Hey guys, just a BIG shoutout to all of our subscribers who have transitioned to paid members across the last week. Firstly, thank you for trusting in what is a continuously developing Substack account that I am actively reinvesting into. Secondly, this is a community we are building, not just a random finance guy writing his ideas on a page.

So I want to encourage ALL of you to reach out, ask questions, connect, and get active in the Substack chat. At the end of the day, no matter what level we get to, we can ALWAYS learn more and I love conversations around markets.

As I emphasised previously, the Substack can ONLY get better, the quality of ideas and models will ONLY get better, especially as more money goes back into it. For those of you who are along for the ride, the best is yet to come!

As a reminder, tomorrow is the final day of our 25% discount, before prices go up. If you’re considering becoming a paid sub, the time to do it is now! There is also an extra discount on the yearly subscription.

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I released the upgraded daily systematic models report on Friday, and there are more upgrades coming to this in the coming weeks. These reports will be paywalled alongside trade ideas and macro reports. For free subscribers, there will be some content still released.

I will be keeping the MMH dashboard, primers, academic papers stack, indicators and indicators guide completely FREE. Check all of this out here:

Now, let’s get into the market dynamics!

There has been an extremely tight correlation between oil and ES through the last month, where we’d get huge bids in ES and oil sells off. However, this is beginning to change today and is a red flag I’m monitoring. My views haven’t chnaged but I am aware that if oil continues to sell off and ES fails to bid, then there is NOT enough of a mitigating factor in crude prices to outweigh the movement in rates.

Today it’s pretty evident that rates are in the driving seat.

It was previously only the Russell that had such high beta to movement in rates, and what we were seeing was the Russell fail to bid when crude prices dropped, but would sell off and bid hard in direct positive correlation with bonds. Now on the day we’re seeing oil down over 3%, but rates are up and ES is trading in direct correlation with that movement LOWER in bonds.

Now the reason this is a red flag is because if lower crude prices can’t reprice rates lower, then that means bonds are pricing in the fact that inflation is a bigger problem than simply crude trading lower and inflation scares disappearing. For as long as oil is trading at these prices, there is an increased chance that we see inflation flow into core CPI (which didn’t really happen ealrier in the year). I noted in the Substack chat that oil doesnt even need to rally to cause probelms here, it just needs to hold these levels to be a tail-risk to equities.

It’s CRUCIAL to note that this repricing of the long-end is being driven DIRECTLY by the Fed (in the orange bars below). That means all tension inside of bonds is directly driven by a component that can flip extremly fast. What I mean by that is, when the long-end is ONLY driven by growth and inflation then there’s more stability because those dynamics take a longer period to shift. But the fed themsleves can shift their stance and policy goal within a single meeting if they decide to.

We’re seeing bond vol rally aggresively while equity vol remains contained, but this has a time limit on it because bond vol can be a HUGE catalyst for higher equity vol if it persists.

One positive I will note is that in previous cases where bond vol has blown out like this, equities have sold off in equal proportion, yet we’re seeing ES hold these levels without any real drawdown, even after this huge rally in bond vol. That means that a collapse back in bond vol is now likely to be just as big of a catalyst as a drop in crude prices, if not bigger.

What I need to see to remain long ES is, 1) a tighter correlation between ES & crude through til the end of the week, 2) a bid in bonds, or at LEAST a range created because there is a specific yield in the 10y that even a drop in crude prices WILL NOT mitigate. There was around 10bp of hikes added yesterday and we’re appraoching a fully priced path of 4 hikes.

Breakevens have found a range and steadied from its the rally previously, and even though credit spreads are rising, they still remain massively conatined and are NOT at levels that are causing tail-risks to being long equities. However, if credit spreads begin to rise further across next weeks trading sessions, as crude prices drop then this is ANOTHER huge red flag. If that happened alongside bonds selling off further, I would atcually flip short rather than neutral, but we’re not there yet and is simply just a scenario I’m laying out.

We’re in an extremly difficult macro enviromement where things flip and chnage so fast. I have no issue with flipping from long to short if the signals are there. This isn’t a common action, I would usually be neutral in between but with the aggression in changes in the market, I have no issue with doing this particulalry given taht I’m onsides on ALL open trades right now (all were sent to the Substack chat) and the short ZT trade has actually been most fruitful.

You can also note how I flipped from being short equities (trade hit 1:2.4 on ES), into being long equities and am now onside there. Also, bear in mind that if bonds bid with bond vol collapsing perisistently, as crude prices drop, we could see ES hit an all time high within a week because repricing can be that aggressive in these conditions.

I also want to note that on the FX side, if the signals to be short equities begin to come into fruition, the dollar will continue bidding aggressively in my view. But as I have laid out multiple times in previous reports, I do not want to be long the dollar and I’m looking for oppurtunities to get long equities and short the dollar, both aggressively (but the dollar trade is really not there yet).

Rates are the driving force here, and if ANY of these signals above occur, I would want to open trade with aggressive management (rolling stops fast). For anyone trading equities or FX, the signals are laid out above, but right now my eyes are on whether ES will begin to bid through this crude selloff and whether bonds can find a bottom, the correlation between ES-crude-bonds is number 1 on my list right now in terms of what to watch.

Thanks

Alfie

Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day’s computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

Before we get into the report, just a reminder that we are switching to paid on October 1st. Until then, we are running a 25% discount on subscriptions so grab it while you can as prices will rise in a few days!

From when we switch to paid, there will be many new models shared in the daily systematic reports, as well as more in depth detail about sizing and HOW I’m managing all trades.

I’ve been very open about my positions, how I’m adding to them, and mainly how I’m managing both equities and oil through this volatile period of time.

For anyone in the substack chat you will see that there were some trades I shared recently:

• ES long, massively onside

• Oil short, onside

• ZT short, most gains realised

• Russell long, hit breakeven

• Eurostoxx long, floating in some drawdown

• ES short, all gains realised

Now I am not disregaridng the FX side of things, but ultimately differentials are driivng the dollar so aggresisvely that it’s becoming hard to step in and get short. I do not want to be long the dollar, I think at best we’ll see EURUSD range, I also think the aggressive sell off in that pair is beginning to hit an extreme but it’s not a time I want to get long.

This is the forward curve for the Fed that’s been priced:

And this is the forward curve priced for the ECB:

Remember that the Eurozone are a net importer of energy so they are DIRECTLY impacted more than the US are when oil rises, which is why I laid out wanting to get long the Eurostoxx because it’s likely that as oil unwinds, eurostoxx & the Dax will probably outperform the S&P unless there are MORE factors driving the S&P, like bonds beginning to bid, which is then when I’d expect US equities to outperform.

Now before getting long EURUSD I want to see ZT bid with momentum and close higher on consecutive days during the week while outperforming German bunds. It’s critical that we get outperformnace in ZT here because if not then the strongest catalyst (differentials) do not support the idea. I’m not in the game of catching lows, but I do think EURUSD is set to bottom at least on a short-term basis here.

It’s also important to note that there is still a strong likelihood that the Fed remains less restrictive than the ECB and create a range in EURUSD, based on what we’ve seen over the recent weeks. And not to forget that even as we have NQ outoperforming massively, we have the 10y yield rising just as aggressively, and the russell underperforming the most which shows that the russell will likely not move as strongly as ES & NQ when oil sells off, but when yields begin to drop then russell will have outperofrmnace.

So all views im creating on the russell are predomianntly based around my views on bonds. Of course, I consider bonds and fx when getting long ES & NQ, but the driving factor now is oil and growth, wheras russell is tied so heavily to movements in the 10y.

It’s also very hard for gold to make a bottom anytime soon for as long as the forward curve is this restrictive with the dollar is bidding too. However, I am not bearish on gold and it would make little sense to get short here considering that I think it is unlikley that the Fed delivers 4 hikes (meaning there’s an extreme that could cause a top in real rates). But we’re not theer yet and I’m not trying to get ahead of the real rates curve, I want to see the forward curve reprice as the Fed maintain their stance on inflation which would be the catalyst to set a top in real rates.

Over the last 20d we’ve also seen equities, rates & the dollar bid which is evidence that regardless of how many inflationary poressures exist from oil and governemnt spending, growth is mitigating these risks. But if we know that most of this growth has come form capex and AI, then we know that a turn in events in either of those themes is going to be the catalyst that could send equities into a prolonged drawdown.

Notice also how even with bonds falling into a huge drawdown, credit spreads are at cycle lows, this can ONLY be because growth is so strong that it’s mitigating these factors.

Bear in mind that if inflationary pressures decline, which is a possibility through 1) how the Fed manage the short-end and 2) oil prices dropping aggresisvely, then growth dominates the theme again (unless the restrictiveness form the Fed is outsized and slows growth), and then we are HIGHLY likely to see another leg higher. I’d much rather keep getting long here as this is my base case scenario. The tail-risks to equities are bonds selling off this aggressively, which I am monitoring. It’s also key to understand that there is a specific yield that exists where growth can no longer mitigate the effects, and that’ll cause a sharp repricing in equities and ultimately could cause a longer drawdown given all the positioning and leverage that would be unwound.

To make it clear, I want to get short the dollar at some point in the next 2 months. Yes this time period is pretty broad but I’m not putting on a trade right now so it’s not important to figure a timeframe. That could be next week or it could be in 6 weeks, the timing for getting short the dollar COMPLETELY depends on how equities, bonds and oil peroform because all of these will be the inputs to reprice the forward ciurve.

If equities began trading aggresisvely lower on the forward curve repricing, there’s a strong chance that those hikes wouldn’t be realised in my view because I think the Fed would rather deal with a higher level of inflation for longer rather than send equities into a drawdown and crush growth, espeically when they understand how much capex and leverage exists, it could cause some type of capitulation like April 2025 and then they’d lose the battle against inflation anyway because they wouldn’t be able to hike where they need to.

The carry trade is also still shaky with AUDJPY, MXNJPY and USDJPY still off of highs, the movements in USDJPY is USD driven and there isn’t persistent strength in the carry trade. If there is a real unwind in the carry trade (a possibility given the dynamics in Japan), then that’s another time where equtiies could be sent into a drawdown. For now, there is not enough risk exisiting in the carry trade for me to want to be neutral or short equities, the edge is titled to the upside.

If the carry trade does unwind and it caused selling in both equities and bonds, I’d likely even get long EURUSD as we could have a type of April 2025 moment where everyone flees the US, this is NOT my base case but is a scenario I’m planning for.

For now, my posiitons are as laid out at the beginning of the report and I will update you guys on any new trades I take, which is likley.

Thanks

Alfie

Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day’s computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

Before we begin, please see my most recent report for context on the ideas I’m speaking about. I’d also recommend reading through the Substack chat where I post updates.

So I posted in the chat that I was closing out most of my ES short position because of the extended nature of the Z-score we are in. This trade was massively onside. It is a great example of how I combine my macro view with some more systematic style approaches.

I sometimes note factors such as this: for every drawdown we’ve had in the S&P, we usually begin the momentum leg in the first 10 days, and by the end of the bearish Z-score range we have often come to the end of that particular leg. Now does this mean I’m bullish? No. I’m just saying that some signals from my models are showing signs of some overextension/fatigure to the downside.

If you are able to combine systematic models with your macro views, it’ll help you time things MUCH better. There have also been times where I will use these models around a catalyst to try to find some type of edge in entry.

If we begin pulling back in ES with no change in the macro backdrop, alongside some bearish signals, I will NOT hesitate to enter another short position.

For now, I’m neutral ES for now. On the bonds side, ZT has sold of significantly since the Jackson Hole event (which I laid out a short for in the Substack chat). Ultimately the market is now aggressively pricing the Fed’s reaction to inflation which is NEEDED. Even to this point, equities have barely sold off which just shows that the Fed is yet to be ahead of the curve. I expect more downside in bonds but not as aggressive as we have been seeing. This is what the forward curve is currently pricing:

Oil is up nearly 20% in September alone… we are only 10 days in. This is going to significantly effect both Japan and Germany who are net importers of oil, and there is MUCH more downside in their equity markets than their is in the US, particularly given 1) the BoJ is way behind the curve, and there’s a bunch of intervention going on in the Yen, 2) Germany’s growth is not in a strong enough place to withstand multiple hikes from the ECB in my view (which is needed if they are to tame inflation). But also, if the Fed usually set the stance for global policy, the we can agree that most central banks will declare the fight on inflation REGARDLESS of the effect on growth, given that Warsh made this clear in his speech.

