Mark Yusko's macro framework for investing in the next decade

Transcript

But what you should do is you should gather the data, all of it. Look at a bunch of milk road macro charts. Look at the data, formulate a hypothesis, see if it works, and then do it again. The greatest wealth is created by being an early investor in innovation. But what does that mean in 2026? Where should investors be looking today if they want to be wealthy tomorrow? Hello and welcome to Milk Road Macro, the podcast that knows that when everyone makes fun of your investment choices, you might be a genius or you might just be wrong. I'm your host, John Gill, and today is Monday, January 26th, and we will be releasing this episode on Thursday the 29th. And today, we are joined by Mark Yusko. Mark is the founder, CEO, and chief investment officer of Morgan Creek Capital Management, a firm specializing

in alternative investments, including digital assets. Prior to establishing Morgan Creek in 2004, he was the chief investment officer for the University of North Carolina at Chapel Hill Endowment Fund. Uh, and he has had a long and successful career investing in innovation. That's something a lot of people are thinking about right now. So, if that all sounds good to you, make sure you like and subscribe. Share this episode with someone who needs to see it. And without further ado, welcome to Milk Road Macro. Mark, how are you, sir? >> All right. Doing great. How about you? >> I am really, really excited to have you on the show today. Um, I have been following your work for a long time.

Something you're known for, and I think this is your pinned tweet on X is is that quote I started with that the greatest wealth comes from investment and innovation. Um but to do this you have to invest in things often before other people even understand them. >> Uh speak a little bit about that and what do you think is the biggest innovation that the market doesn't understand right now? >> Oh man big question. So look the the thing about investing you you had a couple different points on this is you know when you decide to do something and it makes you feel really good nice and warm it's [snorts] probably not going to do that great. It's in fact it might even lose you money. And if you feel really really really good, you probably lose a lot of money. And that's because by the time you feel good about it, it's

already in the price and everyone else. And that's why you feel good about it. Everybody's talking about it. Everybody's reading about it. And so [snorts] the point of my pin tweet is, you know, you you make the greatest wealth from investing in things that you believe in before most even understand. And you'll be mocked and ridiculed for your non-conensus actions. And it's that mocking and ridiculing. you said, you know, if if people are telling you you're crazy, it's usually pretty good. Now, the quality of an idea is judged by the quality of the detractors. So, if people you respect are telling you you're crazy, okay, that's better than people you don't. But, but bottom line is it's when you feel uncomfortable that you're really on to something. So, um you know, we do focus on that. And I've

been super lucky. My whole career has been based around this idea of look, if you can partner with people, get out ahead of innovation. I didn't really invent anything in in my career. I have worked with lots of of inventors and and lots of people who have built new ideas. And I think I have a pretty decent uh ability to to understand when someone's kind of on to a good idea and kind of be willing to blindly follow them. Um, long story short is, you know, we we constantly try to look out and our platform, for lack of a better term, has evolved over the years from, you know, really, let's just focus on on

technology and early stage investing around tech broadly to today. We focus on at Morgan Creek Digital, the what we call the ABCDs of the digital age. Okay, what does that mean? Well, A is AI, B is blockchain, C is chips, and D is data. Well, why do those matter? And and where do we see the opportunity in in those areas? Well, at the end of the day, data is the new oil, right? whether it was Larry Ellison or somebody else who said that and it's a very appropriate analogy in that oil is valuable but the oil that sits in the ground like all this oil that now is supposedly going to get uh developed in Venezuela you know they have the most

reserves of any country in the world but they're poor like the country is super poor humanitarian crisis well how can that be they have all this ass well oil under the It's kind of valuable, but it's really if you can extract it, refine it. I mean, I'm sorry, process it, export it, refine it, sell it, utilize it. And same thing with data. Data like 85% of data gets stored and never touched again. It's not really that valuable, right?

