Trump Is “Kitchen Sinking” The US Economy | Darius Dale
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Alright. What's going on, everybody? Welcome back to forward guidance. We've got the man himself, Darius Dale, forty two macro. Needs no introduction, but we'll give it anyway. Darius, how are you, my dude? I'm
doing really good, man. Thanks for having me back on the show. You guys are doing great work keeping everybody apprised of all the cards going on out there. So, let's just hop into it.
Yeah. When Vol gets us high, things move fast to say the least. Yeah. Time to get into. I know you have some charts as you always do, which is I'm super excited to get into. But I wanna, you know, just start this conversation where, you know, what is the key narrative in markets today? And I wanna hear about how you were thinking about markets going into Liberation Day last week, and how did markets react versus your expectations of that? And and how were you thinking about this process up and towards here we are today with, risk assets rebounding? Is that just a bear market to be sold? How do
A lot of good questions there. So, I'll kinda go from an order here. So heading in the last week, you know, we've been of the view, that two things are likely to occur in 2025 that were not priced in, you know, as recently as, you know, late February. What one, there's likely to be a global debt refinancing air air pocket in 2025 because the Fed and other key central bankers, namely People's Bank of China, were not proactively supplying liquidity in a way that would ease that process. And then number two, which is obviously more important to markets today, is the Trump administration appeared
Yeah. Absolutely. So, you know, now it feels like markets have to quarrel with to your point, how much of this will be durable? We got the worst of the worst expectations become reality last week, and that led to a very quick and aggressive degrossing of a lot of a lot of risk assets. We it's really interesting to me to see the the cross correlations between asset classes where in the lead up until basically Friday, it seemed like it was pretty, you know, calm selling, willing sellers. And then pretty quickly, we started to see, you know, gold down, equities down, rest of world equity, which i
We're definitely the so we're in the position that the Trump administration is serious about this economic transformation transition from paradigm a to paradigm b. If you can throw this chart on the on the on the on the screen there where we show, you know, what I believe to be the most important chart of macro. This is a share this chart shows labor share of national income, which is all the way down here at 51 and a half percent. That's the blue line relative to capital share of national income as the noted by corporate profits, as a share of gross, gross domestic income. That's all the way
Mhmm. Absolutely. You know, I think, treasury secretary Scott Basson put it best in a recent interview where he said, this is a Mag seven problem, not a Mag MAGA problem, effectively. And so, yeah, let's double click on this this idea of the sequence of this compression between these two charts, and we'll get into the market impact of of how investors can deal with that. But, first off, I wanna just hear about how do you see the sequence of that in terms of the economy itself? So if if you're of the mind and you can you can validate this or not that the you know, through the past couple years,
No. I'll start by saying the precondition was unsustainable. And, you know, you you and I talked about The US being in a four turning historically. You know, I wanna say I wanna say about 50 plus percent of
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