On the oil side, which is now the largest contributor to inflationary tail-risks (of course), vol is still VERY contained. Oil is back at the March highs but the implied vol of oil hasn’t even reached half of that. There is still much more room for this vol to blow out, but the market is becoming accustomed to these developments in Iran so there is less uncertainty (uncertainty is a huge reason implied vol blows out). I don’t have targets in mind for oil, and price can retrace so aggressively and get thrown around by headlines that I’m actually not bothered about taking risk in it, I’d rather use my capital in equities for now.

Oil is such a large factor to watch because equities now have a negative correlation with it.

If oil was rallying from demand then we’d have a significantly different correlation but we’re seeing a supply shock which is forcing negative returns in equities everytime that oil rips higher. Ultimately there will come a time where oil drops huge amounts, something like -10% in a day and this will cause direct upside in equities. I am not trading this exact catalyst as there’s almost no informational edge to find it (unless you KNOW when an agreement will be finally reached). Following oil and it’s correlations to equities, bonds and the dollar is very important.

Longer term I’ve made it clear I’m bearish on the dollar but for now, I won’t get long on EUR/USD until 1) my views on equities flip to bullish, 2) EUR/USD reaches at least 1.15500 level (this can change if there is some underlying factors which shift my models, but in the current position this is it).

On the day we have the dollar up, equities down and bonds down which shows a DIRECT inflationary tail-risk being priced in ALL of these markets.

When I have trade ideas ready, I will send them to the chat as you guys know. Check out my recent tweet surrounding returns recently also:

Thanks

Alfie

Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day’s computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

Firstly, see the most recent report below for context surrounding my views today.

Jackson Hole was a pivotal moment, as it typically is, and has created a level in FX, bonds and rates that serves as an invalidation for my thesis in being short both ES & ZT:

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The positive stock-bond correlation we’ve seen is very telling, bonds are selling off as inflationary pressures mount up while equities get dragged by the repricing of rates.

The views I have for equities, rates and FX will be invaldiated if we break these levels below.

There was around 15bp of hikes ADDED to the forward curve after Jackson Hole, and the meeting strip has been left looking like this:

So there’s now over 60bp of hikes priced in and I’m watching the 2s30s to see HOW restrictive the long-end believes the short-end is vs the growth and inflation backdrop. If we begin to see flattening across the next two weeks, that’ll also be confirmation that ES could trade lower but mainly that there is probably an extreme in SOFR here (I can’t see three hikes being realised in the curve).

The repricing of the forward curve of course DIRECTLY dragged the front-end up and the 2s10s bear flattened in the following sessions, which could finally be an indication that the makret thinks the Fed is restrictive enough on the inflation and growth backdrop. Remember, the long-end prices ANY mistake in the front-end, and for a long period of time the steepening in the 2s10s was a reflection of the Fed not being restrictive enough. But Warsh made it CLEAR at Jackson Hole that inflation is the focus, leaning hawkish and causing ES and ZT to sell off as the dollar bid.

As you guys know, I took off my short USD positions before this event and I made it clear that I was waiting for some moving parts before entering, which we haven’t seen yet. It’s likely that I will flip back to bearish USD once my views on equities and bonds have change. But for now, I expect equities and bonds to continue to sell off as the dollar holds a bid because of the repricing of the front-end.

I also mentioned that going into this week, I will be monitoring these correlations (see image below) before adding ANY risk to my short USD thesis.

It’s extremely important that we begin to see the dollar move with a higher correlation to the forward curve (which we have began to see, if you look at the top chart in the image above). Once these correlations spike it means that the thesis can begin to be built around that single variable (although that won’t be the only input to this trade), and there will be more of an extreme in price, which makes it easier to get onside compared to when the dollar is lacking correlations to its main drivers and is being thrown around my more random variables.

The same goes on the equity side, I want to see the market linkage between equities, rates and the dollar rise above 50% before adding.

My tactical target sent in the Substack chat for ES was 7,655 (which we hit). I am currently still holding this ES short exposure after the target was met and won’t hesitate to hold towards 7,325 if:

• The dollar continues to bid as bonds sell off

• The Russell underperforms NQ, NQ underperforms ES (risk curve)

• Equity vol makes a series of higher highs throughout the next week

• 2s10s & 2s30s continue to flatten across the week

There are also scenarios where these variables above DON’T play out, yet ES still sells off due to the repricing of short-end rates and oil rallying and holding above $90. It seems to be the case that there is MUCH more in favour of being short here, although my view on the macro regime itself has little changed, I think this will be a smaller drawdown in the grand scheme of things.

Let’s also not forget that there is movements in terms of the carry trade with the Yen continuously being thrown around, bidding hard and then mean reverting as the intervention struggles to defend many levels.

It’s likely the case that if there is no monetary or fiscal policy change in Japan, the Yen will eventually just sell off back to levels it was at pre-intervention. However, the crucial tail-risk is that if there is either 1) continuous intervention which bids the Yen past the levels we’re at or 2) monetary or fiscal policy change, then equity positions WILL be taken off by big players and it could lead to further drawdown in ES because the Yen is funding a tonne of positions.

Also, the whole enegry shock story really isn’t over. Consideirng this conflcit began with the idea that it’ll be resolved with speed, we’re now many months in and oil is back above $90 which only increases the likelihood that this inflation feeds into core CPI. This is of course another tail-risk that ia posing to equities. Inflation is clearly the risk, growth has been mitigating these risks for a long period of time but we’ve now come to a crossroad

Thanks

Alfie

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Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day’s computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

Hey guys

Firstly, I just wanted to say that I’ve been quiet on the macro report side of things as I’ve been extremely caught up with some things in 1) my personal life and 2) building out some new systems to improve my trading even more.

I will be switching back to the daily systematic reports as a lot of you guys reached out mentioning that you missed them!

There will be a more in depth piece next week.

Another side note, all trades laid out across the last 2 months are sitting in some heavy profits, I hope you have all capitalised. As i said previously, there will eventually be a live trade book here.

Now let’s get into it.

Warsh has pretty much used his first Jackson Hole to say that inflation is too high, stable prices are the Fed’s job, and hinted at hikes (which was already confimed by the forward curve). Without any surprise, he refused to give forward guidance or any explicit reaction function. Remember, he called forecast-based guidance something that works better in theory than practice.

ZT sold off through the speech and ended the day pricing rouhgly 61bp of hikes (we were at around 48bp prior to the meeting).

Given the inflation backdrop, where rates sit AND how strong growth is, I think the amount of hikes priced in are completely fair. Put it this way, we have rates at 3.75% with MORE than two hikes priced in, yet equities are sitting 1.3% off all-time highs. This means that growth in the system is more than strong enough to mitigate the so-called restrictive nature of the fed, but this gives us the EXACT focus… what exactly could shift growth to a point where we actually have less room for these higher rates, and more of a concern about how growth will survive such higher rates.

The channels I’m watching for this growth tail-risk are, 1) rising nominal long-end yields as macro OR fundamental data misses. Right now, the rising nominal long-end is mitigated by earnings beating across AI names (which is accounting for most of the S&P returns) and rising nominal GDP. 2) energy shock OR inflation staying too high. If we get some type of rally in oil again (doesn’t need to be as dramatic as before), and prices remain ABOVE $90, there becomes a strong chance that it feeds into core CPI and makes it extremely hard for the Fed to cut while eventually having negative impact on growth itself, which is the only thing holding up equities right now.

ES traded higher initially on Jackson Hole but then mean reverted and closed the day negative, I expect it to start trading towards 7,655 as I laid out in the substack chat.

ZT is also massively onsides with stops at breakeven. The double selling of both ES and ZT was laid out yesterday.

The key thing I’ll be watching into next week is how the 2s10s moves because right now it’s evidently telling us that the Fed is behind the curve, and equities are rallying on a liquidity impulse, but if we start seeing bear flattening as ES sells off, that’s confirmation that the market is repricing WHERE the Fed stands on inflation, and whether the forward curve will drift towards three hikes (unlikely still in my view).

Breakevens are also marginally up as credit spreads become a LITTLE less contained, but ultimately there has been NO catalyst so far to really blow out credit spreads. If there were to be, it’d likely be through equity or rates vol, which I also laid out in the substack chat yesterday. Keep an eye on skew and implied vol of the short-end, but more so how they are moving as a pair.

We’re beginning to see wider ranges in the gap between skew and implied vol, this is the exact type of thing where we could see vol blow out a little and transmit into equities. I am NOT aggressively short but as I said, I am targetting 7,655 in ES and holding ZT shorts until further notice (there is still so many inflationary pressures that make me want to hold rather than take the position off, when we start seeing some type of change in this thesis then I will be fast to take off my ZT shorts).

I was also short the USD from a couple weeks back, still floating onside and I will be adding to my short exposure ONLY when the marginal driver is differentials. Right now, correlations are weak and there are NO extremes in FX that make me want to put on additional risk.

Thanks

Alfie

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Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day’s computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

Before we get into it, don’t forget I built 25 FREE indicators, a primer course, academic paper stack and a macro console for you all here:

I’ve been tracking the correlation between the movements in the Yen and global asset markets to see HOW much the Yen has the strengthen to actually cause a materially wekaer gloabl equity market.

There were 3 obvious interventions in the Yen from the BoJ which caused NO selling pressure in equities.

Further headlines also failed to cause any noticable movements:

Remember, markets are priced so efficiently that worst-case scenarios from headlines will be priced almost immediately.

Now if the Yen is strengthening, why haven’t equities moved in direct negative correlation?

That’s because this strength in the Yen is NOT a carry trade event. If it was a carry trade event (directly moving rate differentials) then yes, you’d expect equities to move in direct negative correlation. This event is simply an intervention which hits just the spot price. For this type of event to unwind any rally in equities, there needs to be forced deleveraging which needs speed, vol expansion AND some type of scare (rates/growth etc), which we seeing NONE of these things occur.

Rates volaitlity is moving up marginally while FX and equity market vol remains low and therer is absoliutely no sign of a carry trade unwind here

Another thing that is making this Yen strength less of an issue is the weakness in the dollar following the FOMC meeting last wednesday. Dollar weakness is a net-positive to equities (to a degree) which mitigates any effect (if there even was one) of a stronger Yen.

So there is minimal tailwind from the Yen right now, unless volatility begins to rise or there is a true growth scare (nowhere near) meaning that tail-risks for equities sit inside rates, in my view.

The forward curve has priced roughly 50bp for a decent period of time now so this is nothing new for equities to digest and for as long as we’re getting companies beat earnings, the market can shake off any hikes priced in (unless we start moving towards 3 hikes, which is an UNLIKELY scenario). An example is Palantir yesterday, whose revenue is up 93% in the 2nd quarter of the year.

So the market is priced for a hike in September, and then one in January. This shifted a little from the Septmeber and December steup we had just a few weeks ago, all hawkishness is now being pushed further down the line and increasing the liklihood of a scenario where we see just 1 hike being delivered.

The yield curves flipping from bear flattening to bear steepening shows that the market doesn’t think the Fed are having some type of massive negative effect on longer-term growth (which is reflected in the 10y). If the market truly thought the Fed were being overly restrictive and that this would have DIRECT impact on growth, then we’d be seeing persistent bear flattening which we are not seeing. If we do see bear flattening as equity vol moves higher then I’d defintiely considering being neutral or running some smaller sized shorts (although this is not preferred, I want to see A LOT to get short).

Breakevens falling this hard is reassuring me that there is little tail-risk that the previous enegry shock and this rapid growth in the US isn’t bringing any inflationary tail-risk with it. Nomianals are being driven by real rates which is just a function of HOW restrictive the Fed are being (which in my view has reached peak hawkishness).

So where is this bond volaitlity coming from then? Why does it exist? Well firstly, equity vol and FX vol both net out shocks that bonds HAVE to absorb in full. This literally just means that good news lifts earnings but also lifts rates, so equities half-cancel it, and if every country‘s rates are uncertain together then the differnece between them stays flat (so FX cancels it too).. A yield has nothing to cancel it agaisnt so it takes the WHOLE hit.

