Hey, it's Max from UNFR for the Midas

Touch Network here with a look at

Trump's second first year. We'll also

look at what's in store for the US

economy in 2026 along with a key

indicator that threatens to unwind the

global economy no matter what rabbits

this administration thinks that it can

pull from its hat. And we'll lead with

that part first because it's a shocking

development in the financial markets

that the administration and the

mainstream media are papering over

because it seems like everyone is just

crossing their fingers that AI is coming

to the rescue in 2026. Spoiler alert,

it's not. This is the macro take from

Midas Touch. Let's go.

So, as promised, we're going to start by

talking about the thing that no one's

talking about in the financial markets,

but everyone should be paying attention

to. But first, let's start off with a

rare moment of truth from our president.

>> And after just one year, we have

achieved more than anyone could have

imagined.

>> How unusually true, sir. The orange fell

is actually going to be our guide for

much of today since he laid out his case

so eloquently for why the economic pain

that you're experiencing right now is

all in your mind and certainly wouldn't

be his fault if indeed you are

struggling. But first, here's what's

gotten away from this administration and

reveals everything about how tenuous the

US economy is. The repo market. Now,

before you roll your eyes or you glaze

over or you click away from the video,

this is an important concept to

understand. Now, we've covered it

before, so I'm just going to do a very

brief overview of why it's so important

because it'll show you just how crazy

this financial data really is. So, every

night, trillions of dollars flow through

the plumbing of the financial system.

These are giant settlements between

counterparties, somewhere in the

neighborhood actually of 12 to$13

trillion every day. So, there are

clearing houses, these intermediaries

that account for all of it. And some

banks and even non-banks facilitate

these transactions by loaning out money

to cover them until the morning. For

this service, these intermediaries take

pennies. I mean pennies, but on

trillions of dollars, it adds up. So

this is a robust business in and of

itself. Now the borrowing rates between

the parties are set by the market. This

is called the secured overnight

financing rate. But the Federal Reserve

also participates by setting a ceiling

to these rates, the Federal Funds rate.

So this is the range of rates currently

between 3 and 1/2 and 3 and 3/4% that

you hear so much about. So when the Fed

talks about hiking rates or cutting

rates, that's what they're talking

about. So when the market demands rates

outside of this range, when sofur blows

out, the Fed will step in to securitize

these settlements by loaning money

against assets, either mortgage back

securities or US treasuries that the

counterpart is holding on their balance

sheet. So this has happened more in the

fourth quarter of this year than at any

other time outside of a financial crisis

like COVID or the global financial

crisis. Now, it can happen on occasion

at the end of a fiscal quarter, like on

the very last day of a quarter when

firms are making big balance sheet moves

prior to reporting financial data. But

it rarely, if ever, happens outside of

quarter ends and financial crisis. And

yet, here we are. This is how often it's

been happening in the fourth quarter of

2025. All those blue lines represent

billions of dollars that the Fed had to

inject into the overnight markets to

keep rates within the target range. So

what does this mean? I'll tell you why

the markets are ignoring this and why

it's so bad. When this has happened in

the past, market observers freaked out

because it can imply some sort of

liquidity crisis. Like maybe there's a

hidden collapse somewhere in the system.

But because the Fed has the tools to

intervene so swiftly, the markets no

longer overreact, especially when it's

an isolated event. Now, a sustained

period like this signals something

different. And it's one of the reasons

why you're seeing a flight to hard

assets like gold and silver. Right now,

institutional investors and central

banks are growing wary of plumbing

issues like this because it implies that

the parties that have visibility into

one another's activities don't like what

they see. Elevated rates like this means

that banks are asking for a premium to

supply liquidity. It's a risk premium.

So, there's something happening in the

credit markets that's spooking banks and

NBFIs, non-bank financial intermediaries

that are big enough to participate in

them. They're like dogs circling each

other and growling. Now, they might just

sniff your ass, but they also might

bite. So, it's all very uneasy. So, what

does this mean in practical terms for

you and me? It means that for as much as

the Federal Reserve would like to see

interest rates come down, the market has

other ideas. These interbank rates are a

proxy for the credit crisis that is

currently enveloping the US consumer and

therefore the entire economy. And here's

an example. The 10-year Treasury is the

Goldilocks rate that a mature economy is

based on. It's a realistic time frame,

unlike the 30-year, and therefore, it's

the benchmark rate for things like home

mortgages and credit cards. So, despite

proclamations like this,

>> I've secured a record-breaking $18

trillion of investment into the United

States, which means jobs, wage

increases, growth.

