Market analysis

Overview of recent events, principles, and weekly post

The risk in the current situation, then, is that the entire global security architecture has been shaken—and no one can say for sure whether this tremor is merely temporary or the beginning of a much larger tectonic shift.
The momentum is real; it truly has deep causes. The question is whether a transformation can happen without an earthquake.
In any case, the world order will be radically reshaped—both economically and geopolitically.

Today I marked a very pivotal event in terms of sentiment: the Putin–Witkoff meeting. And despite this morning’s assassination of Putin’s lieutenant general—killed by a car bomb—the negotiations were quite benign/promising.

After the close, I once again explained why macro matters.
Most people simply aren’t used to a market where the fundamentals are being shaken. You’re accustomed to a well-supported market riding a growth trajectory driven by fundamental supply and demand among investors, where prices sometimes diverge (catching momentum), and then inevitably mean-revert. You learn to estimate those anomalies through options and volatility positioning, and speculate on them.
(Among retails, this way of thinking is particularly widespread—mainly because most of them came up in the cryptocurrency market and therefore only know a purely speculative mindset on a purely speculative market.)
But that isn’t always how things work.

INVESTMENT (big boys mindset)
I’ve already written about the market’s fundamental driving principles. At root, these come down to the price levels at which investors are willing to buy or sell. They have various methods for determining those levels, which I’ve also outlined briefly. Liquidity providers balance supply and demand (especially against speculative flows), while investors finance companies’ operations and a country’s debt, thereby supporting growth.
But sometimes a particular event will create uncertainty among investors…

When that happens, serious problems arise both in the market and in the broader economy.
If investors pull out, no one remains to finance either the government’s spending and economic growth. That leads to a general slowdown—and in some cases a deflationary spiral.
The withdrawal of investors’ capital causes a massive liquidity drain in the markets, driving prices sharply lower and triggering a chain reaction of margin calls. That deleveraging event then removes even more money from the economy, producing a negative-wealth effect that further depresses prices (a disinf-/deflationary force).

In such situations, it falls to the government to rescue the economy through both fiscal and monetary measures. First, by deploying various emergency mechanisms (which I’ve also described briefly). And second, by restoring investor confidence.
It must pinpoint why investors are withdrawing and address that root problem—offering them a deal that draws them back, convinces them their capital is safe, and makes financing government spending worthwhile.
It is important to note that, investors never “short” their finances; they always go long. To invest is to finance a company’s or a government’s operations because you believe in its growth. In return, the company or state rewards you with ‘dividends’ paid from that growth. (They only enter into speculative trades if they’re setting aside money for hedging purposes or if they want to make a little side income. But I can tell you for fact that most of them suck at speculative trading.)
Many people simply aren’t familiar with this.

LAST YEAR’S BIG SHORT SQUEEZE
Last year, the market was simply being artificially stimulated. I wrote several posts about this around February–March. It was an election year, and the Fed openly stated that it would prioritize economic growth over fighting inflation. The surface narrative was “election year,” but the underlying story was the US–China economic cold war unfolding behind the scenes—one of the very principles of the “Trump trade” (as I pointed out in February, Wall Street would back him to secure that victory).

That rally was built on a short squeeze.
Why? Because everyone by then could clearly see the economy headed toward stagflation—since the Fed in 2022 had shied away from aggressively tackling supply-side–driven inflation (precisely due to the US–China cold war, waiting for China to slip into recession)—so they were shorting the risk of an actual QT.
Yet the Fed itself was effectively short OTM puts at the bottoms and short ATM calls at the tops, creating a rangebound environment.
On top of balance-sheet reduction, it was also buying massive amounts of MBS. It wasn’t genuine QT.

Once the Fed committed to artificially stimulating growth, those shorts began to be squeezed out. Thanks to the nature of the derivatives markets, that unleashed very strong buyback flows—and that became the foundation of the “growth”.
Speculative, highly leveraged trades piled on with the AI bubble. The market would occasionally overshoot the curve of this artificial growth, and then mean-revert.
The standout event came in August, when the market unwound a large, purely speculative gain—unsupported by real investor conviction—after a powerful gamma squeeze. Even that, however, was ultimately just mean reversion on a higher timeframe. It was triggered at the institutional level because—as I repeatedly noted—the Fed needed room to cut rates, which the negative wealth effect could provide. But I also warned it wouldn’t be real QE, since a low‐rate regime amid stagflation isn’t sustainable.
Sure enough, the rate cut happened, then Trump’s election victory followed. On December 5, I signaled that the market’s reaction was unhealthy and that both fundamental and structural issues were piling up. Once again, I was proven right: the market began a controlled decline. I then predicted that the December Fed meeting would turn hawkish due to stagflation pressures—and it did, with the market giving back several hundred points in minutes. A nice, memorable day, indeed.
But even that was still a form of mean reversion. By then, the first genuine fundamental problems had begun to surface.