Rates vol can begin to drag up vol in equities if the reaction function to data points creates negative movements in equities. For example, a stronger growth print with inflationary tail-risk means that rates go up and multiples go down so then there is no offset in equities and that will bring volaitlity up. Basically, when a hot print sells off both stocks and bonds, the netting is gone.

Another example of how rates vol can drag up equity vol is if the volaitlity in rates begins to directly push credit spreads higher which bings up the cost of capital and drags equity vol up.

We are still NOT seeing these risks materialise and there is not enough excuse for me to begin running any aggressive shorts.

Thanks

Alfie

Disclaimer

The information in this publication is provided for informational and educational purposes only and is believed to be reliable, but its accuracy and completeness are not guaranteed. Nothing herein constitutes investment advice, an offer, or a solicitation to buy or sell any security, derivative, digital asset, or other financial instrument, nor a recommendation suited to any specific reader. All figures are drawn from the day’s computed data set at the time of generation and may be delayed, revised, or superseded. Markets involve risk, including the possible loss of principal; past performance and historical relationships do not guarantee future results. Readers should conduct their own research and consult a qualified financial adviser before making any investment decision. The author may hold positions in instruments discussed. This publication is licensed for the personal use of the subscriber only: redistribution, reproduction, or resale in any form is prohibited. © 2026 MARKET MACRO HUB. All rights reserved.

So we’re moving even closer to the release date of the FREE Market Macro Hub console, which will be allow you guys to also add your own models to it. Please see this report below for instructions on how to recieve it on July 17th.

Now below is a full video recording on exactly why I think the dollar is heading lower within the next few months, and builds on ideas I laid out in my previous report:

Recording:

Synthesis of the recording:

Mmh Synthesis

30KB ∙ PDF file

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Slide deck from the recording:

Mmh Slide Deck

1.29MB ∙ PDF file

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Download

Thanks

Alfie

Before we get into the report, I want to remind you guys of the FREE console giveaway on July 17th. To access the console, please see the beginning of this report below for steps.

Now I’m not in this position yet, but this is one I am looking to get into in the coming weeks if cross-asset confirmations and data support it.

Being short the dollar, let’s get into that.

Firstly, I want to mark the report from February when I was long the dollar, which was broadly driven by the forward curve, equity rotation and bond vol. The reason I’m marking this report is because these are three signals that could create the top in the dollar, just the opposite way this time.

Cross-asset vol & the forward curve

Firstly, I want to reiterate my point from the previous two reports that the dollar is NOT bidding because of any risk-off fear (neither driven by inflation or growth). Cross-asset vol is contained and if the dollar was driven by the previous months’ spike in implied vol, then the dollar would’ve unwound as these cross-asset vol levels normalised, which it didn’t.

The dollar trading higher is simply a function of the forward curve itself, which I believe has reached an extreme. I laid out in the report below that I see 50bp of hikes as an extreme and struggle to see a scenario where the Fed hikes twice, pauses for a small period of time, then begins cutting, particularly given that growth isn’t strong enough to give any type of massive tail-risk to inflation. The only need for a hike has come since the energy shock, which has now faded, and everyone is focused on how much will feed into core CPI, which I believe will be little.

The Fed control the demand side of the economy, not the supply side. The supply side has done all the work right now, dragged rate expectations higher after oil rose 70%+. Now oil has fallen 42% and rate expectations have repriced to the same degree, which makes sense because oil’s beta to rate expectations will always be higher on the way up than on the way down, simply due to the tail risks after inflation has hit headline, e.g. how much will flow into core.

Like I always say, if you have a thesis on markets, it needs to be expressed in the asset pricing, otherwise you’re either wrong or mistimed, or both.

Cross-asset vol is low. Cross-asset returns and correlations are clearly showing that there is minimal risk in the system, both growth and inflation, and therefore you cannot attribute the stronger dollar to that. The reason this attribution matters so much is because the thing currently driving the dollar needs to be the thing I focus on to unwind it, which is why I’m focused so heavily on the forward curve.

Credit spreads at cycle lows and the Russell outperforming the S&P 500 tells us exactly what is driving the dollar.

I already think that the inflation risk is declining. Long-end inflation swaps reflect that and ultimately the collapse in oil shows it isn't long lasting. But the evidence is that the Fed are already ahead of the curve, which is why we're seeing bear flattening across the board as the short end reprices more aggressively than the long end. It's basically the market saying that its views on growth and inflation haven't changed and the Fed are being too restrictive given that backdrop.

This is the current forward curve for the US.

The terminal rate has floated around the H7 contract for a while and in my recent report I discussed how I believe there is the most asymmetry in that contract if you are trading the SOFR strip directly. If we reprice even marginally, the dollar will have to reprice given that these differentials are the driver of price. In fact I believe the beta to rate expectations will be very high. If we begin to only price in 1 hike (base case), or even 0 hikes, the dollar will sell off meaningfully as differentials need to reprice, especially if the ECB remain hawkish, which is likely given their tailwind and the current level of rates and inflation tail-risk.

Fiscal policy

Now the fiscal side.

And this is the part of the story that I think is being massively underpriced by the market right now.

The structural argument for a weaker dollar doesn’t begin and end with rate differentials. If the US wants to compete with China on a global basis for exports, as the administration has made clear, they structurally need a weaker dollar.

You simply cannot reshore manufacturing at scale with DXY at these levels. The math doesn’t work. A strong dollar is a tax on every US export, it makes foreign-produced goods cheaper relative to domestically-produced ones, and it directly undermines the entire policy objective of rebuilding the US industrial base.

This isn’t just a political talking point either, it’s been a bipartisan structural problem for decades. The US has run persistent current account deficits precisely because the dollar’s reserve status creates excess demand for the currency, artificially inflating its value beyond what trade fundamentals would justify.

This is what economists refer to as the “exorbitant burden” of reserve currency status. The SAME privilege that gives the US cheap financing also prices its exporters out of global markets.

Now layer on top of that the current fiscal trajectory. The US is running deficits in excess of 6% of GDP in a non-recessionary environment. That is extraordinary by ANY historical standard. The traditional mechanism by which large fiscal deficits support a currency is through the rate channel, the government borrows heavily, rates rise, and foreign capital flows in to capture the yield differential. But that transmission is breaking down. The market is increasingly pricing the risk that the US is on an unsustainable fiscal path, which means the incremental dollar of Treasury issuance is being met with less and less foreign demand at the margin.

We’re already seeing early signs of this. Foreign central bank accumulation of US Treasuries has structurally slowed. The Fed’s own reverse repo facility saw massive drawdowns as domestic money market funds absorbed the supply that foreign buyers are no longer taking as aggressively. If foreign demand for Treasuries softens further, the dollar loses one of its key structural support mechanisms, not because rates fall, but because the safe-haven premium embedded in the currency begins to erode.

Then there is the tariff dimension. The administration’s tariff policy is explicitly designed to reduce the trade deficit, but here is the tension: a large portion of the trade deficit is a mirror image of the capital account surplus. Foreign nations run trade surpluses with the US partly because they are recycling those dollars back into US assets, Treasuries, equities, real estate. If tariffs succeed in compressing the trade deficit, by definition the capital account surplus compresses too, meaning less foreign demand for dollar-denominated assets. That is structurally bearish for the dollar over the medium term, regardless of the short-term inflationary impulse tariffs create.

And the short-term inflationary impulse is itself a problem for the dollar in a way that isn’t immediately obvious. If tariffs push inflation higher but growth weaker simultaneously, the Fed is boxed in. They CAN’T hike to defend the currency without accelerating a slowdown, and they CAN’T cut to support growth without risking an inflation re-acceleration. That stagflationary trap is the worst possible environment for the dollar because it REMOVES the Fed’s ability to credibly defend it through the rate channel, which as I’ve laid out is the primary driver of dollar strength right now.

So when I put all of this together, the rate differential argument for a strong dollar is fading as the forward curve reprices. The structural fiscal argument points to a dollar that is being propped up by a premium that is slowly being questioned. And the policy mix, tariffs combined with reshoring ambitions combined with a Treasury that has every incentive to see a weaker dollar, all point in the same direction. The forward curve is the trigger, but the fiscal backdrop is what makes this a structural move rather than just a tactical one.

Thanks

Alfie

Hey everyone!

I’ve been mentioning the Market Macro Hub console that I will be giving out completely for FREE. Many of you are excited, as am I.

I have built my own personal dashbaord which is now being used by a compnay in London, which you guys will likely be able to rent out/subscribe to at a later date, but for now we have the MMH console.

The release date for this will be July 17th (14 days from today).

There are the simple steps to accessing this:

1. Subscribe to Market Macro Hub

2. Restack & like this article

3. Retweet this post from my X account:

4. On July 17th (not before), message me with proof of the above

I’m excited for you all to be able to use it, you will be able to add all of your own models because you will have FULL access to the file.

Now onto today’s release…

Below is a recording of exactly why I think inflation risk is greater than growth risk BUT inflation risk is also declining rapidly in my view. This is a very different setup to 2022, the comparisons don’t hold up well here.

Synthesis of the recording:

Mmh Synthesis

37.9KB ∙ PDF file

Download

Download

Slide deck from the recording:

Mmh Slide Deck

1.38MB ∙ PDF file

Download

Download

Thanks

Alfie

Credit Markets Confirm Low Growth Risk

I have laid out for a while how I believe growth risk is EXTREMELY low and the credit market is confirming it (and has been for a while). HY and IG spreads are at cycle lows, which tells you credit isn’t sniffing any growth deterioration. Breakevens have started drifting lower too, with the 10Y BE down 11bps and the 5Y down 30bps over the trailing period (even after the oil shock). That combination of compressed spreads and falling inflation compensation is EXACTLY what you want to see in a Goldilocks read… the bond market is agreeing that the growth/inflation mix is improving.

Inflation risk remains larger than growth risk, but neither are a concern and inflation risk IS declining in my view.

Labour Market: The Bear Case That Never Arrived

The labour market has been the consensus bear case for two years and it hasn’t delivered. Payrolls have normalised well off the post-covid surge but the underlying pace has been remarkably stable. The 5-year picture shows a jobs market that decelerated in an orderly way rather than rolling over, and the 2-year detail shows that even through the tariff shock of early 2026, the dip was sharp but brief. Claims are still historically low, openings remain above 7.5 million, and layoffs are actually trending DOWN. Wages are firm but not accelerating. This is a mid-cycle labour market, not one that’s cracking.

This all reinforces my view on growth.

Growth risk is low precisely because the labour channel is holding. Consumer spending runs through employment and wage income, and both remain intact. I’d need to see claims pushing well above 250k and sustained negative payrolls prints before the growth picture genuinely deteriorates in my view.

Inflation: Where the Real Asymmetry Lives

The inflation picture is where the asymmetry lives (and I’ve laid this out in the Substack chat). After a clean disinflation window through 2024, price pressures have re-accelerated across every major measure. CPI, core PCE, trimmed mean PCE are all running well above the Fed’s target and the 2-year trend is moving in the wrong direction. The tariff impulse (old news…) has fed through into goods prices, services have stayed sticky throughout, and the re-acceleration has happened even WITHOUT a demand boom driving it. That’s the uncomfortable part because this is a cost-push dynamic that’s harder for the Fed to address without breaking something.

The long-run chart gives you the historical context. Every sustained inflation episode above 3% has needed either a policy response serious enough to cause demand destruction, or an exogenous price shock to reverse it. We came off the sharpest tightening cycle since Volcker, got a disinflation window, and are now re-accelerating. The Fed is stuck: growth is fine enough that cuts aren’t justified, but inflation is high enough that further hikes would be a political and economic problem. Rates stay higher for longer (and that’s the dominant macro constraint on the cycle right now).

Oil as the Relief Valve

The one genuine relief valve on the inflation side is oil. Crude has fallen over 43% from the Iran war peak and is sitting just below $68, with the yield curve regime shifting toward bull flattener territory as the market starts pricing the Fed ahead of the curve. As oil continues to deflate, it mechanically pulls headline CPI lower and gives the Fed breathing room without requiring any policy action (unless growth crashes fast).