>> The market isn't buying it. Despite the

tax refunds for consumers and seniors on

social security, tax cuts for

businesses, deregulation making business

easier, tariffs incentivizing domestic

productions, the markets see it

differently. The cost of US debt, which

is all a Treasury yield is, remains

higher. Even though the Fed is cutting

rates and Trump is bragging, this is

just another risk premium. Only it's the

whole world asking for it from us. Now,

even though I said it's a benchmark for

credit cards and mortgages, it doesn't

mean it's a tether. So, it's a guide,

not a tie. But you know this much.

Spreads for consumer credit aren't going

to be lower than these rates. So, the

cost of your mortgage or your credit

card debt is going to remain elevated

for the foreseeable future. So, why is

the world basically shorting the US

economy right now? Because we're so in

debt. Not the country, although that's a

symptom, but you and me as citizens. And

that wouldn't be as much of a worry if

there was a way out of our indebtedness.

But right now, we're in a credit spiral,

and it's about to get a lot worse. Now,

we shared in our most recent Midas

report that household credit card debt

is at an all-time high. So, I won't

rehash that, but let's talk about why

this is. There are really two primary

inputs: wages and inflation. If the cost

of your life is more than what you make,

then you go into debt to make ends meet.

So, how does the president feel about

these inputs? Well, let's start with

inflation.

>> I am bringing those high prices down and

bringing them down very fast. Bringing

them down and bringing them down fast.

Well, I tried to include as many

comparisons as possible, but it looks to

me like prices are still pretty

elevated. See, consumer spending is 70%

of US GDP. So, the price of goods and

services matters a lot to our economic

health and our consumer finances. If we

eliminate the massive 20-month spike

under Biden postcoid, Trump's numbers

are flat and now even higher than when

Biden left office. So, he's actually

managed to reverse the trend despite

plunging the global economy into a

recession. The economy is so bad, how

bad is it, that oil is in the 50s and

inflation is still around 3%. While we

shed a record number of jobs, which

itself is in spite of the fact that

Trump has deported around 350,000 people

and shut off immigration entirely, we

should be experiencing deflation, if not

disinflation, and neither's happening.

And if you're saying, "Max, to be fair,

inflation fell in the last report,

right?" Well, according to the Trump

administration, it came down from 3 to

3.1% to 2.7% based on Oh, well,

actually, let's look at what they based

it on. All the numbers are missing. How

would we know what inflation is when

they literally didn't collect 90% of the

data? But look, that's not the whole of

Trump's argument. So, in addition to the

claim that he's brought down inflation,

which we don't know, the more important

piece of what's going on is that wages

have grown. Take a listen.

>> And for the first time in years, wages

are rising much faster than inflation.

>> Okay. Well, now let's take a look. This

is wage growth adjusted for inflation.

It's hovering around 1%. Or to put it

another way, flat to where Biden left

off. Okay, so we've got inflation and

we've got wages and he's making certain

claims that really aren't backed up by

the data. So then it really comes down

to, I guess, the total number of people

who are actually working, right? I mean,

if he's saying that wages are outpacing

inflation, even if we take him at his

word, which nobody ever should, but even

if we do, then how many people are

working? Right? That's the right

question. Very importantly, there are

more people working today than at any

time in American history. Oh, more than

ever before. Wow. Okay, let's fact check

that. Okay. Except that labor

participation was higher when Biden left

office. And I guess you also have to

exclude every administration going back

to Gerald Ford. And in that case, he's

right. All right. Look, there's a reason

that grandpa is screaming like this.

>> One year ago, our country was dead. We

were absolutely dead. Our country was

ready to fail. Totally failed. Now we're

the hottest country anywhere in the

world. He's angry because you're not

grateful. How can you have any pudding

if you don't eat your meat? In fact,

you're so ungrateful. How ungrateful are

you that despite everything he's done

for you, the new ballroom, tax cuts for

corporations and the wealthy, 20 billion

to bail out Argentina, war with

Venezuela, his family buying up Bitcoin,

you still have no faith in him. Consumer

confidence is at the lowest point ever,

meaning never lower. Not during COVID,

the GFC.com

bubble, the 1970s, even ever. We are in

a deep recession. No more talk of this

K-shaped nonsense. 711 firms filed for

bankruptcy through November of this

year. That's the highest since 2010 in

the aftermath of the GFC. That's up 14%

over last year alone. 41,000 households

also filed for bankruptcy this year, up

8% from last year. And we're coming up

on the time that bankruptcies actually

spike come March and April. So, we're

not even in the peak season for it yet.

