Technical Breakouts: ARKK, NVDA, AI, SPX, Copper

1. Transitioning Phases: April marked the crisis phase; we are now in the Response Phase. The Fed has begun rate cuts, with a new Fed Chair expected in September 2025. This nine-month "Shadow Fed" period is reshaping risk assets' risk/reward dynamics.

2. Key Market Influences: Major players include the UK, AI, China, XBI, BRL, and BTC. Reach out for optimal implementation strategies.

3. Shift in Risk Transmission: Oil prices are no longer the primary risk-on/risk-off transmission mechanism. Equity prices now take center stage. The easing of financial conditions supports the "Goldilocks" SPX 6400–6700 thesis.

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### Market Dynamics and Shifts

1. Seasonal Strength: As we enter a seasonally favorable period, markets may rally higher, causing maximum pain for skeptics.

2. Supportive Financial Conditions: A combination of long-end yields, USD, equity markets, credit spreads, and government deficits is fueling asset inflation. This environment is pushing market participants toward riskier segments of the discounting curve, with the discount factor moving lower.

3. Evolving Market Leadership: Momentum and trend-following alone are no longer sufficient for alpha generation. A new market dynamic is emerging.

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### The Changing Nature of Markets

As we progress into 2025, markets are navigating a shift away from the quantitative easing era of systematic dominance. The dominance of systematic macro funds, trend-following strategies, and volatility-targeting models is fading. Instead, policy pivots, flow shifts, and macro uncertainty are driving markets. This is an event-driven macro market where real-world events, rather than liquidity alone, dictate outcomes.

#### Systematic Macro: Rise and Retreat

1. Systematic macro strategies thrived in 2021–2022, attracting significant AUM inflows and driving market action.

2. However, performance faltered in 2023–2024, leading to a one-third decline in AUM from peak levels.

3. This structural change has reduced their influence, making market action less predictable and more fragmented, driven by discretion and positioning rather than programmatic trends.

#### Psychological Shifts in Markets

1. The simplicity of the QE era, where liquidity dominated and trends were king, is gone. Fundamentals, fiscal policy, geopolitics, and central bank reactions now take precedence.

2. Price action is less straightforward and more deceptive, requiring interpretation over automation.

3. Traders accustomed to QE-driven trends now face the challenge of reacting to real-time macro inflection points.

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### Redefining Market Behavior

#### Bull and Bear as Behaviors

1. Traditional definitions of bull and bear markets (+20% or -20%) are less relevant. The market's reaction to news is now the key indicator.

2. Bullish markets rally on good news and ignore bad news, while bearish markets fade good news and overreact to bad news.

3. Contextual interpretation of price action is essential, as we are currently in a bullish environment.

#### Regime Shifts Over Trends

1. The biggest opportunities now come from identifying regime changes, such as central bank pivots, inflation inflection points, and shifts in consumer strength.

2. April marked a crisis phase, but we are now in the Response Phase, characterized by easing financial conditions, rate cuts, and improved real wage dynamics.

3. This environment supports significant upward repricing of risk assets, especially given defensive investor positioning.

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### Macro Benevolence Amid Doubt

1. Despite weak spot data (e.g., housing and labor indicators), easing financial conditions are counteracting these headwinds.

2. Equity markets are nearing all-time highs, volatility is compressing, and risk appetite is shifting toward speculative sectors.

3. Biotech, AI laggards, and certain China plays are experiencing rallies, driven by disbelief and underweight risk positioning. This defines a classic squeeze phase.

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### Policy Shifts and Market Implications

1. Central banks are signaling a pivot, with the Fed moving away from its 2024 "wait and see" stance. Rate cuts are increasingly likely, with July and September cuts expected.

2. Inflation, while sticky in some areas, is now viewed as policy-driven rather than organically overheating.

3. Positive real wages are keeping recession risks at bay for now. Monetary easing is underway but not fully appreciated yet.

The key to navigating this market is regime awareness. Recognize the transition from systematic dominance to a discretionary-driven market. Policy interactions with narratives and positioning surprises are now the primary drivers.

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### Investing in the New Era

The key to this market is neither trends, valuations, nor liquidity in isolation. The true key lies in regime awareness. We’ve transitioned out of the systematic era and into one driven fundamentally by discretion.

Systematic flows may no longer dictate market direction. Instead, the new driving forces are the interaction between policy and narrative, as well as the interplay between positioning and surprise. The market is not re-rating due to euphoria, but rather due to relief and a structural shift toward lower discount rates. In this environment of regime change, the greatest risk is relying on outdated strategies.

Traditionally, investing has been framed as the art of identifying macro mega-trends. Now, we are witnessing central banks entering a phase of even more aggressive monetary stimulus, creating a reflexive cycle of fragility and intervention.

In a world shaped by belief, accelerated by imagination, and destabilised by repeated monetary interventions, the smartest investments are not in certainty—like bonds—but in the forces shaping the future. Bitcoin and similar technologies may represent some of the most profound expressions of this new era.