Podcast Summary: Top Traders Unplugged – GM95: When Consensus Gets the Cycle Wrong ft. Dario Perkins

Host: Alan Dunn (with Niels Kaastrup-Larsen)
Guest: Dario Perkins, MD of Global Macro at TS Lombard
Date: January 28, 2026

Main Theme

This episode critically explores prevailing economic consensus for 2026, emphasizing the risks of groupthink among analysts and forecasters. Dario Perkins challenges the so-called “K-shaped” narrative for the U.S. and global economies, digs into the drivers (and misconceptions) of AI-driven productivity booms, and scrutinizes monetary and fiscal policy settings across the U.S., Europe, and China. Perkins forecasts a period of near-term optimism for risk assets, but warns of looming late-cycle risks, particularly around inflation and policy mistakes.

Key Discussion Points & Insights

1. Critique of Economic Consensus

• Dario Perkins describes consensus outlooks as "incredibly boring" and largely premised on a rerun of the previous year: slightly weaker inflation, steady growth, rates returning to mythical ‘neutral’ levels, and ongoing K-shaped divergence in the U.S. economy (03:34-04:35).

  “Everybody was expecting an exact rerun of what happened last year ... similar levels of growth pretty much everywhere.”
  — Dario Perkins (03:42)

• Perkins rejects the idea that the upper and lower segments of the U.S. economy will indefinitely offset each other, leading to a “Goldilocks” scenario.

  “I just don’t really buy it ... I think either things are going to deteriorate more ... or much more likely in my view, ... we’ll actually see the bottom of the K start to recover.”
  — Dario Perkins (04:34-04:58)

2. Policy Stimulus: The Main Driver for 2026

• Perkins argues ongoing fiscal and monetary stimulus in the U.S., Europe, and China is larger and more significant than most analysts expect (05:00-05:15, 09:00-12:00).

  “We’re going from a 1% of GDP tightening to 1% of GDP easing ... that’s big.”
  — Dario Perkins (09:09)

• He highlights a critical late-cycle dynamic: governments are stimulating demand while simultaneously constraining supply (e.g., immigration restrictions), sowing seeds for inflation later (05:21-06:18).

3. Historical Parallels: 1990s Soft Landing or 1960s Re-acceleration?

• Perkins draws a nuanced distinction between mid-1990s “soft landing” optimism (Greenspan era) versus the late-1960s policy-driven re-acceleration that led to renewed inflation problems (06:18-07:26).

  “I have this period in mind: 1967 to 1969 in the U.S. ... The Fed cut interest rates quite aggressively ... the inflation problem starts to come back.”
  — Dario Perkins (06:24-07:04)

• He is bullish for now but expects policy tightening (higher rates) to eventually end the cycle, potentially as AI and tech bubbles become more central (07:22-07:36).

4. Fed Leadership and Independence Debate

• Extensive discussion about potential Fed appointees (Kevin Warsh, Kevin Hassett, Christopher Waller):
  • Warsh is viewed as likely because of his TV appeal and ability to “carry the rest of the [FOMC] committee,” despite doubts about credibility (17:09-20:19, 20:59-22:28).
  • Central concern: Will the Fed under new leadership remain credible and independent, or become politically compromised? Perkins is skeptical about narratives justifying rate cuts based on speculative “AI productivity miracles.”

  “The big thing about Warsh is that Trump thinks he looks good on TV … that seems to be playing into the arithmetic as well.”
  — Dario Perkins (20:47)

5. AI and Productivity: Hype or Hope?

• Perkins is a “massive AI skeptic.” Recent U.S. productivity gains are interpreted as cyclical, not structural or driven by AI (26:39-28:07).

  "I think this is just an entirely cyclical story... companies went on this huge hiring spree... now they are squeezing efficiency gains."
  — Dario Perkins (26:43-27:22)

• He rebuts the meme that AI-led capital expenditure is propping up the U.S. economy or driving job losses (32:53-34:40).

  “There is this massively overinflated story about what macroeconomic impact AI is actually having ... if you're a policymaker, this sort of AI question is sort of interesting for the next sort of five years ... but it isn't the thing that's driving your interest rate decisions right now.”
  — Dario Perkins (34:49)

• Also questions the “productivity boom” analogies with the 1990s, noting that wage gains followed productivity then, undermining the narrative of endless Goldilocks conditions (29:00-31:10).

6. Labor Market, Recession Risks, and Stall Speed

• The apparent “stall” in U.S. jobs growth is noted as historically rare outside recessions (36:00-36:23).
• Perkins attributes weakness to policy uncertainty, not underlying imbalances, and expects hiring to rebound with renewed stimulus and fading uncertainty (37:21-39:07).