The important nuance is that this relief is coming from the supply side, not demand destruction. Energy deflation with a stable labour market and intact consumer is a clean disinflationary impulse, and it’s the main reason the inflation risk, while still elevated, is gradually becoming more manageable rather than less.

The Forward CPI Path

The forward CPI path reflects exactly this dynamic. The base case trajectory shows headline CPI continuing to drift lower through the second half of 2026 as energy base effects kick in and the war premium fades. The 3-period pace is already decelerating. The risk is that services and shelter keep the floor elevated, which is why the forecast range is wide and skewed to the upside. Inflation coming down is the base case, inflation returning to 2% quickly is not.

Rates Market Pricing and the H7 Trade

Now when we look at the US forward curve, I think it’s highly unlikely that two hikes are delivered given my explanation above. I see most assymetry in trading the H7 contract because if the market repices this forward curve (which is my view), then I believe that contract will shift most as the terminal rate has been floating aorund that contract for a while.

The rates market is pricing the Fed to hike once more before cutting, with a terminal around 4.075% by May 2027 and then 60bps of cuts in the 12 months following. That's a meaningful repricing from where the market was at the start of the year when cuts were expected imminently. The message from futures is that the Fed is on hold, inflation has to show sustained progress before easing begins, and the first cut is well over a year away. That's consistent with everything the data is showing: a resilient economy, sticky services inflation, and an energy complex that's helping at the margin but not enough to unlock policy. The bar for cuts is high, and the market has finally accepted that

Asset Class Outlook: Equities, Rates, and Dollar

Equities remain tilted to the upsise in this environment, in my view. Compressed credit spreads, a stable labour market and falling energy prices is about as clean a backdrop as you get for risk assets, and the S&P 500 structure reflects that. The inflation risk is real but it’s a slow burn, not an acute earnings threat, and the market is correctly treating it as such.

On rates, the 2Y looks capped from here. The Fed is on hold, the terminal is priced at 4.075% and the market has largely accepted that cuts are a 2027 story. There’s not much juice in fading the front end. The 10Y is more interesting: if oil continues deflating and headline CPI rolls over through H2, real yields stay elevated but nominal yields have room to drift lower, which makes duration selectively attractive as a hedge rather than a core position. On the dollar, the stagflation fear trade that drove USD bids earlier in the year is unwinding alongside the oil premium.

Growth holding and inflation easing is not a strong dollar environment because it removes the rates divergence argument. USD likely grinds softer from here, particularly against currencies where central banks have more room to stay restrictive

Thanks

Alfie

Below is a comprehensive breakdown of why equities continue to trade higher even as the dollar strengthens and both ends of the rates curve push up. Honestly, this is one of those macro setups where the cross-asset signals seem to be telling completely different stories, and the divergence is worth pulling apart properly.

I'd strongly recommend going back and reading the recent report connected to these ideas, as they all build on each other. The frameworks and themes carry across pieces, so the fuller picture only really comes together when you read them in sequence.

Slide deck from the video:

Slidedeck

200KB ∙ PDF file

Download

Download

Synthesis of my ideas from the video:

Synthesis

24.8KB ∙ PDF file

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Thanks

Alfie

Both the short-end and long-end are rising (while curves are flattening across the board), yet there has been no drag on equities. The dollar has also been rallying.. so we’ve got the dollar up, rates up and equities up. The quesiton everyone is asking is, why is neither the dollar or rates dragging on equities?

Short-end:

Long-end:

2s10s curve spread:

DXY:

My view on why there hasn’t been a drag on equities is that:

1. Nominal growth running hot enough to overwhelm the discount rate effect

If the driver of higher rates is a genuine upside growth surprise (not just inflation or term premium), then earnings revisions can more than offset multiple compression. The numerator (EPS) grows faster than the denominator (discount rate) rises. This means that rates are up for good reasons. You see this in early-to-mid cycle reflationary phases where nominal GDP is accelerating.

Breakevens down while credit spreads remain at cycles lows is proof that the driver of rates is growth.

2. USD strength driven by US exceptionalism rather than risk-off

There are two common drivers of dollar strength: risk-off (USD as safe haven, equities sold) and US outperformance (capital flowing into the US because the growth differential is widening in America’s favour). In the second case, the same force pulling the dollar up is also pulling capital into US equities. The drag on multinationals’ earnings translation is real but gets swamped by the inflow story. This is where we’re at right now in my view, real rates have directly driven the dollar higher (it hasn’t be some sort of risk-off bid).

3. Credit spreads not widening alongside

The equity drag from higher rates is amplified when credit spreads also widen (growth risk), because it signals financial stress and tightening credit conditions across the system. If long-end nominals are rising but IG/HY spreads are stable or compressing, it suggests the market is pricing a benign growth outcome rather than a liquidity crunch. This setup is where equities can shrug off the rate move (this is where we’re at, so credit spreads matter a lot here).

Nominal growth running hot enough to overwhelm the discount rate effect

The standard DCF intuition says higher rates compress multiples, but that idea treats the numerator as fixed when it isn’t. When the driver of rising long-end yields is a genuine acceleration in nominal GDP, the earnings revision cycle kicks in hard and fast. Companies are pricing more product at higher prices, volumes are holding, and top-line beats start flowing through to operating leverage. The numerator is growing in real time, not sitting static while the discount rate climbs.

Given the whole AI capex spending and just how much AI is contirbuting to equity performance, it’d wise to focus on earnings from the largest companies in that sector whch are giving evidence of my point above.

Nvidia:

The key is the sequencing and the magnitude. If rates rise 50bps but the forward earnings estimate for the index gets revised up 8-10%, the multiple compression is more than absorbed. This is what the 2021 reflation trade looked like in its early phase before inflation became a supply-shock: cyclicals rerated higher even as the 10y moved because the growth read was dominant. The equity market is discounting a stream of future earnings, and if that stream is being revised upward in nominal terms, the present value can still rise even with a higher discount rate.

There’s many times where this has been the case in recent history:

The regime breaks down when the inflation component of the nominal growth is supply-driven rather than demand-driven (we only see this on the margin recently, it’s already been priced out), because then you get margin compression alongside the rate rise: input costs go up faster than pricing power allows revenues to expand. The softer version of this story requires demand-pull inflation, strong labour markets, and positive operating leverage across the index. When all three are present, the growth overpowers the discount rate effect and equities decouple from the bearish rate narrative.

USD strength driven by US exceptionalism rather than risk-off

Dollar strength has two very different macro signatures and conflating them is one of the most common errors in cross-asset analysis. The risk-off dollar, which you see in acute stress episodes, comes with falling equities, widening spreads, and collapsing commodity prices: capital is fleeing to safety and the dollar is just the destination. The exceptionalism dollar is structurally different: it is driven by a widening growth and rate differential between the US and the rest of the world, and it comes with capital actively seeking US assets, not fleeing everything.

It’s clear that the dollar rally has been a function of higher real rates rather than any type of safe haven bid (where we’d see gold trading higher) or growth scare (where we’d see creidt spreads widening).

The Fed’s stance on inflation (which helps price the forward curve to some degree of accuracy) is the input that is directly giving real rates fuel.

In the exceptionalism regime, the same fundamental that is pulling the dollar up, faster US growth, better corporate earnings, tighter labour markets, is also the fundamental pulling capital into US equities. Foreign investors reweighting toward US assets are simultaneously buying dollars and buying S&P futures. The multinational earnings translation headwind is real and will show up in reported EPS for companies with large foreign revenue bases, but the index-level flow dynamic can more than offset it, particularly for domestically-oriented sectors and companies.

The diagnostic here is to watch what else is moving with the dollar. If USD is rallying and EM equities are getting crushed while credit spreads widen, that is a risk-off move and the equity drag will follow. If USD is rallying while European and Japanese equities are flat-to-down in dollar terms but US equities are making new highs on strong economic data, that is the exceptionalism idea I spoke about above. The capital flow story is the tell: are people buying the US, or are they selling everything else?

I’m watching cross-asset returns closely here, if we start to see credit spreads widen as gold bids, equities pull back, USD trades higher and the long-end remain at these levels, I would not want to be adding risk-on exposure.

Credit spreads not widening alongside

The credit market is the equity market’s leading indicator for financial stress, and the most important cross-asset signal when trying to judge whether higher rates will drag on equities is what IG and HY spreads are doing concurrently. When the 10y is selling off but credit spreads are stable or tightening, the bond market is essentially saying that this is a growth and inflation story rather than a default and liquidity story. Companies can still access capital, refinancing risk is manageable, and the fundamental earnings backdrop is intact. That is an environment where equities can absorb the rate move (which is exactly what’s happening).

Inflation expectations are falling and credit spreads are getting tighter, which mitigates some effects of higher nominals and a stronger dollar because lower inflation (to a degree) and low growth risk (tight credit spreads) are a net-positive for equities.

As I mentioned at the start, inflation expectations dropping as credit spreads remain at cycle lows is the easiest way for me to attribute that the rising long-end is tied to higher nominal GDP vs any type of term premium.

The idea is straightforward: if spreads are tightening while rates are rising, the all-in cost of debt for corporate borrowers is rising less than the Treasury move would suggest, or may not be rising at all. Financial conditions are tightening at the margin but not in a way that chokes off credit availability or triggers forced deleveraging. The credit channel, which is the most direct transmission from higher rates to economic damage, is not under stress. Equity risk premia can stay compressed and multiples can hold because the fundamental risk of recession and earnings downside is not being priced in the credit market.

The breakdown scenario, which is the one that really damages equities, is when rates rise and spreads widen at the same time. That combination signals that the rate move is happening in a context of deteriorating credit quality, tighter financial conditions, and rising systemic stress, rather than a strong growth backdrop.

Spreads widening 100bps while the 10y rises 50bps is far more destructive to equities than either move in isolation because it hits from both the discount rate side and the fundamental outlook side at the same time. Watching the credit market alongside the rates move is the single most important cross-asset check on whether the equity drag story will play out.

Thanks

Alfie

Hey guys!

hosted me on his channel where I done a deep dive on how I build an edge for every trade I take.

The video below is a full breakdown of how I think about markets, frameworks I use, and current views on growth and inflation.

Thanks

Alfie

Hey guys, I hope you’re all well.

I want to speak about this single name equity today and the analysis behind it. Before we get into it, I want to start with saying that 1) this is NOT financial advice, I’m simply expressing my analysis on a single name equity and 2) this name was brought about to me by a friend, so no I didnt source this niche idea, I’ve just done research behind it.

Blencowe Just Became a Different Company

Okay so... I need to talk about Blencowe Resources.

It’s becoming interesting because something happened in the last few weeks that I think most people on AIM have completely missed. And by the time they notice, the easy money will already be gone (in my view).

Let’s get into it.

The Resource Story (And Why It’s Bigger Than It Looks)

First, the geology (because it’s the foundation everything else sits on).

Beehive came in at 21.3 Mt at 6.58% TGC on its maiden JORC. That single deposit takes total Orom-Cross resources to 64.3 Mt at 6.03% TGC across Northern Syncline, Camp Lode, Iyan and Beehive.

Total resources up 168% since the start of Stage 7.

I’ll say that again because people skim past these numbers... 168%.

This changes the weight class of the project entirely. Different funding profile and different counterparties returning your calls. Different conversations.

The bit that should genuinely have people sitting up is that Beehive has only been modelled over about 22% of the anomaly, and largely in the upper 25 to 30 metres. Deeper holes have shown mineralisation continuing down to roughly 100 metres.

Then There’s the Rocket Test

This is the bit I think genuinely re-rates the company, and I don’t see it being priced in anywhere.

Blencowe’s graphite has been used in live rocket propulsion nozzle testing. In California. With representatives from US Government agencies in attendance, alongside Purdue University and Pluto Aerospace.

Let that land for a moment.

This is a ~£20m AIM-listed African graphite junior, and their material has been fired through actual rocket nozzles, in a live test programme, with US Government bodies in the room watching.

The work was done by American Energy Technologies Company (AETC), Blencowe’s Chicago-based partner. The question they were trying to answer was simple... could natural graphite from Uganda replace a portion of the synthetic graphite typically used in propulsion nozzles?

The test programme completed its planned runs successfully. Data is now being analysed, further testing is planned, and subject to outcomes, orbital testing is on the table for the second half of 2026.

