Equities: Rally on Thin Ice
We’ve been reducing net exposure across our equity portfolios all year — and while that’s helped preserve some capital during pullbacks, we have to admit: our cautious positioning missed some of the upside over the past month.
The S&P 500 staged a sharp V-shaped rally off the early April lows, fueled by a 90-day pause in tariff tensions and a surge in retail-driven dip-buying. In mid-May, it regained its 200-day moving average – one of the most widely watched long-term trend indicators in markets, shown as the yellow line in the chart below.
We’re watching this rally closely — it may prove to be a headfake before we revisit the April lows. Here’s why:
1. Technicals are very stretched (major indexes are overbought on multiple timeframes), and fundamentals haven’t improved materially.
2. Valuations remain rich at ~21x forward earnings, with underlying earnings breadth still narrow. Not the set-up we typically see at the start of bull markets.
3. The equity market’s risk premium is near multi-decade lows – suggesting investors are not being well-compensated to buy US equities relative to lower-risk Treasuries today.
We’re holding meaningful strategic cash and waiting for more conclusive signs — both technical and fundamental — that we’ve truly bottomed before deploying some of that cash. We believe this is a moment for patience and discipline, not performance-chasing. Of course, as the data changes, so may our outlook and positioning.
Bonds: Market May Force the Fed’s Hand
Bond yields have surged globally, pushing financial conditions tighter — and we think the pain trade isn’t over. But eventually, something breaks.
Take Japan, for example. Right now we are seeing a “buyers strike” in the Japanese bond market after the Prime Minister described the country’s deteriorating finances as “worse than Greece.” Japan bond yields have surged to all-time highs as investors balk at the idea of lending long-term cash to a profligate government that is steering an aging and sclerotic economy.
Why does this matter? Japan is the single-largest holder of US Treasury debt, sitting on $1+ trillion in paper accumulated from years of recycling trade receipts from exports to the US into US Treasury bonds. If those same buyers send a similar message on debt levels, tax cuts and the broader need for fiscal responsibility, the US Treasury market might respond the way Japan’s did on Tuesday: soaring yields and collapsing bond prices.
We expect the Fed and/or Treasury to step in sooner than consensus expects as rate-sensitive sectors flash stress. This may set the stage for a return to looser liquidity, which could buoy rate-sensitive assets and catalyze risk rotations.
This setup reminds us: the bond market often calls the shots long before the Fed does. We are cautious about fixed income today as a result.
Crypto: Positive Conviction, Technically Supported
Bitcoin just hit a new all-time high at $111K - and we continue to believe that we may see $120K–$150K as likely this summer, and $150K–$200K as possible by year-end. These levels aren’t arbitrary: they’re derived from a combination of technical analysis (e.g., log regression curves, long-term RSI breakouts, and prior halving cycle analogs), macro flows (M2 money supply growth, real interest rate suppression), and BTC dominance trends.
Simply put: this could be a textbook environment for a potentially sharp BTC move.
We believe Bitcoin is increasingly being viewed as the global store of value, just as gold has been the generational one. And while we like to joke that gold is the “boomer’s Bitcoin,” we’re constructive on both. In an environment of a weakening US dollar and rising sovereign debt stress, we expect capital to seek scarce, liquid, and non-sovereign assets — and BTC and gold both could fit that bill, in our view.
For those interested in crypto exposure, we believe this may be a compelling environment to consider an allocation, based on individual circumstances and suitability.
One common approach could be to diversify across major digital assets through regulated vehicles, such as ETFs.
Note: this asset class is highly volatile and generally suited for investors with a long-term investment horizon. While we remain optimistic about the long-term potential of the crypto market, we expect significant drawdowns to occur along the way.
Alternatives: Tactical Access for the Long-Term Investor
We don’t invest directly in real estate, credit, or startups at Titan — but we do offer access to select third-party funds for suitable investors that have historically been accessed by institutional investors.
In today’s market, we believe there may be selective opportunities in these areas. Private credit continues to offer relatively attractive yields. Venture is seeing improved pricing after a long reset. Real estate remains harder to underwrite given rate uncertainty, but some long-term investors may view certain strategies as attractive if capital is patient.
That’s where we stand today: cautious but alert in equities, watching the bond market closely, maintaining constructive views on crypto, and allocating thoughtfully to alternatives where suitable.
We’ll continue managing risk actively and communicating transparently - and we appreciate the trust our clients place in us.
