Market Breadth: NYSE advancers outpaced decliners 4-to-1, suggesting resilience beneath the equity rally (SentimenTrader).

Macro Signals: Inflation remains domestically driven; Fed unlikely to cut quickly. U.S. dollar regains strength versus peers (DeepMacro).

Dantes Outlook Positioning: Trimmed active tilts, maintaining preference for U.S. equities while adding emerging markets. Funded by profits in gold and inflation hedges. Launched tactical semiconductor strategy based on momentum signals.

Bond Market Evolution: Portfolio trading volumes in U.S. corporate bonds surged 54% in H1 2025, boosting liquidity and efficiency (Barclays).

Investor Behavior: Morningstar’s “Mind the Gap” shows investors underperform funds by ~1.2% annually due to timing mistakes.

Forward-Looking Markets: Historical data shows equities often rebound after major payroll revisions, underscoring how markets anticipate economic shifts (Fidelity).

Visit us at www.dantesoutlook.com

Topics Covered:

Portfolio construction in today’s macro climate — balancing risk, correlations, and tracking error.

Credit market health — Morningstar DBRS and Proskauer data show improving leverage, coverage, and default rates.

Bond market reset — Deutsche Bank’s historical context on the worst 5-year Treasury returns and forward expectations.

Opportunities in core bonds — PIMCO’s view on yields, international duration, and diversification benefits.

DeepMacro model positioning — long USD, contrarian equity overweight, and rates strategy.

Trend-following under pressure — why CTAs are lagging in 2025.

Emerging markets strategy — Victor Zhou on activeness, tracking error, and the under-researched alpha potential in EM small caps.

Key Takeaways:

Dollar correlations are a driver of our U.S. equity overweight.

Credit fundamentals are stronger, with default rates falling.

Bond valuations have reset, creating better entry points, but real returns may remain modest.

Trend-following struggles highlight the need for multi-strategy systematic approaches.

In emerging markets, higher activeness and small-cap allocations improve alpha opportunities.

References:

Morningstar DBRS

Proskauer Private Credit Default Report

Deutsche Bank Global Markets Research

PIMCO Fixed Income Outlook

DeepMacro Model Positioning

State Street Emerging Markets Strategy Research

This week’s episode covers:

• U.S.–EU trade deal impact and the new 15% tariff baseline
• Margin debt surges—5th fastest rise since 1998 (source: Deutsche Bank)
• Fed and ECB hold steady, but tone remains cautious
• Breadth weakening beneath the surface despite equity highs
• Trimming gold, watching silver/platinum and volatility signals
• July portfolio performance + positioning adjustments
• What we’re watching: CTA trends, EMFX momentum, and central bank shifts

Referenced Sources:

Deutsche Bank Macro Strategy Notes

SentimenTrader Momentum/Breadth Indicators

MRB Partners EM Currency Research

Dantes Outlook internal trend models & analytics

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This week’s topics include:

✅ U.S.–Japan trade deal and what it means for global risk sentiment

📊 Q2 earnings beat expectations—but growth is slowing

📈 Meme stocks signal renewed retail risk appetite

🏦 Central banks pivot toward holding rates—insights from the ECB and Fed

📉 Vanguard cuts U.S. equity return forecasts; bonds catch up

🌍 DeepMacro flags expansion in emerging markets

📌 Internal perspectives from Victor Zhou and Elena Zeng on portfolio positioning

📈 How Dantes Outlook is adjusting exposures across equities, bonds, commodities, and currencies

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Today, we explore global energy through the lens of Russia, the world’s largest exporter of oil and gas. And to the west is Europe, which is heavily reliant on Russian gas supplies. According to some estimates, Russia is earning roughly $500 million per day on oil and another $400 million on gas all together.

But gas flows from Russia to Europe were already declining into the Q4 heating season last year. Flows flattened out earlier this year, and are  now ticking downward.

To help us understand the Russia/EU gas market, we turn to Nadia Kazakova, an analyst at Renaissance Energy Advisors (REA). Nadia is an expert in this field with prior roles at JP Morgan and Saxo Bank. She also provides in depth analysis on operating stats from Gazprom, Russia’s majority state-owned energy company.

On this show, we discussed:

• Russia’s importance in the global and EU oil and gas markets
• The buildup of gas fields and a vast pipeline network from Siberia and throughout Eastern Europe
• Gazprom's growing influence on EU gas supply, and its efforts to go downstream to capture additional margin
• The significance of Gazprom's November export cut to the EU, stemming from the Nordstream pipeline debacle
• Supply mix from Norway, Algeria and US LNG
• Expectations for further export reductions from Gazprom, below its annual output target
• The new system of ruble payments – its complexity and implications for sanctions and long-term contracts
• New evidence that Gazprom is already cutting back volumes to non-compliant customers
• Future price stabilization or volatility, and what to monitor going forward

Most price signals have extended into overbought territory, although pullbacks could be temporary over the next quarter. Elsewhere, metals have stabilized and  oversold signals could present buying opportunities. 

Trading performance was positive in Q1, built on the success of Q4. Short palladium and long soybean oil were the  best performing trades, while sharp moves in wheat and oil detracted from overall gains. At times, volatility can lead to frequent or contradictory signals. 

Evidently, returns across commodities are not equal. At times, there is wide divergence between sectors such as oil/gas, agriculture and metals. That means the risk of a core long position can be offset with tactical long/short positions in specific commodities.

​For now, here is our base-case into Q2:

• The copper/gold ratio, a gauge for risk-on/risk-off, is stuck in a resistance range, similar to what occurred in 2017-2018 when market volatility increased.
• WTI Crude Oil broke above a decade-long resistance level at $105/bbl and faces stronger resistance near the 2008 price high at $147/bbl-$150/bbl.
• The recent decline in stocks relative to commodities is starting to stabilize, although failure to hold a decade-long uptrend indicates further downside in the ratio, especially if bond yields continue to rise.

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In the December podcast, we warned that 2022 could resemble 2018 – a year when the Federal Reserve tried to taper, which triggered a mini stock market crash. And now, we start the year with great turbulence. This time, however, a mix of macroeconomic and geopolitical risk emanating from Russia and Ukraine have kept investors on edge.  

And of course, the threat of rising inflation lingers. Supply chain disruptions and record low inventories contributed to a surge in prices. But fighting inflation by raising rates comes at the expense of slowing economic growth. 

To help us unpack these developments, we turn to Lev Borodovsky, the editor of The Daily Shot newsletter. Geopolitics

​Topics discussed:

• Update on the Russia-Ukraine conflict, and its impact on markets
• European energy crisis
• ECB response and inflation expectations
• Commodity price outlook
• Fed policy and inflation/growth
• Expected returns: equities and Treasury hedge

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Feel free to reach out to learn more about Dantes Outlook and our investment strategies here.

Tim explains that carry trades (borrowing at low interest rates to finance higher-yield investments, and assuming market stability), are behind recurring booms and busts. Tim and his fellow authors argue that market crashes are not the result of economic recessions – rather, market crashes cause recessions. 

Currently, there is risk of another carry crash, which was in development before the Russia-Ukraine crisis.