Darius recently joined our friend Charles Payne on Fox Business, where they discussed the outlook for the US economy, the impact of rate cuts, the significance of the Dollar, 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. What Is The Medium Term Outlook On The Economy?

While the slowing economy might seem concerning after a significant market rally, we believe growth is likely to surprise to the upside over the medium term.

Generally speaking, the preponderance of evidence points to an economy that is moderating and a labor market that is cooling but not collapsing. 

When observing the leading indicators of the broader business cycle, we believe they do not suggest investors should expect a recession over the medium term, which is positive for asset markets.

2. How Would A 50 Basis Points Cut Affect The Global Economy? 

The U.S. Net International Investment Deficit doubled in the five years through 2023, increasing from $10 trillion in Foreign-Owned U.S. Assets to $20 trillion. This means a large amount of unrealized capital gains may flow out of the U.S. if the Fed is not careful managing the pace of the dollar’s decline. 

A 50 basis point cut next week would likely send a signal to international capital allocators that something might be wrong with the U.S. economy, causing them to book gains and return home with their capital.

In our view, we would not suggest starting with a 50 basis point cut. However, if data from the labor market and inflation support it, the Fed should accelerate the pace of easing between now and the end of March. Beyond that, their window to continue easing may close for a while due to accelerating inflation. 

3. How Will The DXY Impact Asset Markets Over The Next 12 Months?

The dollar is typically the most dominant factor in driving the global economy and global liquidity. 

We believe the dollar is poised to decline significantly over the next 12 months, which should provide a positive boost to global growth. 

However, investors should remain cautious and continue favoring defensive sectors and factors within the equity and fixed income markets because this could also trigger the unwinding of popular trades, including the Yen carry trade. 

By now, you’ve likely realized that piecing together an investment strategy from finance podcasts, YouTube videos, and macro “gurus” on 𝕏 is not delivering the results you know you deserve. 

This kind of approach only leads to confusion from conflicting advice, frustration from mediocre returns, and exhaustion from the emotional rollercoaster of your portfolio swings.

If you don’t change your process, how can you expect to get better results?

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