No Rate Cut Possible?📈Macro Outlook w/ Darius Dale

A hotter-than-expected wholesale inflation report just made the Federal Reserve’s decision regarding a September rate cut even tougher. The report raises questions of whether higher prices for businesses will be passed on to consumers, pushing up inflation.

~This episode is sponsored by iTrust Capital~
iTrustCapital | Get $100 Funding Reward + No Monthly Fees when you sign up using our custom link! ➜ https://bit.ly/iTrustPaul

Guest: Darius Dale Founder & CEO - 42 Macro
42 Macro website ➜ https://bit.ly/42MacroDD

00:00 Intro
00:10 Sponsor: iTrust Capital
00:40 Darius Dale: The risk asset is the treasury bond market
03:20 Scott Bessent: I think we take in $300B in tariff revenue
04:33 Can tariffs revenue make up for this gap in deficit?
06:45 Will stablecoins make any difference to our national debt?
09:00 PPI Data: Market slide overreaction?
10:50 Tom Lee: "Buy the dip" - Do you agree?
12:25 BLS data impact
14:30 CNBC: we can do a 50bps make up, cut no problem
17:30 What happens in September?
18:20 No rate cut chances?
19:20 End of year bullish or bearish?
19:30 2026 bullish or bearish?
20:10 Outro

#Crypto #bitcoin #fedrate
~No Rate Cut Possible?📈Macro Outlook w/ Darius Dale~
⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺⎺

Join our community! 

Diamond Circle (FREE): https://www.paulbarronnetwork.com/store
Forge Membership: https://www.paulbarronnetwork.com/forge-membership

Private Telegram Group (FREE): https://t.me/+nISqoMxrok40NTcx

Subscribe on YouTube ✅ https://bit.ly/PBNYoutubeSubscribe
Twitter 📱 http://bit.ly/PBNtwitter

Get official PBN merch! ➜ https://metapaul.com/

~ The Best Self Custody Wallet ➜ https://tangem.com/en/ Use Code PBN for Additional Discounts!
~ The Best Crypto Exchange ➜ Coinbase, get up to $200 in crypto - coinbase-consumer.sjv.io/BARRON
~ Looking for the best tax havens for Crypto? Free Month with iTrust Capital ➜ Use PROMO CODE - PAUL BARRON https://rebrand.ly/PAULBARRON

Episode Transcript

Speaker 1 (00:00):
Let's get into it today. We're going to have a
special guest and we're going to talk about FED rate cuts.
Will they happen? Will they not happen? What is the
market going to look like?

Speaker 2 (00:07):
You're in.

Speaker 1 (00:07):
My name is Paul Barron. Welcome back into the show.
Let's get started. I want to thank our sponsor, that's
I Trust Capital. This is where you guys can go
to get up your idea of a CRYPTOIRA. And the
cool thing about I Trust is it's very easy to
set up. You can also transfer iras into I Trust
So just visit I trustcapital dot com whether you're into
building out a portfolio in your IRA or just locking

(00:29):
in on things like gold and silver, all of that
very flexible within their platform. You get a one hundred
dollars funny reward if you use our link. So it
does help the channel. Thank you so much for all
that good stuff. All right, So I want to jump
to a clip real quick. This is of our guest
today and is his insights to take a look on
where the risk markets are going.

Speaker 3 (00:47):
Take a look.

Speaker 4 (00:49):
The risk asset is the treasury bond market. It's not stocks,
it's not gold, it's not bitcoin, and that's exactly what
the market is telling you today. From a your today
performance perspective, there is a geo politically driven supply demand
and balance in the treasury market.

Speaker 3 (01:04):
We have less.

Speaker 4 (01:05):
Demand and more supply, and neither political party here in
the United States of America has any real political will
to fix it. The best way to be exposed to
financial market risk, certainly throughout the duration of afore turning
poly crisis, is via risk assets, because there are very
limited levers that the sovereign can pull to get itself

(01:26):
out of this mess.

