Darius sat down with Anthony Pompliano last week to discuss global liquidity, the Macro Weather Model, Bitcoin, and more.

If you missed the interview, here are three takeaways from the conversation that have significant implications for your portfolio: 

1. Our 42 Macro Weather Model Is Suggesting A Less Bullish Outlook Over The Medium Term

In our previous appearance on The Pomp Podcast, our Macro Weather Model signaled a bullish 3-month outlook for risk assets. 

However, as of last week, the model has signaled neutral outlooks for both the stock market and Bitcoin over a three-month timeframe. 

While these signals are not explicitly bearish, they indicate a shift toward a more bearish environment. 

This change is primarily driven by the Sovereign Fiscal Balance to Nominal GDP Ratio, which has recently inflected to a positive trend. 

This implies a lower fiscal impulse compared to 2023, potentially leading to a less favorable environment for risk assets.

2. We Believe Global Liquidity Is Likely To Continue Trending Higher Over The Next Quarter or Two

Our 42 Macro Net Liquidity Model, which is calculated by taking the Federal Reserve Balance Sheet and subtracting the Treasury General Account (TGA) Balance and the Reverse Repo Program (RRP) Balance, is trending higher.

Similarly, our 42 Macro Global Liquidity Proxy, which is calculated by summing the Global Central Bank Balance Sheet, Global Broad Money Supply, and Global Foreign Exchange Reserves ex-Gold, is also trending higher.

Furthermore, leading indicators for both the Net Liquidity Model and Global Liquidity Proxy suggest a sustained positive trend in liquidity for at least the next two quarters.

3. We Expect Bitcoin Will Perform Well Over The Long Term

We recommend investors view Bitcoin simply as an additional asset class to maintain a rational perspective and avoid becoming too emotionally invested in the asset. 

That said, it is important to note that the introduction of the ETF is a structurally positive fundamental, likely to boost inflows into this asset class over the long term. 

Additionally, our research into the Fourth Turning indicates we will likely experience well-above-trend inflation over the next decade. 

As a result, the traditional 60/40 investment portfolio is unlikely to yield the same returns it did in the past decade. 

This scenario is likely to prompt investors to seek alternative investment opportunities, and we anticipate a significant portion of this capital redirection towards alternative assets, with Bitcoin being a favored destination among millennial, gen-z, and tech-focused investors.

That’s a wrap! 

If you found this blog post helpful:

1. Go to www.42macro.com to unlock actionable, hedge-fund-caliber investment insights.

2. RT this thread and follow @DariusDale42 and @42Macro.

3. Have a great day!