Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Positions Update

Updates on positions opened and recommended in Second Section within our Newsletter of 25th March

FX : Recent Close-out of these previous positions:-

• Long DXY,

• Long USD/CHF,

• Long USD/ZAR and

• Short GBP/USD

All at profit. Details and pip/basis point returns upon request.

Indices : Recent Close-out of:

• Short Nasdaq 100,

• Short FTSE 100

• Short Stoxx 50

All at profit. As above, details ticks/% returns upon request.

Volatility Options : Recent Close-out of:

• Long OTM Call options on VIX - 300% Return in 72 hours.

Volatility Futures: Recent Close-out of:

• Long VIX Futures - 30% Unleveraged Return in 72 Hours.

  Note: We utilise 5x Leverage on these (but usage of Leverage is optional)

Gilts/US Bonds : Tactical Hedges to insulate assets from the anticipated sharp rise in Yields (= sharp fall in cash bond prices) generated Alpha (non-correlated extra cash profit) on that collapse in bond prices. As highlighted in both the “Trending Upwards” and “Trending Downwards” Sections in our Newsletter of 25th March.

For more precise details on these trade types and our timings, please reach out to your usual Axis IM Contact.

Equities/Bonds/ETFs:

We have prepared a revised comprehensive shopping list of all the Individual Equities, ETFS and Bonds (globally) that we aim to buy, if and when the opportunity arises. These will naturally form part of our Fund Investments upon launch. However, in the interim they are equally relevant for :-

(i) Yield-seeking Portfolio Investors

(ii) Shariah-compliant Portfolio Investors

(iii) Long Term Capital Appreciation Objective Investors

On occasion, we will make note of special cases and themes that we seek to explore in the Section below. For more details on these recommendations, please get in touch with your Axis IM contact.

Market Noise

If you were negotiating in good faith, would you simultaneously present both a carrot and a stick, at the same time, on the same plate - and add an extra threat too?

Hence, we do not think anyone outside a very narrow-minded Fox-news fed MAGA fanbase considers Trump’s words or tweets to hold any weight at all. Truth Social is no longer moving prices - less and less people are listening. The risk of escalation remains very high but the risk of a mistake is even higher. Hegseth is not a military tactician - a Major in name by years served rather than by leadership stars.

If you were Iran, would you show off your new Leader or place any trust in negotiations? Given that, every time Iran (or its proxies) makes itself available for talks and sets a “safe/neutral” location, all they end up doing is painting a target for Israel to take a shot at them. Maybe their leader is injured or dead. If he’s not, keeping him out of sight at the moment seems to be a smart move on their part. Not surprised that they would have “trust issues”.

We think this gets worse and any headlines that make the market bounce are likely offering selling opportunities rather than durable rallies.

We suspect GCC nations in close proximity are even more vulnerable than even they might think - and there are some key reasons for this. On this sensitive point, we have some well defined views for any investors in the region that find themselves exposed.

Current/New Positions Update in the Section Below

For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.
If you would like to view the Investment Recommendations Section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Investment Performance

As many of our readers will know, the recommendations in the newsletter and our frequent time-stamped investment commentary sent to Investors via direct messaging are being replicated within both our Family Office Portfolio and also within unrestricted managed portfolios.

Returns across our Investment Programmes of +35% in 2024, +34% in 2025 and +21% over 2026 to date, for investors that accepted a moderate tolerance to risk.

As this content has naturally become quite sensitive and valuable, the majority of the actionable intelligence and tradeable ideas will now reside below the paywall, with access for investors and select media contacts. Please reach out to your usual Axis IM contact, for access.

This is the first Newsletter of 2026, the last being the Hindenburg issue from 19th November 2025, where we raised the Sell-the-World Warning signal, with a special focus on the Mag 7 - this came to perfect fruition.

The majority of our trade-related content is now currently distributed to active account holders and investors via direct message services. If you believe that you are eligible to receive such commentary, please reach out to your usual Axis IM contact.

This direct-distribution trade content is primarily for active investors that hold accounts with us who are interested in short and medium term trading ideas across: Gold, Silver, Indices, FX, Volatility and Commodities. These will be the same ideas and trade strategies which we currently deploy within our Managed Account and Family Office investment models.

Within this Newsletter, we will continue to present themes, strategic commentary and general opinions.

New Developments - Fund Launches in 2026

We are planning the Launch of 2 Funds, during 2026. These 2 Funds, combined, will broadly represent the majority of the Investment Strategy which our Managed Portfolios and our Family Office have been deploying, for several years. Those with longer memories may recall that our Team had previously managed a Hedge Fund successfully for over 10 years, before, during and after the GFC - even posting a positive return in 2008. All funds will be held and administrated by a separate Custodian.

Axis Balanced Growth & Income - Long Term Capital Appreciation with a Target annual running yield in excess of 5%. Comprising both High Quality Liquid Investments as well as Thematic Long Term conviction ideas across the Liquid Investment Universe, worldwide. Usage of Global Macro, Arbitrage and Option-related strategies to enhance yields and capital growth.

Axis Alpha Tactical - Replicating our trading and active management approach across all asset classes. Both Long and Short positions across Indices, ETFs, Oil, Volatility, FX, Gold, Silver and Commodities.

Both are available as Shariah-compliant, subject to Investor demand.

Next Steps - Two investment tranches will be available for each of the above opportunities.

Investors participating in the first tranche may be eligible for additional participation in the performance fees generated by Axis through its asset management activities. Investors in the second tranche will subscribe to standard units without such participation.

Investments into these Funds can be made directly via your online investment platform (availability may vary), or through your private bank, where investors can instruct their Relationship Manager to execute the purchase on their behalf.

Global Macro Trends - Indices, FX, Commodities

For precise entry and exit points, as well as preferred issuers and equity names, please contact us. The below is indicative and macro-based guidance.

Trending Upwards

(Axis IM Analytics using Bloomberg & Axis IM Proprietary Data)

Volatility trends in the US and the EU still seems strong, indicating that the recent downtrend may have further to go. Safe haven USD/CHF also appearing high on the list is another warning sign. Perhaps a concern for Real Estate investors and anyone (is there anyone left..) that still rates UK Chancellor Rachel Reeves as a safe pair of hands - both the 10 Year and 30 Year Gilt Yields have a risk bias tilted to the upside, increasing borrowing costs and also placing extra stress on anyone, anywhere that has leverage in GBP terms.

