The Bubble in Narratives

Darius Dale, founder of 42Macro, joins Forward Guidance to share his outlook for 2022. Dale explains why his business cycle framework, which tracks the rate of change in growth and inflation in order to forecast and risk manage asset allocation, is signaling that the bloom may be off the rose for high-beta assets such as speculative growth darlings, crypto-assets SPACs, as well as reflationary stocks in the materials and energy space.

Because the rate of change of economic growth is falling, Dale expects “safer” assets like mega-cap tech (FAANG) and long-term government bonds to outperform on a relative basis. Dale notes that his framework is probabilistic in nature, not deterministic, and he argues that investors are better served by weighing the likelihood of relative outcomes rather than looking into their crystal ball for certain outcomes. Dale also cautions against becoming wedded to narratives that promise assured outcomes.

42Macro website: https://42macro.com/

Darius Dale on Twitter: @42macroDDale

Jack Farley on Twitter: @JackFarley96

Blockworks’ Twitter: @Blockworks_