With structural market changes, intensifying geopolitical frictions, rising economic cycle fragility, and the timeline for major macro and policy catalysts all converging, the surface area of risk will continue to expand in the 2nd half of 2025. We will review what happened in the 1st half of 2025, detail our expectations around the immediate future, and assess the near term asymmetry in inflation.

Q2 2025 was a great quarter for the long short long boat. Let us discuss.

What is Money?

It sounds like a simple question with a simple answer.

In the spirit of The Matrix:

"You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes."

We will distill the underlying fundamental trends from the cauldron of distortions currently impacting the reported economic data. From there, we will detail the expected macroeconomic weather patterns in Q2 and discuss the interplay between monetary, fiscal, and trade policy and its likely magnitude of impact in the 2nd half of 2025.

BTC is best understood as a new type of open-source, peer-to-peer electronic cash system. Unlike conventional currencies that rely on trust in central banks and financial institutions, BTC operates in a completely decentralized manner, with no central server or trusted third parties.

The top down and longer term positive attributes that we see include:

• Demographic Shifts and Wealth Transfer

• Labor Market Changes

• Corporate Efficiency and Profitability

Thousands of years of military history show that robust armament spending is fundamentally linked to preventing conflict. It builds the military strength necessary for effective deterrence, discouraging potential aggressors who calculate that the costs and risks of challenging a well-armed and resolute nation are too high. Weakness or insufficient investment in defense, conversely, makes conflict more likely by lowering the perceived barriers to aggression.

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

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

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

The Annual Death Rate Among People Who Know That Statistic is One in Six.

The Drakkar: Our Multi Asset Class Long Short Longship

Global Macroeconomic Summer is on the Horizon

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

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

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

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

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

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

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