Change Is Coming

Nearly a month ago now, we published “The Stagflation Threshold”. In that ledger, we called for the possibility of a Stagflationary regime. We outlined the conditions that would lead to Stagflation, inflation impulses continue to lead and cannibalize growth impulses, and growth impulses fall off a cliff.

That did not happen. Instead, growth impulses are currently pinned at 100% strength, and the underlying growth index has firmly taken the lead against inflation. What will be addressed in this post is where the current macro narrative stands, where it is in relation to our macro regime system, why that gap is the most important so far this year, and the positioning specifics for our members.

The Narrative Has Hardened. The Data Has Not.

Start with Iran. When we wrote the last Ledger, most people thought a deal was a couple of weeks away, and the oil premium would bleed out. Twenty days later, the ceasefires are PR stunts. Iran is boarding ships. Mines are in the Strait. Tankers are getting shot at. Kuwait just cut oil exports. The situation keeps getting worse, and the market has stopped flinching. When a crisis stops moving the tape in either direction, the bad outcome is already priced in, and nobody has actually panicked yet. That is its own kind of risk.

And this time it’s not the Fed making things worse. It’s the White House. A blockade gets announced, then delayed, then actually started. A ceasefire is on in the morning and off by afternoon. Weekend trade talks blow up before Monday's open. Iran says the Strait stays closed until a deal is done. The US sets terms that Iran will never agree to. The line moves every few days. You cannot get a normal tape when the one thing the market actually cares about keeps changing shape between headlines.

The energy damage is everywhere. The Fed's latest Beige Book said fuel costs are up in all twelve districts. US jet fuel prices more than doubled through March. Airlines are already cutting flights. Europe is a month or two from real problems if the Strait does not open back up. Anything touching freight, shipping, plastics, or cheap fuel is getting squeezed the same way.

Stocks are going up anyway. That is what has everyone confused. The ceasefire is barely holding. Every extension breaks within hours. Any headline, on any day, can flip the tape. Stocks are rallying while the war is still live. That is an impossible picture to hold in your head. FOMO if you are sitting on cash. Uncertainty if you are long. This could be a trap. Is this a trick? Are we really going to just rally out of this? That is exactly what our system is built for.

Through all of that, our regime has stayed locked in Inflation. Not Stagflation. Not even Guarded Inflation, the cautious step we would see first if things were really turning. Just Inflation, straight through. For twenty days, the narrative has been hardening toward stagflation, and our system has never once agreed.

The Growth Index Retook the Lead

Both our growth and inflation index have been rising with haste, even as the market was selling in March. The key difference now is that growth impulses have recently begun dominating again, a very hopeful outcome.

Despite all the noise, fear, and fomo being thrown around, our System is telling us this is very likely going to be a robust and materially long-lasting bull market. Risk-taking has seen a significant rise, with the riskiest assets outperforming: IWM, SMH, even Bitcoin's been getting bid up to momo. There is power behind this move that shouldn't be ignored. This rally should've failed 7% ago, but it didn't, because growth is strong. Yes, pullbacks in equities are possible, but will that happen now or 10% higher from here?

This is where being systematic is valuable, especially in uncertain times like these. Our job is to build systems, then relay those signals without an emotional filter. Our system is built around a regime and trend model, both of which need to be confirmed for us to have a real signal. Typically, when they do, we end up seeing durable trends unfold. That’s what we’re seeing right now. Those without a process or a system here will let fear stop them from buying pivotal movements.

We all see equities are basically back up to all-time highs, but the nuance here is that equities have barely progressed for 6 months now. History usually isn't highly repetitive, but when headlines are driving the market without real macro deterioration, it's possible that we can ascend as fast as we decline. A similar example is Liberation Day, and it's not the only time this sort of recovery has happened historically.

After consolidating and trapping shorts for months, our growth impulses remain strong. This sounds like the start of a new bull market to me. The fact that equities are up ~15%-20% off their lows does not concern us; they've barely moved higher since October.

Buying recoveries is hard, especially when they’re rapid. Go back and look at prior robust recoveries; they all look like what we’re seeing right now. You need to have a process, and you need to trust it.

Change Is Coming

Throughout our content, ledger posts, and podcasts, we’ve made it very clear that our position in markets was an outcome of our regime and trend models displaying nonconfirming outputs. We made it clear that the moment equity trends confirmed, we’d be back in. Well, that hurdle has been cleared, and the setup to reposition has arrived.

At this point, the hated “relief rally” is behind us, and now we need to look forward as to what is next. The markets have gone nowhere since October of 2025. Bitcoin is on the verge of breaking its bear trend. The cost of being wrong here is volatility, but the reward is being positioned early for the return of a bull trending market across both stocks and Bitcoin.

Feel free to read the Ares section of the guide to familiarize yourself with the model here. Here’s how we are going to position ourselves for this upcoming change…