Enter Goldilocks, and Q2 Trade results
The market’s focus is shifting away from Israel vs Iran, the White House is extending the tariff deadline so trade deals can get done, and Trump is actually succeeding in influencing Fed policy as Fed board chair candidates Waller and Bowman jostle for favor by competing on how dovish they can sound in public. The market speculates that Trump will choose a successor to Jerome Powell earlier than expected, potentially creating a “shadow chair” whose public statements on Fed policy will carry more weight than outgoing chair Powell.
Meanwhile, US data keeps getting softer. A few excerpts from some of my favorite macro strategists:
Sure, nonfarm payrolls clocked in at 139k in May, slightly above the 126k consensus. But healthcare accounted for 60% of that – masking broad-based weakness in the more cyclically sensitive sectors:
The May print also came with chunky downward revisions of 95k to the previous two months, dragging the 12-month average to just 145k. That falls squarely within the 100k-150k range required just to absorb new labour-force entrants. For context, the St. Louis Fed pegs the short-run breakeven at 153k per month. Translation? Hiring is no longer outrunning demographic gravity; it’s barely at equilibrium. Beneath the headline beats, slack is quietly building – as shown by rising jobless claims.
The softening labor market now puts this income-financed expansion in jeopardy with both hiring slowing and wage growth coming down considerably. Total cash compensation growth for household has slowed to its softest pace in the cycle and is set to slow further.
Meanwhile, the tariff-driven inflation scare that the Fed was concerned about hasn’t hit yet, and even if it does, disinflation in services will likely offset it. The reasons for the Fed to stay on hold are receding while the reasons to cut are growing.
To sum it up - liquidity is about to get cheaper, and geopolitical left-tail risk has been removed. We may be entering a Goldilocks similar to 2019, but what’s different this time is that the dollar is weakening, providing a tailwind for global risk assets, particularly EM. At the moment, the ideal portfolio would have exposure to EM ETFs, China tech, and single-name AI beneficiaries. Gold and bitcoin are in there as well, but they might be taking a breather and go sideways for a few months.
Trade results for Q2 2025
This was a great quarter for my style of trading, which focuses on global macro discretionary swing trades with a time horizon of days to weeks. Trump creates a lot of two-way volatility, causing the market to price in extreme scenarios and snap back just as quickly. All the trades closed this quarter delivered an aggregate 26.4R return (see explainer at the end of this post), meaning a trader risking a consistent 1% of his portfolio on each trade would have made a 26.4% return this quarter. Paid subscribers get a front row seat to my trading as I send a real time alert when I open or close a position. The alerts are meant to be an educational tool to show how the five components of a trade - fundamentals, expression, timing, structure/sizing, and position management - come together to form a winning strategy.
In addition to the trades in Fidenza Macro, my short term S&P futures strategy added significant gains to my performance, thanks to the wild swings in April. Because the trades from this strategy are more frequent, it’s too much work for me to send alerts for S&P futures. A a primer on how I profit trading S&P futures is coming later this year, fully unlocked for paid subscribers.
As usual, trading BTC was a large contributor to my gains, netting 11R. I don’t make money on every trade, but those that win make a lot more than those that lose. Buying the Liberation Day dip and taking profit a month later was the most profitable trade of the quarter.
Long gold was another big winner, netting 12.4R in gains. Gold has been one of my favorite longs this year, as I believe we are in a multi-year bull market.
Thanks to the benefits of larger position sizing, the S&P futures trading strategy, and the power of compounding, my trading account is up 100% for the year - the best start I’ve had since starting this newsletter back in 2022.
However, I want to be careful about patting myself on the back too much for these trading results. Q2 was an opportunity-rich quarter, and it’s not guaranteed that the rest of the year will follow suit. It’s already feeling like we may be in for a low-vol summer where risk assets grind sideways to higher. I’ll have to be more selective in my trades and avoid the temptation to chase extreme moves in the market.
Explainer for the right hand column “R”
When I enter a trade, I set a predetermined stop loss and risk a percentage of my trading capital towards betting that the market will move in my favor and won’t trigger my stop. If I do get stopped out, I lose that predetermined amount of capital, represented by “R”. If I take profit and make four times what I would have lost if I got stopped out, the trade is a 4R winner. The goal of trading is for the sum total of the R column to be as high as possible. The reason I track my gains and losses in R terms and not in percentage or dollar terms is to account for the fact that I trade many different assets with varying volatility, and the only constant between those markets is the percentage of trading capital I risk on each trade. Two traders who choose to copy my trades would have vastly different results if one of them uses five times more leverage than the other. A mediocre trader who makes a few lucky trades in volatile assets can boast of better percentage returns than a more skilled trader who trades less volatile assets. “R” is the one measure you can’t obfuscate and is one of the best determinants of the skill of a trader.
Disclaimer: The content of this blog is provided for informational and educational purposes only and should not be construed as professional financial advice, investment recommendations, or a solicitation to buy or sell any securities or instruments. The blog is not a trade signaling service and the author strongly discourages readers from following his trades without experience and doing research on those markets. The author of this blog is not a registered investment advisor or financial planner. The information presented on this blog is based on personal research and experience, and should not be considered as personalized investment advice. Any investment or trading decisions you make based on the content of this blog are at your own risk. Past performance is not indicative of future results. All investments carry the risk of loss, and there is no guarantee that any trade or strategy discussed in this blog will be profitable or suitable for your specific situation. The author of this blog disclaims any and all liability relating to any actions taken or not taken based on the content of this blog. The author of this blog is not responsible for any losses, damages, or liabilities that may arise from the use or misuse of the information provided.