Top Traders Unplugged

SI344: Trend Following during Trump Tariff Turmoil ft. Katy Kaminski

60 snips
Apr 19, 2025
The podcast dives into the latest market dynamics, featuring Katy Kaminski's research on crisis alpha and how CTA strategies adapt in turbulent times. They discuss significant shifts in investment trends, including a growing interest in long gold positions amidst economic uncertainty. The hosts also highlight the challenges of trend following during high volatility and the importance of risk management. With a mix of humor and solid insights, they provide strategies to uncover opportunities in today’s complex financial landscape.
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INSIGHT

Unusual Market Reactions Signal Shift

  • The market reacted abnormally during the tariff shock: equities fell, yields rose, and the dollar weakened simultaneously.
  • This unusual behavior signals a potential structural shift affecting the safe-haven roles of bonds and the dollar.
INSIGHT

Trend Following's Crisis Alpha Timing

  • Trend following typically struggles at the onset of equity drawdowns under 15% but gains crisis alpha in deeper, longer drawdowns.
  • The initial negative reaction is due to trend models adjusting to sudden shifts in market direction.
ANECDOTE

Return Dispersion Like Penny Toss

  • During shocks, trend-following managers experience wide dispersion in performance depending on their positions before the event.
  • This variability is like flipping pennies: results differ greatly with enough volatility and timing differences.
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