In parallel, AETC has been evaluating graphite-based coatings on rocket fin components for hypersonic durability and icephobic properties (surfaces engineered to resist ice formation). Early performance has reportedly been encouraging, with potential applications across both military and civilian aerospace.

Now, I want to be careful here. I see people on Twitter getting wildly carried away with this kind of news, and I don’t want to overpromise.

“Testing” is not the same as “qualification.” And qualification is where the actual money is.

The graphite game works like this... aerospace, defence and battery customers test material for years. Then they potentially sign supply agreements. Then pricing power kicks in, driven by proven performance and supply scarcity. You don’t go from “NASA-adjacent rocket test” to “we’re selling at 5x commodity prices” overnight.

But the optionality being layered on here was not in the DFS. None of it was modelled. And it’s the kind of optionality that, if even a fraction of it converts, fundamentally changes the revenue model.

The Validation Stack Is Stacking Up

Step back and look at what’s actually been built underneath the share price over the last twelve months, because it’s quite a list:

99.99% graphite purity validated through AETC in the US and Alkeemia in Italy. Two non-Chinese purification routes into the two most important western markets.

53.6% yield on synthetic diamond conversion, which is above the 50% commercial viability threshold.

Live rocket propulsion nozzle test firing, completed successfully, with orbital testing potentially in H2 2026.

Hypersonic coating durability testing under analysis, with both military and civilian application potential.

A $5m grant in the bank from the US International Development Finance Corporation, with first right of refusal on project-level financing.

EU SAFELOOP consortium membership opening a path into European battery supply chains.

Offtake framework that already spans Asia and Europe.

64.3 Mt JORC resource with the next campaign almost certain to push it higher.

Market cap... still floating around £20m.

I genuinely don’t know how you look at that combination and conclude “fairly valued.”

The Cameron Pearce Quote Tells You Everything

Blencowe’s Executive Chairman put it about as plainly as a chairman can:

“The more value-enhancing strategic relationships Blencowe and AETC can build within US Government agencies, and associated technology providers, the more likely offtakes and/or funding from this direction.”

Read that twice.

That is the language of a company that has worked out it’s no longer just selling graphite. It’s positioning itself inside the US defence and aerospace supply chain, the one Washington is actively trying to detach from Chinese critical minerals.

Defence and aerospace validation gets you an entirely different class of strategic partner. Pricing conversations change. Offtake structures change. Strategic interest changes.

And the US Government already voted with its wallet via the DFC commitment. They’re not in this for a press release.

So What Does the Re-Rating Actually Look Like?

The re-rating thesis here isn’t built on any single announcement. That’s what I think people are getting wrong when they wait for “the catalyst.” It’s the stack of them landing in roughly the same window:

DFS optimisation update, where the bigger resource base and refreshed product strategy get re-presented in a sharper form... a JORC update properly incorporating Iyan and Beehive... conversion of existing MOUs into binding offtake agreements... Phase 1 financing structure announcement... further data from the rocket testing programme and the hypersonic coating work... and any movement on orbital testing for H2 2026.

Any one of those would move the share price meaningfully. Stacked together over a 6 month window, you’ve got the makings of a proper, sustained re-rating rather than a one-day pop.

The Honest Risk Section

This is still pre-revenue. It’s still AIM. It’s still African mining. Funding still needs to be properly structured, qualification timelines in aerospace and defence are measured in years not weeks, and graphite pricing has been volatile.

But the asymmetry is what makes it interesting to me. The downside is bounded by asset quality, government backing, and the simple fact that you cannot easily replicate 64 Mt of high-grade graphite with western political cover and a validated US purification route. The upside, if even half the catalysts land in the window I’ve outlined, is materially higher than where we sit today.

Bottom Line

Blencowe stopped being a normal junior miner the moment its graphite went through a live rocket nozzle test with US Government agencies watching. My view is that the market simply hasn’t caught up.

Watch the DFS optimisation. Watch the next JORC update. Watch for further commentary on the AETC programme. Watch for institutional names showing up on the register.

By the time those headlines are landing, the easy part of this trade will already be in the rear-view.

Thanks

Alfie

I made this point below in the Substack chat, now I thought it’d be a great time to write a full report on WHEN I’d flip from long to neutral/short equities

The DAX is rallying from the thesis I shared 2 weeks ago and I still believe we will see ATHs in the DAX across the next month given that there is NO changes to the ideas I laid out, see these 2 reports below:

The four boxes that would actually flip me bearish

Equities have had a tiny bit of a wobble as breakevens are sat firm, while the dollar is still trading firm, now a LOT of people are already lining up to call the top on this rally (which I completely disagree with). The conditions that would actually break the setup we have in equities right now have not shown up, and the cross-asset signature we’re getting from credit, spreads, breakevens, and equity sensitivity is consistent with a market repricing duration risk, NOT credit risk. The difference between duration risk and credit risk is the difference between a multi-week chop inside a structurally intact uptrend (duration risk), and a genuine regime-defining top (credit risk).

This is how my economic data and asset market pricing model sees the setup:

I remain bullish on equities. In this report I will walk through the framework I’m running, the four specific transmission channels that would have to fire for me to flip, the cross-asset evidence on each one, and the EXACT signals I’m monitoring to flag the regime change in real time.

Why this matters: not all inflation is created equal

Before I get into the four boxes, I want to push back hard on a piece of pattern-matching that I think is doing real damage to bearish positioning right now. The intuition goes like this: inflation print comes in hot, then equities should sell off, then I should be short. That’s a one step reasoning chain in a five step transmission system and it skips EVERY key question along the way.

Inflation can transmit to equities through at least four distinct channels, and each one has a different signature, a different time horizon, and a different cross-asset fingerprint. The reason this matters is that the cross-asset signal tells you which channel the market is pricing, and the channel determines whether you’re looking at a vol event or a regime change.

Channel one is the earnings channel, where persistent inflation eats into corporate margins, real wages compress, top line growth slows, and you get a fundamentals-led drawdown. Channel two is the rates channel, where a hot print forces the curve to reprice the forward path, the dollar bids on that, and equities get dragged through tightening financial conditions and FX translation (we had this marginally in March/April).

Channel three is the credit channel, where inflation stays sticky, real growth starts to look fragile, and credit decides that’s a default risk rather than a duration risk, with spreads widening as the lead indicator. Channel four is the most regime-defining one, where equity beta to growth and inflation surprises flips, the market starts trading hot data as bad news, and we move from “growth is good” to a “Fed has more work to do”.

These channels are NOT mutually exclusive, but they are sequentially distinct. The cross-asset tape tells you which one is active, and right now the answer is pretty clear (the rates channel is doing some work, the other three are dormant).

Channel 1: Inflation persists and becomes an earnings problem

This is the slowest moving channel. For inflation to genuinely break equities through the earnings channel, you need to see three things lining up: input cost pressures that corporates can’t pass through, real disposable income compression that slows the top line, and revisions rolling over in a way that’s broad-based rather than sector-idiosyncratic.

Where we actually are is a place where revisions have been mixed, margins have held up better than the bear case predicted 12 months ago, and the dispersion across sectors suggests we’re seeing minor rotation rather than a broad earnings deterioration. The ERP, earnings yield minus real yield, is not flashing the kind of compression you’d expect if the market thought earnings were about to roll. Forward EPS estimates are still drifting up in aggregate.

The reason this matters A LOT for the bullish thesis is that the earnings channel is the only channel that produces a sustained, fundamentals-led equity drawdown rather than a vol event. Rates-driven sell-offs can be sharp but they tend to mean-revert when the rates side calms down. Credit-driven sell-offs require credit to actually start widening (which it isn’t). Sentiment-driven sell-offs unwind. Only the earnings channel produces a sustained move lower, and the data we have right now is just NOT consistent with that channel being active.

What I’m monitoring is the forward EPS revisions breadth (not just headline number, but the proportion of revisions going up vs down), margin commentary in earnings calls, and crucially the relationship between nominal and real corporate revenue growth (and broad nominal vs real growth). When that gap starts to compress because pricing power is breaking I’d worry. We’re not there.

Channel 2: Forward path repriced much more hawkish, dollar bids aggressively, and drags equities

This is the channel with the shortest fuse and the one I’m watching most actively. It’s also the channel that’s done the most work over the last few weeks/month, but critically, not enough to flip the regime.

A hot inflation print forces the curve to reprice the terminal rate higher. Short-end yields back up. The SOFR strip pushes the cutting cycle further out or fewer cuts overall. Real yields back up because the nominal repricing outpaces the breakeven move. The dollar bids on rate differentials, and a stronger dollar tightens global financial conditions, hurts emerging markets, drags multinational earnings through translation, and increases the discount rate on equity duration.

But people forget that these forward inflation prints are already priced, we’d need to see significant surprises to the upside to reprice this forward curve (probably a 20-30bp range higher).

Now the setup above doesn’t neccesarily look great for equities, but we’re just off ATHs as the forward curve sits here, meaning if we reprice the forward curve, it’ll be an assymetric move.

For the dollar channel to actually drag equities, you need to see the equity-dollar correlation flip from neutral or weakly negative to strongly negative. You need DXY going up while SPY is going down, and you need that to be persistent across multiple sessions rather than coincident on one print. Rolling beta of SPY returns to DXY returns is the cleanest measurement of this, and right now it’s wobbling around neutral, occasionally negative on specific days but not regime-shifted.

The other thing to monitor here is the SOFR strip shape itself. If the market is pricing fewer cuts but the terminal rate is stable, that’s a delayed-easing story instead of a hawkish shock. If the terminal rate itself starts pushing meaningfully higher and the strip steepens at the long end, that’s a hawkish regime shift and that’s when the dollar bids in a way that causes tailwinds.

There’s a second-order point here worth making, which is that not all dollar strength is equal in its equity impact. Dollar strength driven by US economic outperformance is generally equity-positive (the risk-on dollar). Dollar strength driven by hawkish Fed repricing is equity-negative (the rate-differential dollar). The same DXY number can be either, depending on what’s actually driving it, which si why attribution analysis is SO important.

The way to disambiguate is to look at whether front-end US yields are leading the dollar move (rate-differential, bearish) or whether US growth surprises are leading it (outperformance, neutral to bullish). Right now, it’s been more outperformance than rate-differential, which is why the dollar bid has not yet started doing equity damage.

What I’m monitoring is where the terminal rate implied by SOFR strip sits, real 2y yields, rolling 30-day beta of SPY to DXY, and the decomposition of dollar strength into rate-differential versus growth-differential components.

Channel 3: Credit spreads start widening as inflation swaps hold these levels or push higher

This is the chart that carries the entire report. If I had to pick a single image to communicate why I’m still bullish (and why credit risk is so low), look at how credit spreads are still at cycle lows EVEN as breakevens hold a higher range.

Here’s why this matters so much. Credit is the cleanest read on whether the market thinks elevated inflation is a growth problem. When breakevens push higher and credit shrugs, the market is literally saying that inflation is a problem for bondholders who are getting their fixed coupons inflated away, but it is not a problem for corporate solvency. Corporates can pass through, refinancing windows are open and balance sheets are intact. Duration risk, not credit risk.

When breakevens push higher and credit also widens, that’s the regime change. That’s the market now saying that inflation is sticky enough that the Fed will have to engineer a slowdown to break it, and that slowdown will hit corporate cash flows, defaults will rise, and the spreads need to compensate for that. That’s when you get the genuine equity drawdown because the credit signal precedes the equity signal almost every time. Credit ALWAYS knows first.

Right now, HY and IG spreads are tight. The combination of firm breakevens and tight spreads is EVIDENTLY a duration story. It’s the cross-asset market telling you (with very high information content) that this inflation print is being absorbed by the curve, not by credit.

There’s a nuance worth flagging here. The credit signal works best when you look at the change in spreads relative to the change in breakevens. If breakevens are up 20bp and HY is up 5bp, that’s a duration story. If breakevens are up 20bp and HY is up 50bp, then you can start saying it’s a credit story. The ratio matters more than the level because spreads can be tight in absolute terms but widening at the margin (and the margin is what flags the regime shift).

The other place to watch is the cross-currency credit signal. European IG and HY should be moving roughly in line with the US analogs. If you start seeing dispersion (US credit calm but European credit widening, or vice versa), that flags a region-specific issue rather than a systemic credit deterioration, and the equity read becomes more nuanced. Right now, the cross-Atlantic credit signal is broadly aligned and broadly calm.