7. Global Yields and the End of the Bond Bull Market

• Perkins posits that COVID marked the end of the secular bull market for bonds; now expects “higher highs and higher lows” in yields driven by persistent fiscal deficits and diminishing bond ‘insurance’ properties (40:00-43:02).

  “I can definitely see another hundred basis points on the term premium, which would push up the whole curve. I think that's the risk here.”
  — Dario Perkins (44:02)

• He notes that the term premium is now equivalent to late-1990s levels—concerning given today's fiscal backdrop is far less benign (41:31-42:03).

8. Japan and Europe: Normalization and Recovery

• Japan’s move away from deflation, normalizing yields—a healthy development, debunking demographic-deflation link (46:04-47:24).

• Europe looks set for positive surprises:

  • Policy easing, much improved labor market, and positive spillovers from Germany’s fiscal expansion (49:10-53:16).

  “You could see a pretty good boost coming to Europe. With or without the fiscal spending.”
  — Dario Perkins (52:23)

  “If Germany does reaccelerate, that is really positive news for France, Italy, all of these European countries.”
  — Dario Perkins (53:06)

• Defense spending framed as a catalyst for innovation and industrial renewal, especially in France and the UK (54:03-54:29).

  “If you can get a vibrant defense industry ... you get high quality manufacturing jobs, science, engineering, technology. A lot of the big technological breakthroughs of the last 50 years in the US have come from the defense sector.”
  — Dario Perkins (54:05)

9. Eurozone Fiscal Dynamics—Old Crisis Unlikely to Repeat

• The acute Eurozone crisis dynamic (2011-12) was about lack of ECB backstop. Now, the ECB has assumed the role of "market backstop," making repeats of those crisis episodes unlikely except in cases of outright anti-euro governments (55:19-57:27).

10. China’s Path—Stimulus and Rebalancing

• Recognizes that China can no longer rely on export surpluses, but pressures are building for re-stimulation, possibly surprising to the upside versus very low expectations (58:17-60:23).

Notable Quotes & Memorable Moments

• On the market narrative:
  “There is this massively overinflated story about what macroeconomic impact AI is actually having.”
  — Dario Perkins (34:49)

• On the cycle’s endgame:
  “All I'm saying is that I think you can also see for the first time how this cycle is actually going to end... this overheating dynamic cuts the cycle short. So, you know, bullish, but not bullish in the sense that this is just like 1995 where this can continue for the next five years.”
  — Dario Perkins (61:50-62:11)

• On policy independence:
  "The fact that they've sort of threatened Jay Powell with jail time doesn't scream that the next Fed chair is going to be completely independent."
  — Dario Perkins (44:18)

Timestamps for Important Segments

• Consensus critique and policy stimulus: 03:34 – 12:00
• Historical analogies (mid-90s vs. late-60s): 06:18 – 07:26
• Fed leadership and independence: 17:09 – 22:28
• AI and productivity skepticism: 26:39 – 34:49
• Labor market risks and recession discussion: 35:52 – 39:07
• Bond yields and the end of the bull market: 40:00 – 44:02
• Japan, Europe, and normalization: 46:04 – 54:29
• Eurozone fiscal crisis redux?: 55:07 – 57:27
• China’s stimulus and trade dilemma: 58:17 – 60:23
• Wrap-up on growth and cycle risks: 61:05 – 62:11

Tone & Style

The conversation is candid, intellectually skeptical, and often counter-consensus, with Perkins consistently challenging prevailing narratives. Humor and mild sarcasm (“productivity fairies”, “meme anomics”) lighten the tone while underscoring substantive critiques.

Summary Table: Core Outlooks

| Region | Perkins' Near-Term View | Key Risks / Considerations | |-------------|-----------------------------|--------------------------------------| | US | Growth rebounds, inflation risk later | Overheating, policy independence, AI bubble | | Europe | Underestimated upside, fiscal & policy tailwinds | Old euro crisis dynamics unlikely short-term | | Japan | Normalization, positive for yields | Demographics not deflationary | | China | Upside surprise possible, stimulus likely | Can't repeat “China shock”, export model dead |

Conclusion

Dario Perkins provides a refreshing, critical examination of consensus macro thinking for 2026, highlighting complacency around AI/productivity, underappreciated policy stimulus, and the fragile balance facing policymakers. He anticipates upside economic surprises in the short run, especially outside the U.S., but is wary of inflationary and policy risks later in the cycle.

For more insights, follow Dario Perkins on X and read his contributions at TS Lombard.