Listen on The Move:
Darius Dale, Founder & CEO, 42 Macro LLC, and Mary Hagerman, Portfolio Manager, Raymond James (our guest advisor panelist) joined us on Raise Your Average for a full market macro overview. Darius Dale takes us through the inner workings of his and his firm's "GRID" macro framework as well as macro-forecast modelling framework. We discuss his outlook at the time for the markets and economy, and the inflationary and simultaneously, deflationary dynamics that are causing confusion surrounding whether inflation might be pernicious or temporary.
The key takeaway from this conversation is that we are likely entering a period of heightened volatility as the market reacts to what could be a temporary inflationary pulse, as Dale's framework suggests there is a "sea of D's" or (D)eflationary signals in 2022. It remains to be seen what the half-life could be of a 'reflation' trade (that favours for example value stocks vs. growth stocks) as we progress to toward the second half of this year.
Darius Dale's framework provides a fully quantified view of all market fundamentals - what he calls "Quantamental" – and it provides a magnificent view from 30,000 feet. Among the highlights of our conversation was a series of 3 charts that demonstrate quantitatively and eloquently the zeitgeist of discontent and inequality in the U.S., which gave rise to the Fed's disproportionately large stimulus reaction during the pandemic and how that has given rise to the inflationary pressure boundaries we are currently breaching. We also discuss the nuance of the question, "Is it inflation, or is it inflationary?"
As of mid-January, Dale's model now indicates the economy, which is showing signs that some of the inflation we are experiencing could be sticky, is not set up to provide a long runway for a reflation trade and while it looks that way now, he believes investors should consider that it may be shortlived, possibly as short as 2 months. In that respect he says that for time being, reflation trades should be rented, or should not be considered long term positions. (https://www.youtube.com/watch?v=eHb2z7lNd3g)
Where to find Darius Dale:
Darius Dale on Linkedin
42 Macro LLC
Darius Dale on Twitter – @42macroDDale
Where to find the Raise Your Average crew:
ReSolve Asset Management - https://investresolve.com/
ReSolve Asset Management Blog - https://investresolve.com/blog/
Mike Philbrick on Linkedin
Rodrigo Gordillo on Linkedin
Adam Butler on Linkedin
Pierre Daillie on Linkedin
Joseph Lamanna on Linkedin
This episode was recorded November 2021
"You don't have to be brilliant, just wiser than the other guys, on average, for a long time." Charlie Munger
Welcome to Raise Your Average, our deep dive journey into learning from the people and process behind the world of investing. Through conversations with leaders in the investments game, we peel back the layers of the onion on how these holders of the keys to the kingdom allocate their time, their energy, and their dollars.
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