Those who have access to our trading positions comments will already know our views on these, entry and exit points as well as other tactical trades we recommend.

Trending Downwards

(Axis IM Analytics using Bloomberg & Axis IM Proprietary Data)

Some Metals and Emerging Markets are unsurprisingly under pressure in this war-footing environment. That weakening trend seems intact for the time being. Weakness also in Gilts, US Notes and EU/US Indices is a worrying confluence of negative indicators.

We are corroborating these trends with our other analytics tools. As stated above, those who have access to our trading positions comments will already know our views on these, entry and exit points as well as other tactical trades we recommend.

Positions Update

For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the Investment Recommendations Section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Position Updates

We closed our profitable shorts on the FTSE 100, Euro STOXX 50 and our Long VIX futures position during yesterday’s session.

We also closed our profitable Short Bitcoin Futures (XBT-USD) position yesterday, as well.

Our Bias remains unchanged for all these instruments, however in view of the Nvidia earnings due to be released later today, the event risk exceeded the potential returns at the time. We will re-visit over the course of the day. Interested parties are welcome to make contact for further information.

The Buffett Indicator

The Buffett Indicator is a lagging ratio indicator which compares the aggregate Stock Market Value to it’s Nation’s GDP. There is debate as to which levels (high or low) constitute a meaningful signal, with >200% noted by Mr Buffett as being a level of concern in 2001 (“playing with fire”). We don’t use the Indicator in that precise fashion, instead we prefer to identify regions of over-extension or under-performance, feeding this data into our overall metrics where we combine a multitude of fundamental, technical and quantitative inputs. Previous departures from the mean trend line, by >1-2 SD, seem to have provided good entry/exit timing information (eg. Long, Short, Take Profits) when paired with our other proprietary tools.

Data from Axis IM Analytics & Bloomberg

Currently, the Indicator Ratio is looking quite stretched in relation to both the US and the Japanese Stock Markets. On the prior 2 occasions when it was similarly overextended, stock markets corrected downwards by a material amount (>25%). No slight intended towards Japanese equities per se - we simply wanted to round out our data sources for better interpretation.

Stock Market Indices meet Hindenburg

Onto a purely technical signal, to complement the valuation-based signal above. Based on the identification of ‘under-the-hood’ stock market instability, this signal doesn’t appear that often. Although nothing is infallible, previous Hindenburg signals preceded falls in overall stock market values of 25% to 60%. Notable is that a signal also appeared on the MAG 7 Index, being the Index of the 7 Top Tech Names in the US, as well as the S&P 500 Index and the Nasdaq 100 Index.

Data from Axis IM Analytics & Bloomberg

In direct opposition to these above observations runs the conviction that the markets are now completely different to prior cycles:

• AI Spending: CAPEX is a huge drain on cash but hoped to bring exponential payoffs and a structural redefinition of the Global Economy

• Vastly increased productivity from US Corporations; and

• Low Leverage across the Mega-Cap names; and

• Strong Free Cash Flow

We are in agreement with all the above. However, one should note that from April 8th to date, the Nasdaq 100 is up by over 43% and not a whole lot has changed with the “long term potential of the AI story” since then. So - perhaps there is still room for some upside - but most certainly a whole lot of room for downside. Nvidia may calm some nerves tonight, albeit temporarily - but nevertheless, Caveat Emptor.

For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the Investment Recommendations Section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

The UK Economy and how to fix it…

In one of the early newsletters which were issued in the current format, we were not short of blunt criticism of both Rachel Reeves’s ability to manage the big job at no.11 as well as the lack of depth in their support team. We’re not happy at all to have been right about this, as a failure to launch any growth at all, spikes in 5 Year Swaps and ripples of concern all across the funding line are not good for anyone, anywhere. Too many mis-steps and gaffes to date lead us to believe that more policy and strategy mistakes in the near future are more likely than less.

It does not matter that the flip-flop on policy may be as a result of possibly better growth expectations and a gift from the OBR in the form of a smaller fiscal hole to fill (although it’s still lots and lots of billions). What matters here is that the people holding the big jobs have absolutely no idea at all on how to communicate and interact with the capital markets.

We do not write or advise from the perspective of classical economics, nor in the style of practising economists. You would know if we did, as we would never be able to recommend anything or offer a straightforward opinion, ever.

Our solution is simple and might upset a few people. A 50Bp Cut in UK interest rates, immediately.

Growth is basically zero. Productivity is terrible. Sentiment for both Business and Individuals is also poor. Unemployment trending up.

But - what about inflation…? Yes - we agree that it’s a little high although much of the consumer-inflation experience is down to geopolitical factors. And yes - Brexiteers - you did this to yourselves. Tariffs don’t help either.

Onto the concerns that such a cut in interest rates will destroy everything. With growth, spending, sentiment and all optimism conspicuously absent, any upward pressure on inflation from a cut is likely to be negligible or absent given the depressed state of other economic markers. Rachel Reeves’ UK Economy won’t just grow into growing no more than Prince Akeem of Zamunda (quoting Nietzsche in Coming to America) could fly into flying.

It won’t just happen - now is the time for assertive action. The markets don’t respect the UK Treasury, the Gilt market is nervous and if the BoE don’t step in to make a move, this Budget run-up is likely to be choppy.

Update on Recent Positions - Merger & Risk Arbitrage positions (from Axis Tactics 29th September, 2025 - ‘Tis the Season to be Tactical)

Corecard - Acquisition by Euronet completed on time.

International Money Express - We booked an early & quick profit. Transaction is due to complete in mid-2026 but we were happy to take the quick win and move on. 10% Return in ~6 Weeks.

All such positions, when opened, are presented within the Investment Recommendations Section of these Newsletters.

Global Macro Trends - Indices, FX, Commodities

For precise entry and exit points, as well as preferred issuers and equity names, please contact us. The below is indicative and macro-based guidance.

Trending Upwards

(Axis IM Analytics using Bloomberg & Axis IM Proprietary Data)

Volatility in the US and the EU seems to be basing here and trending upwards, raising a warning for short and medium term performance in Equity Indices. Both Gold and Silver, prima facie, seem to be solidly trending higher. Corn & Soybeans are trending higher.

Those who have access to our trading positions comments will already know our views on these, entry and exit points as well as other tactical trades we recommend.

