QI PRO HOLY GRAIL DASHBOARD

LONG MACRO
Recession probability to rise into 2025’s second half as private demand underperforms. The tariff shock should generate greater risks for a downshift in business investment and a more challenging environment for consumer cyclicals vis-à-vis consumer non-branded noncyclicals.
Manic shifts in U.S. politics harken first a deflationary gully to cross followed by the threat of impeachment and ultimately, a fourth change in administrations in as many U.S. presidential elections, a first in sequential terms since the precipice of the U.S. Civil War. The subsequent pendulum swing will manifest as Universal Basic Income/Modern Monetary Theory, and with it, the secular rise in inflation being prematurely predicted today by those positioned to profit from being short Treasuries.
Saturday Intelligence Briefing— 10.18.25
By the end of the week, the gallows humor in the QI Pro chatroom was that Jamie Dimon owned an interest in SC Johnson, the manufacturer of Raid insect spray. To this, the denizens of private credit responded, Dimon might want to keep some handy in case the infestation, in fact, turned out to be in his own loan book. The public vs. private fight, thus, broke out onto the scene and into the markets. In Dimon’s defense, the growth of privates has been nothing short of absurd. The week started with a client pointing out that nontraded Business Development Company assets had exploded by 20 times since 2020. That was enough of a wake-up call given the backdrop.
TACTICAL
RATES:
Short-end and Belly best opportunities for total return. Rally keys off weaker macro. Challenged private demand, higher unemployment and lower core inflation raise Fed rate cut probabilities.
Long-end holds at elevated levels with de facto caps at 4.5% for the 10-year & 5% for the long bond with the term premium supported by fiscal malfeasance exacerbated by falling sovereign revenues and despite diminishing stimulus to the U.S. consumer.
Curve view – Bull steepener in 2025’s second half.
USD:
A sidelined Fed contrasting with most global central banks easing catalyzed a selloff in the greenback. A Fed forced to play catchup could easily thin the massively crowded trade, especially as global trade weakness impairs an open global economy vs. its closed U.S. counterpart.
CREDIT:
• Underweight HY, overweight strong cash-flow IG
• Lower-rated buckets at risk of dispersion with Fed Higher for Longer
• Jobless claims deterioration makes a cautious Street rethink already-wider-spreads 2025 expectations, i.e., up default estimates as bankruptcy cycle speeds up and size
• Fitch’s acknowledgement of cyclical consumer sector “deteriorating” fits this view
EQUITIES:
OW Utilities
OW Fossil Fuel Energy
OW Senior Living
UW Consumer Staples
UW Consumer Discretionary
UW Large & Midsize Banks
OTHER ASSETS:
• USD view supports UW commodities & EM
• Oil is a different story with geopolitical risk ramping (Israel v Iran)
• Long MOVE to capitalize on runaway lending to Nondepository Financial Institutions triggering a credit event
The Feather — Charts of the Week
The Three-Legged Geometric Principle
R.I.P. Spaceman
2015: A Benchmark Year
Anora’s American Dream
Financial Insecurity is Threatening to Boil Over into the Real Economy
O’er and O’er Again
Tuning into Canada
Rolling Boulders in the Third District
Heisting the Global Downside
Housing Used to Sizzle, Now It Sputters
From the City of Tough Brotherly Love
You Can’t Judge a Book by its Cover