What's valuable is data that you can organize in a way that you can get access to it. That's kind of what blockchains do. So data is the base layer. Then blockchains allow you to organize data in a better, more efficient way. Well, then you have to process it. Well, processing comes from computing power, chips. And chips are one of the most exciting areas today. You know, we keep getting smaller and smaller and smaller. We're getting to the limits of physics and and you know, things like electrons. One of the areas we're looking at is photonics, right? As we shift from electrons into photons, you have less heat. You have, you know, greater distances you can travel. Now, you have

to harness and find a substrate that they can move in, which is challenging, but that's that's an area we like. Then once you process the data, ultimately you need to make decisions because ultimately if you don't make decisions, you don't make investments, you don't make any money. So AI is just a tool to make decisions. Everybody's like, "AI is this thing." Like, "What are you talking about?" It's been around for 70 years. The term the term AI was coined in 1955, right? A long time ago. And I'm old enough to remember 1980 was the year of AI. Time magazine, Rocket Ship. Okay.

Not the year of AI. We didn't even have Clippy yet. 2000 Intel stock had gone up 20 times the previous 10 years because their chip was going to, you know, change AI and we got Clippy, which was cool, but it really didn't do very much. And now we have LLMs and they're cool. But I'll give you a great example. So I asked I was doing my 10 surprises. I do this every year. January, I do this 10 surprises presentation and the idea is to look at what consensus is, okay? And if you invest in consensus, you might be right, you might be wrong. It's right about half the time. And if it's already in the most people already believe it, so

you're not going to make that much. You can do fine. Like the consensus last year was the stock market in the US would go up. It did. You made 18%. But you could have made a lot more investing in Japanese stocks or European stocks. Everyone last year thought Europe was going to be terrible but actually did great and European banks crazy made 70%. So, it's the non-conensus ideas that really make you the money, the surprises. And so, you know, when I when we look at at surprises, I asked Chachi PT, what's the consensus, right? It should be able to gather all this information. It was horrible. Like, like horrible. And [clears throat] so, I asked it again and I refined my

prompt and it was still horrible. And by the third or fourth time I got something that I could at least publish, but it still was bad. But the really crazy one is one of my surprises was about Japan and how they are making a series of I think really bad monetary and fiscal decisions because of this new prime minister. I just don't think she's very good at her job. And so I asked Chachi, when was Prime Minister Takashi Takichi um elected? And he said, "She [clears throat] wasn't like, "No, I'm I'm pretty sure she was." Well, you may be right, but but she wasn't officially like, "No, I'm I'm certain that she was elected." Oh, you're right. She was

elected on October whatever it was 13th. I'm like, "You've got to be joking." So, if I had just taken that first answer, I would be stupider because I hadn't, you know, I I just accepted at face value what came out of the the machine. So that's a long answer to where's there opportunity. We think there's opportunity in blockchain. We can talk about that. We think there's incredible, incredible opportunity in chips and computing power. We talk about that. We think there's huge opportunity in AI, but not in the way people think about like I wouldn't buy Open AI for anything at this valuation.

I I I would I would short it if I could, but I can't so I won't. But but I would never buy that and I would never buy X AI at these valuations. Now, if I could have bought X when he started it, great. But I like the things underneath where everyone else is focused that are the infrastructure, the picks and shovels. >> Quick pause here. If you like this show, you are going to love our Milk Road Macro newsletter. It hits your inbox twice a week with everything we can't fit into these episodes. charts, Fed moves, liquidity trends, recession signals, all of the big forces that are shaping the markets. It's free, it's fast, it keeps you ahead of the next macro move. Hit up milkroad.com and subscribe. Gotcha. Okay. So, this is, I

think, a really helpful framing for how you think about breaking down innovation into those four categories. One of those uh that I wanted to ask you about was the intersection between A and B, right? Between artificial intelligence and blockchain, because I think that that's something that we, especially here at Milk Road, have been focusing on a lot with our content. We've uh launched Milk Road AI to focus on this as well. Um what are you seeing in terms of opportunities there? Is it too early to be investable? Is it still prototypes? What are your thoughts on the intersection of those? >> No, look, and by the way, if anyone isn't using Milk Road, you should. I use many of your slides in my presentation.