Consistent with the strengthening trend in Volatility, the EU Stoxx 50, Dow 30 and the Nikkei are appearing to soften a little, even though they still appear in the ‘trending-up’ section. Brazil, trending strongly, has flashed an Overbought warning.

Trending Downwards

(Axis IM Analytics using Bloomberg & Axis IM Proprietary Data)

The S&P 500 Futures contract is losing momentum, also consistent with the increase in Volatility noted above. UK Bond Yields are trend-less at the moment but we notice an existential risk to the upside here with the Long Gilt Future exhibiting very poor trend characteristics. GBP, South African Rand (vs USD) and Bitcoin are also looking weak.

For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the Investment Recommendations Section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Notable Mentions

New Supported Markets

Our cross-asset Platform now supports equities, derivatives and fixed income investments in the following:-

• Mainland China

• South Africa

• Saudi Arabia

• India (NRI/Banking/PAN requirements apply)

Please reach out to your usual Axis contact if you would like access or more information.

Capital Guaranteed Portfolios (Guarantee of Principal by UK HM Treasury or US Gov’t)

For those conservative investors that might be interested in a Sovereign Capital Guarantee for their Principal Investment as part of their investment structure, we offer the following:-

GBP

• 100% Guarantee of Initial Principal Investment, secured against UK HM Treasury.

• Accumulated Profits from the Axis IM Proprietary (Family Office) Investment Strategy, forecasted at >7% annualised return for conservative investors, all returned as 1 lump sum on expiry of fixed 5 Year Term.

• Worst Case Scenario : No Loss of any Principal invested amount. 100% of Initial Principal returned to Investor.

• Best Case Scenario : 100% of Initial Principal returned to Investor. Plus a Compounded >7% Annualised Return per year for 5 years, all returned on expiry.

Alternative structures are available to increase the Guarantee Level to 110% (7 Year Structure) or to reduce the Term Length to 3 Years. Minimum portfolio sizes apply.

USD

• As per GBP but with the Principal Guarantee for the Initial Investment supported by the Full Faith & Credit of the US Government.

Subject to portfolio size, alternate term expiry structures and capital guarantee levels can be provided.

ISA Transfers and New ISA Accounts for UK Nationals (Adults and Junior ISAs)

Addendum to a previous announcement on this - We also facilitate Inward ISA Transfers from other providers for pre-existing ISAs. These ISAs can be portfolio managed or part of an advisory arrangement.

Investment Recommendations from our “GARP” Analytics Programme

In the section below, we have updated and refined our listings of equities which both exhibit robust fundamental characteristics and yet still offer meaningful upside, even in this exuberant marketplace. We have modelled for several attributes including but not limited to : Dividend Sustainability, Creditworthiness, Growth Prospects, Consensus Share Performance Outlook for the next 12 months, Sales Quality, Cash Flow predictability and Liquidity, inter alia. These data points are available to interested investors.

We own some of the names listed below and can certainly make recommendations on which may be suitable for your requirements. Please reach out to your usual Axis IM contact for more details.

To Follow shortly in the next Newsletter……Technical & Tactical Studies on the USD Index, FX Crosses, Indices and Metals…

For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the Investment Recommendations Section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Sector Asset Allocations

(Axis IM Analytics using Bloomberg & RRG Data)

For precise entry and exit points, as well as preferred issuers and equity names, please contact us. The below is indicative and macro-based guidance.

EMEA

3 Sectors seem interesting from the above study : Basic Resources, HealthCare and Retail. Many of Retail Sector equity names tends to fall short when we cross-check by assessing them fundamentally, so investments in that area have to be cherry-picked. More conviction with an overweight bias for both Basic Resources and Healthcare.

Quite a cluster of Sectors in the EU that are losing momentum. It appears that there will need to be a meaningful catalyst for the overall Index to appreciate much further from here, in order to offset the broadening softness across several areas.

US

The US HealthCare Sector is looking chipper in the US as well. US Energy and US REITs are worth a watch in case their price action stabilizes. A key observation on the US Information Technology Sector, which appears to be running out of momentum here.

ASIA

Please contact us for any Asia & Africa Investment Strategy questions.

Global Macro

Interesting times for Commodity Traders, with Arabica Coffee (volatile as ever) building an upwards trend. Corn, Sugar, Wheat & Cotton are still underperforming -but on the mend - and worth a close watch for potential stabilisation and future improvement. Silver’s performance has been outstanding and still solidly in the outperformance segment until proven otherwise.

A mixed picture on Crypto, with Dash, Zcash and Ethereum (even Ripple) outperforming Bitcoin on a relative basis. The USD has just crept into Improving territory - but not compelling, as yet.

Investment Recommendations Section

Equity Strategy

Equity Market Indices are continuing the melt-up, volatility is depressed (or compressed, if you liken it to a spring) and the investment community cares not about Inflation, Government Shutdowns or any of the conflicts raging worldwide.

Mindful of this, we are approaching our Equity Strategy recommendations with 2 Strands:-

1. Equities with robust fundamental properties and very conservative valuations, which can potentially offer in excess of 25% return over the coming 12 months.

   ”potential growth at a still reasonable price”

2. Equities with robust fundamental properties and moderately conservative valuations, which can potentially offer in excess of 20% return over the coming 12 months - but are also estimated to pay out a Dividend Yield of greater than 5%. “get paid while you wait”

   Opting for a foundation within conservative valuations is designed to insulate investors from any upcoming market gyrations, as is a common occurrence with potentially toppy markets.

Listings of Equity Ideas for both Strands are in the Section Below.

For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the Investment Recommendations Section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Notable Mentions

ISA Accounts now supported

In conjunction with our HMRC-Approved Clearer, we are now offering ISA Wrapper Accounts (Tax Efficient Accounts for UK Nationals) for Individuals (Adults and Juniors) via our platform. Please do get in touch if this is of interest.

These accounts can be held on a fully portfolio managed or an advisory basis, in conjunction with your current points of contact.

Shariah Compliant Portfolios

We have also re-screened our Shariah-compliant Universe to identify and update our listings of the Global Top 500 Companies that are Shariah-compliant. For more information on this and on how we can design a Shariah-compliant portfolio that also meets your precise investment objectives and risk tolerances, please reach out to your usual point of contact.

We favour some of the names in the top 500 far more than others, the above listing is for illustrative purposes only.

Irrespective of your belief system, the Shariah 500 identifies Companies which adhere to high standards of fiscal discipline, leverage and operational principles. As a result the listing can be a useful guide for low and moderate risk investors, as the constituents tend to have a far lower probability of default.

