Forward Guidance The Post-Summer Market Rotation is Here | Weekly Roundup
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Aug 29, 2025 This week, the discussion focuses on the market shift post-Labor Day, highlighting increased volatility. There's an insightful look at inflation trends and the impact of systematic strategies on price movements. Listeners will learn about the intriguing rotation from large-cap to small-cap stocks. The complexities of government intervention in markets and comparisons between AI capital expenditure and historical gold cycles are also explored. The episode wraps up by analyzing significant treasury company holdings in Ethereum.
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Labor Day Market Reset
- Labor Day often marks a market reset as managers return and reposition for year-end.
- Expect early September volatility, bond supply pickup, and rotations from large caps into small caps.
Systematic Flows Shape Price Action
- Systematic flows (passives, CTAs, volatility targeting) dominate price action and compress apparent liquidity.
- Thin equity microstructure means small systematic flows can create outsized price moves.
Implied Correlation Dictates Strategy
- Low implied correlation creates pockets where single-stock fundamentals can beat systematic traders.
- When implied correlation rises, everything trades together and you should avoid holding idiosyncratic risk.