Channel 4: Equities start underperforming on solid growth data, the negativity sensitivity flip

This is the most subtle of the four channels and the most regime-defining, but I’d actually say it’s also the hardest to see in real time because it requires you to watch the reaction function of equities to incoming data rather than just the data itself.

So in a goldilocks backdrop, strong growth data is bought. Why? Because strong growth implies strong earnings, the Fed is on a path that’s already priced, and the marginal new data point about growth is good news for the cash flows that equities are valuing. The equity beta to positive growth surprises is positive.

In an inflation fear backdrop, the reaction function inverts. Strong growth data is sold. Why? Because strong growth implies sticky inflation, which implies the Fed has more work to do, which implies higher rates for longer, which compresses the multiple faster than the cash flows can grow. Good news becomes bad news. Equity beta to positive growth surprises flips negative.

In this backdrop, you’d see strong growth data be broken in asset markets. For example, if we have strong NFP, the low of that day will struggle ot hold.

This flip is the cleanest regime-definition signal in the ENTIRE cross-asset toolkit because it is internal to the equity market itself. You don’t need to look at credit, you don’t need to look at the dollar, you don’t need to look at the curve. You just need to look at how SPY responds to NFP, to ISM, to retail sales, to CPI itself. If hot data lifts equities, it is a growth-positive regime. If hot data drags equities, the regime has flipped.

Right now, we’re broadly still in the growth-positive reaction function. The reactions have been noisy, individual prints have been mixed, but the pattern has not yet shifted to consistent “good news is bad news” trading. Until that pattern shifts, the regime is intact.

A caveat worth noting is that this signal works best when you separate growth surprises from inflation surprises. The reaction function to growth surprises tells you about the regime. The reaction function to inflation surprises is more mechanical (hot CPI almost always drags equities in the moment, regardless of regime, because it forces an immediate repricing). So the diagnostic is specifically about growth data (NFP, ISM, retail sales, GDP) rather than inflation data (CPI, PCE, PPI).

Vol regime confirmation: MOVE doing the work, VIX calm

A useful cross-asset diagnostic that doesn’t fit cleanly into the four boxes but supports the entire thesis: the MOVE-VIX divergence.

Rates vol is elevated because the rates market is genuinely uncertain about the forward path. Equity vol is contained because earnings are landing, growth is tracking, credit is tight, and the cross-asset stack is voting growth positive. When MOVE is doing all the work and VIX is calm, that’s the textbook signature of a duration repricing inside an intact growth regime.

Historically (sorry to be that guy again…), sustained equity drawdowns have been preceded by VIX climbing while MOVE was already elevated, the equity market joining the rates market in pricing risk. The reverse pattern (MOVE up and VIX calm) has typically been a buying setup once the rates volatility burns off.

What I’m monitoring is the MOVE-VIX ratio and its z-score, the term structure of both, and any signs of VIX backwardation that would suggest the equity market is starting to price genuine tail risk.

What I’d need to see to flip

I want to be explicit about the exit plan rather than just stacking bullish points. Here’s the framework for when I actually change my mind.

If HY OAS widens through recent ranges while breakevens stay bid or push higher, the duration vs credit thesis breaks and I’d cut risk meaningfully. This is the HIGHEST priority signal because credit always knows first (in my view).

If the SOFR strip prices in a materially higher terminal rate over a compressed timeline, and DXY breaks higher with the rolling SPY-DXY beta turning persistently negative, I’d cut risk. The combination matters: a higher dollar without an equity correlation flip is just dollar strength. A higher dollar with the correlation flipping negative is the rates channel actively doing damage.

If earnings revisions roll over broadly in a way that’s not explainable by sector idiosyncrasy, and forward EPS trajectory bends down rather than flatlines or drifts up, I’d cut risk. This is the slowest signal but the most definitive.

If equity beta to growth surprises flips negative, meaning hot growth data starts dragging equities rather than lifting them, I’d cut risk fast. This is the regime-flip signal and it tends to move quickly once it starts.

If MOVE-VIX dynamics shift to VIX leading MOVE higher, equity vol starting to price tail risk independent of rates vol, that’s the equity market joining the bears, and I’d respect that signal.

None of these are firing right now. Not one. The cross-asset tape is unambiguous on this point.

How I’m positioning

Bullish equities, with appropriate respect for the volatility the rates side is generating. I still believe in my DAX thesis, although this report is US-centric.

I’m not adding aggressively into strength here, because the rates side genuinely needs to sort itself out and a hot print can absolutely produce a 3-5% wobble that’s uncomfortable to sit through if you’re maxed out on equity beta. The chop is real and the rates vol is going to keep generating equity vol until the curve stabilizes.

I’m also not trimming, because the conditions that would justify trimming, the four boxes laid out above, are not ticked. Trimming on rates vol alone is fading the regime, and the regime says growth is fine.

The positioning that makes sense to me right now is to stay long equity beta, but lean into the parts of the market that benefit from the duration story rather than getting hurt by it. Quality over junk, where junk is most exposed to refinancing risk if rates stay elevated. Cash-generative businesses over long-duration growth. Sectors with pricing power over those with margin squeeze risk. And keep some dry powder for a deeper wobble that might come if condition 2 starts to fire harder.

The thing to avoid here is the same thing to avoid in every cycle, confusing a vol event with a regime change. Higher inflation prints generate volatility. Regime changes require credit, the dollar, equity sensitivity, and earnings to all rotate together. We have one of those rotating with any conviction, the rates channel, and even that one hasn’t broken through into equity-dragging dollar strength yet.

The regime is intact until proven otherwise, and right now nothing is proving otherwise.

Thanks

Alfie

In Part 1, I made the case that this is not a recession setup. The yield curve is bear steepening, GDPNow is at 3.52%, core inflation is not showing oil pass-through (yet), and the 10y nominal decomposition is being driven by LOWER real rates.

I also made the case that oil is the pivot. The bearish macro narrative is entirely downstream of the oil rally. And oil itself is sitting at an extended z-score, with a price / implied vol divergence that historically does not last, in a complex that has rotated from macro to dispersion. The base rates point toward normalisation.

That sets up the question for Part 2. If the macro setup is bullish and oil is the variable doing all the bearish work, what is the cleanest way to express the asymmetry?

Long DAX in my view.

Let me walk you through WHY.

DAX is in the most negative oil-sensitivity regime in nearly a decade

Roll a sensitivity analysis of DAX returns vs WTI over the last decade. The latest beta is highly NEGATIVE. This is one of the most negative readings in the entire sample.

Plain English: DAX is right now MORE sensitive to oil moves than it has been at almost any point in the last decade. That cuts both ways. It explains why DAX got hit hard on the rally to $100+. It also means that if oil normalises, DAX has the most coiled spring in the cross-section.

The FX channel: why DAX got hit harder than ES

The DAX underperformance vs ES on the oil rally was because the Eurozone is structurally a bigger net oil importer than the US, and the FX channel makes the impact larger.

Net importers like CNY, INR, JPY, KRW, EUR get hit on oil up. Net exporters like SAR, RUB, CAD, USD, NOK benefit. The US sits on the exporter side now, with 1.5 mb/d of net exports; Germany / EU sits on the importer side with 2.5 mb/d of net imports. That is a structural difference and it shows up in the relative move.

If you accept the view that ‘US equities need a pullback’, the flip side of that view is that DAX outperforms on the unwind. You do NOT need the US to sell off at all, you just need the energy / rates pressure to come out, and the DAX captures MORE of that benefit than ES does.

The asymmetry sits in DAX favour as the market normalises past the oil shock.

The ECB is the linkage

Last wee’s ECB meeting was a hawkish hold. Lagarde explicitly disclosed that a rate hike was discussed. Statement language got harder: ‘intensified’, ‘second-round effects’, ‘selling price expectations’ all moved up; ‘determined’ got softened to ‘committed’. The market read it as hike bias confirmation for June (once again, meaning it’s PRICED).

But here is the thing. The ECB forward curve is STILL pricing 3 hikes across 2026. That pricing is the artefact of the oil rally and the hawkish framing.

If oil normalises, that pricing HAS to come out (in my view, because nothing actually HAS to happen). The ECB does NOT want to be hiking into a supply-led inflation shock (transitory) with cracks already showing in growth. They are structurally more constrained than the Fed because they set one rate for 20 economies and the asymmetry of policy errors there is not easy: hike too hard and you risk fragmentation, BTP-Bund blowout, the whole 2010-2012 nightmare. They will absorb temporary inflation rather than destroy growth where they can.

The forward curve is the release valve. Lower oil unwinds the priced hikes. Unwinding the priced hikes lifts the DAX. Both legs are market-implied so it makes complete sense. The DAX rally is market-implied, the forward curve is market-implied. There is NO narrative judgement here, no PM saying ‘I think the ECB will not hike that much’. The market is telling you (through the price) that it expects growth to hold even with the current oil and rate prints.

DAX moves in lockstep with the German 2s10s

The DAX vs DE 2s10s relationship is one of the CLEANEST. April tariffs aside as an anomaly, the lockstep is clear. DAX has rallied as the German curve has steepened.

The long end has yet to fully reprice higher nominal GDP. If core CPI prints contained over the next prints, the long end reprices, 2s10s steepens further, and the DAX follows.

The unfinished business in the trade is the long-end repricing. Mild steepening is already underway; data confirmation is what completes it.

The 2022 analogue

Pull up DAX vs DE 2s10s through 2022 to 2024. Energy shock hits. 2s10s flattens meaningfully, repricing lower growth expectations. DAX sells off. Then the relationship inverts: 2s10s starts steepening on the repricing of long-term nominal GDP, and the DAX rallies all the way back to ATHs.

The current setup mirrors this. We have had the shock, the flatten, and now starting to see the steepening. If the ECB doesn’t deliver the priced hikes and core CPI stays contained, the analogue plays out AGGRESSIVELY. Particularly if both conditions are met.

Energy shock compresses growth expectations, growth expectations stabilise as the shock fades, long-end reprices, the asset class most exposed to the original shock outperforms on the unwind. DAX is the asset class to express that.

What could make me wrong

The honest version of ANY thesis includes the conditions for being wrong. Here are the ones that matter:

1. Core CPI transmission. If core CPI / Core PCE start showing meaningful pass-through from the oil rally, the inflation resurgence story has legs and the ECB is not bluffing. Watch the next two prints carefully. The whole thesis hinges on the energy shock NOT transmitting to stickier prices.

2. A genuine supply break. The base-rate argument on oil normalisation assumes the current rally is shock-driven. If we get a structural supply event, OPEC+ break, Strait of Hormuz, hard sanctions enforcement, then oil prices don’t mean-revert in the usual way.

3. Eurozone fragmentation. BTP-Bund spread is the fragmentation tell. If it widens meaningfully, the ECB hike pricing becomes self-defeating and the DAX does not get the release valve benefit because risk premia rebuild faster than rate expectations come out.

4. Hard data deterioration. I’m leaning hard on the US growth diffusion and GDPNow read. If the next NFP, claims, and retail sales prints break meaningfully softer in unison, the recession crowd gets a real data point (even though we’d stilll be far from a recession).

The setup right now is high conviction but not unconditional. The conditions are listed, watch them.

Putting it together

The thesis across both pieces is straightforward.

It is not a recession. The curve, the data, and the inflation read all point to expansion repricing higher nominal GDP. Recession views are wrong, mistimed (or both as I said previously).

Oil is the pivot. It is doing all the work on the bearish narrative, and it is sitting at extended levels with a price / implied vol divergence in a complex that has rotated to dispersion. The base rates point toward normalisation.

The DAX is the asymmetry. Beta to oil at the 1st percentile. ECB OIS still pricing 80bps of hikes that have to come out if oil normalises. The DE 2s10s lockstep with DAX is unfinished, with the long-end repricing yet to complete. The 2022 to 2024 analogue ran exactly this script and ended at all-time highs.

The trade is positioned for a release of pressure. If oil normalises and core CPI stays contained, the path of least resistance is rates expectations come out, the long end finishes repricing higher nominal GDP, and the DAX captures the massive follow-through.