Investment Recommendations

In the section below, we will be setting out our investment ideas on the following themes:-

1. M&A/ Event Arbitrage - We have identified 4 listed target companies that have accepted bids from acquirors and are priced to return, unleveraged, over 10% in USD, within 12 months (stc).

2. Fixed Income - USD Corporate Fixed Income yielding between 6% & 25% and GBP Corporate Fixed Income Yielding between 5% & 15%

Sovereigns to follow in coming issues.

Global Equity Indices Recommendations & Strategy Calls

It has been a relatively peaceful for few months now, since April. There has been little need to switch positions around in the midst of a strong bull trend that has also been blessed with low volatility.

We suspect that we are now at a point where one has to be prepared for a more tactical and nimble footing. The melt-up may continue a little further but we are constantly watching for a rarefied atmosphere - and it’s starting to feel that way….

We will be posting our time-frames, levels and targets for Equities, FX and Metals in the section below over the coming weeks.

For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the Investment Recommendations Section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Recent FX Comments

For USD Crosses, as we outlined in our last FX comment on 15th April, we opined that the Dollar Bears were in control. The predicted higher levels on GBP/USD, EUR/USD and lower levels in the USD Index have come to pass in the weeks since that comment.

Both EUR/ZAR and USD/ZAR also met their forecasted price targets in the weeks since our last FX comment.

Recent Global Equity Indices Recommendation & Strategy Calls

After raising our concerns on sustainability of the rally in November 2024 and further Short Sell/Reduce/Take Profits recommendations in January and February, the market did correct nicely, with the MSCI World Index falling from 3900 to 3200 - a fall in excess of 20%. The S&P 500 Index fell over 30%. Our guide for both the entry and exit was the derivatives market - using several volatility and exhaustion models as well as options analysis. We had published a VIX forecast of ~40 as our target level. Once the VIX Futures Contract had reached our target of ~40, we unwound our shorts and reversed from Short to Long - re-deploying the capital that we had released only a few weeks before.

The return for conservative portfolios which do not use derivatives that adopted these recommendations, for the period above, was in excess of 35%.

The return for the Volatility and Derivatives programme, for the period above, was 210%.

Outlook

FX

Very early reversal signs in USD Major Crosses and the USD Index. Path of least resistance for the moment is still for a USD that is slightly weaker than the current print and a re-test of ~98.00.

However, there are clear indications that GBP/USD especially is in a rarefied atmosphere at these levels. GBP/USD at 1.36/1.37 is very possible but we would view such price action as a selling opportunity, rather than a target to aim for, as buyers.

We await clarity from our proprietary indicators on a trend reversal for the USD Index. Today’s up-tick would need to be followed up with some sustained upward bias over the coming trading sessions to >DXY 101.20.

Although today’s comments might appear circumspect, the probability of an upcoming USD turn-around is material enough for us to close all our Short USD positions - closing both our short DXY Index positions and also our Long GBP/USD positions.

Global Equities

We think the summit is in sight. All we need is a catalyst to set off a chain of events that will result in a medium-term top being set in the broad equity markets. For the S&P 500, there is room to run up to ~5925 with Volatility and Risk gauges looking prone to a further squeeze lower.

Trump tweets or other Tariff/Macro signalling could propel the S&P 500, Nasdaq 100 and the European Indices a little higher - but it’s getting more and lonely up here, the further we go. Marginal buyers are noticeably scarcer and the the undercurrents of economic data are indeed troubling.

We’ve been lightening up our exposures and will continue to do so.

Recommendations

Recipients of our emails will occasionally receive listings of Bonds or Equities (inter alia) that we find of interest, rather than precise or nuanced recommendations.

Trade Recommendations as well as recommended Bond and Equity Ideas that we may also own within our Investor Portfolios are provided in the section below.

Below is a list of high-yielding GBP & USD Bonds that we consider are a good fit for our Investors.

In the next issue, we will be circulating a list of Equities that we expect to outperform their Indices over the next 12-24 months.

On all the above - For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the section the section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Key Support and Resistance levels for Major Currencies

(Data and Levels compiled from Axis IM systems and Street Sources)

GBP/USD — Completes U-turn and hits fresh six-month high as support from the 55-DMA showed pound remains a buy-on-dips; daily fear-greed at highest since late 2022 as weekly Ichimoku shows topside risks prevail. The Daily pattern, based on our proprietary analyses, also seems to maintain an upside bias, at least for the time being.

• Spot: 1.3203

• Intraday support: 1.3164, session low; Weekly support: 1.2959, 21-DMA

• Intraday resistance: 1.3264 pivot; Weekly resistance: 1.3434, Sept. 26 high

EUR/USD — Monthly price action completed a basing pattern, based on our own analysis, in February and a Bullish Harami on the quarterly chart as the euro trades above a 17 year-old descending trendline; oscillators are in overbought territory and a pullback cannot be excluded but the long-term outlook remains constructive for gains

• Spot: 1.1358

• Intraday support: 1.1280, April 14 low; Weekly support: 1.1144, April 3 high

• Intraday resistance: 1.1425, April 14 high; Weekly resistance: 1.1495, Oct. 2022 high

USD/JPY — First attempt to establish a short-term bottom proved futile and weekly outlook points to further losses. Our proprietary basing pattern models still appear incomplete which also supports the case for further downside continuance.

• Spot: 143.06

• Intraday support: 142.07, April 11 low low; Weekly support: 141.65, Sept. 30 low

• Intraday resistance: 144.31, April 14 high; Weekly resistance: 147.90, 21-DMA

BBDXY — Extends declines to satisfy a weekly Bearish Engulfing Line as fear-greed on the tenor shows bears in control of the price action by the most since 2016; on the daily, the gauge shows fear at its highest since late 2022

• Spot: 1,229.18

• Intraday support: 1,227.25, April 14 low; Weekly support: 1,216.49, Sept. 27 low

• Intraday resistance: 1,237.55 pivot; Weekly resistance: 1,262.23, 21-DMA

EUR/CHF — An Inverted Hammer was completed on the daily yet failure to stay near Monday highs suggest downside risks remain intact

• Spot: 0.9271

• Intraday support: 0.9222, April 11 low; Weekly support: 0.9206, Nov. 22 low

• Intraday resistance: 0.9354, April 14 high; Weekly resistance: 0.9456, 21-DMA

EUR/ZAR - EUR/ZAR Technicals available upon request.

