Last week, Darius Dale joined Andrew Bell on BNN Bloomberg to discuss 42 Macro’s 100th-percentile-bullish Paradigm C theme and the US government shutdown. He explained why a U.S. government shutdown would likely be a non-event for markets, how the U-shaped U.S. economy remains on track for a likely robust recovery in 2026, and why a weaker dollar could unleash a powerful tailwind for risk assets.
If you missed the discussion, here are three key takeaways that likely have huge implications for your portfolio:
1) Government Shutdown Fears are Misplaced
History has shown that shutdown fears are misplaced. Darius points out that the longest shutdown in U.S. history (spanning from December 2018 – January 2019) saw the S&P 500 rally 10% during the closure and another 10% in the three months that followed.
Key Takeaway: Political theatrics continue to be unable to derail 42 Macro’s 100th-percentile-bullish (relative to Global Wall Street) Paradigm C thesis. The past and present government shutdowns have continuously proven to be noise, not signal.
2) The U-Shaped U.S. Economy Will Likely Reaccelerate
During the segment, Darius reiterated that 42 Macro’s U-Shaped Economy thesis remains intact. While the U.S economy may reach a nadir in the second half of 2025, we continue to anticipate a robust recovery in 2026 as growth-friendly fiscal, monetary, and regulatory policies align with our view.
Key Takeaway: Markets are smart and wise enough to look through the worst part of the U-Shaped economy. We continue to believe that risk assets are likely to be much higher in price over a medium-term time horizon.
3) A Weaker U.S. Dollar is Bullish for Risk Assets
42 Macro models continue to signal that the U.S. Dollar is likely to stay weakened on a 12-24 month time horizon as other major central banks are either done easing (ECB, BOE, SNB, PBOC) or normalizing monetary policy in a hawkish direction (BOJ). Additionally, such periods of globally synchronized economic recovery have tended to perpetuate significant declines in the dollar – an outcome that will likely result in a much higher stock of global liquidity that is incredibly bullish for asset prices.
Key Takeaway: Instead of scaring away foreign investors, we continue to believe a weaker USD will continue to reflate global liquidity and support the bullish environment for asset prices.
Final Thought: Investors That Systematically Block Out Bear Porn Will Continue To Win
Fiscal expansion, moderate inflation tolerance, and monetary adaptation continue to shape a regime that favors growth and risk assets. Investors who stay systematic and positioned for this policy-driven expansion are best equipped to capture the upside as Paradigm C unfolds.
If you are not confident your portfolio is positioned correctly for the evolving macro landscape, partner with 42 Macro for data-driven insights and proven risk management overlays—KISS and Dr. Mo—to help you stay on the right side of market risk.
No catch—just real insights to help you stay ahead in the #Team42 community.
Best of luck out there,
— Team 42
