incredibly vulnerable. When

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you see a rotation this sharp, you have to focus

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on quality. You know, earnings growth. reasonable

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valuation, companies that can actually withstand

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these huge macro shifts. OK, let's pivot now

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to our last segment where we see that same zero

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-sum fragility playing out on the domestic policy

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front. The health care gridlock. Right. And this

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is all about the Affordable Care Act subsidies.

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A looming political time bomb. It really is.

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Yeah. These enhanced ACA subsidies, they're set

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to expire soon. If they lapse, premiums could

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just skyrocket for millions of people. It could

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throw the whole insurance market into chaos.

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And renewing them needs bipartisan support to

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get past the Senate filibuster. But the whole

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thing has hit an ideological wall. A massive

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wall. And that wall is abortion restrictions,

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which the GOP sees as a red line. Absolutely.

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A broad swath of the GOP says this is a must

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-have. They are demanding that any insurance

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plan getting a federal subsidy be prohibited

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from covering abortion services. So applying

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the Hyde Amendment to the entire ACA marketplace.

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That's the goal. And it's a powerful political

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weapon, especially now. The expiring subsidies

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give them a ton of leverage over what is basically

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a must -pass spending item. A high -stakes moment,

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for sure. It is. And the White House tried to

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just skirt the issue entirely. Their proposal

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had some conservative limits, like a high -income

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cutoff for subsidies, but it completely excluded

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the abortion issue. Which ironically just made

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it a bigger problem. Precisely. The silence was

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meant to avoid attention, but it just focused

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the opposition. Meanwhile, the Democrats are

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equally dug in. They say any abortion restrictions

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are a non -starter, so you have paralysis. And

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this gridlock has immediate real -world consequences

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for states right now. It does. Currently, the

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ACA let states decide on abortion coverage. 25

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states either allow or require it. If the GOP

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restrictions pass, those states would have to

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change their laws or risk losing billions in

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federal subsidies. It shows how hard it is to

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solve a basic funding crisis when it runs into

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these non -negotiable political and moral lines.

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It really does. It feels like everything we've

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looked at today, global finance, consumer costs,

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the market. domestic policy, it all points to

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the same theme. A structural lack of resources.

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Exactly. Whether those resources are fiscal credibility

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or political capital or even just market depth,

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there's not enough to solve the big problems.

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That's a synthesis we're left with, isn't it?

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We've gone from the risks and fiat money and

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the flight to gold, to the painful inflation

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hitting your grocery bill, to the fragile equity

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market, and finally to total paralysis and core

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domestic policy. All these systems are under

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pressure at the same time. So let's leave you

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with a provocative thought. that really ties

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all of this together. If that massive global

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public debt and the loss of confidence in fiat

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money, if that reflects a kind of structural

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exhaustion of national resources and credibility,

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how does that fiscal unsustainability then stop

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governments from being able to navigate major

00:12:43.789 --> 00:12:47.100
political crises? Think about it. whether it's

00:12:47.100 --> 00:12:49.600
securing a complex international peace deal,

00:12:49.879 --> 00:12:51.600
like the Ukraine -Russia situation mentioned

00:12:51.600 --> 00:12:54.799
in our sources, or breaking a critical domestic

00:12:54.799 --> 00:12:58.379
stalemate like the ACA subsidies. Every single

00:12:58.379 --> 00:13:00.679
solution relies on future funding promises. And

00:13:00.679 --> 00:13:02.279
political compromise. And political compromise.

00:13:02.480 --> 00:13:04.399
So what happens when the political capital, the

00:13:04.399 --> 00:13:06.580
willingness to give ground runs out at the exact

00:13:06.580 --> 00:13:08.740
same moment, the fiscal capital, the ability

00:13:08.740 --> 00:13:13.419
to actually pay for the solution? You are suspended

00:13:13.419 --> 00:13:14.879
in a state of high fragility