Speaker 1 (01:28):
All right, So bringing in the real Darius Dale coming
in and no longer a clip.

Speaker 3 (01:33):
How are you, man, I'm great man. It's great to
be back, man, handsome guy. Huh, nice to see it.

Speaker 1 (01:38):
Nice to see you.

Speaker 5 (01:39):
Hey.

Speaker 1 (01:39):
Listen, that was some pretty good statements there. I think
you are kind of positioning the markets around this. Let's
dive a little bit deeper on this. This is a
Kobeec point that they were hitting on, kind of in
line with what you're talking about. US treasury posts of
two undred ninety one billion in budget deficits in July,
second largest of any July on record. Twenty seven billion

(02:01):
budget surplus is what we're looking at terms right now.
Also in terms of government spending surge nine point seven
this year over year, so another six hundred and thirty billion,
so second highest since January. All of these macro environments
continue to put a lot of pressure, Darius on the economy.
But at the same time, we've got a lot of
investors that are saying, what do I do? What do

(02:23):
I do? Where are the plays right now? Extend a
little bit further on your analysis.

Speaker 6 (02:29):
Paul, Well, thanks again for having me on the program. Brother,
appreciate you in terms of so you know what, my
answer to that is always going to be kissed. Obviously,
stocks go bigpoint, stocks go bitcoin. But the reason we
believe that's the case is because we ultimately identified that
geopolitical driven supply and demand and balance in the church
bond market a couple of years ago, and every step
that the both administrations have taken thus far tells us

(02:52):
that a that is likely to persist and be the
only way we're going to fix it or resolve it
or even address it. Are things that would likely to
cause the price of the equity market, the price of
the goal bullion, and price of bitcoin to go much higher.
In price, and obviously our clients have benefited tremendously from
that over the past few years.

Speaker 1 (03:10):
So easy to keep it simple. I think you know
when you look at those many because this right now,
I think a lot of investors are trying to position
around this, and in some cases they get a little
cute with how they're trying to play their portfolio, which
is where mistakes usually happen. I want to go to
this clip here. This is Scott Besson talking about how
much money is being taken in on tariffs, and I

(03:32):
want to ask you think about this of how tariffs
are going to affect the market. Let's take a look.

Speaker 7 (03:38):
I think August September is going to be a very
good test. I've been saying that I think we can
take in three hundred billion, and as the Treasury Secretary,
I like to be conservative, but there is a chance
that I'm going to have to substantially upgrade that number.
And Maria, the way to think about it for your

(03:58):
viewers is every three hundred billion dollars is one percent
of GDP. We were left with a mess. The deficit
to GDP six point five, six point seven percent highest
when we are not a recession, not at war. So
just the tariff revenue can bring that down into the fives,
which fits with this administration's plan of getting the deficit

(04:22):
to GDP back into the threes the long term average
before President Trump leaves office.

Speaker 1 (04:28):
All right, So Scott Bessen kind of laying out his
plan there of how he thinks this can be corrected.
Do you think that tariffs are going to have any
impact on what they are trying to do in DC?

Speaker 6 (04:40):
Great question, So let me answer that in two ways,
because both are very important for investors. So on the
deficit reduction. So I've known Scott for many years as
a former client, very serious man, has very big ambitions
with regards to the fiscal conference in the fiscal health
of the United States. It's highly unlikely that we see

(05:01):
tariffs alone having make a material dent.

Speaker 3 (05:04):
In terms of putting us on a sustainable fiscal trajectory.

