Axis Tactics 4th April, 2025 - Roadmap for Global Equities and FX, post-Tariff Tantrum

Interim Comment further to Today's Market Falls across Metals, S&P 500 Index and Nasdaq 100, and the USD vs Majors

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Review of Financial Markets since our last commentary on 10th March…

Last month, we expected a few simple things to come to pass:-

1. A potential trading bounce between 10th March and Tariff Tantrum Day, overwhelmingly likely to be a dead-cat bounce unless data-driven to the contrary.

2. Continued High Volatility

3. Expectation of Further Equity Market Downside (after dead-cat bounce)

So far, all 3 have come to pass and Investors that acted in accordance with these recommendations have either :-

(i) Banked and Taken considerable profits, or

(ii) Entirely avoided Any and All downside, up to this point.

It is peculiar that Investors have had so much time to prepare for this. Usually such corrections are a surprise. This one was telegraphed, sign-posted and clamoured about, well in advance, on every medium imaginable. Stretched Valuations, Index Concentration, Fad Investments, Ubiquitous Mindsets - there were plenty of red flags waving before this week.

We surmise that this is why the VIX rose from ~18 to only ~30. Whilst we are pleased that our Volatility Trading Programme capitalised on this (>60% Unleveraged Return) , we had expected a move to nearer ~40 on the VIX before even considering an early night.

Why does this matter? Because it highlights the risk of Equities falling much further (and the VIX spiking much higher) as being material rather than a distant tail risk - a plausible scenario that needs to be considered and managed. There may well be a few more stings in the tail before these markets stabilise.

As far back as our Newsletter of 12th November, 2024 (‘Axis Tactics 12th November, 2024 - A comment on US Equities and Global Bonds’), We were unashamedly tactless in our views of traditional bankers and traditional money managers, that simply throw a few Index trackers together from their prime office locations (you’re paying for that…btw). Instead we prefer a far more precise and targeted investment approach that puts the relevance and management of risk at the centre.

We cautioned then that ‘Indexing is not Winning’. This has clearly been shown to be the case.

More data points to come. Today’s US Non-Farm Payrolls and any/all comments from Jerome Powell might add some new dimensions to the current situation

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Trade Recommendations & Investment Strategy for G7 Equities & Indices (US, EU, UK, Asia), USD Major FX Crosses & Index Volatility