AFTER 2025 FEBRUARY (investigating the trend)
In January, we bought the dip. But the situation was starting to look problematic.
It became clear that Trump wasn’t interested in boosting growth at all costs—he wanted something more sustainable and realistic. Investors like that; speculators, not so much.
That’s when I launched the Substack and called for a day-by-day approach with long bias. I repeatedly stressed that things were changing, and the story the market was trying to tell was growing murky, so we need to be patient until the story unfolds.
One thing I was sure of: Trump intended to buy out China’s role in the tech sector. I said this several times. So, ahead of the February OpEx on Wednesday, we shorted—and the market did begin to fall, albeit slowly…

I noticed the down-move was manipulative: daily short speed positionings, a relatively low-variance decline—what I called “spot decay,” or “oscillation with negative drift.” That struck me as suspicious.
A true analyst doesn’t just describe what happens—that’s mere commentary anyone can do after reading a couple of books.
To front-run a market trend, you must understand what the market is really doing, what its narrative is, and thereby being able to project what comes next.

So I asked myself: what’s going on?
I concluded that this low-variance environment prevented hedges from printing enough, allowing insiders to probe margin levels and steadily accumulate (buying sold shares) as the market stepped down.
That explained why Trump surrounded himself with wealthy billionaires in and around his administration. (Once the market operation concluded, those individuals would quietly receive new positions—Elon Musk among them, and indeed, it’s already unfolding.)
I began digging into exactly whom they intended to buy out, so I could pinpoint the sectors, companies, equities (and derivatives) to watch for trend analysis.
As I dove deeper, insider sources came forward with help. I already knew about Trump’s 2019 outreach to Russia and his plan to buy out China. I analyzed those trends back then and profited handsomely.
Then, in late February, I was told that this plan had resurfaced: Kirill Dmitriev had met with Trump—before his inauguration—to discuss building a US-Russia-Middle East alliance, which I dubbed “Holy Alliance 2.0” after the 1815 historical coalition. I’ve described that plan in detail multiple times; the post is pinned in the “Market Analysis” section for anyone to find, and every updates are linked at the bottom of the posts. Take your time with it.

Knowing and understanding this is crucial, as it provides the market with context—revealing precisely what investors (not speculators) are pricing in, and thus essentially supplying a framework for interpreting the momentum of market movements and macro trends.
This was particularly important in March, when we began to see the market react unusually sensitively to Trump’s statements. And without this context, Trump’s actions and the market’s reactions would have been completely meaningless—leaving many, who don’t understand or don’t know about this plan, literally scratching their heads in confusion.

THE US - RUSSIA - MIDDLE-EAST ALLIANCE AND THE MARKET
In short, the essence of the plan was to forge a new economic and military alliance between the United States, Russia, and the Middle East—and it would benefit all three and their partners. On one hand, it would provide genuine geopolitical security and keep the world open. On the other, sharing technology and economic resources would deliver stable growth and rising prosperity for everyone involved. (See details in the dedicated post)
We must recognize that the two superpowers competing today are the United States and China—and that the real battleground for leverage lies in winning over Russia and the region’s sovereign wealth funds. China has already cultivated a close relationship with Russia—first because the West shut Russia out, and second because through Putin it gained a bridge to the Arabs, who together control over 42 % of global wealth.
Those Russian and Arab interests are straightforward: they seek reliable, stable investments.

That Sino-Russian connection deepened in 2019 when President Trump first opened to rapprochement with Russia. The key here is diplomatic cooperation, not an isolated militarism.
A U.S.-Russia alliance would also be ideologically more durable than any China-Russia entente—since Putin deliberately transformed post-Communist Russia (extreme left) into a nationalist state grounded in Orthodox Christianity (extreme right), so as to share deeper cultural roots with the West. And Trump, observing America’s excesses of liberalism—which ultimately leads to collapse in both social and economic terms—has steered the U.S. toward a right-leaning mindset, a mirror of a broader global trend.
The right naturally aligns with the right, the left with the left. This is crucial.

But Russia and the Gulf investors imposed two conditions on the alliance:
1) stagflation must be purged from the US economy—even if only on paper.
This is vital, because stagflation is a time bomb. Everyone knows that only drastic demand cuts and a deliberate boost to supply can defeat stagflation—and that process brings deflation (not necessarily a spiral, but deflation nonetheless). It’s extremely unstable, and not a place where billionaires want to park capital; they need to see solid conditions, because they will invest only once it’s clear America can deliver stable, genuine, sustainable growth. This is critical.