I always give you credit at the bottom. I always list where I where I get it from, but but at Milk Road, I I did steal because I'm a I'm a pictures guy, right? Picture's worth a thousand words. So I can tell a lot more if I just show people pictures and and talk about them. So my whole presentation is all about these pictures. So I just I scour the internet for pictures of things that that we believe in and then I you know make up a tagline or or a headline. Um, but if you think about this AI A and B and and it's a great point, John, we love A B C D, but what we really love is A and B or B and C or D and A or like AB D like if you can get three or even four

Nirvana. So the more intersections like that vin diagram, it's like the icky guy, right? You have the four things and in the middle is the icky guy. That's the secret sauce. uh if you can get all four. Um so that's a Japanese term for your purpose in life, right? >> I I read the book. I'm familiar. Yeah. >> Yeah. Yeah. Yeah. But I mean, so we actually coined a term, believe it or not, and actually tried to service market and it cost too much money, so we didn't do it. But called blockchain intelligence back in 2022. We were raising our third fund. And our first two funds in 2018 and 2020 were really about because I'm a financial services guy. I'm not a tech guy. I'm not an engineer. I don't even play one on TV, right? I'm I'm an old school financial

services. I was an allocator. I was a macro guy. In fact, I'm I'm one of the OMGs of of blockchain, right? The old macro guys. So, it's myself and John Burbank and and and Dan Morehead and Dan Tapiro and Mike Novagrass. I mean, there's a whole bunch of old macro guys. Now, why did old keyword macro guys suddenly see this as an opportunity? Well, it's cuz it's just the biggest macro trade in the history of mankind where we're reinventing money. So, but in 2018 and 20, we were all about the picks and shovels of the digital gold rush. So, I actually wrote a long paper about this,

like 40 plus pages back in 2017 about how in the gold rush, right, the gold miners did not get rich. I mean, a couple of them did, but by and large, they all lost a lot of money and a lot of lives. The guy who got super rich, the first millionaire in California was John Bannam. And he was the owner of the general store in Yerba Buena. It wasn't even called San Francisco back then. And he literally bought every pot and pan and went down banging the pots and pans in the middle of the street saying there's gold in the American River. And you know, he got super rich selling, believe it, $6 eggs in 1849.

Do that in your inflation adjustment thing. And and we complain about eggs a year ago. Now eggs are super cheap again. But the the thing is in 2018, 2020, everything we did was about what blockchains were going to do to financial services. Because what the internet did to media and commerce total disruption created $7 trillion dollars of value that it basically extracted. Netflix versus ABCNBC CBS is the best example. ABCNBC CBS had all the market cap. They had all the content and then suddenly Netflix took all their market cap and started creating content. How how did they ABC, NBC, CBS, the

incumbents seed power to this little upstart Netflix that almost went bankrupt twice. The first time because they were shipping discs, which is a really bad business model because they'd break or get lost. Then they tried video on demand, but video took 4 days to download and no one's going to wait 4 days. So, they almost went bankrupt twice. But broadband came along and suddenly they got people to sign up for subscriptions and ABC, NBC, CBS were, "No, no, we're adbased revenue. We're not going to go to subscription because our stock price would fall." Well, your stock price fell anyway and now all your market cap's gone. So, I don't really understand it, but but they didn't do it. So that that transition of what the internet did to media companies and

commerce, all the mom and pop went to Amazon is what's happening now with financial services. And financial services is by far the largest industry in the world. Like it's orders of magnitude bigger than commerce. It's orders of magnitude bigger than uh media. It is by far the biggest. It's 7 trillion with a t dollar a year of fees so that we can give our money to these centralized authorities. Then now it becomes their money. Like this is a dirty little secret. You put your money in the bank, it's no longer yours. It's now the banks. And you have an IOU and it works most of the time, but when it doesn't, it's bad. Same

thing with brokerage firms. We have accountants and auditors and all these people counting the money. But why? we have a better technology now. So that transition we thought was going to be monstrous. So our first two funds were focused on that and they've done nicely, very well actually. Um humble brag and but we were we got that timing right in that financial services companies like Figure Technologies and Coinbase and E Toro were going to evolve into this these markets. But in 2022, we saw this integration, as you say, between the A and the B and the AI tools, right, which were still pretty rudiment rudimentary. This was prel

were helping us make blockchains more efficient, more intelligent. And so we we coined this term blockchain intelligence. Now, it didn't do us a hill of bean of goods cuz nobody understood what we were talking about. Um, but it did help us make a couple really nice investments in fund three. Um, and fund four, which I think are going to do amazing things. But, you know, this idea that that you should only own, you know, the LLM companies just makes no sense to me in the sense that is a tool and the best example is what anthropic is doing to chat GPT, right? Open AI. So, OpenAI had 85% market share.

