| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
QCAM maintains neutral macro positioning amid Gulf war uncertainties that have created entrenched oil and gas supply shortages lasting longer than markets anticipate. The conflict has damaged critical infrastructure in a region accounting for 20% of global energy supply, with Iran leveraging Strait of Hormuz control as bargaining chip. Early March inflation data shows half percentage point increase, transforming goldilocks scenario into stagflation with rising prices and falling growth. Central banks face policy dilemma as inflation pressures mount faster than growth implications materialize. Fed expected to stay on hold potentially easing year-end, while ECB and BoE likely hike 25 bps once. USD gained 2.6% since war start but remains 13% overvalued on DXY basis. FX markets experiencing continued volatility bouncing between de-escalation hopes and escalation fears. Business sentiment positioning shifted 30% long USD with shorts in EUR, CHF, and GBP. Overall strategy maintains slight USD long bias through small EUR and CHF shorts while keeping macro positions neutral pending conflict resolution.
Gulf war has created entrenched oil and gas supply disruptions that will persist longer than markets expect, driving stagflationary pressures that force central banks into policy dilemma, while FX markets remain volatile amid geopolitical uncertainty.
Manager expects continued volatility in FX markets as they get bounced around by hopes Gulf war may end soon and fears of escalation. Oil and gas supply conditions unlikely to improve quickly even if hostilities end, with supply shortage lasting through year-end. Central banks face policy dilemma with some likely to hike rates despite economic downside risks.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 2 2026 | 2026 Q1 | - | Central Banks, Currency, Dollar, inflation, Natural Gas, oil, rates, volatility | - | Gulf war creates persistent energy supply disruptions driving stagflationary pressures and central bank policy dilemmas. USD gained 2.6% since conflict start but remains overvalued. QCAM maintains neutral macro positioning amid geopolitical uncertainty while shifting business sentiment 30% long USD. FX volatility expected to continue as markets bounce between escalation fears and de-escalation hopes. |
| Jan 8 2026 | 2025 Q4 | - | Central Banks, Dollar, FX, Geopolitical, rates, volatility | - | QCAM sees two-way volatility risks for FX markets in 2026 as the disconnect between low volatility and high uncertainty may break. Maintains USD bearish outlook but acknowledges geopolitical shocks could support dollar while US policy credibility events would hurt it. Currently positioned moderately short USD with longs in EUR, CAD, CHF, JPY. |
| Oct 9 2025 | 2025 Q3 | - | Central Banks, Currency, Dollar, Euro, FX, rates, Yen | - | QCAM maintains bearish USD stance despite October rally, viewing market concerns about JPY and EUR as overblown. Underlying USD weakness persists due to policy stability concerns and debt sustainability issues, evidenced by gold's surge. Short USD positions held against major currencies with expectation that BoJ independence and European growth recovery will support JPY and EUR. |
| Jul 3 2025 | 2025 Q2 | - | Central Banks, Currency, Dollar, FX, Macro, Trade Policy | - | QCAM expects continued USD weakness through year-end as foreign investors reduce overweight US asset positions amid Trump tariff uncertainty. Positioned long EUR, CHF, SEK, NOK versus dollar, targeting surplus currencies. Fed on hold while other central banks ease. Key risks include geopolitical flare-ups and stretched short positioning, but structural rebalancing should dominate. |
| Apr 3 2025 | 2025 Q1 | - | Currency, ECB, EUR, Fed, FX, JPY, tariffs, usd | - | USD weakness in Q1 reflects policy uncertainty from Trump administration rollout, with Fed facing tough growth-inflation trade-off limiting easing room. European defense spending provides some EUR support but tariff conflict hasn't peaked. QCAM maintains neutral stance except long JPY, viewing Japan as insulated from geopolitical risks while BoJ continues normalization. |
| Jan 9 2025 | 2024 Q4 | - | Currency, Dollar, Fed, rates, Trade Policy, volatility | - | QCAM's FX BIAS returned 3.7% in 2024 after strong first nine months were offset by Q4 USD rally. Strategy validates business survey value despite positioning challenges. Base case supports further USD strength from Fed policy divergence and Trump policies, though implementation uncertainties create volatility. Modest net-long USD positioning reflects fundamental outlook. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
OilGulf war has created entrenched oil supply shortages that will last longer even if hostilities end soon. Oil futures anticipate near-term price increases followed by quick declines, but supply conditions may not restore quickly due to damaged infrastructure and Iran's use of Strait of Hormuz as bargaining chip. |
Brent Supply Infrastructure Futures |
Natural GasGas supply squeeze from Gulf conflict affects global markets. Dutch TTF gas futures imply stagnation at current price levels through year-end, though at much lower levels compared to 2022 Russia-Ukraine crisis. Production and transportation infrastructure damage will keep prices higher for longer. |
TTF Supply Infrastructure Prices | |
InflationEarly inflation reports for March show average increase in headline inflation of about half a percentage point due to Gulf war impact. What looked like goldilocks scenario is turning into stagflation with rising inflation and falling growth, creating policy dilemma for central banks. |
Headline Stagflation Energy Central Banks | |
RatesCentral banks face dilemma with mounting inflation pressures from energy crisis. Fed expected to stay on hold and may ease at year-end, while ECB and BoE will probably hike once by 25 bps. Bank of Japan will maintain gradual policy normalization path. |
