The Pomp Podcast - #1558 Darius Dale | Why the Smart Money Is Going All In on Bitcoin

Episode Date: June 4, 2025

Darius Dale is the Founder & CEO of 42Macro. In this conversation we talk about why bitcoin, gold, and stocks will continue to win, Elon Musk & DOGE, spending bill, China, and how markets across the world are reacting.========================BitcoinIRA: Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Take 3 minutes to open your account & get connected to a team of IRA specialists that will guide you through every step of the process. Go to https://bitcoinira.com/pomp/ to earn up to $500 in rewards.========================Bitwise is one of the largest and fastest-growing crypto asset managers. As of December 31, 2021, the company managed over $1.3 billion across an expanding suite of investment solutions, which include the world's largest crypto index fund and other innovative products spanning Bitcoin, Ethereum, DeFi, and crypto equities. Whether you’re an individual, advisor, or institution, Bitwise provides intelligent access to crypto with your unique circumstances in mind. Visit www.bitwiseinvestments.com to learn more. Certain of the Bitwise investment products may be subject to the extreme risks associated with investing in crypto assets. Visit www.bitwiseinvestments.com/disclosures/ to learn more.=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on, guys? Today, we've got an excellent episode with Darius Dale. He's the founder and CEO of 42 Macro, my favorite Wall Street advisory firm. They do fantastic research. And as you know, Darius always brings the heat.

In this conversation, we talk about why Bitcoin, gold and stocks, things that used to be called risk assets, maybe actually they're exactly what you need in your portfolio during a time where The dollar and bonds are getting their butts kicked. On top of that, he explains to us exactly what's happening in the treasury market, what's going on with China, Japan, Europe, and much more. Darius always brings information that teaches me something. And this conversation is no different. Here's my latest conversation with Darius Dale.

Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Bitcoin IRA. Are you a crypto investor with a retirement account, but don't have any crypto in your retirement account? Then listen up. This is

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Bitcoin open source developers. Bitcoin developers are the unsung heroes working tirelessly to maintain, improve and innovate the blockchain. Their efforts ensure that Bitcoin remains true to its promise as a decentralized system that is built to last. Go to bitwisepomp.com to learn more about their ETF and other services. Once again, that's bitwisepomp.com. Bitwise P-O-M-P dot com. As always, remember investing is risky and carefully consider the extreme risks associated with crypto before you invest. And here we go, Darius. Breaking news right as we're about to record this elon musk the world's richest man the man who has been slashing government spending literally living out of a closet essentially in the administration just tweeted

i'm sorry but i just can't stand it anymore the massive outrageous pork-filled congressional spending bill is a disgusting abomination shame on those who voted for it you know you did wrong you know it reaction what do you think i told you man i've been trying to tell y'all this is uh this train has left the barn it's left the station um you know it's it's so i'll start by saying uh one thank you for sharing that two thank you for having me three this is exactly what we were warning about last fall when we said doge is this kabuki theater process that's designed to distract a very gullible american public from trillions of dollars of debt finance tax cuts and not nearly enough expenditure reductions to offset that.

So it's great to see, to welcome Elon to this side of the aisle. This is the purple side of the aisle. I should have worn my purple tie today. I think Elon, you, me, folks like us, we're doing our best to try to stave off what could potentially be a real erosion of U.S. borrowing power and borrowing authority in the coming years as a function of our fiscal,

our inability to get our fiscal house in order. So thank you, Elon, for calling it out. So, you've got this chart here that says the congressional Republicans' inability to dramatically cut spending. It's basically exactly what Elon is calling out. What is this chart showing us, and what are your takeaways? Yeah, no, totally. I'm just grabbing this chart from our monthly macro scouting report. We've shown this chart for years to our clients. You know, look, what I'm essentially calling out is the fact that something I identified a couple of years ago in the context of our investment in a fortune and regime analysis, which is both parties are addicted to fiscal largesse. are just on one side of the equation, you have the Democrats and their profit, get fiscal spending and their aggressive overreach in terms of regulation and spending. And on one side of the aisle, you have folks who just do bad math and don't understand that if you lose revenues and or if you have a deficit, that's seven percent and you don't grow nominally seven percent,

