Questions for 2025

2024 has been a year for the ages. For equity investors, riding the beta gravy train has been spectacular. For even riskier assets like BTC, patience paid off post election. For macro investors, we were blessed with significant volatility. For example, the 10y started at 3.80, sold off to 4.72 within 4 months, rallied to 3.6 over 5 months, and have now sold off to 4.55 to close the year. As someone who has traded years where the 10y moved 20 bps total, this has been a gift for trading. My focus has been on selling rallies given my constructive views on the economy, and riding the bearish trends. FX also had significant volatility. EURUSD started the year at 1.11, went to 1.07 by mid February, bounced to 1.10 by mid March, fell to 1.06 by mid April, rallied to 1.12 by end of August, and then closed below 1.04. My focus there has been on putting on trades for gradual declines over a 2-3 month horizon.

As I summarize my performance this year, it went as follows: very hot Q1, sideways to slightly up PnL over the summer, and then a monstrous run since August, with the VAR shock, Sept FOMC 50 bps cut and election all acting as catalysts. I closed with my best year ever, although of course trading personal capital and institutional capital are always somewhat different.

My framework for this year was heavily focused on the FCI loop, which I outlined in the note: The Loop. As we enter this year, my thesis is that the framework is evolving to a mania playbook, which I outlined in: Manic Monday - New Paradigm.

2025 will not be as straightforward as 2024, as we have a new administration, with a complex set of policies. As such, it will pay to be nimble and humble with our views, ready to adapt as circumstances warrant. Below are some of the key questions for 2025.