three and a half years ago 85. Now they're down to 25 and Anthropic has 32 and Google is at 18. And Google Google's going to win it all because they manufacture their own chips, the the TPUs, the tensor processing units. And if you're open AI, you got to buy chips from Nvidia with money you don't have, which is going to be a problem. But anyway, um, again, long answer to your your important question, [laughter] which is the intersection of the things and AI and blockchain we think are one of the most important because data organized on blockchains, it's just a a it's a ledger. It's a general ledger system. But if you embed intelligence into it so that it can I'll

give you an example. So, we invest in in companies that do something called FH, fully homorphic encryption. Now, here's why. If you think about data, right? All the data on your phone or here on my phone is encrypted. But if I send you a text, an iMessage, it's not encrypted. If I send you a signal or a WhatsApp is, but if I send you an iMessage, now no one really cares. Hey, John, what are you having for lunch? They're not going to snoop that. But if I sent you my, you know, uh, credit card number, they might be interested in that. But it's not encrypted. Most of us have put our data on the cloud, right?

Because we don't want to have onrem anymore. Okay, that's that's fine. And as long as it's at rest, it's encrypted. But everyone listening to this podcast has had the experience, oh, your data was leaked in a breach, whether it was Target or American Express or whatever, and now you have to get protection because someone's going to be stealing your identity. Well, how does that happen? Well, as soon as the data becomes in motion, people are working on it. Visa's looking at how you're, you know, your your history, it can be hacked. And the problem is the hackers know where the information is. So, they go after the companies like Visa. Visa gets attacked 30,000 times a day. And you're like, "How does he know that

number?" Well, my son was the auditor at Visa and he told me they get attacked 30,000 times. Now most of them are not successful but occasionally they are and when they are it's inconvenient. So fully homamorphic encryption would allow the data to stay encrypted all the time and you can still work on it. Now that actually makes my head hurt because how can I work on data if it's encrypted? Like don't worry about it. we that's just math and it's speed and like okay but but like I don't understand how I'm talking into a metal and glass box and it's going into the air into a cell tower down into a fiber optic cable out another cell tower into

your metal and glass box in real time there's no lag I wish it was a little fuzzier because I have a face for radio but at the end of the day how does that work I don't know and I don't really care I just know that if I invest in the things that facilitate that, we can make a lot of money because that's innovation. And so the same thing's true here is I don't really need to know how fully homorphic encryption works. I just need to know that the companies we're investing in are solving a fundamental issue about privacy. And privacy is really good. Secrecy less good. Privacy fundamental human right. We all should have it. And simple little thing, right?

right now with a wallet. If I have a wallet and I want to make a transaction, people can see everything I have. [snorts] That's less good. It's like like Venmo when people leave that switch so people can see everything they've done. And like why would you let people see where you're sending money? That seems like bad information to give out. But um at least you with Venmo you can turn it off. But with a Bitcoin wallet you can't. And so now, you know, we we're looking at a company, it's interesting technology, innovation, that puts a a blocker in between, not a Tumblr, so they're not going to go to jail, but some technology that says you, whoever the transactor party is, all you need to know is that Mark actually has enough