Thanks

Alfie

The recession call is back, louder than it has been all year. This time it comes with Oil above $100, the ECB framing turning hawkish, the BoE still squeezing, and the usual talk about a slowdown into a global downturn.

I want to address this DIRECTLY because the data and the price action are NOT saying what the recession crowd thinks they are saying. If anything, they are saying the opposite in my view.

This is a two part series again!

Part 1 (this piece) lays out why the macro setup is NOT a recession. The curve, the US data, the inflation read, and the 10y decomposition all point the same way. Then I make the case that oil is the single variable doing the heavy lifting on the bearish narrative, and that the base rates and price action on oil are pointing toward normalisation, not extension.

Part 2 (next) takes that setup and turns it into a trade. Specifically, why the DAX is the cleanest expression of the asymmetry, why the ECB OIS curve is the release valve, and why the 2022 to 2024 analogue is the template.

I laid out multiple times over the last few weeks how the DAX has the most upside in my view, I’ve been holding my long positions and will continue to until the macro backdrop says otherwise.

Let’s start with the recession call itself.

The yield curve is bear steepening

The first thing you check in a recession scare is the curve because that usually picks are the backdrop first. Recessions come with bull flatteners and eventual bull steepeners as the front end gets ripped lower on cuts. That is the textbook sequence and it’s what every legitimate recession has looked like.

What is the US 2s10s doing right now? Bear steepening. So is the German curve. So is the UK curve. The long end is repricing HIGHER because the market is pricing higher inflation expectations and a re-acceleration in growth, while the short end stays anchored because central banks are not cutting.

This is the regime that prices HIGHER nominal GDP. It is not the regime that prices a recession. There is genuinely no historical precedent for a global synchronised bear steepener being the leading edge of a global recession. The two things do not happen at the same time.

If your view is that we are heading into a recession, your first job is to explain the curve. I have NOT seen a coherent answer.

US growth data is consistent with expansion

If the US is supposedly the source of this global recession, the data should be flagging it.

• GDPNow is tracking 3.52%

• Unemployment, NFP, jobless claims, retail sales: all consistent with expansion

• Manufacturing PMI back into expansion territory

Look at the rolling 24m z-score grid across unemployment, NFP, ADP, job openings, layoffs, jobless claims, continuing claims, industrial production, retail sales, services PMI, and manufacturing PMI. The recent prints are NOT flashing a recession. They are flashing an expansion regime with low confidence on acceleration vs deceleration, but expansion all the same.

If you hold the recession view, your view is either wrong, mistimed (or both). The job of a macro trader is to connect the data to the asset markets. The data and the asset markets are telling you the same story right now.

Headline inflation is priced, so core is what matters

Yes, headline CPI is going to tick higher because of the oil move. Yes, that is going to generate headlines. No, it should NOT move markets, because the market has already discounted it.

Markets price the unknowns. Being shocked that headline CPI ticks higher because oil rallied is like being shocked the Fed cut when the forward curve had a 100% chance priced in. The information value is zero.

The variable that matters is core. The transmission from oil into stickier core CPI and Core PCE is the only thing that would change the macro regime. So far, on the data we have, that transmission is not showing up. Core PCE has been printing in the 2.65% to 2.81% range, with the latest tick at 2.60. Avg hourly earnings are running 3.65% with a 24m z-score that is not flashing pressure.

The headline number is going to be noisy, so the core number is the one to watch, and right now it is not validating the inflation resurgence call. It definitely could, I’m not discounting that.

The 10y nominal decomposition: it is real rates doing the work

Decompose the US 10y move and the dominant driver is real rates. Real / nominal correlation is sitting at 0.85. Inflation expectations and breakevens are showing materially LESS movement than the real rate component.

This matters because it tells you what the market is actually repricing. It’s inflation expectations, real growth expectations and term premium. The market is repricing real growth higher and demanding more compensation for duration risk. It’s not panicking about runaway inflation and it’s certainly not pricing a growth scare.

Oil is the pivot

Every bearish macro narrative right now traces back to oil. Higher oil drives higher headline CPI, which drives the hawkish ECB framing, which drives the rates repricing, which drives the equity drawdown in energy exposed names.

So let’s look at oil on its own terms.

Global risk is rallying through the shock

Before getting into the oil setup itself, look at what risk assets are doing. NDX, SPX, RTY are MASSIVELY outperforming on a 20-day vol-adjusted basis. Strong bids across global equities, even with BoE and ECB hikes priced in and oil above $100 (so the market is rallying in the face of hikes priced, says it all).

The market is fading the stagflation narrative in real time. Stagflation does not produce +3σ rallies in global equity indices. The release valve is set, imagine the upside IF hikes start getting priced out and oil normalises.

The base rate for normalisation is overwhelming

20-day z-score on Oil is currently moving out of an extreme again. The pattern of the last several years is unambiguous: every prior excursion above +3σ has mean-reverted violently.

I am NOT making a directional call that oil collapses tomorrow. But what I’m saying is that positions in oil at extended z-scores have a poor expected return on the long side and a strong expected return on the short side, on a multi-week horizon, and I definitely WOULDN’T bet against that.

The price / implied vol divergence is the tell

This is the more interesting setup. Look at WTI price vs OVX over the last few weeks. Price is sitting at the highs of the move while OVX has compressed meaningfully off the spike. That is skew flipping and realised vol starting to come in even as the headline price stays bid.

Historically (sorry I don’t wanna be the guy that says that but…), this divergence does not last. The way it resolves (almost without exception across both supply-led and demand-led shocks) is the price comes down to meet the vol rather than the other way round.

This is the kind of setup where you want to be paying attention because the unwinds tend to be sharp and they tend to mark the regime change (which is already underway in my view, just look at equities).

The commodity complex has rotated from macro to dispersion

60-day CS correlation & momentum tells the same story. The commodity complex moved as one block during the macro phase when the oil shock was driving everything. We are now in a dispersion phase.

Correlation:

Momentum:

Dispersion regime is NOT what you see when a macro shock is in front of you, with more to come. Dispersion regime is what you see when a macro shock has run its course and the cross-section is starting to trade on its own fundamentals again.

If the oil shock had legs the complex would still be moving as one (macro driven).

Where this leaves us

The data is NOT on the side of the recession call. The curve is bear steepening, GDPNow is at 3.52%, the 10y is repricing real rates and nominal growth, and core inflation is not showing energy pass-through.

Oil is doing ALL the work on the bearish narrative. And oil is sitting at an extended z-score, with a price / implied vol divergence that historically does not last, in a complex that has rotated from macro to dispersion.

The setup is ready. The question is HOW to express it.

In Part 2, I make the case that the DAX is the cleanest expression of this asymmetry. ECB OIS still pricing 80bps of hikes that have to come out if oil normalises. A 2022 to 2024 analogue that ran exactly this script and ended at all-time highs.

That is the trade. See you in Part 2.

Thanks

Alfie

So Powell signed out, Warsh is signing in and oil is trading above $100 again.

Now Warsh signing in is not a nothing event. So the question everyone asking is wrong… "is Warsh hawkish/dovish", the question should be "are Warsh’s theories accurately priced?". The market has had months to price this transition, anyone acting like this is a fresh catalyst is operating off misinformation.

Before we get into this report, I highly recommend you read these reports below as we have moved directly in lockstep with those views and it relates to this idea that I’m laying out today:

Straight into it, the MOST important thing I’m watching right now is how cross-asset pricing of stagflation has shifted into a reflation style pricing. Now for everyone who is saying, “well oil above $100, hikes priced so equities will probably crash” are forgetting how markets work. Crashes are caused by an asset-liability mismatch that is almost ALWAYS not priced. We’re literally not seeing that, GDP nowcasts across the board are showing how strong growth is despite this energy tail-risk, but not only that, European equity markets have already priced the ECB forward curve.

Now for equity markets to move LOWER (particularly European), there needs to be a FURTHER extreme priced (I’ve spoken about this a bunch of times in previous reports how markets price things VERY fast, they also price extremes). So now we need a tail-wind to FURTHER push European equities lower, which I don’t see as my base case.

Let's say the ECB across the next month double down and basically say they're going to hike 3 times, the markets have already priced that so the markets will just trade the growth data because they want to see if this energy shock has transmitted into any reasonable slowdown.

This is the setup that is causing tail risk to European equities (fully priced in).

And this is how the DAX has responded to that, 6% off ATHs:

Ok so where do I see value? Well there's no doubt that if things don't materialise anywhere in the ECB forward curve (highly unlikely in my view, I don't even think 75bp of hikes will be realised let alone more). I also think that when it comes to this type of shock, growth matters more than anything. So people will get caught up in watching inflation (very important of course), but if that inflation doesn't feed into lower growth then markets can brush it off until inflation is high enough for long enough that it negatively drags growth, then equities will melt down.

But the simple fact is that coming to the market assuming mispricing ALL the time is operating from a place of superiority, which we don't have in markets honestly. Like if you are to assume that your thesis is correct and the market is always mispricing something, then you may get caught offside a lot (I used to struggle with this issue). So instead what I tend to do is have a thesis, look at market pricing and then look at the gap between the two and see if there's actually value to extract between the two, or is my thesis/timing completely off? (you could say both).

I’m also not saying that the market can’t misprice stuff or at least price things that are unrealistic (it can, and does a lot) but to assume that it’s always mispricing a completely different regime all the time is not the way to start.

I like monitoring the risk curve when I hear things surrounding growth crash, recession etc. Do we think that there is some imminent recession or growth crash when the Russell is outperforming ES like this? No. Indices like Russell feel the hit first and by the way, markets price things BEFORE we get data because everyone is ALWAYS nowcasting things. So unless everyone is nowcasting things completely wrong and there is some extreme tail risk we don't know about that isn't priced, it's HIGHLY unlikely we're going to see some type of imminent growth crash or recession, it'd be at least beginning to be priced in my view.

My view is that holding risk being long DAX here makes more sense than being exposed to US equities, I think if the ECB come out today and double down on 75bp, yes it may cause a shakeout but it’s heavily priced, hedges unwind around catalysts and it’s unlikely to push a market down massively considering it’s priced. Remember, energy shocks are almost always seen as transitory if it’s supply led.

Look at every supply-led oil shock in the last 30 years that wasn’t accompanied by a demand collapse, 1990 Gulf, 2011 Libya, even the initial 2022 Russia spike, the equity drawdowns were SHARP but short, 2-3 months max, and then markets re-rated higher once it became clear demand wasn’t breaking. The shocks that actually killed equities (2008, 2020) were demand-led or had a demand-collapse component. So the question I’m asking myself constantly is, is there ANY evidence demand is breaking? PMIs, payrolls, retail sales, credit card spend, none of it is rolling over. Until that changes, this is a supply story and supply stories get faded.

There’s very much the same setup in the UK and it wouldn’t be a silly idea in my view to be exposed either directly to SONIA to trade an unwind in the forwrad curve, or FTSE futures. I just think European equities are a better expression.

There's obviously a tail risk to this. If growth data across the next month meaningfully trades lower (whether that's from energy or not doesn't matter) then I'd expect DAX to start moving lower. If oil trades ABOVE $100 for the next 2 weeks I'll also start getting a little concerned about the timing of my longs because of the Eurozone's energy dependence.

And the reason I'm picking DAX over CAC or Eurostoxx is because the DAX is the most cyclically geared of the European majors, heavy industrials, autos, chemicals, so if the growth data holds up like the nowcasts suggest, DAX gets the biggest beta to that. CAC is more luxury/defensive weighted and FTSE is basically an energy/miners proxy at this point so it trades its own thing. if my thesis is "ECB hawkishness is priced and growth is fine", DAX is the cleanest expression of that, you want the index that's been punished the most on the growth fear and has the most operating leverage if growth data comes in fine.

So to put numbers on it, my line in the sand on DAX is the recent swing low (23,486), if we break that on growth data deterioration (not on an ECB headline, those get bought back) then I'm out and reassessing. On oil, sustained above $100 for 2-3 weeks is my warning, sustained above $110 and I'm cutting regardless of what equities are doing because at that point the Eurozone energy dependence math stops working. Thesis is thesis, but you have to know where you're wrong before you put the trade on otherwise you're just hoping.

Thanks

Alfie

If you haven’t already, check out the recent report and video breakdown from Part 1.

