We expect the USA to oscillate between macroeconomic summer and macroeconomic fall for the first half of 2025. More importantly, the USA’s probable macroeconomic weather is materially more positive relative to the rest of the world (RoW) which appears to be mostly in macroeconomic fall. Furthermore, we will discuss our approach to risk managing the administration change and the growing constellation of known-unknowns. We will also dissect the fundamental dynamics supporting a mostly macroeconomic summer forecast in the USA for most of 2025. Finally, rising geopolitical tensions around the world serve as an amplification of the turbulence and divergences between the USA and the RoW.

The USA is currently experiencing a macroeconomic fall, characterized by decelerating economic growth and accelerating inflation. Growth is slowing, with labor market softening and challenges for “have not” households and small businesses. We expect inflation rates to accelerate due to factors such as US Federal Reserve policy easing, China's stimulus measures, and a weaker USD which is contrary to the consensus view of continued inflation deceleration. Geopolitical tensions further exacerbate this economic turbulence.

The second half of the year is poised for a mathematical deceleration in year-over-year growth as the combination of labor deceleration, further cumulative deterioration for the “have nots”, and the higher for longer conditions of interest rates means constraints on acceleration in the cyclical economy and consumer credit growth.

Does the speed of the mouse trap closing when triggered matter?

The Drakkar: Our Multi Asset Class Long Short Longship

Global Macroeconomic Summer is on the Horizon

We will detail the macroeconomic winter weather pattern and its rate of change asymmetry that will characterize the first part of 2024.

In the echoing halls of our longhouse, we shall recount the current chapter of this Convergence epic, deciphering the length of the Stagflationary season ahead, and how we are charting our course aboard the multi asset class long short longship: the Drakkar.

Seasoned investors that thrive long term understand that the Pain of Discipline is less than the Pain of Regret. In this context, the pain of discipline is following your risk management process while everyone else is succumbing to their Fear of Missing Out (FOMO) while you watch from the sidelines refusing to participate in what you know is reckless behavior.

Our team’s extensive experience in the banking industry permits us the means to analyze the regulatory filings of your existing bank to better inform your judgment when making decisions about your cash reserves.

In this blog post, we'll explore the reasons behind the Silicon Valley Bank's failure, as well as its impact on startups and the broader financial landscape.

In a world full of negative headlines and uncertainties, it's easy to get caught up in worries and second guess ourselves. But waiting for the perfect time when things are less uncertain is an illusion.

Not since 1926 has market conditions been this painful and yet our managed portfolios incurred a fraction of the pain compared to long only stock and bond allocations which is the most common allocation for most investors.

While equity markets have sold off over the past several weeks from their mid-summer highs, we do not believe they adequately discount this earnings recession risk.

It’s been an extremely difficult year for investors, with equity markets falling into bear market territory (down more than 20%) and “low-risk” bond markets registering low double-digit losses.

Diversification into other asset classes, market segments and alternative strategies can be particularly valuable in such an environment. This specifically made a huge difference to our portfolio’s relative performance.

The fact that market declines are a normal part of investing in stocks and happen relatively often doesn’t make them any less unnerving to investors whose financial security may seem to be at stake.

A quick summary of our annual 2021 investment commentary and portfolio update.

Our in depth annual 2021 investment commentary and portfolio update.

A lot has happened in a very short time in terms of China’s regulatory actions, and it has appropriately created huge uncertainty and raised many questions among investors.