Speaker 6 (05:06):
In fact, when you look at the July monthly Treasury
budget statement, we analyze the budget statement. One of the
ways in which we analyze it of a myriad of ways,
but one of the more important ways is the annualized
fiscal year to date year over year change. And when
you look at that inclusive of tariff revenue, that's tracking
up one hundred and eleven percent year to date. We're

(05:27):
not quite annualizing at three in a billion in revenue
yet we're about halfway there. But even with halfway there,
we still have a budget deficit that is up about
one hundred and twenty two billion dollars on a fiscal
year today annualize fiscal year today basis year over year,
and so that can that reminds me and to remind
investors that the drivers of the deficit, particularly the categories

(05:48):
that our friend over at Force for the trees, Luke Growman,
you know, is true. Just expense metric, you know, Medicare,
National Defense, and net interest in social security. That's really
what's driving the budget deficit. And that stuff's been compounded.
One it's about two thirds of the overall federal expenditures
when you had all those four categories up and on
its way higher by the way, as a function of
the one bigly bill, those things are compound to get

(06:09):
plus eleven twelve percent year after year after year after year.
So we have to raise all this terar for revenue
just to sort of maybe hope to offset the growth
in those categories.

Speaker 3 (06:19):
And oh, by the.

Speaker 6 (06:20):
Way, we have a big tiscal you know, a task
cup program that's going to start to get the tape
in early twenty twenty six as well. So, uh, there's
a lot of running in place, if you will think
about this retrenchment standpoint.

Speaker 1 (06:31):
With with that being said, obviously we saw the Genius
Act go through. Stable Coins are now part of maybe
best since long term plan here because this is in
some way a way to shore up the dollar. Stable Coins,
digital tokens peg to a national currency. Most often right
now it's the US dollar. Ninety percent of all stable
coins right now are backed either by cash deposits or

(06:52):
short term US treasures. That's going to potentially, you know,
prop up the treasury market itself. So when you look
at best Since vision, every stable coin minted worldwide now
becomes kind of a new funding of the US government.
He states it there. I mean, because this is now
stable coins could go into all sorts of countries, a
lot of you know, second tier markets that have been

(07:13):
looking for dollars for a while. Now they get them,
and of course that backstops these US treasuries in terms
of the asset. How would that make any difference in
his plan to try to write the ship there in DC.

Speaker 3 (07:26):
It's not going to write the ship.

Speaker 6 (07:27):
But I think it's a brilliant strategy, and it's consistent
with our paradigm C inspired view that the administration would
carry on and continue our fellow Yelly Jenny Yellen's dubbsch
net financing policy. So part of so, when you have
a fiscal problem, there's a bunch of levers governments tended pulled.
The primary levers are trying to cut you away out
of the problem. You can try to grow your out

(07:48):
of the problem, which is what the Trump administration pivoted
to on April ninth. And then now eventually you're gonna
have to wind up print of your out of the problem.
That could be years down the road. Part of that,
one of those levers that you can pull in the
context that grow you out of the problem is shifting
to dubbish and net financing policy. Right now, T bills
are about twenty one percent outstanding of total marketable treasure securities.
The percent of marketable treasury securities that mature in the

(08:10):
next calendar year is about thirty one percent. Those numbers
were as high as thirty five percent and forty eight percent,
respectively in terms of those respective time series. So we
know we're going to continue to finance on the short
end of the curve. So the genius act is in
fact genius in terms of meeting the market in terms
of demand, meeting the supply that they were going to
bring to the market where the demand with growth in

(08:32):
the market is going to be, and that's going to
artificially depress yields. And I'll take I'll take the other
side of one of the things you said, respectfully, Paul,
is that when you finance, when you capitalize on the
short end of the curve, what happens is you roll
over FX head just much more quickly. And so the
likelihood that we see as sustained bear market in the
dollar is a lot higher. The probability is much higher

(08:53):
when you when you capitalize on the short end of
the curve as it is when you capitalize on the
long end of the curve.

Speaker 1 (08:58):
Okay, So with that being said, and you look at
PPI just coming in much hotter, rises to three point
three expectations two point five core PPI going to three seven,
up from two nine on expectations. How does this play
into this because the FED is now in a really
really tight spot. You've got interesting data coming in, You've

(09:22):
got pressure from DC, the Trump administration continuing to pressure Powell.
All of this does does the macro environment change at
all right now, at least in the near term, which
is September coming up.

