Monetary Matters with Jack Farley The Fed Won’t Pop AI: It Will Save Housing | Blue Door’s Dan Krausz On The Three Neutral Rates, The Liquidity Waterfall, and Why Profits Rising While Employment Falters Is Not Bearish For The Stock Market
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Nov 23, 2025 Dan Krausz, an investment manager at Blue Door Asset Management, dives into the intersection of fiscal policy and AI's impact on the economy. He challenges conventional wisdom, suggesting that rising profits amid weakening employment can be positive for the stock market. Krausz explains the concept of a 'three-speed economy,' where 6% fiscal deficits create a liquidity waterfall, prioritizing government over small businesses and housing. He shares three critical investment rules, emphasizing the shift from AI infrastructure to practical implementation.
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AI As A Macro Productivity Engine
- AI is a macro driver, not just a micro trend, and may be the key source of future productivity gains.
- Dan Krausz argues AI could sustain margins and help the Fed manage long-term inflation and debt.
Margins Rising While Jobs Slip
- Rising profit margins with weakening employment is different from past recessions because margins haven't deteriorated first.
- Krausz says margins can stay high while employment weakens, so weak jobs data alone isn't necessarily bearish for stocks.
The Four Tailwinds Have Peaked
- Four historical tailwinds for rising returns (capital-light, lower taxes, cheap debt service, falling labor share) have mostly run their course.
- Only labor productivity (via AI) remains as a plausible large tailwind for future margin gains.