2) Putin’s full ceasefire terms must be accepted. In essence, those restore conditions to the pre-Paris-1997 status quo, creating a buffer zone where no NATO forces are deployed on Russian soil.
What does this mean for Ukraine? To understand that, recall that in 2014 the Crimean peninsula voted to secede—an initiative Russia supported, since Crimea is predominantly ethnic Russian and its ports remained vital to Moscow. Ukraine neither consented nor went to war over Crimea’s annexation; partisan actions occurred, but no full-scale conflict. Then Ukraine’s military doctrine changed to make reclaiming Crimea by force a priority. The UK, EU, and the Democratic U.S. government pledged support to President Zelenskiy and pushed to admit Ukraine into NATO.
Putin’s red line was clear: no country embroiled in a military conflict could join NATO, per Article 10 of the Washington Treaty. If Ukraine became a member and resumed operations to retake Crimea, NATO’s Article 5 would trigger a clash with the CSTO—and thus World War III. Those facts were well understood in Brussels, London, and Washington, and they gambled that Putin might back down. Instead, Russia moved to secure additional territories, ensuring Ukraine could never qualify for NATO membership. Putin himself spelled out that rationale. From then on, each action prompted a reaction.

I must emphasize that no one truly knows the truth; but Russia holds the power: anyone who seeks peace must accept Russia’s position. Yes, Russian diplomats also tend to employ their own “nuances” and persuasive framing (so are europeans)…but that is how diplomacy works.

There’s no moral high ground on either side. Both are dirty. Both are equally responsible. Why? Because each has its own arguments to justify its actions. And that’s the key. That’s the most important thing. (According to my personal belief, every one of them will answer to God for this, and I leave that to Him.)
From a diplomatic perspective, what matters is the risk/reward ratio. Go to war with Russia? Possible, but the risk far outweighs the reward. Negotiate and let go of some moral principles? Well, that’s still not a positive reward either, but the risk is much smaller, so it’s a more favorable ratio. That’s all that counts here, nothing else. And this is sad…

To analyze their position, you must think with their mindset—and personal moral judgments have no place here.
From the Russian envoys involved in the peace talks, I was told that Putin does not actually wish to annex more territory. They envision partitioning Ukraine along “Korean Peninsula” lines; Putin fundamentally wants a diplomatic resolution—a path that the EU has so far refused to consider.

Let’s think for a moment at the level of principles… if we choose to handle the two problems separately, each will inevitably spawn further problems. That’s why we need to find a single tool that advances both causes. And that tool is the …**drum roll**… tariffs

TARIFFS (the main idea behind them)
If you recall 2024, when I wrote about Trump’s comeback and its significance—and then, by mid-summer, it had become a very popular topic—everyone knew exactly what his plans were for immigrants, that he wanted a weak dollar, higher tariffs, and to isolate America to some degree: to turn more introvert rather than babysit everyone else. That’s typically right-wing, nationalist thinking.
The market priced that in. So how could his tariff policy almost trigger a Western crisis?

It happened because the context changed and the tariff levels became too high and surprising for those who didn’t know about the underlying plan.
Investors and traders didn’t understand exactly what was happening, but they understood what it could cause: the unraveling of the U.S. federal system, the strengthening of BRICS, a Chinese counterattack via bond sales, a drastic economic contraction, a deflationary spiral, a ‘California vs. Texas’ U.S. civil war, and military conflicts around the world as U.S. hegemony weakened. I wrote several analyses on these risks.
This creates very high inconfidence among investors…

Yet the true purpose of the tariffs was to force the European Union to the negotiating table—and thus compel them to agree to a ceasefire—simply because the EU is essentially supported and protected by the U.S.
Moreover, a wave of selling triggers a market crash, creating a negative-wealth effect. The CEOs of BlackRock, JPMorgan and other big banks and funds assured the government that they got every tool to prevent a deflationary spiral. And once the risk subsided, the Arabs and Russians would buy into U.S. markets again, sparking a long-term upswing.
At the same time, high tariffs could also bring other countries to the table to reshape global relationships. This served as a filter to expose BRICS’s weaknesses.
Although China then proposed talks, they also bristled at the challenge.