(From Street Sources) Credit Agricole issued a recommendation to buy ZAR versus EUR tactically; selling EUR/ZAR at 21.44, targeting 20.00, with a stop loss at 22.16,

We parse their reasons as being:-

• Recent talks between African National Congress and Democratic Alliance supportive of ZAR gains, shows parties’ willingness to stick to current coalition

• Pause on reciprocal tariffs by Trump administration means duties applied to South Africa fall to 10% from 30%, provides respite for ZAR “which we believe can be played tactically”

• From fundamental point of view, ZAR offers decent carry; in EMEA region, it has restored its status as a relative high-yielder, particularly versus EUR

• Country runs “decent” external position, while economic growth benefits from improved energy production capacities

USD/ZAR - USD/ZAR Technicals available upon request.

(From Street Sources) Nedbank have a “low 18.00s” target for USD/ZAR while Investec have a ~18.60 target for USD/ZAR.

On all the above - For current & precise entry/exit levels and intra-day position updates in real-time, please reach out to your Axis IM directly.

If you would like to view the section the section below, please request access from your Axis point of contact.

Read more

Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

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

If you have a trading account, portfolio or existing relationship with Axis IM or any of it’s associate Companies, you would be entitled to view the section below. If you would like access to the section below, please get in touch with your Axis point of contact.

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

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Bull Market? Not today…..

Regular readers and viewers will know that we have been very sceptical and borderline insulting about the investment philosophy of buying US Tech and Fashionable Segments.

Nvidia is over 50% down from it’s high

Novo Nordisk has almost halved

AMD has lost over 60% from it’s high

There are many examples of this, both in the current market and prior periods of market correction. We have advised investors, repeatedly, to be cautious of and to preferably avoid completely, all such over-valued (in our opinion) names.

Our approach to Safety, Portfolio Protection and Generational Estate Planning Strategy & Capital Preservation have been supported by 2 key attributes:-

1. A recognition of how and where to position portfolios in light of Volatility and Market Risk.

2. For Durable, Long Term Capital Appreciation : A Bias towards Assets, Properties, Bonds & Equities where both the valuation credentials and credit-worthiness are identifiable and prudent.

Most of our readers and viewers do not engage in short selling and only a certain type of investor typically engages in the usage of derivatives. This is with the exception of covered call writes - which can often enhance yield for even the most cautious investor.

However, yet again, a look beyond the cash markets is where many of the risk levels and break-points in modern markets lie. So, even if you are very risk-averse and have no appetite at all for such exotic instruments, we encourage you to consider the clues that we offer when analysing these trading dynamics. These clues informed us and prepared us to take the following range of pre-emptive actions for our Investors:-

(Ranging from more conservative courses of action, to the more adventurous)

1. Take Profits on any securities that had previously moved sharply upwards, relatively quickly

2. Raise cash to take advantage of future buying opportunities at more attractive prices

3. Rebalance Sector Allocations : Reduce Tech/US Core, Buy EU/HealthCare/Utilities/Real Estate

4. Hedge some downside risk and/or Reduce Equity Weighting and Increase Bonds/Cash/Precious Metals

5. Use VIX, Index Futures and Options to :

   (a) Completely neutralise all potential downside risk; or

   (b) Speculate with a view to profiting from the Correction; or

   (c) Speculating on the fall in value of Overpriced “Fad” stocks using Put Options, Sector Futures, ETFs, and/or CFDs.

For anyone that likes the idea of 4b :-

The VIX Volatility Index was up 20% today (unleveraged) and 66% in the last couple of weeks.

Using typical exchange margin, those figures translate to returns of 100% intra-day and 330% over the last 3 weeks.

As our readers will know, we named this VIX/Volatility trading activity as a core part of our 2025 Strategic Outlook and we naturally participated in these moves above.

Our frequent warnings to be prepared for higher volatility and a re-set on the valuation of high-priced US Tech came home to roost - but there were and still are actionable steps that are open to all types of Investor. So far the Index damage, relative to the huge gain over the last 2 years, isn’t critical. There is still time and space to re-assess and plan for the next phase of market activity.

Broken Bull Run or simply a Speed Bump?

The S&P 500 has, for the last few years, bounced back from these sharp corrections. From a simple study (below), we are at a rough level from which there is often a bounce:-

Separately, there are several other technical levels which have been severely breached. So, while there is a moderately high probability of a bounce, in order for it to be a live version rather than the ‘dead-cat’ variety, US Tariff policy has to find a way to avoid sending the US into recession and hence change the mood music completely. The Trump administration seems more concerned with the US 10 Year Bond Yield (which fell ~10bp and US Treasury Secretary Bessent will rather like that - cheaper mortgages, cheaper loans for Main St) rather than the US Stock Market, so there may not be a high level of intervention or policy shift in the event of further market declines.

If you would like access to the section below, please request access from your Axis point of contact.

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Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Sector Rotation Charts for EMEA, US and Globally

In advance of the Nvidia Earnings Print, scheduled for after the US close tonight, some observations at Sector Level - across EMEA, US and in a Global Context - using RRG Research tools.

Sector Allocation strategy can inform us on where and how to allocate funds, which is especially helpful in a market that is quite highly valued in places.

In the EMEA zone, Utilities, Telecoms, Real Estate & Healthcare are Improving, relative to the rest of the EMEA Stock Market.

Regular readers/viewers will recall that these have been our Sector picks within Europe, for a while now.

Deep in Weakening territory, is Technology. Media & Retail are not far behind.

The US picture also demonstrates good credentials for Healthcare and potential for Utilities to catch up. Consumer Staples’ performance is indicative of a rotation across from Growth to Value. Technology has gone round in a circle, the recent flat performance across the Mag 7 and Chip Sector is a testament to that.

Globally, the layout resonates with EMEA and the US. Consumer Staples and Healthcare are in the ascendancy. Although Energy, in a global setting, is better placed here than it was within the EU and the US - pointing to a healthy Energy investment cycle across Asia and Africa.

Real Estate & Utilities are showing potential to perform well, on a relative basis.

As we noted above in the regional studies, Technology appears to be in an overall spin, which might result in a valuation re-set over the coming 3-6 months - irrespective of what happens later tonight with Nvidia.

For our specific Sector picks, per region, please reach out to your usual contact.