Bitcoin to pay you. You don't need to know what else he owns. You don't need to know if he has any NFTts or if he's done any transactions that you don't approve of. None of your business. It's like again as a father of a daughter, I hated the fact that when my daughter would go out to the bars in college, she would show people an ID with her home address on it. And so there's innovation around all kinds of things that is is really kind of cool. ETFs provide investors with a structured, disciplined, and diversified approach to crypto, which is cool, but the world is moving on chain. We need a crypto native equivalent. That's exactly what Reserve's decentralized token folios bring to the table. Reserve ETFs are rule-based baskets of crypto assets

packaged into a single token like Coin Market CMC 20, crypto's version of the S&P 500. Go to milkroad.com/reserve to find out what's on offer. >> Uh Mark, you're one of my favorite people to listen to on podcast interviews because, you know, I can ask you, if I ask you the right questions, you'll share all kinds of alpha in terms of things that you're looking at, companies, technologies. Um, so I hope our audience appreciates the the wealth and abundance of of uh information in that answer. Um, I want to try to get in a couple more questions before we wrap up here, but um, I wanted to ask you about Bitcoin. Um, and you know, I don't want to get into price action or cycles and all that stuff. Um, your your experience uh, working at at the endowment fund for UNCC Chapel Hill, I think, um, is something I want to draw

on here. Um, Harvard's endowment has nearly half a billion dollars allocated to Bitcoin via IBIT. Um, and I know you spent a lot of your career working with other university endowments. Do you think that uh there's going to be a lot of fast followers from endowments on Harvard's lead on this? Do you think they're an outlier? How do you think that endowments are going to appraise Bitcoin as a as an allocation? And and what what do you see? How do you see that playing out basically? >> Well, you know, it's interesting. So, look, I'm a huge NAR fan, the the CIO at at Harvard. We've been buddies for a long time. Um, but he wasn't actually the first, right? I mean, there were a lot of other schools that got in earlier. Mostly they got in peripherally. They backed people like Paradigm or A16Z. Paradigm in particular

because Paradigm was about 75% Bitcoin and 25% venture. But Harvard came along pretty quickly and they are the biggest name and so I think there will be others that that follow and other boards and this is the way it happens right is every innovation in the endowment world and I lived there for a long time comes from some crazy CIO right some crazy CIO has an idea that he that and it's usually not their idea like I had lots of crazy ideas but mostly they came from people like Howard Marx right or Kleiner Perkins Coughfield buyers. I say before it was just called Kleiner and I feel sorry for Perkins Cfield and Buyers or Sequoia,

right? When Sequoia was not famous and you know I was at Notre Dame and we put a little money with them and they put money in this company called Google and our board was like it's a stupid name like now it's a verb and turned out you know we turned 500K into 200 million so there should be a quad called the Google quad. But it always starts from from an idea and at first you're shunned, right? The first investors in venture capital, oh you guys are crazy. We can't do that. We have to have stocks and bonds or mutual funds. And then somebody gets successful, whether it was Harvard or Yale and David Swenson was one of the real pioneers, God rest his soul. And whether it was Jack Meyer at Harvard or or others, I mean, and there's some been some great investors both at Notre Dame

where I was at and then UNCC and Duke. And it's those leaders that then there are, you know, sometimes they're fast, mostly they're slow because Barton Biggs, famous u strategist from Morgan Stanley years ago, wrote this piece, best two pages ever written on the psychology of investing. It's called groups stink. And it basically said that groups don't make good decisions. And the reason is the groups, particularly endowment groups, have no diversity at all. Like when I showed up at Carolina, my board was 11 guys, all guys, nine of them from the same fraternity within

three years of each other. So they were all the same age. They were all the same demographic. They all wore the same khakis, the same polos. They thought exactly the same way. And so it was not shocking that they underperformed the market because if you ask them their best idea, they would look around the room and say, "Geez, if I say that I think international stocks are good, they'll kick me off this board and I want to be on this board cuz I like going to football games and basketball games." And so the the desire to stay in the group trumps the desire to give your best idea. And so groups tend toward mediocrity. And you know whether it was Warren Buffett or somebody else, it was

probably somebody else, but Warren gets credit. You know, investment committee should be an odd number and three is too many. And individuals always make better decisions. It doesn't mean they're always right, but the quality of the decision is better. It's faster. It's more rational. There's none of this emotional baggage. And so this is a long-winded way of saying yes, I think others will follow, but mostly it's going to come from great individual investors pushing. I'll give you an example. In 2018, Pomp and I went on a West Coast trip and we met with I don't know 25 big institutions and we made him a very simple proposition. We said,