The problem was that the EU, because of its left-wing ideology, turned to far-left China for help—as I had predicted—to fill the financing role the U.S. had played for them. China was ready.
That undercut Trump: the tariffs’ impact diminished and the EU refused to negotiate. So, after careful calculation, tariffs were raised again against China to force them to the table. The aim was to expose China’s weaknesses, deter them from supporting the EU, and prevent BRICS from becoming too powerful. This was what I called the “U.S.-China poker game”.

China’s weakness was evident, but the U.S. had way much more to lose—and that’s the key. That’s what Xi was speculating on: time.
Investors didn’t trust Trump’s ability to navigate this through. They saw that China was holding firm, preparing for a protracted conflict, threatening Taiwan, and that America’s former allies were drifting toward BRICS, and steadly losing leverage. It was an extremely unstable situation.
They also knew that tariffs ultimately stoke more inflation (fueling stagflation), and they saw that Trump currently lacked the leverage to force the EU into a ceasefire.

Faced with this instability, investors pulled their money out. Seeing the U.S. economy teeter on the edge of a deflationary spiral, Washington slowly activated its support mechanisms.
However in itself it is not enough for the investors—no real progress was made. Any bad news—further escalation, new Chinese tariffs, a blockade of Taiwan—would trigger another sell-off and a fresh low.
China then enacted monetary easing. In this context, that was clearly a sign of weakness under the hood (for those who saw the underlying context). In the eurozone, stagflation risk emerged.
And this was the point, where investor uncertainty began to ease: they stopped massive selling, though they still weren’t buying.

Then, in the latest developments—namely, the successful Putin/Witkoff talks—investor sentiment began to shift.
Inside China, domestic discontent is rising, and economic weakness is surfacing. Their denial of having any talks on with the U.S. is a severe diplomatic and trust blow. This could soon restore U.S. leverage. A few European politicians have already signaled their willingness to negotiate. Trump plans to speak with them after the Pope’s funeral. So by Sunday we’ll know more. All signs, however, point to Trump’s policy having finally stepped onto the path that leads out of the woods.
For investors, this shift signals that U.S. dignity and strength have passed the test. Therefore, no further withdrawals (no “lower lows”) should be expected—unless some positive progression reverses. The odds of that aren’t high, but they’re significantly above zero. And that matters. Do you get the idea? Okay. ‘cuz there are more…

WHATS THE PROBLEM?
Let me tell you what’s wrong.
On one hand, the fact that China is denying any dialogue with the U.S. (despite their own press releases) shows that they intend to keep the tariff war going. Remember, it’s not in China’s interest to let the U.S. achieve its goals. China’s weapon is simply time here. The question is whether Xi has correctly judged that China’s moment has arrived or not. Who folds first…? Still no one has folded—only the odds have shifted, and dramatically so.

If China does continue the tariff war, that could be a major turning point. Because if they don’t cut off EU support—and the ties between China and the EU grow tighter—the EU could still back away from the ceasefire.
Let me note here that the EU still hasn’t formally agreed to the truce. It only appears they may soon be willing to sit down with the U.S. Don’t forget…
But if that bond deepens and they see U.S. being in trouble and stepping back from the peace negotiations as they promised in London, Taiwan and the First Island Chain still loom as threats. Trump knows this, and so do investors.

So the problem remains that, even though U.S. superiority is clear, risks from China still persist. China didn’t fold, the EU didn’t accept the truce, and one more… **drum roll**
…our dear friend Jerome Powell still doesn’t see rate cuts as appropriate.
As I’ve been saying since March, we’re expecting the first cut in June. That’s crucial, because the market needs monetary support to see a stable rally.
If that happens, we’ll get a truly parabolic squeeze—followed by a mean reversion.

tl;dr the market needs two things for a true bottom: China must fold (which then forces a US–EU truce), and the Fed must embark on sustainable QE—before you’ll see lasting confirmation. None of them actually happened, only the odds have shifted today…

HOW ABOUT THE MARKET?
As I mentioned above, you have to understand that in most cases the market is driven by supply and demand, quarterly positioning, and the associated structural flows. However, in the current state the market and the economy have become fundamentally unstable, and policymakers are working to stabilize them. We are literally on the left tail—as I keep emphasizing—in the low-probability extremes of the distribution.
This environment demands rapid adaptation and a precise mapping of the fundamental forces that define market trends.

Remember that before the market even started to fall, I said the target was last April’s low. For now, that remains the bottom. If the progressions continue and real acts happen, then bottom confirmed and I go net long. Until then, the risk that the market drops below that level—or that it simply retests and fills the four gaps below—is significant.

Let’s think like investors.
The market needs liquidity in order to functionate more efficiently not hyper-sensitively. That liquidity is provided back by the dealers and the ever-more confident day-traders.