"to cut someone out of the equation" means to prevent them from participating in or benefiting from some activity, endeavour or situation. It could also simply mean stop seeing them or communicating with them. It has to be interpreted within the context of what's going on in the storyline.
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"Cut you out of the equation"-
as rightly perceived, in all interpersonal dealings it is customary to assume a measure of confidentiality and trust in the discourse and when