you're going to wind up with a debt to GDP ratio that continues to go higher. So on one side of the aisle, you've got people who can't stop spending on the other side of the aisle. You got people who can't do high school math and you wind up with you know just this you know ever never-ending you know debt and deficit situation so doge was saying they were going to cut a trillion two trillion those big numbers out there um i don't know if people ever thought they were actually going to cut two trillion but they thought they're definitely going to cut a good amount uh you've got a chart here that says we told you that even if doge cuts one trillion dollars of federal expenditures it ain't gonna fix nothing yeah this was always my my biggest

point of contention uh with doge you know obviously i support doge the concept of doge what doge is trying to do but to me again i always thought it was a very calculated distraction from what actually needs to happen which is legitimate fiscal austerity right if you flowed in a trillion and so we were in the camp going back to last fall that hey elon's not going to get anywhere near two trillion dollars not two trillion dollars of waste in the federal budget uh maybe they'll get up to one trillion. We specifically identify five hundred and fifty billion dollars of things that could cut back then. Obviously, they stopped well shy of that. But we said, hey, let's just, you know, give them full credit of the benefit of the doubt. Let's say we float an entire trillion

dollars of federal expenditure reduction all the way down to the bottom line. What would that do in debt deficit to GDP terms? Well, you'd wind up from you go from a seven percent budget deficit to GDP to a five percent budget deficit to GDP. And again, this exercise does not include any negative ramifications upon the economy via tax receipts. And it also is pre pro forma prior to the one big ugly bill that is now adding incremental debt to the debt to the deficits to the debt. So, you know, this U.S. fiscal situation is a real issue. I mean, you look at the last couple of years, the deficit grew by $250 billion in 2024 after growing $365 billion in 2023. It's probably going to shrink a bit because of tariff revenues in 2025. But in my

opinion that's more of a transitory shock because again once you walk into 2026 you're going to start to wind that um that that sucker back up again now uh i think i heard a translation in there uh i think they call it the one big beautiful bill you call it the one big ugly bill so does elon can a big be beautiful and big in the context of our starting point go back to that first chart man put the first chart back on the screen you look at the us's federal expenditures as a percent of nominal GDP at 24 percent, we are at like crisis, financial crisis type levels of federal expenditures. Go back to the GFC when everybody was unemployed and we're handing out unemployment checks and everybody was on Medicaid and SNAP and everything else. That's the kind of

expenditures that we have now. So America clearly voted for the Congressional Republican Party to come in and fix this. Well, now that they're sitting in the driver's seat, they're like, you know what this pork tastes kind of good you know for lack of a better word yeah china they having a blast right now they seem to uh oh the world's distracted let us make some moves what are they doing yeah well look i tell you what man uh never underestimate your end is me that's what page one of sun tzu uh page two of sun tzu is probably never underestimate the Chinese dynasty because these people are always plotting and scheming. You know, I have no I'm hopeful that the U.S. wins this geopolitical strategic conflict. But as evidenced by our

inability to cut federal expenditures from extreme levels, this suggests that we are we're not even playing in the right game. Right. They're playing, though, and or chess and we're setting up a checkers pool. Right. And I think so. But this chart shows is the U.S. imports various from various countries just to track the share of imports and how they've evolved over time. And what we see from China is that U.S. imports from China are now 9% of total imports. And that's one month of data from the month of April. If you look at it on a trailing one-year basis, it's 13%. That 13% is down from a peak of 24% back in 2015. So the share of imports that we get from China continues to decline, which ultimately means the amount of dollars that

China needs to reinvest in the treasury market will continue to decline as a share of the total amount of marketable treasury securities, especially in the context of our deficit situation that we can't seem to get under control. So this is a world in which you have one of the main investors in the U.S. treasury market, China being the number three economy. I think they own three to four percent total of the market of the treasury market you know they they just will need to reinvest and recycle dollars into the treasury market at a lower and lower frequency going forward what about europe and japan yeah it's same it's the same dynamic for different reasons um so with respect to uh europe and japan they currently have economic incentive to repatriate capital