"Give us some money and we will buy Bitcoin on your behalf and we'll take care of all the back office and the infrastructure. You don't have to do anything. We'll charge you no fees. Once you make three times your money, we'll split the profits 7030. You get 70, we get 30." We got zero takers. The price was $6,000. So even when you give them a great idea where they can't miss like if if we don't get it right you don't pay any money no fees even with that we couldn't get anybody to give us money and so it takes time for someone and in this case it was you know people like actually Notre Dame was at the lead

Stanford was at the lead because they're right there in Palo Alto so Harvard wasn't the earliest but Narv did a good job going in in size and I think that will inspire others. >> Yeah. And I think that that's helpful context just on the the institutional adoption curve because I think that uh everybody has been paying attention to that institutions finally moving into digital assets. Um and they're kind of wondering when people will come over that hill and get over that hump and and start making allocations. Um so yeah, just was interested to get your insights on that. Uh Mark, I wanted to finish with uh something you mentioned briefly before. Um but every year you do a list of 10 surprises for the market to watch out for for the year ahead. Um and I I haven't seen your list. I know you recently uh just did the presentation,

but I was wondering if you would share with us maybe one or two of the biggest >> I'll give you I'll give them all. So I I just did on Thursday. Um and it's my favorite thing of the year, right? I I love doing it because a couple things are fun. One, it's actually kind of fun to figure out what is consensus because sometimes you think you know what consensus is and then you do a little research, you're like, "Oh, no, that's not consensus. That's just, you know, the loudest person talking about it." So, so finding out what consensus is across and I do I do a surprise and what a surprise is, it's not a forecast. I don't think I have a crystal ball and I can forecast the future. A surprise is the inverse of the the consensus. So if

the consensus is US stocks are going to go up, then the surprise would be US stocks don't go up, right? That has we think better than 5050 chance of happening. Okay? And if it does, you can profit. So I'll give you a great example. So last year we do 10 surprise. I always throw a bonus one in. So I always end up with 11. And I went six and five. I shouldn't say I went, we that, you know, that the surprises went six and five because again, it's not me predicting anything. It's just coming up with my perception of what the opposite of the consensus is. But here's the interesting thing. If you built a portfolio equal weight, right, just 9% in each of the 11 areas, the market was up 18%. Okay, the portfolio was up 31.

It's actually pretty good. Even though we're only six and five, so not not right very much more than we were wrong. And when we were wrong, we lost a bunch of money, right? Because we thought the market would go down. Again, the surprise was the market was going to go down, but it didn't. It went up 18%. So being short the market, you lose 18%. But even with that, you know, like we had gold going to $3,000, which back a year ago was really outlandish. It made 3,000 by April and then, you know, went up a lot. So we made a lot on that surprise. But and then you know we were one of the few last year that said Bitcoin wasn't going to the moon. We thought that the cycle still existed and it was going to have a tough year and it did. So we we made some money on that.

But this year we always start with big picture economy and again for I think like the sixth year in a row everyone's sure there'll be no recession. Recessions have been outlawed. No more recessions. So the surprise this year would be there actually is a recession. Poly market says the odds are, you know, sub 15%. So that's probably right, but that would be a big surprise if it comes out of the blue. Now, what I said is the overall economy doesn't look like it's going in recession. But there is this K-shaped economy problem. The people at the top, they feel good. If you're at the bottom, you've been in recession for a few years, and it's tough living paycheck to paycheck. and you know the bottom half of the US they don't own

stocks they don't own real estate so I I will argue we've been in a recession for a while we just don't count it because the billionaire class gets to make the rules so that's what second was uh on interest rates so everyone you know was convinced that the Fed was going to cut rates I think not so much why would you cut rates if growth really is 5% so that was that'll be another surprise. If if things surprise to the upside on the economy, you're unlikely to get rate cuts. And so that you know um now the the one piece of that that is interesting is the QE, although we can't call it QE, but it is QE is restarting.