Speaker 8 (09:36):
Yeah, So, I mean, in our opinion, it can change
if the Pow FED commits to making its fifth major
policy mistake, called they were too slow to the overtightened
in twenty eighteen, they were too slow to ease in
twenty twenty, they were too slow to tighten in twenty
twenty one, they were asleep at the regional bank supervision
will in twenty twenty three, and then in our opinion,
we think they're too slow to easier in twenty twenty five.

Speaker 6 (09:58):
They're angered on future values for the most lagging indicator
of the business cycle. To set prospective monetary policy with
I don't even care what the inflation numbers are. That
is a policy mistake, especially in the context of the
worst part of the U shaped economy that we've been
calling for. We are now in the worst part of
the you, which is the bottom left side of the you,
and so we need policy support to both shore up

(10:20):
confidence among investors but also to show up confidence among
business builders and employers like myself that hey, we can
actually pride our way through this rough patch that's caused
by the advent of this tariff shock.

Speaker 3 (10:30):
It's not a durable shock.

Speaker 6 (10:31):
It's just a you know change that's going to cause
a lot of you know problems and one time price
adjustments across various sectors of the economy. And you need
the FED to play ball in order to ride us through,
to help us ride through that, and so in our opinion,
you can see some volatility if they do.

Speaker 1 (10:45):
Not, okay, So that's going to lead to some interesting mark.
It's Tom Lee. I don't know if you follow Tom,
but he of course funstrat he's jumping in. He's one
of the goats. Well right now, he's the number one,
the number one major league investor out there. Number one,
since late twenty two twenty two, every dip has been bought.
Number two, since late twenty two, every dip has been bought.

(11:07):
And number three since late twenty two, every dip has
been bought. And he's talking about it again. By these
dips as we start to see them come in. Do
you agree with where his frame of reference is right now?
Because he's very bullish on where the market could be going.

Speaker 3 (11:23):
Lookay, I don't think there's an institution investor on.

Speaker 6 (11:26):
Global Wall Street that's been more bullish than Darius Dale
since May night of tuning to Tom Lee has joined
me in this.

Speaker 1 (11:34):
Darius was the o G. Tom Lee came to the
party late.

Speaker 6 (11:37):
Okay, yeah, let's be I love Tommy, he's one of
the ghats, but let's be honest here.

Speaker 3 (11:42):
We aunted the paradigm cview back in late April.

Speaker 6 (11:45):
We essentially said, hey, the administration is pivoting from cutting
their out of the nests to growing there out of
the nest.

Speaker 3 (11:50):
You need to be very, very publishous is going to
last multiple years.

Speaker 6 (11:53):
And so you know, obviously we've seen a wave of
upside capitulation across Global Wall Street for his social investers
and obviously reach as well to get aligned with our view,
and we expect that view to persist even if we
get some sort of pall policy mistake driven volatility in
the next couple of months. You still got to buy
that dick because there's a whole coord of investors that

(12:13):
are not aligned.

Speaker 3 (12:14):
With our long term structurally village paradigm cview.

Speaker 1 (12:18):
What do you make? Okay, so so far we're in agreement.
I'm following along with the I'm drinking the Darius Stale
forty two macro milk.

Speaker 3 (12:28):
I like being You're a smart dude, Paul. This is great.

Speaker 1 (12:30):
I'm just following the smart people. That's all I do.
But Lynn Alden is another small smart person and she
kind of goes on right here and she's saying, let's
see what happens with the BLS data currently stands FORIGN
producers Inagrid haven't followed lower prices to offset the tariff
expenses paid by US importers, so we're probably going to
see some adjustments within that right now. Will that possibly

(12:54):
cause some struggles for Powell right now at least on
some of the data that could still be coming in
with inflation maybe starting to tick up slightly here before
he is his h September FED meeting.

Speaker 3 (13:06):
Yeah, so appreciate you highlighting Lynn.