Equities with up to 30% Upside within the next 12 Months

We have curated a list of equities that, according to at least 10 different analysts, have an average upside potential of up to 30%, within the coming 12 months. We have used our own criteria to further narrow down the list according to our own internal investment disciplines : Liquidity, Large Caps, Credit Worthiness, Prudence and Fundamental Valuation.

If you would like access to the section below, please request access from your Axis point of contact.

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Access Codes also available for Trusted Media contacts.

For more information on what we do and the services we offer, please visit www.axis-im.com.

Some Charts & Data from Both Internal and Street Sources on Major FX Crosses, Gold & Bitcoin

GBP/USD — Pair sets a new YTD high on Wednesday and session high at 1.2640 comes within a whisker of 100-DMA at 1.2659; need a break and close above 100-DMA to confirm further upside ahead. But Bollinger and this 100-DMA are tough obstacles to overcome at the first attempt.

• Intraday resistance: 1.2640, session high; weekly resistance: 1.2659, 100-DMA

• Spot: 1.2574

• Intraday support: 1.2575, weekly support: 1.2333, Feb. 11 low

EUR/USD — Looking more evenly balanced as pair drops for a third day, keeps setting lower lows while managing to hold above its 55-day moving average at 1.0387; YTD high of 1.0533, last seen in January, continues to cap short-term euro gains

• Intraday resistance: 1.0461, session high; weekly resistance: 1.0533, Jan. 27 high

• Spot: 1.0438

• Intraday support: 1.0419, session low; weekly support: 1.0280, Feb. 10 low

USD/JPY — Neutral; pair consolidates below 200-DMA at 152.66 while 55-DMA at 155.35 still acts as near-term resistance; need a daily close above 55-DMA to confirm more upside

• Intraday resistance: 152.31, session high; weekly resistance: 154.80, Feb. 12 high

• Spot: 151.39

• Intraday support: 151.25, session low; weekly support: 150 key level, last breached on Dec. 9

USD/CAD — The pair stays within a broad range defined by 55-DMA at 1.4330 and 100-DMA at 1.4131; also near the bottom of Bollinger band

• Intraday resistance: 1.4230, session high; weekly resistance: 1.4330, 55-day moving average

• Spot: 1.4229

• Intraday support: 1.4176, session low; weekly support: 1.4131, 100-day moving average

Bitcoin vs Gold

This graphic illustrates how any fall in Bitcoin might be accompanied by fresh highs in Gold. That being said, if we find ourselves in extreme margin call territory within major stock indices, correlations often collapse. Bitcoin backing down from $100,000 may be a reason for gold to visit the $3,000 an ounce resistance level. Our graphic shows the ounces of the metal equal to the crypto slipping below last year's high and potentially forming an enduring peak. A Peak in the Bitcoin/gold ratio may have similar implications for the S&P 500 vs Gold ratio.

Trade Recommendations, Entry & Exit Levels and Risk Management Guidance is within the Section below:-

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For more information on what we do and the services we offer, please visit www.axis-im.com.

Recent Performance Data by Strategy and Risk Profile : Start-2024 to Date

Unrestricted, No Leveraged Products : 26.5%

Unrestricted, With Selective Use of Leveraged Products : 47.2%

Low Risk Basket : 18.1%

Medium Risk Basket : 21.0%

High Risk Basket : 31.3%

Risk Arbitrage Programme: 100% Hit Rate, Median Return per Investment : 8.8%

Performance for Bespoke Strategies and where other Investment Restrictions or Objectives apply to the Mandate, will be different to the above. Above Data is pro-forma.

For granular trade details, portfolio metrics, ratios and draw-down data, please get in touch with your usual contact.

Asset Allocation Recommendations and our Best Equity Ideas will follow in the Section Below, in subsequent Newsletters.

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For more information on what we do and the services we offer, please visit www.axis-im.com.

Good Morning,

Link to this morning's appearance on CNBC by our Group CIO is below,

https://www.axisim.com/inthemedia

Typically, precise and timely recommendations for trading positions and investments across asset classes will be in the section below. Please reach out to your usual contact for access.

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Swift Recap on Some Recent Recommendations

Nvidia, named and cautioned about in our Newsletter of 15th October 2024 (“The Problem with Ubiquity”), had a nice fall today of over 18% but is currently recovering a little.

While we certainly didn’t know very much about DeepSeek until this weekend, our working hypothesis was that competition and disruption was invariably going to come from somewhere to disturb Nvidia’s lofty valuation.

DeepSeek, per se, may not ultimately be the wrecking ball for the Magnificent 7 - but the sheen of supremacy has certainly taken a dent and we would expect valuations to settle back to less fanciful levels, over time.

If DeepSeek’s arrival heralds a paradigm-shift within AI Architecture, the tail risk is that some of the highly priced names in the AI space may be in process of finding out that their IP has become instantly obsolete.

Volatility has also proved to be a prudent place to park some risk capital when the raw Index values are low. Readers will note our usage of VIX Futures & Options as well as options dynamics, to best manage turbulent markets. We explained this in our Newsletters of 19th December (19th December “The Morning after the Fed”) where we successfully held Long VIX and Equity Index Shorts everywhere and also on 12th January (12th January “Recent Positions & Strategy Update”) where we expected Q1 (2025) and Q2 (2025) Volatility to be “markedly higher”.

This view led us to be positioned from late last week with Long Volatility (via VIX Futures).

The unleveraged VIX Index today was up 26% intra-day. The tradeable futures contract was up 21% intra-day (which would be +105% return, using prudent 20% margin).

We will continue to take Long VIX Positions on selected pullbacks in the Volatility price and/or when we are concerned that Equity Markets Indices are at unsustainable valuation levels.

US Equity Outlook

Today’s market movements might, at first glance, seem extreme. However, they are not so. Actually not even close. The damage was extremely well contained within some key Tech Names.

The S&P was down somewhere in the order of ~150 points in EU time. If this was a broad and chronic meltdown, we would have seen much more drama in the Bond Markets and Volatility (which did move ~25%) would have moved >50%.

Readers (and viewers of recent media appearances) will recall that we have made reference in the past to the equal-weighted S&P.