So, now let's add it all up because the

picture starts to get really clear. The

financial market plumbing springing

leaks almost weekly. Consumer confidence

all-time low, but household debt is at

an all-time high. Fewer people are

working. Inflation is still ripping. And

we haven't even hit the worst of it yet

because the big pin pop that signals the

collapse hasn't even happened yet. And

so what's the pin? Is it the AI bubble,

the private credit markets? War with

Venezuela, stock market correction?

Nah. I mean, these might all get swept

up into it, but the big pin might not

even be in America. As we've said

before, the monetary crisis in the US

might start in Japan because the

Japanese economy is falling apart. Now,

what does that have to do with us? Well,

because inflation is on the rise in

Japan, the Bank of Japan, which is their

Fed equivalent, has started to raise

interest rates, and they just signaled

at their last meeting that they intend

to keep raising them in 2026. This has

already had an impact on us. How? Well,

it's a good question. It shows up in a

roundabout way that plays into

everything we just covered. You see,

Japan is the largest sovereign holder of

US debt. And that's because the rates

they pay on their treasuries has been

next to nothing for decades. And now

that their central bank is raising

rates, we're beginning to see something

called the yen carry trade unwind. The

long and the short of it is that it's

been advantageous to take advantage of a

depreciated yen to convert those yen

into dollars to buy US treasuries. And

since Japan is still such a huge economy

and their treasuries are starting to pay

more, Japanese capital is starting to

repatriate. This is just the beginning

of an already bad situation. As you can

see here in the most recent Treasury

International Capital or tick data

release, the United States saw an

outflow of dollars from both private and

official sources. And it's hard to

impress on everybody just how

significant this is because it confirms

the notion that US dollar dominance and

exceptionalism is finally over. In other

words, not only does the rest of the

world now believe the US is on the wrong

trajectory, but it also believes that it

has viable investment options outside of

the United States. And we can see it in

our last slide today. US dollar holdings

or foreign exchange reserves are near an

all-time low, which makes this claim

even more spurious. I've secured a

record-breaking $18 trillion dollars of

investment into the United States, which

means jobs, wage increases, growth. The

translation for all of this global macro

data is that the sell America narrative

is very real. And the result of it is

that our cost of capital is going to

remain very high. Mortgage rates, credit

cards, lines of credit, you name it. And

with flagging consumer sentiment, we're

headed for a bloody 2026 for the

consumer at least. And this lack of

confidence means people stop spending,

which will eventually eat into corporate

earnings. So we'll see even more stress

in the private credit markets, more Fed

interventions, and tighter credit all

around. See, this is how economies come

to a grinding halt. And look, some of

this is part for the course. Capitalist

economies are built to boom and bust.

Recessions are a feature, not a bug. But

over the years, we've learned how to

intervene to limit the amount of pain

that's felt throughout the economy. But

the Trump administration has already

signaled that the levers will be pulled

exclusively for the banking sector. The

entire Trump economic plan is built

around this idea that your tax refunds

will be so enormous, a theory that we

already debunked again in our last

video, that it'll lead to an economic

boom. But the math just doesn't pencil

out. So looking ahead, here are the

factors to keep an eye on because the

existential threat to the US economy

goes beyond whether there's an AI

investment bubble, a war with Venezuela,

or even a stock market correction. So

will the yen carry trade unwind lead to

panic selling of US debt? Will inflation

resume once we get the actual data to

fill in the blanks? We already know the

labor market is cratering, but will the

official figures finally match what we

all know is true? And will the dollar

continue to lose value relative to our

counterparts in the world? Because these

trends will lead to something else. In

the immediate, they can combine to pop

the bubble, to lead to severe downturns

in myriad sectors. And with health care

costs set to skyrocket and tariffs and

dollar devaluation continuing to

pressure inflation, the consumer is

screwed. And these things alone can

cause the credit markets to seize, which

means the Fed will have to flood the

financial system with dollars to prevent

regional banks in particular from coming

apart at the seams. But the long-term

effect of this kind of spiral is the

flight away from the dollar as reserve

currency and toward a new regime that

probably looks like stable coins backed

by bricks currencies and precious

metals. And these things are already in

the works, which means that any kind of

US long-term rec recovery will require

something more than just data centers

and coal plants. Which brings us back to

the beginning. And after just one year,

we have achieved more than anyone could

have imagined.

>> This reckoning might have been a long

time coming, but it's also the case that

it was still several years, if not

decades away. What Donald Trump might

have pulled off in this second of his

first years is to bring this faraway

reckoning right to our doorstep.

That's your macro take from the Midas

Touch Network. I'm Max from UNFR and you

can connect with me on Blue Sky UNFR and

find me on YouTube by the same handle.

Make sure also to visit unfr.com to sign

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