Speaker 6 (13:08):
I think she's also one of the amazing The one
thing I would say on we can't read too much
into anything we've seen reported thus far, and the reason
for is We've seen one terrorfvolatility. We've seen teriff rates
go up and down as a function of the negotiating
process that we've been involved in. Two, we've seen a
tremendous amount of front running of inventories prior to certain

(13:28):
terif announcements for different sectors in different countries, and so
there's a lot of non tariff goods sitting in inventories
and warehouses and retail and on retailer shelves around the country.
So we haven't really seen the pinch yet, both in
terms of corporate writing margins, but also in terms of consumers.
That pinch is coming. We know it's gonna come. It's
not gonna come at all once. It's gonna come.

Speaker 3 (13:48):
Over the tended period of time across different sectors of
the economy.

Speaker 6 (13:51):
So it's gonna feel like a slow moving, sole building
wave of inflation, and ultimately it's going to be playing
hot potato. We're gonna see the import prices going in
a little bit. We're going to see operating margins go
to go down, lit we're going to see inflation you
go up a little bit.

Speaker 3 (14:03):
And the net result, in our opinion, is an economy
that should make it through the bottom of that U
shaped economy, unscathed, just in time for the boom that
we're likely to see in twenty twenty six.

Speaker 1 (14:14):
Okay, well listen, I mean this is guys, we're giving
you some of the best alpha that is out there
right now. Pay attention. I'm just telling you, pay attention
to what's being said right now. I'm going to Okay,
so we're gonna get into some predictions here on how
the Fed's going to handle this, what the twenty twenty
five looks like you're in and next year, so stick
around for this, Darius. Before we do that, I want
to go to the CNBC clip and they're talking about

(14:36):
a fifty basis point rate cut. That's kind of crazy
to hear, but listen to what they had to say.

Speaker 5 (14:43):
You can't they're not just concrete numbers. And one to
three percent on inflation is about the best really that
that agency can give you. And if employment looks weak,
you should cut.

Speaker 2 (14:54):
I completely agree with that. The worry is that these
job numbers got revised down very you know, very big,
unusually big, and we before that we had to disconnect
where GDP numbers have been weak about one point one
percent for the first half of the year, jobs number
has been strong, and then the jobs data got revised

(15:16):
towards GDP, and so we now know that the economy
has been growing weaker. And so a four point three
to three FED funds rate is just is just too high.
And the market will always tell you what you should
be doing. And we see the inversion at the front
end of the curve, which is over fifty basis points
tells us that we could easily do a fifty basis

(15:36):
point makeup cut because the data had been wrong in
the past without disrupting anything at all. So it seems
like pretty much a no brainer to me.

Speaker 1 (15:46):
All right, So this goes back to my thesis, which
was last month saying, because I was on record, I
just simply said, I think we're going to we deserve
a rate cut in July based on the data we're getting.
He just said, makeup rate cut. So if we've got
potentially that in play September, what would Darius Dale be
doing if you were running the FED right now, Give

(16:06):
me a quarter, give me fifty, how would you play
this toward the end.

Speaker 6 (16:10):
Of the Darysdale or his former client, Secretary Scott Bessemer
running the FED right now, the Fed funds rate would
be below three percent. There's no reason at all four
and a half percent Fed funds rate for a variety
of reasons.

Speaker 1 (16:21):
Most of all that goes back to what Scott said.
He said, a full point and a half is where
it should be.

Speaker 3 (16:26):
Yeah, well, the man's form client.

Speaker 6 (16:30):
So the point I'm making is that the two things
out points I'm making. One, the data had deteriorated enough
just toward a fifty basis point cut. In September, recall
that we published a op ed on the evening of
the July f MC meetings saying, hey, you guys made
a policy mistake. This is another policy mistake. Fast forward
two days later to the job support. Then everyone else

(16:50):
agrees finally, so it corrects me. But more importantly, this
is a federal reserve institution that is operating with a
legacy inflation tart two percent that is asinine and does
not make sense.

Speaker 3 (17:03):
For today's economy.

Speaker 6 (17:05):
There are so many structural reasons why their policy is
too tight because of their arbitrary two percent inflation target.
And we've been preaching very hard to catalyze regime change
at the federal reserve. We think it's coming, and KISS
is very very well positioned for you.