The equal weighted S&P 500 Index is down 0.1% today. Unaffected and minding it’s own business. This relative outperformance is indicative of a shift from Growth to Value, a diversification away from Tech concentration. Put another way, the remaining 493 Companies in the S&P are deemed to be capable of handling the changing dynamics in the AI landscape and might arguably be benefiting from the “USA First” Agenda of the Trump Administration

A couple of graphics, prepared on Bloomberg, elegantly illustrate how investors can go from here:-

The question raised by this graphic is will today’s events signal a turnaround in the relative performance of Growth to Value? Our view is that it is now time to take a greater allocation within Value and to re-visit this incrementally, with a Medium to Long Term Investment Horizon. This applies, in our view, globally.

Even within Technology, one must ask if AI can be managed by most people with simple kit rather than the posh stuff? Are the Hyperscalers and even end users still obliged to make huge Capex commitments into top flight GPUs? Is this Capex still worth it? Or will any modest GPU work just fine?

DeepSeek seem to have managed quite well with a miniscule budget and a smaller electricity bill - so perhaps many other can too.

Warren Buffett has referred many times to “moats” as one of his favoured investment criteria.

DeepSeek’s developments might mean that the perceived barriers to AI entry do not really exist.

Despite the down-beat tone for Tech today, one doesn’t necessarily need to abandon Tech in totality but we suggest instead that those with this bias instead be vigilant for opportunities where valuations are grounded and the business use cases are sustainable in an Open Source World.

Onto Valuations…

The Valuation of the equal-weighted S&P, where the Mag 7 weightings have been pared back, is not excessive, appearing to be close to its 10 Year Average.

This leads us to be confident in our long-held approach to remain prudent and be paid to play while our funds are invested (Dividends, Buybacks, M&A potential, EM High Yield Equities/Debt). Growth at a Reasonable Price can be found here and in similar Indices globally.

Insurers, Healthcare, Pharma, Real Estate.

The FTC under a Trump Administration might also be more sympathetic to M&A Activity, thereby opening the door to Merger and Event Driven Arbitrage Investments.

If you seek Growth at absolutely any price - those would be the Tech and High Valuation names that are down double digits today. When they are cheap enough, we will be happy to re-evaluate them too.

But for now, instead of Growth and Momentum, we’re choosing patience. And Value.

A footnote on the moves in Gold, Silver, Fixed Income & Crude Oil - Although meaningful, still very much in keeping with normal & contained market behaviour rather than panic, contagion or capitulation: Simply a range of Forced Liquidations, Margin Calls, Algo Model Trading and Safe Haven Buying.

Such data also reinforces our observation that, so far, this is a narrow-focused AI story without excessive bleed into other sectors.

Some Equities, ETFS and Short Dated Fixed Income Suggestions with >8% Yield will follow in a coming Newsletter, later this week.

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Swift Recap on Some Recent Recommendations

We expressed our reservations about Novo Nordisk and Eli Lilly in our Newsletter of 15th October 2024 (“The Problem with Ubiquity”).

Since then, Novo Nordisk has fallen over 30%.

Eli Lilly has fallen over 15%.

EUR/USD has fallen over 250 ticks since our Tactical Short Recommendation on 12th December 2024.

The S&P 500 Index did not re-claim its upwardly trajectory after its decisive downside break of 6000 c.18th December 2024. Our expectation for further weakness (19th December “The Morning after the Fed”), in that event, has become a reality, with any rallies being hit with further selling.

Both momentum and sentiment are indicating further weakness to come. Irrespective of the short term direction, we have conviction that Q1 and Q2 volatility (For all of : Stock Options, FX, Equity Price Swing Volatility and Index VIX volatility) will be markedly higher than the same time last year.

Should this view resonate with yours in any way, your actionable plans can range from (i) Hedging, Shorting or Reducing Risk (ii) Taking Selective Profits (iii) Preparing to take advantage of upcoming medium to longer term buying opportunities.

The UK : GBP, Debt Markets and a Treasury that’s Mathematically challenged…

The unforeseen (only by the Chancellor) but strikingly obvious (to everyone else) consequences to this Chancellor’s first Budget are pervasive.

Businesses instantly froze hiring. Capex was held back. Financing for many SME commercial transactions is under review.

There are no policy levers being pulled that will encourage growth across the UK, at the moment. With 5 Year Swap rates back to 4.25% and trading with a bias to higher levels still - all structured financing costs, inclusive of domestic mortgages, are approaching the sort of troubling heights that will stymie deal-making and investment.

GDP is likely to bounce around near to zero and the double-header of a falling Sterling and rising Gilt Yields are symptomatic of a decline in the UK’s perceived attractiveness for international capital.

Compared to almost all prior Treasury functions where there was a solid team of competent Civil Servants and as well as strong Economic & Financial Advisers to the Treasury with a receptive Chancellor (From Kenneth Clarke all the way to Jeremy Hunt, minus Kwasi Kwarteng and Nadhim Zahawi - who was hardly there so we cannot include him on this) we surmise that one of two things is going wrong here:

(i) Political Intransigence. This would augur more of a headache as the odds here of a repeat “Truss/Kwarteng” car crash, are significantly raised. Lack of insight into consequences, little regard for market dynamics and a shaky backroom team that isn’t up to the job could lead to numerous and successive poor policy decisions. Likelihood in our view : 30%

(ii) Chancellor and her Treasury advisers are just not very good at this, at all. Relying on ~GBP 10bn of headroom and making all those promises? Moaning about a black hole for months? Well, that was always going to end badly. Likelihood in our view : 70%.

Where does this view lead us next?

To prepare a contingency plan for a likely higher 5 Year Swap Rate, perhaps 50bp higher than current levels (so higher mortgage rates and financing costs). And to judge the risk of a return to Truss levels at >5.4% as being possible but still unlikely.

A return to Truss-like levels would almost certainly require some severe global contagion factors, the most probable source being Trump-related chaos (Inflationary Tariffs, More Wars).

The other risk factor here is the continued decline of Sterling.

Even if you don’t trade Derivatives and have no interest in ever doing so, the derivatives markets can inform us on where market positioning and sentiment lies.

Readers will recall how effective such analysis was, ahead of the S&P 500’s sharp fall, and the VIX’s explosive rise, in our piece from 19th December (“The Morning After the Fed”).

This graphic, prepared on Bloomberg, illustrates the range of expected future prices for GBP/USD - Between $1.12 and $1.20. These are not precise forecasts, simply a strong indication that the bias for GBP/USD remains to the downside. And this, coupled with Gilt Yields that might yet push a little higher, is quite a toxic combination.

All such things do blow over - and we would suggest that longer term buyers (of bonds, currency or stocks) take this opportunity to pre-emptively develop a shopping list of what suits your investment objectives.

