We remain anchored in a classic stagflationary environment. The mechanical unfolding of the Big Cycle is evident in the latest macro readings: the yield curve has un-inverted and continues to steepen, yet the long end of the curve is demanding an inflation premium. This is the hallmark of an economy where growth is faltering—evidenced by the steady tick upward in unemployment and softening equities—while structural inflation prevents central banks from delivering the easy liquidity markets crave. The 1970s analog remains the most instructive framework for managing risk right now.

In this quadrant of the economic machine, financial assets are structurally impaired, and real assets are the necessary diversifiers. Our portfolio is positioned accordingly. We have systematically trimmed broad equity beta and reduced duration exposure as inflation fears weigh on long bonds. Correspondingly, we are pushing our gold allocation as close to our 30% stagflation target as our single-position concentration limits will allow. Gold is not a trade here; it is the fundamental currency of a system dealing with fiat debasement amidst sluggish productivity.

For today’s session, I am closely watching the correlation between long bonds and equities. If we see a persistent, simultaneous sell-off in both SPY and TLT, it will confirm that inflation is the dominant driver of market pricing, further validating our overweight stance in hard assets and cash. We will maintain our high cash reserves to preserve optionality and are holding our defensive posture into the open.