Darius Dale joined Charles Payne on Fox Business Network to explain why markets are embracing his Paradigm C thesis—which is a pro-growth blend of excessive government spending, tax cuts, deregulation, and strategic reshoring. If you missed the discussion, here are three key takeaways that likely have huge implications for your portfolio:
1) Paradigm C = Paradigm A + Tax Cuts, Deregulation, And Strategic Reshoring
Darius reiterates our economic framework—Paradigms A, B, and C—to help investors understand evolving macro conditions. Paradigm A (Biden-era excessive government spending) produced a K-shaped economy, boosting wealth for upper-income households and businesses while leaving the bottom half behind. Paradigm B, feared by markets, implies painful but potentially equitable restructuring via tariffs and fiscal austerity. Paradigm C, however, is emerging as the likely path forward.
Key Takeaway: Paradigm C builds on Paradigm A’s excessive government spending with added tax cuts, deregulation, and strategic reshoring—boosting Wall Street without demanding the sacrifices required for a more-equitable outcome for Main Street.
2) Paradigm C Is Structurally Bullish For Risk Assets And Structurally Bearish For Defensive Assets
Paradigm C creates a bullish backdrop for risk assets. Investors can expect structural tailwinds for stocks, credit, and crypto—while defensive assets like U.S. Treasuries and the dollar face growing headwinds. Darius notes that Bitcoin is already up 17% month-to-date and up 30% since KISS bought Bitcoin back on April 14—signs that markets are already pricing in this regime shift.
Key Takeaway: An even bigger K-shaped economy means a bigger bull case. Although Paradigm C’s gains are skewed to the top like they were in Paradigm A, risk assets are the beneficiaries of both paradigms.
3) Bond Volatility Is A Feature, Not A Bug, Of Paradigm C
With bond yields rising, military budgets expanding, and deficits ballooning, hiccups in the Treasury market—like the recent sloppy 20-year bond auction—are inevitable. But investors should view these as noise, not signal.
Key Takeaway: Don’t fear higher rates—focus on staying long risk assets. Cross-asset volatility emanating from the bond market represent buying opportunities for risk assets in Paradigm C.
Final Thought: Don’t Fight Paradigm C; Embrace It If You Want To Retire On Time And Comfortably
Paradigm C reflects the political realities of the Fourth Turning: fiscal dominance is here to stay amid demands for populism and increased defense and border spending from Main Street amid demands for debt-financed tax cuts and deregulation from Wall Street. For investors, the message is clear—investors should be generally overweight risk assets and underweight defensive assets until something changes. As Darius put it: “When in doubt, think Paradigm C—and buy the dip.”
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