Speaker 1 (17:21):
All right, So I'm going to show you this tweet
right here. It's basically that, you know, the cabal of
twelve unelected, unaccountable people that's pricing money right now? What
do you think is going to happen? I gotta get
you on record. What do you think is going to
happen in September? What happens in September?

Speaker 6 (17:37):
I believe there's going to be a twenty five base
point rate cut until they get that FED funds rate
to at least three percent. I would say probably two
and a half percent. They're making the policy mistake. Hey,
there needs to regime change that institution.

Speaker 1 (17:50):
Wow, okay, well there you guys have it?

Speaker 3 (17:52):
Are you? Yeah?

Speaker 5 (17:54):
For sure?

Speaker 6 (17:54):
Why are you guys who will listening to me talk
right now? Where do you position appropriately forward or not?
It's coming because this is one of the.

Speaker 3 (18:01):
Easiest levers any administration around the world can pull to
help caw their way out of a debt problem. It's coming.
Position for it, Kiss as well positioned for that?

Speaker 4 (18:10):
All right?

Speaker 1 (18:10):
I'm getting okay, I'm getting two work questions here because
we're trying to.

Speaker 4 (18:15):
All Right, So.

Speaker 1 (18:17):
Let's say Powell is completely ignoring everything that he's being
fed right now, and he simply says, no rate cut.
What is the chances of no rate cut through the
end of the year. Do you think it's very low
or no?

Speaker 6 (18:30):
I think the chance of no rate cut through the
year is actually a meddling probability, So probably fifty to fifty.
Because you have a guy who's determined to protect his legacy.
He let the inflation genie out the bottle by overcooking
monetary policy in the context of historically expansion and fiscal
policy in twenty twenty, twenty twenty one, and now he
wants to retire as someone who put it back into
the bottle.

Speaker 3 (18:50):
Well, loose less for you, mister Powell. If you had
just been running sound monetary policy the whole time, you
wouldn't be in this mess and you would able to
be able to say incredibletful monetary policy for today economy,
not your future legacy.

Speaker 1 (19:02):
He's projecting Volkler, that's what he's doing. He's projecting what
he is exactly.

Speaker 3 (19:08):
He's aholic. I like it, tell step program.

Speaker 1 (19:14):
Twelve program, I love it. End of your end of
year bullish, bearish.

Speaker 3 (19:20):
In view, you have to buy eighty dip as long
as we're in paradigm C.

Speaker 6 (19:24):
So somebody who say we're going back to paradigm B,
we're going way higher in stocks, go bitcoin and kiss.

Speaker 1 (19:30):
All right, and then last point twenty twenty six, do
we start to see a fall off in the market
or do you feel like twenty twenty six is a
is a big year for investments.

Speaker 6 (19:39):
I think the biggest test for the market over the
next twelve to eighteen months will come in the midterm
elections in twenty twenty six, because that could potentially truncate
the levers that the Trump administration can pull to maintain
paradigm C. If they get forced out of paradigm C
by fiscal policy maker by you know, by Congress essentially,
or by Congress that becomes less amenable to their state

(20:00):
aid desire to enact regime change at the FED, then
we get on some serious problems from much higher prices.

Speaker 1 (20:05):
Yeah for sure. All right, listen, guys, we are going
to We'll get Darius back on. He's always dropping bombs
out here on the show. I love it when you're on.
Thank you so much for coming on today. We appreciate it, Darius.

Speaker 3 (20:16):
Always a pleasure, Paul, appreciate you, brother. You bet all right.

Speaker 1 (20:18):
So you guys, we will get more of this for you,
because this is going to be a heated, heated next
few months with everything that's happening with the Fed. What
we'll see in the market is obviously Bitcoin hitting its
all time high. If you're not part of our Diamond Circle,
get in right now. It's our own special newsletter that
goes out to you guys absolutely free, and of course
follow me out there on X at Paul Baron. We'll
catch you next time right here on The Paul Baron Show.