Happy Friday! 

Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro. These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you. 

While the macro landscape can be complex, we believe it doesn’t have to be intimidating. In this recurring series, we break down the key takeaways from the week ending, explain what we’ve told hedge funds, and outline how we’re trading these ideas – all in a straightforward and actionable way. 

First of all, how have our trade ideas and portfolio performed over the past week?

It should be no secret that we have leaned towards increasing US bond exposure relative to equity exposure over the past couple of weeks (and positioned accordingly). Our models on growth in the US have weakened a lot during November, and they have been extremely precise in predicting the developments we are seeing in yields this week—first after the weak ISM services report, and now with the weaker-than-expected NFP report. While the headline number came in slightly above consensus estimates from both the market and qualified economists, private payrolls increased less than expected. Most importantly, the October number was not revised up to the extent markets had been hoping for.

Our portfolio is currently enjoying the momentum we are seeing in crypto. Both our ETH position and broader crypto bet (Coinbase) have performed fantastically, with BTC hitting 100k momentarily over the past week.

We are taking small hits in our long energy position at the moment, but remember that this is a hedge against inflation picking up speed in December/January. The loss is more than offset by the momentum we are seeing in the Russell 2000 and our Copper/Gold bet, as manufacturing numbers rose this week while services numbers declined—exactly as we projected last week. Equities are far more sensitive to moves in manufacturing versus services, which suggests that the equity momentum could continue for some time (even though positioning data signals that the trade is getting crowded).

The portfolio is perfectly positioned for the weeks to come, as the weak macro trends observed this week will likely enable the Fed to cut in December, despite markets previously doubting whether rates would remain steady for the rest of 2024.

The portfolio is looking strong, performance is excellent, so let’s dive into the key themes we are watching at the moment—and how you should trade them!

Chart of the week: Portfolio performance since inception