Darius Dale Predictions

[1:46] saying that the risks of a 1998 style correction were rising uh as we headed into Q3, maybe Q4 of this year... And so that's essentially the kind of market dynamic we see as the most likely outcome in the context of our views on the monetary policy cycle.

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[15:08] 19%. So the market rallied 21% I think from December through the high of July. It gave it all back and then some by the end of August and then it rallied like 27% to close up like 20some percent uh by year end.

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[9:32] So, in our opinion, we do think the Federal Reserve is going to it's going to have to tighten monetary policy... when you think about where we are where we're headed for the next let's call it two to three months maybe even three to four months particularly when you get into the September October FOMC meetings is the fact that the this modest tailwind in the monetary policy cycle is likely to invert into a headwind.

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[0:00] He calculates that it's more likely than not the Federal Reserve will tighten this fall in order to appease the bond market and set itself up to start easing in early 2027.

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[24:14] It'll probably decrease uh for two reasons. One, um, the peak impulse from ABBA is in 2026... my assumption is that we're probably peak paradigm C here in 2026. We'll still be running a nomally hot economy in 20207. Uh but ultimately uh it probably won't be, you know, this is probably as good as it gets from a growth rate perspective.

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[6:39] will this dynamic force Kevin Borch and his colleagues at the FOMC to print. Uh yes is the answer.

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[22:15] Our budget deficit will widen. It'll probably double. You know, we'll go from about $1.8 8 trillion to, you know, somewhere around 3.6 to 4 trillion.

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[29:07] we're still about 100 110 basis points below uh uh the long run mean of term premia prior to the GFC. So if you just added that back to the bond the 10-year Treasury yield, we'd be 5.7% right now. That's fair value for 10-year treasuries.

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[0:00] Yeah, we still think the risk of a 1998 style correction markets is is still pretty high over the next one and two quarters.

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[5:37] we think there is still material risk of the Fed uh tightening monetary policy over the medium-term. Let's call it in the first in the next one to two quarters.

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[10:09] the net result of these five task forces are are are doubbish... if you don't mind I can kind of walk you through what we're thinking in terms of those task forces and why we think the Fed has to be you know more tight now more more hawkish now so that it can ultimately create the scope for that

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[23:24] you're talking about a a 10-year nominal Treasury yield that is a a fair value of about, you know, five and a quarter, somewhere about 5.9 somewhere between five and five and 3/4 to 5.9%... you're talking about a a bond market that could easily reprice to somewhere well north of 5%.

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[4:38] We're currently annualizing at 8% on headline CPI on a three-month annualized basis. That's going to come back down and and we're going to be off, you know, we're, you know, the markets have appropriately priced that that's going to come back down

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[11:25] you know the Federal Reserve will have a serious inflation problem in 2027 if they go from today to tomorrow which is where we think they're going tomorrow which is more easy

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[26:16] I think we finished the year at a much higher level from a stock market standpoint than we are today but that doesn't mean we can't have a let's call it 10 to 15% draw down between now and then as a function of central banks reaction function uh getting incrementally hawkish

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[29:29] Yeah. No, I think we could if folks are on your your channel using the R word. Um just tell them to punt it into the ocean at least until late next year. Just take the R word, punt it into the ocean

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[31:01] We've been saying since last April it's at least 3%. And so consensus is about 50% too low on growth relative to our paradigm C theme.

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[21:00] yes yes and yes... we ultimately have to figure out whether or not the Kevin Walsh Federal Reserve is going to look through uh these sticky inflation pressures... The only thing that's negative is sticky inflation. And in our opinion, we think the sticky inflation thing may cause some problems uh once we get uh maybe you know um you know may cause some problems over the next let's call it 3 to six months.

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[0:00] And this is why we think we're early innings of a a secular dollar bare market.

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[3:06] Our base case scenario is that we are in what we've been saying is a W-shaped market in a U-shaped economy. And what I mean by that is that if you think about the shape of a W, we're sort of on the inside left of the W. And we're expecting over the next one to two quarters that the markets will eventually have to uh sell off again and price in the inside right of the W

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[10:08] we see the economy heading into a technical recession. Uh a technical recession is a just a mere collection of of negative quarters where you're having negative growth.

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[36:37] to me, the the best currency in the world has been and is very likely to continue to be gold

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