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Just two weeks left of the last FOMC meeting of 2025, and the market has flippped the odds of a cut once again. And the round trip has happened within November. With no data on inflation and unemployment to make informed decisions, investors feared the Fed was not going to venture into additional cuts with the risk of increasing inflation. Then a 150 years study on tariffs effect on inflation by the San Francisco Fed popped up, providing some tehnical background supportive of

Bitcoin has been the poster child of every risk on strategy. Over the last 15 years, it has been the most profitable asset by far, except in 2014, 2018 and 2022, when it’s been the worst. Although it doesn’t have a long history, it looks like it shows cycles of 4 years with big swings up and down. And perhaps investors have detected that seasonality and have decided to arbitrage that. Over the last month and a half, Bitcoin has fallen more than 30%, questioning once again its

It looks like investors are debating wether the risk on trade should continue to roll. Over the last few years, the “buy the dip” strategy has worked very well, and passive strategies have had no competition vs traditional active ones, since you needed to have perfect timing to avoid the drawdowns and reinvest the money. “Time in” has beaten “timing”. Now look at the chart below: Thursday’s put volume was the 4th biggest ever in th CBOE, which if we take it as contrarian indi

Japan’s Cabinet, under Prime Minister Sanae Takaichi, approved yesterday a comprehensive economic stimulus package valued at ¥21.3 trillion ($135 billion). This marks the largest such initiative since the COVID-19 pandemic and represents Prime Minister Takaichi’s first major policy move since taking office in October 2025. The package aims to counteract a recent economic contraction (Japan’s GDP shrank by 1.8% annualized in the July-September quarter) and wants to address per

About 70% of all the trading in the US stock markets is done by algorithms. For F/X and derivatives it goes up to 80%. One of the most widely used trading strategy is known as VWAP (Volume Weighted Average Price), which basically looks at periods during a trading day with high volume, and tries to execute large block orders at that time to benefit from the liquidity. If 30% of the trading volume occurs in the first 2 hours, the machine will try to execute 30% of its order dur

NVDA results were published yesterday. Since it is the poster child of AI, and has become the backbone of the market and quite frankly, the economy, its financial health, has a huge impact on almost everything. In terms of revenues, the results are impressive. Revenues were up 62% YoY with a net income increase of 109%. That’s the impressive part. The worrisome part is the surging inventory ↑96% and the increase of +45% on accounts receivables, which implies declining Cash

For 30 years if not more, global investors have benefited from the Yen Carry Trade (YCT). The operation is simple: you borrow at very low rates in Yen, to invest in high yield or high return assets elsewhere, mainly in the US. If the Yen stays stable or weakens, you make a killing. But rates in Japan have started to go up, because for the first time in 30 years, and after spending a fortune in monetary stimuli, Japan has a little bit of inflation. As a consequence short rate

Federal Reserve Governor Christopher Waller addressed the Society of Professional Economists in London yesterday, emphasizing the use of economic theory and data to assess the U.S. economy amid a 43-day government shutdown that delayed official statistics. The title of the speech was “the case for continuing rate cuts”. His main points were: (1) weakening labor market, attributed to weak labor demand, (2) inflation under control, with tariffs causing one-off increases, but wi

The third-quarter 2025 earnings season for S&P 500 companies has been robust, with strong beats on earnings and revenue expectations despite some sector variability. As of mid-November 2025, 91% of the companies in the index have reported, here are some numbers: (1) 82% of reporting companies have beaten EPS estimates, surpassing the 5-year average of 78%. The aggregate earnings surprise stands at +7.0%. (2) Blended Revenue growth was 8.3%, the highest since Q3 2022, exceedin

The credit market continues to offer some warning signs, and unless things change, we might be close to a turning point. The chart below shows the avegare price of bonds that have split rating by agency, in the riskier frontiers of the credit spectrum. You can see that for BBB/BB and BB/B, there is still some stability, after the liberation day shock. But the B/CCC price difference has sinked below the April lows, which is an indication that investors are demanding more yield

The Fed has started to understand they might need to lower interest rates irrespective of their views on the economy. So they have started to document their epiphany. In the chart below, you can see a study by the Federal Reserve of San Francisco, where the review 150 years of tariff data an conclude that tariffs are in fact deflationary, and they end up increasing unemployment. The top part of the chart refers to the period where tariffs are enacted, and the bottom part show

Private funds are a hot topic today. After the episode of First Brands and the “cockroaches” comment from Jamie Dimon, they are being subject of an increasing scrutiny. At the center of that scrutiny is their valuation policies. How do you value a private asset that by definition is not subject to market forces? It besomes an art, particularly in times of stress. The chart below is a good example of how subjective valuations can be, and the dangers associated with private ass

With the government shutdown, the US has not had an official source of goods pricing for the economy. Private sector measures and other indicators have been used in their absence and all of them seem to indicate that inflation is starting to show up on the numbers again. As you can see in the chart below, more than half of the goods in the CPI basket have experienced a price increase of at least 3%, while the Fed’s official target continues to be 2%. This is due to tariffs a

New all time high for the Dow Jones Industrial Average, the least tech heavy index of the three majors (18%). The Nasdaq 100, with almost half of its components in the the sector, is still hustling to regain its peak from 2 weeks ago. Is there any value left to support the push for new highs? It’s getting more difficult to answer yes to that question, both in absolute and relative terms: on one hand, earnings continue to come strong, although their quality has decreased sign

Bond investors are starting to see the actual cost of building the AI infrastructure in the U.S. in the chart below, you can see the 5 year Credit Default Swaps (CDS) for the Banking sector and the Tech sector. Despite the fact that banks are going through a tough period, with low liquidity levels in the short term market, the perception of risk by bond investors is mostly muted. For the tech sector, however, the fact that organic cash flow can only satisfy half (if at all) o

We start the week with the good news about the reopening of the U.S. government, which has been closed for a record 40 days. But there is a full laundry list of items that are problematic for the Trump administration. Among them: The SCOTUS decision on tariffs, which doesn’t look good at this point, inflation and high short rates, which are squeezing the middle class, and housing affordability. In the chart below you can see two charts that would indicate the American dream i

The current market concentration phenomenon has been discussed extensively. Concentration at company level, with the mag 7 wonder, at sector level, with the AI related companies responsible of 75% of the S&P500 gains since the introduction of chatGPT on November 2022, and concentration at country level, where the U.S. dominance has been exceptional over the last 15 years. These companies have created an unprecedented level of dependency for the world. To the point that the wo

Central banks are combining different levers to manage the current economic environment. On one hand, they are cutting rates at an unprecedented rate for a non recessionary period. On the other, they have been reducing their balance sheets (mostly G7), which suffered a staggering expansion during the pandemic. In the chart below, you can see the Fed’s balance sheet and how it went from 35% of GDP to the current 22%. As a consequence of that, liquidity might’ve been running a

It looks like the art of the deal is becoming challenging these days. After a victory lap last week where President Trump announced a set of agreements on the White House website regarding a potential sealed agreement between him and President Xi, information is coming out that challenges if in fact the deal is seen the same way by both parties and, more importantly, if they’re going to honor it. China is imposing conditions to a president that doesn’t want to be told what to

As of today, the government shutdown we are currently suffering has been the longest in modern history. 37 days and counting, where thousands of government employees are furloughed, until Congress authorize the treasury to fund it and reopen it. As you can see in the last column on the right, in the table below, the market seems to be numb to the fact that we don’t have a functioning government, which begs the question of the need to have a big government. Perhaps also the ma