The Growth Strategy Trapping The Fed | Darius Dale

**Jack Farley** (0:00)
Nothing said on Forward Guidance is a recommendation to buy or sell any investments or products.
All right, what's going on, everybody? Welcome back to another episode of Forward Guidance, and excited to be joined today by repeat guest, Darius Dale, founder of 42 Macro. Darius, it's been far too long since the last time we had him on the show, what's going on?

**Darius Dale** (0:23)
Dude, it's a real pleasure to be back, Felix, man. It's great to see you, glad you're doing well. You guys are making moves over at Blockworks and the acquisition side of things, so best of luck with that. Things are good, man.
Business is booming. Life is booming. I had a two-year-old who's as crazy as ever.

**Jack Farley** (0:40)
Things are good, man.

**Darius Dale** (0:41)
God is good. I'm blessed.

**Jack Farley** (0:43)
Yeah, glad to hear that, dude. That's awesome.
No shortage of news this summer. I thought sometimes we get these summers where it's a bit dull and you just kind of get this low vol, you know, grind up or what have you and little news. Feels like the complete opposite this summer, especially in recent weeks. Want to just start off by understanding, what is the broad regime that you're viewing Macro through right now? Obviously, there's been some pretty interesting headlines coming, especially from the fiscal authority side of things and what Secretary Scott Besson has been up to. There's been this Yen Intervention, the first coordinated intervention in decades, I believe, and then some interesting priority shifts and term changes in terms of, what is it looking like in terms of, do we prioritize issuing on the long interest, the short end, and what are the Macro implications of that? So yeah, I just want to catch up on how you're thinking about all these different frameworks.

**Darius Dale** (1:34)
No, I appreciate it. Great way to set it up, man. I agree. So let me take a step back before we get into the nitty gritty. I would say things have been broadly fine from a risk standpoint. Recall that we've been in this paradigm C bull market since April of last year, paradigm C being the administration's choice to run the economy hot. That's something that our fundamental research process picked up on in April of 2025 And so we've been coaching our global investor community to anticipate these kinds of dynamics, the kinds of dynamics that we're seeing on the tape today. Bubble-like conditions in equity markets, interest rates, bonds selling off on the long end of the curve, because they can't compete with the nominal GDP expectations that are associated with running the economy hot.
Obviously, we've been in this environment, what we've been terming as the geopolitically driven supply demand and balance in the treasury bond market that's been our core research thesis since the summer of 2023 And part of that core research thesis is a limited menu of options that the sovereign here in the US can choose to kind of deal with that issue. Deal with that disequilibrium in their supply demand and balance. And so we noticed the administration's choice to go with what we call paradigm B, which has cut the deficit back in the spring of 2025 or winter, late winter, early spring of 2025 And so we were appropriately positioned for that crash. But we immediately noticed, going back to April of last year, that hey, they were actually pivoting from paradigm B to paradigm C, which is running the economy hot. Then they layered on a sprinkling of paradigm D in December, when the Fed launched its Reserve Management Purchase Program. So right now, here in 2026, we have paradigm C, which is running the economy hot, with the sprinkling of paradigm D, which is printing to kind of counteract the issues in the bond market and address this disequilibrium. And so ultimately, what we've been expecting and coaching our global investor community to expect are bubble-like conditions in the equity market. So and ultimately, some issues in the bond market associated with all that extra nominal GDP growth. And so here we are today with our Treasury Secretary, Scott Besson, our former client of mine, making choices to kind of incrementally address this unfavorable disequilibrium. And ultimately, it's our view that that unfavorable disequilibrium will be set at bay for now.
That's hard to determine ex ante. And so we have to kind of rely, we have to stand on the shoulders of giants as it relates to our market regime now casting process, our macro weather model in terms of interpreting signals from the macro economy until ultimately, converting those signals into actionable, forward-looking market risk signals. And so ultimately, when you put those two things together, things are fine and they should be fine. We'll start with the market regime now casting process. So we use our global macro risk matrix to now cast the market regime. Investors must position for the market regime if you want to avoid FOMO or FOMO, or arguably the two worst emotions you can feel as an investor. Fear of missing out causes you to buy cycle tops, fear of more losses causes you to sell cycle lows. And so ultimately, this market regime now casting process is essentially saying the coast is clear.