Report:

Video:

Let’s get into Part 2…

The FX Picture

The dollar is the key variable for everything else right now and could be particularly important in 12 months given the implications of a weak currency on the equity market (depending on the extreme of weakness we see in the dollar). I always start with the rates dynamic, but ultimately if structural weakness hits the dollar in the next 12 months (likely) then people will start question, how much of a dollar weakness will equities be able to sustain before a bunch of cross-border selling happens.

I’ve tried simplifying this breakdown, but I’d say if you don’t get it just throw it into AI and ask for help. Focus on the bottom part of this flow chart, that reflexive loop can lead to a type of capitulation in equities. But I’m not trying to fearmonger, it’s just a scenario if we get this structural weakness in 12-18 months time.

So there are different factors driving the dollar in the short run vs the medium run because they point in completely different directions. In the short run, the flows have been driven DIRECTLY by the Iran conflcit which pushed real rates higher and finaly made the USD a safe haven again (which we didn’t see in April). So it’s is a geopolitically driven dollar bid that has LESS to do with the fundamental story.

The medium-term picture is structurally dollar negative. The fundamental logic for continued dollar weakness is: if the Fed is going to cut while other central banks are on hold, the forward rate differential creates outsized downside. There is also MASSIVE fiscal pressures on the dollar as it makes sense to structurally weaken it if Trump is going to be successful at reshoring manufacturing and actually competing with China.

A Fed willing to fight inflation aggressively means that they DIRECTLY keeps real rates high and therefore gives a stronger dollar (which is also a tail-risk to equities eventually), and attracts global capital into dollar-denominated assets and we’ve seen just how sensitive dollar flows are to real rates over the last few weeks. But a Fed that is hopeful about inflation staying above target for longer is a Fed that allows real rates to drift LOWER and adds a bunch of liqudiity to markets, which reduces the carry incentive to hold dollars.

The rolling correlation between real rates and the dollar have been extremely high. It is so important to not just focus on direction of a given asset, you want to see how changes in correlations happen in DIRECT correlation ot the implied volatility of the asset. Don’t let that confuse you either, I am for sure the first one that wants to dumb down ideas. Literally run a rolling correlation and regression model, then watch how changes occur as the imlied vol of the asset moves.

In the most recent video breakdown I spoke about the fact that real rates are the most imortant source of liqudiity because they affect it directly day to day. So when people think about things like QE, yes it’s important, but they only come about in particular macro regimes. I’d rather focus on a liqudiity source that is pulling and pushing liqudiity in and out of the system by the day.

The whole FX market is predominantly just differentials (infl swaps, real rates, growth etc) and the dollar’s strongest fuel is yieldd, but when US yields decline relative to Europe, the UK, or Japan, the dollar forfeits a portion of its carry benefit. That is EXACTLY what the looking through inflation posture delivers.

The euro has been and probably will be the biggest beneficiary because European growth has surprised to the upside and the ECB is no longer in a position where it needs to be dramatically more dovish than the Fed (particularly as they are net importers of oil and would likely need to keep their forward path more hawkish than the Fed).

Equities as a Function of Rates and FX

This was the visual I used in the most recent report, which explains why equities are a function of rates and FX, which is why you can’t run regressions the same. For example, you can ask “what % of movements in rates has accounted for returns in equities”, but you can’t ask “what % movement in equities has accounted for returns in rates” because that doesn’t make sense. Rates don’t move on equities, equities moves on rates and FX.

Equities are a rates and FX story with a fundamental overlay that mostly just determines who wins within the asset class rather than the level of the market itself.

The discount rate is rates. The earnings power of US multinationals is FX. Once you understand those two inputs, you have 80% of the equities story. When the Fed looks through inflation and real rates drift lower, the discount rate falls, which is DIRECTLY positive for valuations. That is the immediate bullish read that equity markets want to run with, BUT it is incomplete analysis because you then need to think about what the FX channel does to earnings and what the dollar’s trajectory means for the composition of returns.

The market level analysis is fairly simple with lower real rates, higher multiples, all else equal. The complication is that all else is NEVER equal. The reason the Fed is looking through inflation is that there is an inflationary shock that is partly supply-driven and partly tariff-driven. That same supply shock that is pushing prices up is also compressing margins for a lot of US corporates, particularly those with significant goods exposure and domestic cost bases that are rising.

So you can have a higher multiple from lower rates and simultaneously have a lower earnings number from the margin compression, and the net effect on price is not obvious.

The FX channel into earnings is the part that most people understand in the abstract but don’t fully work through the math on. The S&P makes roughly 40% of its revenues from outside the US. When the dollar weakens, those non-dollar revenues translate into MORE dollars, which is a direct EPS tailwind. That is the straightforward version of the story, and it is why broad dollar weakness has historically been associated with S&P 500 outperformance. But there is a subtler point which is, a weak dollar also makes US exports more competitive, which benefits certain industrial and tech companies that have meaningful global market share.

The contributons to retruns in the S&P will likely shift meaningfully as we move through the next couple months.

The Sectors That Win in This Liquidity Regime

The liquidity unlocking from a Fed that is NOT hiking is most directly felt in the sectors and asset classes that are most sensitive to the cost of capital. Let’s go through them properly.

Commodities and real assets are the most DIRECT beneficiary of inflation being tolerated above target. If the market believes the Fed is not going to crush inflation, then real assets that act as inflation hedges see structural inflows and you’d probably see XLRE massively outperform (I don’t have an egde on the bottom-up in real estate, but top down would look great).

Real estate is a DIRECT beneficiary because it’s the most explicitly interest rate sensitive sector in the equity market. Mortgage rates follow the 10y more than the Fed funds rate but the signal effect from a more dovish Fed/forward curve does filter through to lower longer-term rates at the margin which improves affordability and cap rates simultaneously.

Small caps are the most interest rate sensitive equity category because they have more floating rate debt relative to large caps and LESS access to the investment grade bond market. When the Fed/forward curve pivots from hawkish to looking through inflation with an eventual cut bias, the cost of capital for small caps falls more than it does for large caps. The Russell has historically outperformed in the 6 to 12 months following the last hike in a cycle. The caveat is that small caps also have MORE domestic revenue concentration, which means they benefit LESS from dollar weakness but are also hurt LESS by dollar strength than multinationals.

Tech (specifically the non-profitable and duration-sensitive end of the spectrum) is the sector that benefits most from lower real rates. Long-duration assets are the MOST leveraged to the discount rate. When real rates fall, the present value of earnings that are 5 or 10 years in the future rises disproportionately. That is exactly why the most speculative parts of the Nasdaq went up so much when rates were at zero and fell so hard when rates rose. The current view I have of real rates drifting lower as the Fed tolerates above target inflation is a positive setup for tech and you’d be best exposed to single names than the sector ETF in my view because some of these moves will be outsized.

I want to just make it clear that by no means am I the guy for EM, I have little edge there as I don’t have many models running on it nor do I spend much time on research there. But emerging markets are the big beneficiary of the dollar weakness that comes alongside this regime.

Portfolio flows into EM equity ETFs are almost ALWAYS associated with a weaker dollar. EM countries and companies often have dollar-denominated debt, so dollar weakness reduces the real burden of that debt. At the same time, EM central banks have more room to cut when the Fed is on hold or cutting because they do not need to maintain rate differentials to defend their currencies. Lower rates in EM, lower debt burdens, a weak dollar supporting commodity prices, and a risk-on environment from easy US financial conditions is a perfect setup for EM.

What’s interesting about EM is that their currency and equity market can often rally together because both are driven by the same thing (dollar weakness attracts capital inflows that simultaneously bid up local assets and local currencies).

I’ve inverted the scale here below, but the Brazilian real has been rallying with their domestic equity market:

The Downside

Now here is where this ALL goes wrong. The most dangerous scenario is the one where the Fed’s tolerance of above-target inflation is read by the market as a structural shift in the reaction function (policy error).

Right now, long-end inflation swaps are still anchored around 2% which suggests the market believes the Fed’s long-run commitment. But that anchoring is a belief, and beliefs can change quickly when data changes. If business-level inflation expectation starts to become entrenched, you get second-round effects that make the energy shock look LESS transitory than the Fed is modeling.

The second downside is what happens if the labour market breaks more than the Fed expects. The Fed is looking through inflation partly because they believe the labour market is just cooling rather dramatically cracking. Just look at how volatile jobs growth has been:

The Fed’s March statement pointed to reduced hiring rather than widespread layoffs as the dominant dynamic. If that characterisation is wrong and you get a genuine labour market deterioration, the Fed faces a stagflationary dilemma where cutting would add fuel to the inflation problem but not cutting would accelerate the labour market decline (1970s type analogue), but I really don’t believe we’re heading there. You can see how there has been a little more emphasis on the jobs data:

The third downside is positioning. If the consensus trade is long risk, long EM, short dollar, short rates vol, and that positioning is crowded, then any shock that forces a reversal of those positions becomes amplified beyond what the fundamental catalyst would usually warrant.

The backdrop of record high markets combined with rising underlying implied volatility has created a distorted risk profile where catalysts are likely to trigger larger than normal market movements. The size of the reversal from a crowded consensus unwind can be severe particularly if carry trades start to unwind.

Why Sustained Dollar Weakness Can Actually Hurt Equities

Firstly I’d say refer back to the first flow chart in this report. This is the part that most people miss and it is worth really thinking through carefully because cross-border flows matter so much.

There is a version of dollar weakness that is good for equities (which is why we often see inverse correlations between equities and the dollar). That is the version where the dollar weakens because global growth is accelerating, the rest of the world is growing faster than the US, and capital is rotating into higher return opportunities abroad. It’s basically the dollar decline that comes alongside a global risk-on environment. Multinationals get the earnings tailwind from translation, and EM gets the capital inflow and everyone wins.

The equity-negative version is where the dollar weakens because of concerns about US fiscal credibility, because foreign holders of US assets are reducing their exposure, or because the Fed’s willingness to let inflation run above target is eroding confidence in dollar-denominated assets as a store of value (this is the likely trigger in this scenario). In this version, you get a situation similar to 2022 in reverse, where a falling dollar is associated with falling US equity prices because both are symptoms of the same loss of confidence in US financial assets. There’s been much more positive stock-currency correlation across the last 5 years than there were in the previous 5 before that.

It’s not always obvious in real time which version of stock-currency correlation you are in (fiscal credibility or Fed behind the curve) but this is why it’s SO important to run rolling regressions and attributions so that you can see where flows of capital are going. The signal to watch is the relationship between stocks, bonds and the dollar rather than in pairs.

In the less worrying version, all three can do reasonably well because the driver is global growth optimism. In the toxic version, bonds sell off, the dollar sells off, and equities sell off together because the driver is a loss of confidence in US assets broadly. A significant widening of swap spreads (which is just where Treasuries trade higher in yield relative to SOFR rates) and sustained steepening of the 2s10s would be signals that the selling of bonds is becoming an issue beyond normal cyclical dynamics.

The more practical channel through which sustained dollar weakness hurts equities is through imported inflation. If the dollar fallsaggressively on a trade-weighted basis, it adds somewhere between 50 and 100bp (historical avg) to domestic inflation through import prices over a 12 to 18 month lag. For a Fed that is already tolerating above target inflation, that is a MASSIVE problem because it extends the period during which they cannot cut even if growth is slowing. You end up with a tighter for longer outcome by the back door even though the Fed never explicitly tightened. That slower growth, higher inflation, constrained Fed combination is NOT the environment that justifies the multiple expansion that equity bulls are counting on.

The bottom line across all of this is that the regime of the Fed tolerating above target inflation is fundamentally a bet that the transitory story is correct and that the second-round effects do not materialise. If that bet pays off, you get lower real rates, a softer dollar, higher risk asset valuations, strong EM performance, and a steeper curve that reflects growth optimism rather than credibility concerns.

If it DOESN’T pay off, you are in the scenario where the central bank falls behind the curve, loses credibility, faces a dollar that is falling for the wrong reasons, and an equity market that eventually reprices to reflect the reality that easy financial conditions were built on a foundation that turned out not to hold.

Thanks

Alfie

Hey everyone!

Below is the full video breakdown of my most recent report.

Report:

Video:

Thanks

Alfie