from the treasury bond market china has incentive to stop investing at the same rate which is a problem when you have you know budget deficits that need to you know constantly be capitalized we need to capitalize somewhere between six to seven percent of U.S. GDP's worth budget deficits every year. And so if you have one major investor cohort pulling away, that's China from a strategic decoupling standpoint. And then you have our other two investors, the two big investors Europe owns, I want to say somewhere close to eight or nine percent of the marketable treasury market. The Arizona economy, Japan owns about four to five percent total. So, you know, this is a big swath of the u.s treasury market from a foreign ownership perspective and uh with respect to u.s

with respect to european and japanese investors you know it's no longer economic for them to invest in treasuries right if you look at the the yield the the the the spread beats the spread that the european-based investors get for for investing in treasuries let's say the 10-year nominal treasury yield once you hedge out the the the currency risk from their from their perspective they get they're losing 83 basis points relative to their home market japan you're losing 107 basis points relative to your home market so you would make a you know 202.89 if you're a european based investor and just investing in the you know 10 year you know weighted average european you know yields you would make 1.49 if you're a japanese investor investing in the jg market you would

actually lose 83 basis points and 107 basis points respectively relative to those uh to those numbers So it doesn't make any economic sense for this pocket of, you know, I guess I would say friendly investors to continue investing in the treasury market at the same speed, which is a problem because, again, you're talking about the three largest sources of external demand for our marketable treasury market, all moving in the wrong direction. At the same time, congressional Republicans are legislating the one big ugly bit. Let's jump to the U.S. public sector, and they seem to be already consuming a historically large share of the world's capital. it seems like uh on one hand it could be good but maybe not what people think it is oh it's definitely not good sorry let me be very very clear about this um so again you have europe remilitarizing which is going to you know essentially be a capital call for their economy for the german economy and for other economies across europe you have japan's monetary policy

normalization continuing uh we used to have persistent above targeted growth and inflation And above target and above trend growth inflation in Japan with no end to that in sight. So the BOJ was out overnight essentially confirming that their QT program is going to extend indefinitely into fiscal 2026, which starts fiscal 2027, which starts in April of next year. And then obviously, we talked about with respect to China's strategic decoupling. These are three major geopolitical forces that essentially represents a negative demand shock for U.S. Treasury debt. And that's a problem in the context of the following two statistics. One, the U.S. already has more public sector debt than it can capitalize with its own internally generated capital. If you look at the U.S.'s debt to liquidity ratio, we're at 114 percent.

That means we have 114 percent of U.S. public sector debt relative to the amount of U.S. domestic liquidity. If you want to compare that to other economies like Europe, it's 61 percent. Japan is 61 percent. China is at 31 percent. So we're nowhere near in the area code of what a healthy debt to liquidity ratio will look like. And moreover, if you look at U.S. public sector debt as a share of global public sector debt, it's now 35 percent. It was, what, 24 percent back in back in, you know, essentially, you know, 20 years ago. And so, you know, we know it's been this kind of one way move higher in terms of how much of the world's capital we've been gobbling up. And, you know, I'm not calling for an imminent

collapse or anything. But again, I think this is all part and parcel to what our long term conclusion has been on the next slide, which is the risk asset is the treasury bond market. It's not stocks. It's not gold. It's not Bitcoin. And that's exactly what the market's telling you today from a year to date performance perspective. Stocks up 2 percent, Bitcoin up 13 percent, gold up 28 percent. And this is versus the dollar that's down 7 percent and treasury bonds that are down 3 percent. Again, you need to freeze frame that performance spread or those those relative performance of those risk assets versus those traditionally defensive assets. And just remember that every time the market is down for the now until we get through the end of this fourth

turning policy crisis. I would keep saying, I don't know for how long now, why would you consider bonds safe if they're guaranteed to lose value? It makes no sense to me. It's crazy to me that people are still running around talking about, I'm going to bonds, I'm going to cash, I'm going like, so you think the safest asset in your portfolio is the thing that's guaranteed to lose value by the way other things could go down but at least you got a shot that they're not going to go down totally the bonds and the dollars are guaranteed there's no shot that they're going up in value over time yeah well i wouldn't say no shot because there's obviously a distribution of outcomes but again it's a very negatively skewed distribution for those assets right

