Darius Dale joined our friend Maria Bartiromo on Fox Business Network to break down the Fed’s evolving reaction function, 42 Macro’s 100th-percentile outlook for growth and corporate profits, and the rising role of AI in reshaping cost structures across Corporate America. Despite near-term volatility around last week’s FOMC meeting, Darius reiterated that the U.S. economy is heading into a period of extremely robust economic growth supported by structural reform at the Federal Reserve and powerful secular productivity forces.
If you missed the discussion, here are three key takeaways that likely have huge implications for your portfolio:
1) A “Hawkish Cut” Today, but a More Dovish Fed Tomorrow
Darius noted that while Powell may downplay expectations for further easing to preserve credibility, the real story is the coming leadership shift at the Fed. The next Chair is widely expected to prioritize growth and embrace a structurally dovish reaction function that is aligned with the administration’s agenda.
Key Takeaway: Structural reform at the Fed sets the stage for more easing, more liquidity, and continued support for risk assets.
2) Corporate America Is Accelerating Toward AI Adoption
JP Morgan’s surge in tech and AI spending is a microcosm of a broader competitive dynamic. Firms will be forced to adopt AI rapidly to control costs, driving productivity higher even as labor markets lag behind.
Key Takeaway: AI-driven cost compression will fuel profit growth and likely extend the Paradigm C bull market.
3) The Bull Market Lives On — But It’s Becoming White-Knuckle
The next 3–6 months may be volatile, but the medium-term setup is unequivocally bullish. Growth is likely to come in 50% higher than current consensus estimates throughout 2026–27, which implies corporate earnings may demonstrably surprise to the upside as well.
Key Takeaway: The journey may be bumpy, but the destination is likely higher. Having the data-driven courage to remain invested and not reacting not to every headline is the winning strategy.
Final Thought: Eyes on the Prize
Paradigm C remains one of the most constructive macro backdrops in decades. As liquidity improves and AI-powered profitability accelerates, 42 Macro’s systematic overlays—KISS and Dr. Mo—will help ensure our clients’ portfolios stay aligned with the prevailing macro regime, while safeguarding against the risk that our fundamental research views are proven wrong.
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
