Darius recently joined Cheryl Casone on Fox Business to discuss the current risk-on Market Regime, the medium-term drivers of asset markets, the impact of upcoming fiscal and regulatory policy changes, and more.

If you missed the interview, here are the three most important takeaways from the conversation that have significant implications for your portfolio: 

  1. We are currently in a risk-on Market Regime, and we anticipate that risk-on condition may generally persist for the next ~three months due in large part to a likely $700-800bn decline in the Treasury General Account (TGA). In risk-on Market Regimes, investors are typically rewarded for taking on high-beta, cyclical exposures, such as consumer discretionary, technology, financials, and industrials.

  2. As we move further into 2025, the key issue for asset markets is likely to be the significant changes coming from fiscal and regulatory policies. Some of these initiatives should be positive for asset markets, including tax cuts, much more M&A, and DOGE, while others, such as tariffs, a too-strong USD, and stagflation lowering the strike price of the “Fed put,” may have negative implications. For investors, the challenge is to understand the size, sequence, and scope of these policy changes. Ultimately, navigating the sequence of policy changes effectively will determine whether you make or lose money as an investor over the medium term.

  3. Earlier this month, Fed Chairman Jerome Powell’s press conference marked the end of the Fed’s asymmetrically dovish reaction function, which they had effectively maintained from November 2023 through December 18, 2024. This reaction function supported the buoyant asset market performance throughout the year that we have persistently called for. However, the Fed’s approach to monetary policy moving forward will likely be more balanced, with a nuanced view of labor market and inflation risks. This shift places the responsibility back to us as investors to accurately forecast where the labor market and inflation are headed, as these will ultimately determine policy decisions.

Since our bullish pivot in November 2023, the QQQs have surged 43% and Bitcoin is up +169%.

If you have fallen victim to bear porn and missed part—or all—of this rally, it is time to explore how our KISS Portfolio Construction Process or Discretionary Risk Management Overlay aka “Dr. Mo” will keep your portfolio on the right side of market risk going forward.Thousands of investors around the world confidently make smarter investment decisions using our clear, accurate, and affordable signals—and as a result, they make more money.

If you are ready to learn more about how our clients incorporate macro into their investment process and how you can do the same, we invite you to watch our complimentary 3-part macro masterclass. 

No catch, just high-quality insights to help you grow your portfolio—our way of saying thanks for being part of our global #Team42 community of thoughtful investors.