Luckily, it's not what we do. Still, the rollercoaster ride continues. You’d think we were already a couple years into the Trump 2.0 presidency, but we haven’t seen the first 100 days yet. In fact, the 90-days tariff pause announced on April 9th is longer than this administration has been in power.

And what a move it was on April 9th, a 9-standard deviation move of the S&P500, the kind of move we haven't seen since 2008. Below we show the top 10 daily returns since 1995, it doesn’t include the 30’s, 70’s, and 80’s, but it’s still illustrative.

At the end of this newsletter, we show the output of NINA’s macro engine. Interestingly, it started sending the first buy signals again on April 9th. That’s peculiar, because our system isn’t built to predict the US President’s social media posts.

Still, the connection is arguably there. The signals that began shifting most noticeably were those tracking the financial system's underlying mechanics and overall conditions. They had tightened so sharply that they started serving as contraindicators for us.

Following that day, NINA’s risk engine took almost all of the risk budget away, as a result of realized volatility peaking across several, usually uncorrelated markets.

Q1 2025:

So let's talk about March and Q1. After a strong finish to 2024, the first quarter of 2025 proved more challenging. We entered the quarter ready for a sell-off and kept most of our powder dry, even after the temporary leg up in January.

In March, we were on the verge of re-entering the market. The long-term outlook for equities started improving, supported by signs of easing inflation and a more accommodative stance from central banks. But after a week, that momentum quickly reversed, driven by weaker-than-expected job market data and deteriorating market behavioral signals. In response, the system reduced our exposure back down to 30%. The week following coincided with Liberation day.

Given how unusual the start of April has been, it's worth addressing developments through mid-month. On April 3rd and 4th, 2025, global equity markets experienced a sharp decline—nearly 10%—resulting in a loss of approximately $5 trillion in market capitalization from the S&P alone. Despite the turmoil, we remained disciplined and adhered to our process. Below, we present our performance figures in both US dollar and Euro. Notably, there is a discrepancy between the two.

Our Euro performance is impacted by the US dollar volatility, as we hold 50% of our dry powder in US dollar. As mentioned in our last newsletter, this was where we were expecting some pain. The US dollar devalued approximately 9% against the euro, since March, as shown below.

The graph highlights the significant appreciation of the Euro against the US dollar. Approximately 2.5% of our March loss in Euro terms can be attributed to the dollar’s devaluation during that period.

We expect to buy USD-denominated instruments with this cash. Since we do not take active currency views or hedge our FX exposure, this cash is pre-allocated in USD purely for risk management purposes.

That said, we acknowledge the potential for a longer-term regime shift—similar to what occurred in the early 2000s or the 1970s—where the dollar underwent a prolonged period of depreciation. In anticipation of such a scenario, and following an expected short-term rebound in the DXY (which currently appears oversold), we plan to diversify our cash holdings into other safe-haven assets such as gold and the Japanese yen.

This strategy will only come into play during periods when we are holding significant amounts of cash.

April outlook:

As mentioned in the intro, our macro intelligence engine is actually turning more positive. While the fundamental outlook remains weak—though modestly improved following the latest backward-looking inflation data—it’s the behavioral signals that have shown the most meaningful improvement.

Among others, the reasons for this are:

• Significant tightening of financial conditions and glitches in the underlying plumbing of financial markets, which we believe could be a warrant intervention. Our hypothesis is that this was also the reason behind the March 9th pause, on the exact day our signals flagged the issue.

• A shift in sentiment and understanding the Trump end-game: friendshoring / reshoring of vital supply chains, especially with respect to China.

• Sentiment changes as the spokesman has become Bessent vs Navarro.

• The inflation trend has shown a comfortable trend, giving central bankers some room to manoeuvre, even if the forward-looking outlook remains inflationary.

Still, it’s all very delicate. The latest inflation data is backward looking. I remember being highly skeptical of the Fed’s ability to deliver a soft landing back in 2022. But in all honesty, they were very much on the right track, until the new administration took over.

Just last week, the University of Michigan’s consumer survey showed inflation expectations picking up again. We are not near the point where the Fed can worry about expectations becoming unanchored, but it’s certainly a worrying development.

One of the concerns of policymakers is that the inflation shock from the tariffs won’t be transitory, especially when coupled with the expected immigration policy. Though divergence amongst Fed governors remains, as is signalled by NINA. For example, in his speech on April 14th, governor Waller held his ground. The inflationary effects of tariffs are expected to be transitory and rate cuts are warranted.

Lets remember: he is a possible replacement for the seat of Powell.

Both our system, NINA, and research from the Fed suggest that this dataset isn’t necessarily accurate or as market-moving as the backward-looking hard data. As surprising as that might seem, given that markets are in essence forecasting machines, either “voting” or “weighing”, in macro, the backward-looking hard data still matters, even in these times.

That’s because the macro system is extremely complicated to forecast, and the transmission mechanism from policy, either government-based or central bank-based, is non-linear and always delayed. For example, the Atlanta Fed’s April Core PCE nowcast still sits at 2.5%, especially given the dramatic fall in oil prices.

Juxtapose this with the GDPNow forecast of -2.4% for 2025 Q1 GDP growth, and we’re left with a picture where stagflation looms as a potential forward-looking risk, but perhaps the fear of the weakening of economic activity is even greater.

In any case, we are systematically slow, willing to wait for the fundamental picture to unfold. The tortoise, not the hare. As always, we are willing to take some pain, less than the market, as we'll always come back stronger in the inevitable up-trend.

So for the rest of April, we’re seeing a more positive picture following the sell-off, with improvements in behavioral signals and inflation trends. We’ve been buying slowly, but still underexposed, as our risk engine has significantly reduced the risk budget. Our US Dollar cash position remains our most dividing position. Making our USD denominated performance versus our EUR denominated performance divergent.

Over our investment horizon of 5-7 years this effect reverses and does not impact performance. We have seen this for example in the 2000s where in the second half the weakening of the US Dollar reversed. Our equilibrium performance lies in between.

Argan.ai

This month, we announced the appointment of Christoph Auer-Welsbach as advisor of the board, joining from April 2025.

Christoph brings a deep expertise in operational execution and leadership across the global tech industry, particularly in the US, UK and EU. He’s joining to support argan.ai’s vision — building and managing technology to safeguard capital from large drawdowns while outperforming the global equity market. Besides his rich history and current involvement in multiple global businesses, Christoph has been chairman of the board and investor in Dan.com, the company argans’ co-founder Ali Sardeha successfully sold to GoDaddy in 2022.

Christoph will be pivotal in supporting the company's vision of growing to +$1 billion AUM with our “Warren Buffet meets Macro Machines” equity strategy.

Final thoughts:

Patience remains our edge. We’ll continue to let clarity emerge, and act when the moment is right. Till next time