Friday Chart Book

February 28, 2025

I will keep it short today as I’m travelling. I will enjoy some skiing with family for a week, but don’t worry: the main publications of ATW (Attack the Week) and Friday Chart Book will be published as usual.

The market is causing havoc, and it feels like we are transitioning into a new phase. I called for a regime shift a few weeks ago, and we are seemingly progressing with that script at the moment. This hasn’t been easy. While this is a full-on macro environment, I can tell you from experience that these markets are very damn hard to trade. Not only are we juggling uncertain growth and inflation dynamics, but the political/geopolitical landscape is forcing another complicated layer on us, with their impact still very much uncertain. Maybe we are facing a regime only a few have ever traded in: Stagflation.

Anyone telling you precisely where we are and where we are going from here with any kind of certainty is simply lying. There are plenty of possible outcomes, and we need to be prepared for any direction this can take. For now, my script for a continued growth scare remains intact. I’m happy to be wrong on this, but that’s where I see things going. In addition, my allocation model and the technical models have been nailing the current environment, and we are grateful for their guidance.

I read a Wall Street Journal article which highlights that the top 10% of American earners now drive nearly 50% of all consumer spending — up from about 36% in 1989. Fueled by robust gains in stocks and real estate, these wealthy consumers are spending more on luxury goods, high-end travel, and other premium items, a trend that has obviously contributed to economic growth by accounting for nearly one-third of the nation’s GDP. Now, think about what a slowdown and weak equity market would do to these spending patterns. It would collapse and, with it, impact growth meaningfully.

It’s true that we are still about flat in US stocks YTD, which isn’t a total disaster, but I would think a 10+% correction from here would firmly cement the chain reaction laid out above.

Bonds have been on the move, but Thursday’s market behaviour was extremely interesting. When even Gold, which has previously been unfazed by either equity and/or bond performance, is reacting negatively, my senses get alerted. Uncertainty is spreading, and even a 1+ SPX sell-off couldn’t stop long-dated US treasuries from selling off, causing havoc in anyone’s portfolio construction - a good old VaR shock. It has the feel of a big de-risking move, with risk parity funds de-grossing their exposures as realised volatility increases and correlations change.

The allocation model is up on the week as of Thursday's close, and the 2025 long-term portfolio is still up 6% YTD.

Trump, of course, is not helping with his tariff shenanigans, which had seemingly lost their bite until the US Dollar caught a strong bid in Thursday’s trading. It’s all happening at the time when CTA’s started selling their Dollar overweight.

These markets are going to be volatile and offer plenty of opportunities. It is, therefore, very timely that I have launched the intra-day model this week. All current subscribers should now have access. If you are interested, read below.

This is a reminder that you can now also use my models in TradingView scripts, which I made available for subscribers to use on their charts. This is not for free and incurs an additional cost.

If you are interested, ping me an email with your TV username. Note that only paying subscribers will be granted access. No exceptions.

Let’s now go into more detail and read what my friend Macro D has in store for us. We then scan the multitude of charts I have updated below. 250+ charts, to be more precise.

Let’s go.