The Fed balance sheet is going back up. And this thing that we just did last night um with the bailing out of the yen, that was not on anybody's bingo card. So that means money supply is going to keep growing fast. That's really good. And you've seen it in gold and silver. Now, Bitcoin hasn't caught up yet. So then third surprise was was about general markets. Everyone thinks the market's going to go up 12%. They go up 12% every single year. Like if you look at 10, every year they think it's going up 12%. It never does. It's actually never in 140 years gone up exactly 12%. Um you know, a little more, a little less, or a lot more, a little lot less. So the surprise would be that that we actually have a bare market. And um you know, my my theme this year I do

a theme this year. So, I you know, last year it was uh um House of Stark. Um oh, what's the show called? Um >> Game of Thrones. >> Game of Thrones. It was all Game of Thrones. And the year before that it was um uh Rolling Stones songs. And the year before that it was something else. This year it was Top Gun, my favorite. And in fact, I just watched Maverick again this weekend. Um but he did all Top Gun quotes. And you know, the the bear is not going to be happy till he's going Mach 2 with his hair on fire. So, we'll see what happens. You know, number three was that the Mag 7, um, which everybody loves, suddenly becomes kind of the lag seven. And, uh, you actually think that one's probably baked in because there's

a lot of people who are starting to favor small caps. Surprise five was about oil. Um, look, oil, we all know what what the president wants. The president wants low oil prices because there's an inverse relationship between presidential popularity and the price of gasoline. He said, "I want $2 sub$2 gasoline by the midterms." We'll see if he gets that. You know, right now supply is in excess demand and so we're headed lower. But the surprise would be that oil prices firm and Saudi gets what they want, which is higher prices. Six was on the dollar. Again, everybody this year thinks the dollar was going to reverse and recover.

No way. In fact, we're we're collapsing partly because of this intervention. So I think I think the dollar is going to have another year in the toilet. Um, surprise number seven was about Europe and you know again after last year was oh Europe's great like no Europe's not great there's no growth the economy is more abundant there's no tech they have no um uh trillion dollar companies what's great about it so I think now that everybody's jumped on the bandwagon that Europe's going to go up I think it probably doesn't eight was was Japan you know Japan Japan's super easy since 2011 Japan is supre. If the yen goes down, Japanese equities go up. And

unfortunately, and I think we're seeing it this week, the yen is on its way to zero. Like literally going to zero because it has they end up no way out. But the governments aren't going to allow that right away. So in order to save equities, you need the yen carry trade to stay alive. And so I think the US just bailed out the yen. So the yen went from 160 to 154 and I think that means you know Japanese equities could turn into you know I said from the land of the rising ton to goodness gracious great balls of fire. Um so I think I think Japanese equities will get torched if uh if they let the yen strengthen. Um surprise nine was was about China.

Everybody hates China. I mean everybody hates China. I love China. I've been a China file since 1994. I love China. And um it's been one of the best performing markets and again not every year and not every sector but man if you invest in China for local Chinese growth it's it's unbelievable. So um I think that will will outperform and what people don't understand is the US and Trump in particular playing they're arguing about how you set up the checkerboard. China's playing go. It's a totally different game. Checkers and chess are all about confrontation right? go is about relative advantage and they are playing a game that we don't even know we're losing and and they're crushing us in things like 5G and AI and dominance

in technology chip production. So really good stuff. Um 10 was about Bitcoin. Uh I think sadly we're in crypto winter. Um I don't think we're going to make new all-time highs this year. I hate I hate to say that out loud, but I I just don't think it's going to happen. Um I look I think the next cycle is going to be glorious and I think we'll hit you know 4 500k um in 28 29. So you know the glory days are to come but I think the short term is going to be going to be tough. Um and then surprise 11 was on precious metals and I said that look the debasement trade that everybody thinks is going to happen. It's long in the tooth. We're probably closer to the end than the beginning. So we'll see how that goes.

