On the Friday Fix before the US open, we flagged that the late-week price action would provide us with valuable insights. Would the dip in mega-cap equities, crypto and precious metals get bought, or was sentiment finally tiring?
Yes, we got a bounce. But the feel of the market is shifting. The odds of a sideways grind into year-end are rising, and the S&P 500 has probably already printed its highs for 2025. That turns passive exposure into a dead weight and puts active management back in the driver’s seat.
With P&L worth protecting and catalysts running thin, composite hedges are about to become November’s favourite trade. We like to refer to it as insulation for year-end, and a seatbelt for Q1.
Here’s our favourite cross-asset basket to hedge for the coming few months.
Hunting for Cockroaches
Fintech underwriting is running into real-world stress, and the failures at First Brands and Tricolor show how quickly these models can crack.
Both companies followed a similar trajectory of rapid loan growth during ZIRP, thin underwriting and misrepresented borrower quality. Once the credit cycle turned, the losses were immediate and severe.
On Friday, a Bloomberg article flagged up that a record number of Americans are falling behind on car payments, stoking concerns that more pain is in store for subprime auto lenders. Data from Fitch Ratings showed that the share of borrowers with auto loans at least 60 days past due rose to 6.65% in October, the highest level since 1994.