that's the problem right like it's we there is a geopolitically driven supply demand imbalance in the treasury market, we have less demand and more supply, and neither political party here in the United States of America has any real political will to fix it. And so this is why, if we go to the final slide, this is something we continue to pound the table on to our client base and to retail investors all around the world, which is the best way to be exposed to financial market risk, certainly throughout the duration of a 430 poly crisis, is via risk assets. Because there are very limited levers that the sovereign can pull to get itself out of this mess there's grow your way out of the mess there's print your way out of the mess or there's cut your way out

of the mess from a fiscal austerity perspective we just saw their willingness to do number three is very low so guess what they're going to try number two grow their way out of the mess when that fails guess what they're going to do print their way out of i know exactly what they're going to do i mean here's the crazy thing you know what i've been saying this is bad for my country this is good for my portfolio yeah 100 that that is going to be the next decade or so of uh what we're probably going to face here is it's bad for my country it's good for my portfolio and the people on the internet understand that better than the people in the institutions and it seems like the retail investors just buy every dip deploy capital just keep throwing money

into the market because the alternative of cash or bonds not good i don't know institutions there's plenty of them that are going to make money right they're not dumb they're working hard um but it does seem like more of them are sitting on the sidelines than you would otherwise think considering what retail's doing. Yeah, we can observe that in our position model. We track 12 or 15 different indicators across, you know, from long-term time with a long-term time series. And we can see that none of those indicators is even close to where they were in the, at the February highs. Obviously talk to institutional clients. We advise on $25 trillion worth of institutional client AUM. I'm talking to institutional investors every single day of the week, including Sundays some

days, then to a person, no one is fully invested. It certainly has the like they were back at the highs of February. So, you know, we're going to continue to pound the table on our paradigm C thesis, which is, hey, they're going to try to grow their way out and eventually they'll wind up trying to print their way out once that fails. And until then, you just need to stay focused on the three asset classes that matter from the perspective of retiring on time and comfortably as a retail investor. Stocks, gold, Bitcoin. Your job is to be maxed along those assets until you get a risk management signal that tells you to take raised cash so that you can do the most important thing I think most in retail investors should be doing if they want to

retire on time and comfortably, which is avoid volatility drag. And that's what this chart shows is that if you can reasonably consistently sell somewhere near the top, you're never going to sell the exact top. Sell somewhere near the top, right out of bull bear market and buy somewhere near the bottom. You don't have to buy, you're never going to buy the exact bottom unless it's pure luck. And buy somewhere near the bottom. Even it could be 10, 20% off the bottom. If you truncate, if you take out that negative alpha, that negative beta from your portfolio and you do that consistently, what you're going to wind up happening is you're going to compound your portfolio from higher levels of net asset value. And you're going to see the money that you have

in your account widen relative to everyone else who's not doing that. So this is why we continue to pound the table on our institutional risk management frameworks that we feature in our KISS portfolio construction process, which is stocks, gold, Bitcoin, no bonds. Hey, you ain't going to convince me. I've been telling people that Bitcoin is the new bond, right? If you think about it from that perspective, sure. People are like, oh, but I don't get my interest payment. Who cares? Well, you're getting a negative interest payment because you're losing money on the actual principle. What are you doing? We're going to, you and I are going to revolutionize the way a lot of investors

approach financial market risk. Our clients tend to skew older and richer because they tend to be more focused on risk management. But again, at some point, the people that you and I are talking to will be 10 years older and 10 years richer. And they're going to start to care about risk management as well. So I'm glad that you've been pounding the table on Bitcoin and helping folks like me get comfortable with the asset class so we can turn around and help other people get comfortable with the asset class. Because to me, it's one of the only ways out. Could not agree more. Where can we send people to find more about 42 Macro? I appreciate you, brother. Thank you so much for having me. 42macro.com. I'm on Twitter,

42macrodale. Come collect this free alpha and the alpha only gets bigger and better when you get inside of our paywall. So we appreciate you. Free alpha on the internet, on social. Is that not true? That is 100% true. But say it again. That was such a good line. I need to fire one more time. Say it again. Come collect this free alpha and the alpha only gets bigger and better when you get inside of our paywall. You go ask our clients. I speak truth. If I was terrible at my job, I would tell you that was average at my job. I'm not average at my job. I appreciate you, brother. We're going to do this again soon. Thank you so much. Thanks, fam.