All alpha is generated when markets shift paradigms.
The Market Has Priced the Hike, Not the Regime In my market thesis yesterday, I discussed the Fed’s possible playbook and how the different scenarios are beginning to play out. In this note, I want to focus on the trade itself and explain why I think the current setup could produce one of the more profitable macro regime shifts of this cycle. The obvious trade is no longer whether the Fed hikes 25bps at the next meeting. The market has already moved substantially in that direction. The more interesting question is what happens if 25bps does not solve the problem, inflation remains persistent, and the Fed discovers that it cannot stop after one adjustment. That is where I think the larger mispricing remains. The Problem Is Bigger Than 25bps The starting point is oil. Brent has moved back above $100 as the Middle East supply shock has intensified. The important
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