Fed ECB BoE Policy | |
DollarUSD DXY gained 1.1% over last four weeks and up 2.6% since start of Gulf war. Dollar remains broadly overvalued at 13% for USD DXY. Diverging monetary policy paths could imply return to USD depreciation scenario, but volatility expected to continue. |
DXY Overvalued Volatility Policy | |
| 2025 Q4 |
VolatilityGlobal FX volatility has declined significantly despite ongoing high geopolitical, policy, economic and market uncertainties. The disconnect between low market volatility and perceived risks could break in 2026, with two-way FX effects depending on the nature of volatility shocks. |
FX Volatility Risk Disconnect Market Uncertainty |
DollarQCAM maintains a bearish USD outlook for 2026 but acknowledges risks are spread in several directions. USD negative shocks include policy credibility events and government shutdowns, while geopolitical shocks would likely be USD positive. |
USD DXY Dollar Bearish | |
GoldThe gold price has surged 70% over the last year to unprecedented historical highs, reflecting the sense of heightened uncertainty in markets despite low volatility measures. |
Gold Price Safe Haven Uncertainty | |
| 2025 Q3 |
DollarUSD received boost in early October but underlying bearish trend remains due to loss of confidence in US policy stability, debt sustainability, and central bank independence. Gold surge reflects USD downside potential compounded by Fed's dovish bias. |
Dollar Currency Gold Fed |
YenJPY plunged on LDP leadership election expectations of Abenomics revival, but market overestimates vulnerabilities. BoJ likely to act independently and focus on price stability given public discontent with inflation. |
Yen Japan BoJ Inflation | |
EuroEUR declined on French PM resignation raising political uncertainty, but France's solvency assured within EU framework. ECB has tools to stabilize situation and cyclical growth lift expected in 2026. |
Euro France ECB Politics | |
RatesFed resumed easing in September with further cuts expected if labor market remains soft. Monetary easing has run its course in most countries, notably Euro area, with only residual rate cuts expected. |
Rates Fed ECB Monetary Policy | |
| 2025 Q2 |
DollarUSD fell more than 10% YTD due to falling market confidence in the US as guardian of global security and economic stability. Trump's tariff policies have stagflationary implications undermining USD safe-haven status. Foreign investors reducing US asset positions will continue weighing on USD through year-end. |
USD Safe-haven Tariffs Positioning |
Trade PolicyMagnitude of Trump's tariff hikes have stagflationary implications that undermine USD and US Treasury safe-haven status. Tariff conflicts moderated but remain a key risk factor affecting currency positioning and global trade dynamics. |
Tariffs Trump Stagflation Trade | |
RatesFed held rates steady while other major central banks cut rates. Changes in long-term rates and yield curve dynamics defy orthodox FX wisdom. Fed expected to stay on hold before contemplating cuts toward year-end while other central banks continue easing. |
Fed Central Banks Yield Curve Monetary Policy | |
| 2025 Q1 |
Defense SpendingGermany's likely next coalition government has pushed through constitutional changes to soften the debt brake and engage in whatever it takes military and infrastructure spending. EU leaders have agreed on an 800€ billion defense package that allows member states to either borrow directly for defense spending or provide special loans for defense programs. |
Defense Infrastructure Europe Germany Spending |
Trade PolicyThe tariff conflict has probably not yet peaked and the outcome will probably hurt other countries more than the US. Liberation day just passed and the details of US tariff increases are not yet clear, but the thrust was at the hawkish side of expectations. |
Tariffs Trade Trump Policy Conflict | |
InflationThe Fed has raised the inflation forecast to 2.8% from 2.5%. The deterioration of the growth-inflation trade-off leaves the Fed in a tough position limiting the room to ease even as the economy slows. US inflation remains more resilient than other major economies. |
Fed Inflation Monetary Policy Resilient | |
RatesPolicy uncertainty was the buzz word of Jerome Powell's press conference after the last Fed meeting. The market has raised its rate cut expectations for the end of the year from near zero to 75bps. The Fed is unlikely to turn outright hawkish soon but will need stronger signs of economic weakness to cut rates. |
Fed Rates Powell Cuts Policy | |
| 2024 Q4 |
DollarThe USD rallied strongly in Q4 2024, breaking out of its two-year trading range. The dollar's strength was driven by Fed policy expectations and Trump administration policies viewed as growth-friendly but inflationary. The base case points to further USD strength based on solid US economic growth, policy developments, and the Fed having less room to ease compared to other major central banks. |
Currency Fed Rates Policy Strength |
RatesInterest rate differentials are a key driver of currency positioning. The Fed is expected to lower rates by just 32 basis points over the next 12 months, significantly less than other major central banks. The ECB is projected to cut rates three times as much as the Fed, creating favorable rate differentials for the USD. |
Fed ECB Cuts Differentials Policy | |
Trade PolicyTrump's trade policy agenda creates significant uncertainty for currency markets. The complexity and interconnectivity of the policy agenda, along with diverging preferences among players, suggests multiple overlapping initiatives rather than one clean implementation plan. This uncertainty is expected to create more volatility in FX markets. |
Trump Tariffs Uncertainty Volatility Implementation |
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