Upcoming Travel Schedule

If we are coming to your part of the world, please be welcome to get in touch:-

Dubai/Abu Dhabi : 19-24 Jan 2025

Dubai : 7-9 Feb 2025

Johannesburg, Capetown & Durban : Early Q2 2025

New York : End June 2025

Tokyo & Naha : July 2025

Dubai : July 2025

Some Bonds (GBP, USD and Shariah-compliant USD Sukuks) that we watch and like, are below. Stocks and FX tactical trades to follow…

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Position Updates

Most of the year and most of the time, investing successfully often requires stringing together a set of little victories over the year (as Fletcher from Porridge would put it).

However, in the last few weeks, we have had an extraordinary set-up for the sharp rise in volatility yesterday and the fall in asset prices.

One look at the financial news - and you’d think this was only about the Fed decision, the hawkish conference, inflation worries, the pivot away from 3-4-5 cuts over 2025….

But - with all corrections in asset prices or even just modest falls of 3-4% as was the case yesterday, this is an opportunity to remember just how modern capital markets work.

Not much has changed since the GFC or indeed since any other modern market collapse. There are layers of investments of various denominations and risk profiles, above and below the cash markets.

The Fed may have disappointed the market, for sure. However, the initial reaction was a relatively mild one, of only a few bps.

Here’s what actually happened, and why yesterday was not just our best trading day of the year - but the most obvious by far.

Around the time of our 12/13th December Newsletter and CNBC appearance, the breadth of the market had continued to narrow hugely. In addition, the cost of portfolio insurance, hedging and/or the cost of making a big downside trading bet on the US stock market, was extremely low - v v v cheap indeed. In fact, much too cheap, given the FOMC event that was around the corner.

We like asymmetric trades. Nominal Downside, Very Attractive Upside.

Separately, and harking back to my earlier point about layers of investments that most Cash Equity Investors, Index Tracker Fund owners and Family Funds rarely watch, it was the derivatives markets that led the way yesterday.

The line in the sand, using options and derivatives modelling tools and other metrics that we (and perhaps others) use to determine not just where supports and resistances lie but also where the vacuum hides, was around 6000 on the S&P 500. A prior level of ~6050 had been briefly tested a day earlier and that was also a golden clue.

Nothing much happened until the S&P broke 6000. After that, the floor fell in and the Dow, S&P 500 and the Nasdaq 100 all posted extremely large and vertical drops from that point onwards. No bounces, no sideways action, no dip buyers - just straight down.

Vacuum.

800 point drop on the Nasdaq, 1200 point drop on the Dow, 180 point drop on the S&P.

30% Unleveraged Profit on the VIX Futures (300% using 10% exchange margin requirements).

185% Move on the VIX Cash Index.

Even if these sorts of trades are not for everyone, the very same tools can inform investors on where their investment risks may lie, when to hedge and when to reduce large positions or diversify.

The S&P 500 has now certainly posted a clean break of a very long upwards trend. If the Index does not reclaim it’s upwardly trajectory within a few trading sessions, we would expect further weakness ahead.

More details to follow - and in the meantime (and just in case things slow down):

Season’s Greetings for the Holiday Season and all the best for 2025 - From your favourite bunch of Philosophers, Physics Nerds and MMA kicky-punchy addicts at Axis….

Typically, precise and timely recommendations for trading positions and investments across asset classes will be in the section below. Please reach out to your usual contact for access.

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Good Morning,

Link to this morning's appearance on CNBC by our Group CIO is below,

https://www.axisim.com/inthemedia

Typically, precise and timely recommendations for trading positions and investments across asset classes will be in the section below. Please reach out to your usual contact for access.

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In advance of our full 2025 outlook, we set out a few pertinent observations below, with more detail to follow in the coming few days.

Global Equities and Asset Allocation

If one invests with the principles of prudence and discipline at the core, then some form of diversification across an invested portfolio is highly desirable.

With this in mind, we seek out alternatives to the very expensive US sectors that have driven returns to date. The risk of a correction is very much present, given the elevated valuations of some Tech names. That being said, following the trend (until it ends) is paying off so far and since it is currently inexpensive to hedge using equity options or VIX Index Futures and Options, the risk profile of running with the trend until it breaks can be mitigated quite economically.

We could quite easily see a 6500-7500 range next year for the S&P 500, especially if the US 10 Year Yield also has a 75bp or 100bp range during the year. Tech supremacy aside, if the Indices are locked in a range, the US is likely to be a special situation and stock selection marketplace next year, within infrastructure and select sectors that benefit from the new Trump administration.

At investment level, with the S&P 500 and Nasdaq 100 at all-time highs, the outlook appears rosy. However, under the bonnet, there are still structural issues in the US which could derail the party. Individual debt is still a serious concern, with Home Ownership funding at around 7% and Car Finance well into double figures. Tariffs and the ensuing knock to US GDP and inflation bump could certainly cause a little mayhem by pushing the cost of living over the threshold, for many US households.

Elsewhere, we find value in Brazil & China and a simple ETF such as EEM will service this allocation nicely. Gradual accumulation across both, given the volatility journey that both markets are expected to follow.

Across Europe, we think that France is best avoided, with Germany preferred due to it’s superior US exposure. Broadly, though, as the Stoxx 600 is trading on almost a 10% discount to it’s average P/E (10 years) and also at it’s widest discount to the S&P 500, we drilled down into this Index to find value - and we landed on Healthcare and Pharmaceuticals, both of which have been discounted heavily on several fundamental valuation criteria, relative to their Sector Peers.

In the UK, the FTSE 100, at a P/E of just under 12, has the feeling of a value trap. Cheap - but cheap for a reason with a slow BOE and messy Budget aftermath. Almost a third of FTSE 100 Index constituents are trading at least 1 SD below their 10 Year P/E average.

For these reasons, Index investing in the UK isn’t our preference, instead seeking to mine for specific situations and names that offer both upside potential and a valuation margin of safety.

FX/Commodities

Tactical calls so far:

Short EUR/USD

Long GBP/CHF

Short EUR/GBP

Short WTI

Cash >10% (opportunistic allocation) as volatility expected to be higher in Q1 (2025) and Q2 (2025) than Q3 & Q4 (2024)

Typically, precise and timely recommendations for trading positions and investments across asset classes will be in the section below. Please reach out to your usual contact for access.

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