>> Mark I can't believe you remembered. I I can't believe you remembered all those off the top of your head. Um >> I worked on I worked on them for a month and and and look it's my favorite thing of the year. I I absolutely love doing it because when you take time I always say not just to think out of the box but to think like there is no box. So if you can start from first principles and just don't worry about what everyone and just think like based on the data how would I interpret it? So cool. I love it. If you are listening to this right now and thinking, "Okay, but what's really driving the economy right now?" Well, that's what Milkroad Macro Pro is for.

Every month, our big brain researcher, Thomas, drops a monster report about the state of the economy, including metrics and charts you can't find anywhere else. It's all in-house analysis created by our research team. Plus, you can even chat with me directly in Discord and during our Milk Road Macro Pro AMAs, which we do every month. If you want to invest with context instead of just chasing headlines, Milk Road Macro Pro is where you need to go to level up. So, hit the link below in the show notes to join our community and get on the alpha. Mark, I really appreciate you coming on Milk Road Macro and sharing this with our audience because I think there's a ton of things in what you said that people can go research more and kind of, you know, come to their own conclusions about, but just sharing that mindset and

that investor thinking about identifying opportunities to invest in innovation before the market understands. Find something that's adding value that you believe in and then be patient while the market market catches up to you. Um, that's an opportunity for for wealth creation there. I really appreciate you coming on today. >> I and I love being on the show because I I believe in what you're doing and and what look the whole idea of of macro, right? Is to analyze the data, not not have to have a hypothesis and then find the data to support. In fact, there's actually a great book on this called belief. And the way humans create beliefs is we form the belief and then we gather data that supports it and

reject anything that doesn't. And social media has just made that so much worse. But what you should do is you should gather the data, all of it. Look at a bunch of Milk Road macro charts, look at the data, formulate a hypothesis, see if it works, and then do it again. And that's why I say, look, I'm a biology and chemistry major. I'm not a I'm not a engineer. I'm But I argue it's the best training ever for investing because investing is what biology and chemistry are all about. Forming a hypothesis, create an experiment, test the hypothesis, gather the data, reinterpret, form a new hypothesis, lather, rinse, repeat. The scientific

method, right? This whole idea, trust the science. Are you joking? That's the antithesis of science. No one has ever trusted the science. The science is evolving. We used to think bloodletting was good. Now we think there are other things you can do to get healthy. Now I I will argue that for guys in particular as you get older your blood gets you know heavily iron and you keelation which is kind of cleansing the blood is not exactly the stupidest idea in the world. It sounds barbaric but it's not exactly stupid. So there are things that you can again if you look at the data you can support even though it sounds antiquated but anyway I digress. [laughter] You do, but I always enjoy your digressions. Mark, thanks so much for

being on Milk Road Macro. I learned a lot. I hope our audience did, too. Where can we send people to find more of you and your work online? >> Yeah, I'm easy. So, you know, our our website for the firm is Morgan Creekcapcap.com. I'm Markus on Twitter. I'll never call it X, by the way. Um, just because I'm old. Um, and uh I still like the name. I just I like Twitter better. Um, but hey, he's richer than me, so he can do whatever he wants. But uh I'm Mark Yusco. M A R K Y U S K O. Uh I'm all over the internet. I like to talk. My wife says too much. But um I'm I'm all over the place. So if people just Google me, they can they can find in fact, you know, although I can't say like Kirk Signetti, you know, I win. Google me.

Like the best line ever in the history of of college football. I mean, Sabin had a lot of good lines, but um that signetti line from his first conference, like that is confidence. and and he and he did it. And congratulations to IU and uh and I'm a Notre Dame guy, so it pains me that we didn't make it because we're the last team to beat Indiana, by the way. No one remembers that. Um but congratulations to them. I don't think we would have beat him this year, per se, but it would have been a fun game. >> Mark, thanks for being on Milk Road Macro. I hope we can have you back again soon.

>> Awesome. Thanks. >> Thank you all for joining us. I hope you all learned something today and had some fun, too. Uh, so until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Macro. Thanks for being here, everyone. Bye. Want insights on what's really moving markets and how we're trading each event? Subscribe to our channel, then join the Milk Road Macro and Macro Pro newsletters. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.